Opinion
16-P-943
04-20-2017
Lucy GILBERT & another v. DEUTSCHE BANK NATIONAL TRUST COMPANY, trustee,& others.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs, Edward O'Neil and Lucy Gilbert, appeal from the judgment on the pleadings rendered by a judge in the Superior Court in favor of defendant Deutsche Bank National Trust Company, as trustee (Deutsche Bank). We recite the undisputed facts and procedural history.
In 2005 the plaintiffs obtained a judgment in the eventual amount (including interest, costs, and attorney's fees) of $465,900 against Brian Fallon resulting from a dispute over a home construction contract. In 2003, during the prosecution of the lawsuit resulting in that judgment, Brian and his wife, Paula Fallon, transferred property they held in a trust of which Brian was the beneficiary to themselves as tenants by the entirety. After the transfer, and also in 2003, the Fallons mortgaged the same property to secure a loan of $420,000. The mortgage was executed by both Fallons; the sole signatory on the note was Paula. The Fallons are alleged to have dissipated the loan proceeds within ten months of receipt.
We use the first names of the individual defendants because they share the same surname.
Deutsche Bank is the successor by assignment to the original lender, and currently holds the mortgage. Seeking to collect on the judgment they had obtained against Brian, the plaintiffs initiated the instant case against Deutsche Bank in 2014 alleging various theories of fraudulent conveyance with respect to both the title transfer and the subsequent financing, principally based on G. L. c. 93A.
During the discovery phase of the initial case brought against Brian, the loan application signed by Paula had been produced; the application represents that her annual income was $228,000. The plaintiffs assert that her actual annual income was approximately $20,000.
The judge's memorandum of decision in the case here on appeal recites the following events from the initial case the plaintiffs brought against Brian (which resulted in the judgment the plaintiffs now seek to collect): "In November of 2011, at the trial in the [case brought against Brian], Mrs. Fallon testified and was asked about the representation she made on the Loan Application and why she had reported that her income was $228,000 instead of her actual income of approximately $20,000. Mrs. Fallon testified she completed the Loan Application ‘with a mortgage person, and he had instructed us what to write down.’ At this point in the trial, the trial judge ... interrupted the proceedings and advised Mrs. Fallon of her Fifth Amendment right to remain silent rather than to testify in a way that further implicated her in criminal behavior. Mrs. Fallon ceased testifying at that point."
Discussion. We review the facts asserted in the complaint for " ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting from Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). At issue here is the claimed invalidity of a mortgage allegedly rendered defective by the original lender's fraudulent collusion with the borrower at the time of issuance. We discern no error in the judge's analysis of each count of the complaint, or in his dismissal of the suit.
General Laws c. 93A. The factual assertion on which the complaint hinges is derived from the testimony of Paula set forth, supra, in note 5. As the judge rightfully concluded, this evidence falls short of supporting a finding that the unnamed "mortgage person," who can be inferred to have been a representative of the original lender, had instructed Paula to misrepresent her income or even knew her income level. We assume in considering dismissal at this stage of the proceedings that Paula intentionally misrepresented her income, see Iannacchino v. Ford Motor Co., supra at 625 n.7 ("In considering [a motion for judgment on the pleadings], ‘the allegations of the complaint, as well as such inferences as may be drawn therefrom in the plaintiff's favor, are to be taken as true,’ " quoting from Nader v. Citron, 372 Mass. 96, 98 [1977] ). Even so, her statement that she was told "what to write down" does not attain even the liberal pleading requirements required to charge an agent of Deutsche Bank's predecessor lending institution with conspiracy to commit an unfair or deceptive act.
As the judge also pointed out, there is no evidence that the original lender or any of its agents knew of the plaintiffs' claims against Brian.
Further basis for the inapplicability of c. 93A in these circumstances may be found in the statute's reference to standing enjoyed by "[a]ny person ... who has been injured" by the allegedly unfair act or practice. G. L. c. 93A, § 9, as appearing in St. 1979, c. 406, § 1. We agree with the judge's observation that making a loan to an individual who may not qualify for an extension of credit is not an act that the Legislature considered injurious to a potential judgment creditor of the unqualified borrower.
As we conclude that the claim under c. 93A is substantively unsupported, we do not address the parties' arguments concerning the statute of limitations.
General Laws c. 183, § 28C, and G. L. c. 183C. To the extent that the plaintiffs' allegations incorporate a theory to reach and apply an asset consisting of their debtor's claim of lender liability, i.e., that the original lender induced the Fallons to incur an obligation that it knew they would be unable to satisfy, the statute of limitations would bar recovery. There is no dispute that the Fallons were aware of the loan at the time it was made.
Additionally, G. L. c. 183, § 28C, and G. L. c. 183C were adopted in August of 2004; consequently they cannot avail the plaintiffs in their efforts to assign liability to Deutsche Bank for a loan made by its predecessor in interest in 2003.
Judgment affirmed.