Opinion
ESCV2002-02352
07-22-2016
Maureen A. Maestranzi v. Michael J. O'Brien No. 134491
Paul D. Wilson, Justice of the Superior Court.
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO VACATE DEFAULT JUDGMENT
Paul D. Wilson, Justice of the Superior Court.
In this 2002 lawsuit, Plaintiff Maestranzi sued her brother, Defendant O'Brien, accusing him of failure to pay Plaintiff her one-half share of the rents he received from real estate that they jointly owned but O'Brien managed. In 2003, the court entered a default judgment in this case in the amount of $276,500 plus interest and costs. Plaintiff collected nothing from her brother during his lifetime, so, after his death, she filed a claim with his probate estate (the " Estate").
By then there was a substantial competing claimant, however. For the last several years of his life, O'Brien had been cared for in a rehabilitation center or nursing home, partly at the expense of MassHealth, the state's Medicaid program. MassHealth therefore filed a claim with his probate Estate for the return of the amounts it had expended on his behalf.
The Estate was not large enough to pay both claims. Therefore O'Brien's personal representative moved to substitute the Estate for O'Brien as the Defendant in this case, and MassHealth moved intervene as well. Both the Estate and MassHealth contend that the default judgment was improperly entered, and so a motion to vacate the default judgment is now pending before the court.
I have held two hearings on this matter. After the first hearing, and after a careful review of the substantial court file, I decided four preliminary motions. Specifically, I allowed Plaintiff's motion to substitute the Estate for O'Brien as the Defendant; denied two motions to strike factual materials from the record, one filed by each party; and ruled that Plaintiff's motion to strike MassHealth's Rule 36 Request for Admissions was moot.
Having cleared away that underbrush, and having carefully reviewed the lengthy briefs and the voluminous factual materials submitted by the parties, I held the second hearing on July 20, 2016, at which the parties argued the merits of the motion to vacate the default judgment. For the reasons set forth below, I will allow Defendant's motion, and will vacate the default judgment.
Background
The following facts are drawn from the factual materials submitted by the parties, or from the court's docket, or both. All of these facts are undisputed.
1. The Parties
Plaintiff and O'Brien, sister and brother, jointly owned a parcel of real estate at 44 and 46 Central Street in Manchester (the " Property"). The Property contained three apartments and a small house. The Property came with floats at which boats could be moored. Until October 2002, O'Brien lived in the house on the Property, and managed the apartments. The parties did not get along.
In October 2002, O'Brien suffered a severe stroke. For the rest of his life, he lived in a rehabilitation facility or nursing home or some other medical institution.
2. The Complaint
On December 9, 2002, about two months after O'Brien's stroke, Plaintiff filed this lawsuit against O'Brien. The complaint consisted of four paragraphs. The first two paragraphs identified the parties and their residential addresses; for O'Brien, Plaintiff listed the Property as his address, even though he was then in a medical facility (and, as it turned out, would be for the rest of his life). The third paragraph identified the Property and alleged that Plaintiff and O'Brien owned it as tenants in commons.
The fourth and final paragraph of the complaint concerned damages. In its entirety, that paragraph said: " The Defendant owes the Plaintiff the sum of $276,500 for contribution of rents the Defendant has received and not accounted to the Plaintiff as shown on the statement hereto attached and marked 'B.'"
Exhibit B to the Complaint was headed " Rents Never Received by Maureen Maestranzi @ 44 Central Street, Manchester, Mass." Below this heading was a three-column chart containing 18 entries. The first 16 entries were calculations of rental income, beginning with:
1977-1983
7 years @ $1,000/month
$84,000
and ending with:
2002
12 months @ $1,750/month
$21,000
The last two entries contained calculations of a slightly different sort:
Laundry
25 years @ !0 (sic) per week
$13,000
Floats
4 boats @ $2,500/yr. for 15 years
$150,000
Below these 18 entries, the chart contained what it labeled a " TOTAL" of the amounts in the third column. That amount was shown as $553,000. Although neither the complaint nor Exhibit B said as much, that " TOTAL" number divided by two yields the claim for damages in the complaint of $276,500.
3. The Default Judgment
Plaintiff did not serve the complaint on her brother until January 8, 2013, a month after she had filed it. Plaintiff filed the return of service with the clerk on January 13, 2003. That document revealed that service had been effected at a medical facility. Defendant did not respond to the complaint.
On January 31, 2013, 23 days after service, Plaintiff made two filings with the court. In the first, Plaintiff requested that the clerk default O'Brien. In the second, Plaintiff requested that the clerk enter a default judgment under Mass.R.Civ.P. 55(b)(1) against O'Brien in the amount of $276,500 plus interest.
The clerk defaulted O'Brien that day, and the docket records that notices of the default were mailed on February 3, 2003. The docket does not reveal the addresses used by the clerk for this mailing. I infer that O'Brien's copy went to the Property, the address listed for him in the complaint, rather than to the medical facility in which he was then ensconced. Plaintiff suggests that the clerk would likely have sent to the notice to the medical institution because that is where the constable reported that he served the complaint. I think this less likely, because, even if the clerk had decided to look at the return of service despite the fact that an address was listed in the complaint, the clerk probably would have been reluctant to adopt a medical facility, where stays are often short, as the address of a party for purposes of notice.
On February 10, 2003, Judge Haggerty endorsed the Request for Default Judgment as follows: " Defendant defaulted. Schedule a hearing on assessment of damages." The clerk then issued a notice to the parties to appear on March 25, 2003 for a hearing on assessment of damages. Again the docket does not record where the clerk sent O'Brien's copy of this notice, but again I infer that notice went to the Property.
Before this hearing could be held, however, default judgment was entered against O'Brien. The docket entry for February 21, 2003, reads as follows: " Default judgment (55b1) by clerk v defendant Michael J. O'Brien in the amount of $276,500.00 plus interest from 12/09/2002 in the sum of $6,726.96 and its costs of action. Copies mailed February 25, 2013."
On March 24, 2003, the day before the once-scheduled assessment of damages hearing, the clerk issued an execution in the amount of $286,364.86 to Plaintiff's lawyer. Plaintiff then began the process of levying on O'Brien's interest in the Property, but she suspended that effort, and she never collected anything on this execution.
4. The Motion to Vacate the Default Judgment
There things stood until O'Brien died in December 2011. O'Brien's will was submitted to the Probate and Family Court, which appointed Patricia Ambrose, O'Brien's girlfriend, as his Executrix on July 12, 2012.
Plaintiff filed a proof of claim with the Estate based on her default judgment in this case. The amount of the claim, including interest accrued since the issuance of the default judgment, was $815,781.86. MassHealth also filed a proof of claim, seeking $500,991.19 that it allegedly paid for O'Brien's care during the last several years of his life.
The assets of the Estate are insufficient to pay both claims. Therefore the Probate and Family Court was asked to decide which claim had priority.
While that Probate and Family Court action was pending, on December 7, 2012 Plaintiff moved to have Ambrose as the executrix of the O'Brien Estate substituted for O'Brien as Defendant here. Plaintiff's motion stated Plaintiff believed that the Probate and Family Court was the appropriate forum to resolve all disputes, but she was filing the motion to substitute just in case the Probate and Family Court disagreed. She asked that this court hold the motion in abeyance, a request that was allowed on March 11, 2013. As a result, that motion to substitute remained undecided until I recently allowed it.
On March 20, 2014, MassHealth, under name of its parent agency the Massachusetts Executive Office of Health and Human Services, filed a motion to intervene in this case, which Plaintiff opposed. Four days later, on March 24, 2014, Defendant filed the motion to vacate the default judgment which is the subject of today's order. Plaintiff also opposed this motion.
On April 3, 2014, Judge Cornetta of this court heard the parties " at length, " as he put it in an order he issued the next day. Judge Cornetta's order stated that the Probate and Family Court was deciding " the issue of whether or not a Massachusetts Medicaid lien has priority over an execution levy and suspend arising out of the Superior Court action." Order of April 4, 2014. Judge Cornetta allowed the MassHealth motion to intervene, and he stayed proceedings " regarding postjudgment relief, " id. --presumably a reference to the motion to vacate the default judgment--until the Probate and Family Court had resolved the issue of priority of the two claims. He also issued a preliminary injunction prohibiting the Estate from transferring or encumbering the real estate interest that was apparently its only substantial asset.
In an order issued on May 30, 2014, Judge Kaplan of the Probate and Family Court decided the issue of priority, holding that Plaintiff, as a secured judgment creditor who had begun the process of levying on O'Brien's interest in the Property, had priority over MassHealth. The parties so informed Judge Cornetta of this court, who then scheduled an evidentiary hearing on the motion to vacate the default judgment in this case.
Allowance of the motion to vacate would destroy Plaintiff's status as the higher-priority claimant against the assets of the Estate. In an attempt to head off that possibility, on July 25, 2014 Plaintiff filed an interlocutory appeal of Judge Cornetta's April 4, 2014 order allowing MassHealth to intervene. A Single Justice permitted the interlocutory appeal to go forward. More than a year later, on October 22, 2015, the Appeals Court issued an unpublished decision under its Rule 1:28 affirming Judge Cornetta's order allowing the motion intervene (the " Appeals Court Decision").
5. The Current Proceedings
Because of the appeal, the Superior Court did not hold the scheduled hearing on the motion to vacate judgment in 2014. After receiving the Appeals Court Decision, in February 2016 the Estate asked the Superior Court clerk to put that hearing back on the court's schedule. Plaintiff opposed that motion.
By then, Judge Cornetta had retired, and there was no judge in his session. Upon my arrival in the session, I scheduled this case for a hearing, which, in light of my unfamiliarity with a complicated file, the parties and I treated as a status conference. With the parties' assistance, I determined that five motions were pending: the four motions I describe at the top of page 2 of this Memorandum of Decision, and the motion to vacate the default judgment.
I later decided those four motions, and scheduled a second hearing to hear argument on the motion to vacate the default judgment. Judge Cornetta had made clear that the evidence at that hearing would be limited to exhibits rather than live testimony. In an order dated May 13, 2016, 1 informed the parties that I would follow Judge Cornetta's lead in this regard. I then heard oral argument on the motion to vacate the default judgment on July 20, 2016.
Analysis
1. The Timeliness of this Motion
An obvious question is whether the motion to vacate, filed so many years after judgment entered, is timely. Plaintiff argues that the answer is no, because Mass.R.Civ.P. 60(b)(1) and (3), which allow a court to vacate a final judgment for mistake or fraud, respectively, carry one-year time limits.
However, the Appeals Court has already ruled that, on the facts of this case, the Superior Court may revisit the judgment under Rule 60(b)(4), which allows the court to undo a judgment that is " void, " and which contains no time limit for the filing of a motion to vacate. Appeals Court Decision at 2 n.3, quoting Bowers v. Board of Appeals of Marshfield, 16 Mass.App.Ct. 29, 31, 448 N.E.2d 1293 (1983) (" Notwithstanding the powerful interest in finality of judgments, a motion for relief from a judgment which was void from its inception lies without limitation of time"). The Appeals Court Decision is, of course, the law of the case.
2. The Propriety of the Default Judgment
MassHealth, which has taken the lead in prosecuting the motion to vacate the default judgment, gives three reasons that the judgment must be vacated. First, MassHealth argues that the nature of the damages required a damages assessment hearing before a judge, rather than an entry of a default judgment by a clerk, according to Mass.R.Civ.P. 55(b). Second, MassHealth contends that the complaint claimed a specific amount of damages without the support of an affidavit explaining the calculation as required by M.G.L.c. 231, § 13B, and therefore the complaint could not support an award of damages by default. Third, MassHealth argues that O'Brien's medical condition in early 2003 rendered him incapable of defending the lawsuit, and thus a default judgment was inappropriate. I need only consider the first of these arguments.
Mass.R.Civ.P. 55(b) provides two methods for the entry of a default judgment. Under Rule 55(b)(1), the clerk may enter default judgment when the plaintiff's claim " is for a sum certain or for a sum which can by computation be made certain." " In all other cases, " says Rule 55(b)(2), a judge must order the entry of a default judgment, not the clerk. Rule 55(b)(2) further states that if " it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings . . . as it deems necessary and proper."
When Plaintiff sought a default judgment, 23 days after serving the complaint, she specifically requested, in the caption of the document, that judgment be entered under Rule 55(b)(1). That is, she asked that judgment be entered by the clerk, not the judge, presumably because she believed that the claim was for a sum certain. Judge Haggerty disagreed, ordering that the clerk schedule a damages assessment hearing.
That is not what happened, however. Instead, the clerk entered the default judgment in the amount $276,500 just 11 days after Judge Haggerty issued her order, and more than a month before the date of the hearing that the clerk had scheduled as a result of Judge Haggerty's order. The relevant docket entry specifically states that this was a default judgment under Rule 55(b)(1), and " by clerk."
The clerk's power to enter default judgment under Rule 55(b)(1) extends only to cases in which the plaintiff's claim " is for a sum certain or for a sum which can by computation be made certain." It is true that Exhibit B to the complaint contained the calculation of the damages, and arrived at a sum of $276,500. That does not mean, however, that entry of this judgment fell within the clerk's power under Rule 55(b)(1), for at least two reasons.
First, the calculation contained in Exhibit B was not signed, much less sworn to, by any person with knowledge. Such an omission might be overlooked if Plaintiff were suing on a promissory note, or on some other contract where the document itself made obvious the amount of damages. This was not such a complaint, however.
Second, Plaintiff proffered no explanation about the source of the figures used in Exhibit B. For example, Exhibit B did not explain how Plaintiff determined the various monthly rents employed for the lengthy period covered by the calculation, namely the years between 1977 and 2002. Exhibit B also did not explain the basis for Plaintiff's apparent belief that O'Brien had collected $10 a week from laundry machines, every week, without fail, for a quarter of a century. Exhibit B also failed to provide any basis for its assumption that the owners of four boats had paid O'Brien $2,500 per year for the right to moor their boats; why the owners had made those payments for 15 years as opposed to 25 years; and why the boat-mooring rate had remained unchanged for 15 years, in stark contrast to the rising residential rents listed in the same Exhibit for the same years.
One question that a judge would have considered at an assessment of damages hearing is whether O'Brien had any meritorious defenses to the case. One such defense is obvious from even a cursory examination of the complaint: Plaintiff was seeking damages allegedly accrued over a quarter of a century. Although the complaint did not specify any particular legal theory, most likely Plaintiff was suing O'Brien for breach of contract or breach of fiduciary duty. Such claims, and any other conceivable claims that might flow from the parties' joint ownership of property, are subject to statutes of limitation considerably shorter than 25 years.
At oral argument, Plaintiff suggested that the discovery rule might have tolled any statutes of limitation. But this cannot be so, because Plaintiff was suing O'Brien for his alleged failure to pay Plaintiff her share of rents collected in 1977 and thereafter, and obviously Plaintiff knew in 1977, and in each year thereafter, that O'Brien had failed to pay her any share of the rents he was collecting. Grasping an even flimsier reed, Plaintiff also suggested that the statutes of limitation were tolled by O'Brien's alleged threats to physically harm Plaintiff if she continued to ask him for these rents. One would think that the most sensible way to respond to a physical threat is to stop making in-person demands to a party who responds with threats, and instead to take him to court. In any event, Plaintiff cites no authority for the proposition that a physical threat can toll a statute of limitation.
The Supreme Judicial Court comprehensively considered the hearing requirements for default judgments in Hermanson v. Szafarowicz, 457 Mass. 39, 927 N.E.2d 982 (2010). Although Hermanson postdates the default judgment in today's case, the court there did not hesitate to vacate a default judgment entered years earlier, and so I will not hesitate to apply the teachings of Hermanson in this case.
In Hermanson, a motion judge--not a clerk--endorsed a plaintiff's motion to assess damages as " allowed in the [amounts] set forth in [the plaintiff's] affidavit." Id. at 50. The court ruled,
This was error. The affidavits accompanying the plaintiff's motion presented a number of substantial questions concerning the damages being sought for which the motion and its accompanying papers did not provide answers. Some type of hearing on damages was called for, at least to the extent of an inquiry of the Plaintiff's counsel concerning the basis for the damages claimed, and perhaps to hear testimony from the Plaintiff herself.Id. The Supreme Judicial Court vacated the default judgment because of these " substantial questions" even though the plaintiff there had submitted both her own affidavit and that of a real estate appraiser, and even though a judge rather than a clerk had ordered the entry of judgment.
As in Hermanson, Plaintiff's request for default judgment here " presented a number of substantial questions concerning the damages being sought, " at least some of which I describe above. Nonetheless, Plaintiff submitted no affidavits concerning, for example, the derivation of the annual rents employed in her damages calculation.
At oral argument, Plaintiff suggested that the Hermanson court only vacated the judgment there because the defaulting party himself had submitted valuation affidavits that differed from those submitted by the plaintiff, thereby creating an issue of fact that could only be resolved by a judge at a hearing. In contrast, Plaintiff points out, O'Brien did no such thing in 2003. But the Hermanson court vacated the default judgment, it said, because the " affidavits accompanying the plaintiff's motion presented a number of substantial questions concerning damages, " id. (emphasis added), not because there were competing affidavits. Furthermore, O'Brien could hardly have presented expert affidavits to defend against a request for a default judgment filed 23 days after service of the complaint, of which he may not even have received notice, and while he was being treated for a stroke.
Plaintiff also strenuously argues that O'Brien agreed, well after the default judgment was entered, that he would not contest the judgment, in return for a loan from Plaintiff which he could use to upgrade the house on the Property, at least in part to accommodate his post-stroke handicaps. It is undisputed that Plaintiff and her husband lent money to O'Brien, who signed promissory notes. One of those notes specifically stated that it would be junior to the default judgment. However, Plaintiff concedes that O'Brien's alleged agreement not to challenge the default judgment was never reduced to writing; that O'Brien was not represented by counsel in any negotiations on that topic; and that no guardian was appointed to represent his interests in any such negotiation. The only evidence that O'Brien made such an agreement comes from the testimony given by Plaintiff and her husband, after O'Brien had died and could not refute it. On the basis of the extensive factual record before me, I cannot find that O'Brien entered into any agreement not to contest the default judgment before he died.
Conclusion and Order
Because the default judgment sought by Defendant was not for a sum certain or for a sum which can by computation be made certain, the clerk lacked the power to enter judgment under Rule 55(b), and it was error for the clerk to do so. Plaintiff's complaint, and her request for a default judgment, " presented a number of substantial questions concerning the damages being sought, " as Hermanson put it. Id. Judge Haggerty had correctly decided that a hearing was necessary. That hearing should have been held before a default judgment entered. Because there was no hearing before a judge, the judgment is " void" within the meaning of Mass.R.Civ.P. 60(b)(4).
Defendant's Motion to Vacate Default Judgment (Paper No. 10) is ALLOWED . The default judgment entered on February 21, 2003 (Paper No. 5) is VACATED . The clerk is to schedule a status conference in the near future at which the court will determine the future course of this case.