Opinion
SUPERIOR COURT CIVIL ACTION DOCKET No. CV-16-154
08-02-2017
STATE OF MAINE, Plaintiff v. DANIEL B. TUCCI, SR. BEATRIX T. TUCCI, and MARCH 31, LLC, Defendants
Plaintiff-Thomas Knowlton, AAG Defendants-David Turesky, Esq.
Plaintiff-Thomas Knowlton, AAG
Defendants-David Turesky, Esq. STATE OF MAINE
CUMBERLAND, ss. ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT Before the Court is Defendants' Motion for Summary Judgment
I. Background
As alleged in the Complaint, between 2004 and 2012, Defendant Daniel B. Tucci, Sr. ("Tucci, Sr.") was engaged in the business of home repair and maintenance services. Tucci, Sr. pled guilty to a Class D theft charge in connection with his home repair business on November 18, 2008. On January 22, 2009, Tucci, Sr. inherited two parcels of real estate, along with the buildings thereon, located at 104 Monument Street in Portland, Maine, (the "Property") as a tenant in common with his three brothers, by deed recorded in the Cumberland County Registry of Deeds at Book 26625, Page 69. The Property contains a multi-unit building with at least three apartments in which Tucci, Sr., two of his brothers, and their families live.
On February 24, 2009, Tucci, Sr. transferred his interest in the Property to himself and his wife, Defendant Beatrix Tucci, as joint tenants, by deed recorded in the Cumberland County Registry of Deeds in Book 26666, Page 277. Defendant MARCH 31, LLC, was formed on September 24, 2009 and on November 24, 2009, Tucci, Sr. and Beatrix Tucci transferred their interest in the Property to MARCH 31, LLC by deed recorded in the Cumberland County Registry of Deeds in Book 27424, Page 68. Beatrix Tucci was the sole manager of MARCH 31, LLC in 2010. In 2011, and from 2013 to present, MARCH 31, LLC was, and continues to be managed by Beatrix Tucci, Pauline S. Tucci, Daniel B. Tucci, Jr., and Francis Everett Nash Tucci, all of whom reside at the Property with Tucci, Sr., Pauline, Daniel, Jr., and Francis are the children of Tucci, Sr. and Beatrix Tucci. As of December 20, 2011, Pauline was 16, Daniel was 6, and Francis was 3 years old.
In 2012, the State brought suit against Tucci, Sr. and TPDF, LLC, through which Tucci, Sr. operated his home repair business, for violations of the Maine Unfair Practices Act (the "UTPA"). The State alleges that Tucci, Sr. falsely advertised that he was licensed; threatened and intimidated consumers; took advance payments for services that he did not perform; performed home repair services in an unworkmanlike manner; and refused to correct such work or to pay refunds. After a bench trial, the Court issued Judgment against Tucci, Sr. and TPDF, LLC for multiple violations of the UTPA and ordered them, jointly and severally, to pay $236,500.50 in restitution to the Office of the Attorney General for the benefit of fourteen consumers on whose behalf the suit was brought. The Court also ordered Tucci, Sr. and TPDF to pay, jointly and severally, $140,000 in civil penalties to the state of Maine which were fully suspended on the condition that he pay a minimum of $250 per month toward the restitution amount for a period of ten years to the Office of the Attorney General.
Neither Tucci, Sr. nor TPDF has ever paid anything towards the court ordered restitution or civil penalties. In deposition for the prior action, Tucci, Sr. claimed not to have any assets, to be collecting food stamps and Social Security Disability and assistance from the "Church". The Attorney General learned that the Property was listed for sale for $2.5 million in 2016 by an anonymous tip.
This action for fraudulent transfer pursuant to 14 M.R.S. § 3575 was brought by the State on April 19, 2016. On March 3, 2017, the Court signed the agreed upon order dismissing claims brought for fraudulent transfer with actual intent to hinder, delay or defraud. The State amended its complaint to reflect that only those claims for fraudulent transfer without receiving a reasonably equivalent value in exchange remain. Defendants now move the Court for Summary Judgment on these claims.
II. Standard of Review
Summary judgment is appropriate if, based on the parties' statements of material fact and the cited record, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. M.R. Civ. P. 56(c); Dyer v. Dep't of Transp., 2008 ME 106, ¶ 14, 951 A.2d 821. "A material fact is one that can affect the outcome of the case. A genuine issue of material fact exists when the fact finder must choose between competing versions of the truth." Id. (citations omitted). When deciding a motion for summary judgment, the court reviews the evidence in the light most favorable to the non-moving party. Id.
When the party moving for summary judgment bears the burden on a claim or defense, the moving party must establish the existence of each element of the claim or defense without dispute as to any material fact in the record in order to obtain summary judgment. Cach, LLC v. Kulas, 2011 ME 70, ¶ 8, 21 A.3d 1015. If the motion for summary judgment is properly supported, then the burden shifts to the non-moving party to respond with specific facts indicating a genuine issue for trial in order to avoid summary judgment. M.R. Civ. P. 56(e).
III. Discussion
Defendants move the Court to grant summary judgment on the State's claim for fraudulent transfer pursuant to 14 M.R.S. § 3575(4) for failing to meet the statute of limitations as set out in 14 M.RS. § 3580. According to 14 M.R.S. § 3580:
A cause of action with respect to a fraudulent transfer or obligation under this Act is extinguished unless action is brought:14 M.R.S. § 3580. According to the statute, the cause of action for fraudulent transfer is extinguished if it is not brought within six years of the transfer or when the obligation is incurred, or if the injured party reasonably does not learn of the transfer until after the six-year period and fails to file a complaint within one year of discovery. See Id.
1. Intent to defraud. Under section 3575, subsection 1, paragraph A, within 6 years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
B. Argument
Defendants argue that the transfers occurred in 2009, outside of the six-year statute of limitations permitted by Section 3580. Defendant argues that the State was obligated to perform a record search as soon as a judgment was entered against Tucci, Sr., and possibly sooner. Defendants further argue that even if the State was not obligated to search the registries of deeds in Maine, it should have known from the nature of the judgment against Defendant and the AG's previous experience with Tucci, Sr., of his "general unreliability and untrustworthiness." (D. Mot. for Summ. J. at 6).
The State responds, arguing not only that the Court should deny Defendant's Motion for Summary Judgment, but also that the Court should grant summary judgment in favor of the State on the issue of whether Section 3580(1) applies to the State in accordance with M.R. Civ. P. 56(c). The State presents three main arguments to support its requested relief: the statute of limitations is not applicable to the State, the State did not discover the transfers until April 5, 2016, and unclean hands.
Looking first to the State's contention that the statute of limitations is not applicable to the State, the State argues that it is not bound to a statute of limitation "unless expressly named therein". Dep't of Corr. v. PUC, 2009 ME 40, ¶ 11, 968 A.2d 1047. By that reasoning, the State argues that Section 3580 does not bind the State.
In the alternative, if the Court finds that Section 3580 does apply to the State, the State argues that Defendants have not shown that it was unreasonable that the State did not discover the transfers until April 5, 2016. The burden falls upon Defendants to prove the affirmative defense that the action is barred by the statute of limitations. Drilling & Blasting Rock Specialists, Inc. v. Rheaume, 2016 ME 131, ¶ 15, 147 A.3d 824. The State argues that there are questions of genuine material fact as to whether the State's late discovery of the transfers was reasonable, and therefore whether the statute of limitations was tolled. Because there are genuine questions of material fact, the State contends that summary judgment should be denied.
Finally, the State argues that the Court should apply the doctrine of unclean hands, thereby preventing Defendants' enforcement of the statute of limitations. The doctrine of unclean hands stands for the proposition that "whenever a party who as actor seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience or good faith, or other equitable principle in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right or to award him any remedy." Hamm v. Hamm, 584 A.2d 59, 61 (Me. 1990); citing 1 Pomeroy, Equity Jurisprudence § 397 (3d ed. 1905) (emphasis removed). The State argues that Defendants, having purposefully sought to mislead the State, cannot be granted relief upon the basis that the attempts to mislead were successful.
C. Analysis
As the State argues, there remains a question of fact concerning whether the State's discovery of the 2009 transfers in 2016 was reasonable. The question of when late discovery is reasonable was discussed in Drilling & Blasting Rock Specialists, Inc. v. Rheaume. In that case, the defendant granted a warranty deed on a property to the plaintiff, stating within the deed that the property was free and clear of all encumbrances. Drilling, 2016 ME 131, ¶ 4, 147 A.3d 824. The defendant failed to tell the plaintiff that the property was encumbered by a mortgage. Id. The plaintiff did not learn that the property was encumbered until defendant ceased to make payments and the mortgagee brought a foreclosure action. Id at ¶ 8. The Law Court followed the well established rule that "[w]hether a claim is barred by the applicable limitations period is a question of law, but whether a plaintiff has exercised sufficient diligence to avoid a finding that it "should have discovered" the cause of action earlier for purposes of determining when the limitations period on a fraud claim commenced is 'ordinarily . . . a question of fact,'" Id. at ¶ 16. The Court notes that a creditor's obligation to search public records necessarily exist only once the creditor is reasonably put on notice that fraud had occurred, and that the concept of record notice does not equate to a defense against fraud sounding in tort. Id. at ¶¶ 26, 28. On those grounds the Law Court found questions of material fact and vacated the grant of summary judgment.
In the same order, the Law Court stated that "when uncontroverted evidence leaves no room for a reasonable difference of opinion as to whether the plaintiff exercised due diligence and indisputably demonstrates that the plaintiff should have discovered the fraud, the issue may be resolved at summary judgment as a matter of law." Drilling, 2016 ME 131, ¶ 24, 147 A.3d 824. --------
Defendants contend that the current case does not have a direct misrepresentation, as was made by the defendant in Drilling when he warranted that the property was free and clear of encumbrances. Additionally, Defendants claim that Drilling analyzes 14 M.R.S § 859, not Section 3580. Defendants argue that the standard is not exactly the same and urges the Court to look to Oklahoma caselaw finding that recordation of an interest was sufficient to foreclose the possibility of the tolling of a statute of limitations for late discovery of that interest. See Eskridge v. Nails, 852 P.2d 818, 819 (Okla. Ct. App. Apr. 6, 1993). Finally, Defendants distinguish the case at bar from Drilling by pointing out that the plaintiff in Drilling was unrepresented, whereas here the State was represented by the Office of the Attorney General.
The Court finds Defendants attempts to distinguish the current case from Drilling unpersuasive. As with the plaintiff in Drilling, the State alleges that Defendant made a misrepresentation and that the State was not reasonably on notice that fraud had occurred. Similarly to the plaintiff in Drilling, the State, in this matter, did not perform public record checks to ensure that fraud had not occurred. This Court finds, as did the Law Court in Drilling, that the facts of the case as presented at this point allow for a reasonable difference of opinion as to whether the State should have learned about the transfers before 2016. Because the Court finds that genuine questions of material fact remain, the Court does not reach the State's alternative arguments.
IV. Conclusion
The Court denies Defendant's Motion for Summary Judgment.
Dated: 8/2/17
/s/_________
Lance Walker
Justice, Superior Court