Opinion
20-P-1249
05-20-2022
DARYL CAHILL v. STEPHEN G. SILVA[1] & others.[2]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 2 3.0
In 2012, the plaintiff, Daryl Cahill, obtained a judgment against defendant Exodus Medical Transportation, Inc. (Exodus). Unable to recover on the judgment though, due to what Cahill alleges was intentional and fraudulent misconduct on the part of the defendants to avoid satisfying the judgment, Cahill filed suit for civil conspiracy, fraudulent transfer in violation of G. L. c. 109A, fraudulent transfer under the doctrine of corporate disregard, statutory reach and apply, and unfair and deceptive trade practices in violation of G. L. c. 93A. Each claim, excluding Cahill's claim for reach and apply, was dismissed as barred by the relevant statute of limitations. Later, summary judgment was awarded to the defendants on Cahill's reach and apply claim as being superseded by G. L. c. 109A, and barred by the statute of limitations. Cahill appeals. We affirm.
Discussion.
1. Reach and apply claim.
Cahill claims that the award of summary judgment on his reach and apply claim was improper, because his reach and apply claim was a common-law claim that is not preempted by the Uniform Fraudulent Transfer Act (UFTA), G. L. c. 109A. We disagree.
Cahill also argues that the entry of summary judgment was improper where it denied him the right to certain procedural safeguards, including an evidentiary hearing, discovery, and cross-examination. We disagree. A judge who decides a case on a motion for summary judgment engages in no fact finding at all. See Albahari v. Zoning Bd. of Appeals of Brewster, 76 Mass.App.Ct. 245, 248 (2010). Thus, Cahill's appellate argument ignores the nature and purpose of a motion for summary judgment. See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002) (only after moving party demonstrates there exists no genuine issue of material fact, may judgment as matter of law be awarded in that party's favor). See also Guardianship of Phelan, 76 Mass.App.Ct. 742, 756 n.26 (2010)("If a hearing is necessary to resolve disputed issues of material fact, a grant of summary judgment is inappropriate").
In Cavadi v. DeYeso, 458 Mass. 615, 629-631 (2011), the Supreme Judicial Court (SJC) held that where the basis for a common-law reach and apply claim lies outside the reach of the UFTA, a common-law reach and apply claim is still viable. However, where a constructive trust is implied for the benefit of creditors in order to set aside a fraudulent conveyance, the UFTA takes precedence over and preempts any common-law reach and apply claim. See i_d. at 630-631. Put another way, if the reach and apply claim "require[s] no proof of a fraudulent conveyance," then it is "discrete from, and not preempted by, [the] UFTA." I_d. at 632. Such an analysis is to be made on a case-by-case basis, depending on the particular factual circumstances that arise. I_d. at 630-631.
In Cavadi, supra at 616, the plaintiff, Jules Cavadi, obtained a judgment against a debtor, Stephen Barnes, and sought to assert a common-law reach and apply claim against three properties owned by the defendant, Christina DeYeso. Where Barnes provided a majority of the funding for DeYeso's purchase of the two properties in Martha's Vineyard and New Hampshire, the SJC held that DeYeso essentially held the properties in a resulting trust as a straw for Barnes. See J_d. at 618-623, 631-634. Where the property was held in resulting trust for Barnes, Cavadi need not have demonstrated proof of a fraudulent conveyance for his reach and apply claim to be viable. I_d. at 632-633. Thus, where no such proof of a fraudulent conveyance was required, the common-law reach and apply claims for the two properties in Martha's Vineyard and New Hampshire were not preempted by the UFTA. See id. at 630-631.
However, the third property subject to a reach and apply claim in Cavadi, the South Boston property, was transferred directly from Barnes to DeYeso, as a matter of public record, for very little consideration, in exchange for satisfaction of outstanding child support payments owed by Barnes to DeYeso. See J_d. at 623, 635-636. Unlike the circumstances in which DeYeso obtained the other two properties, no resulting trust existed, as Barnes did not fund DeYeso's purchase of the South Boston property. I_d. at 635. Therefore, where no resulting trust existed as to the South Boston property, Cavadi needed to provide proof that the transaction between DeYeso and Barnes was fraudulent, such that he, as Barnes's creditor, was entitled to the imposition of a constructive trust as a result of the purported fraudulent sale. See J_d. at 630-631, 635-636. Thus, where the reach and apply claim sought to impose a constructive trust as a result of the alleged fraudulent transaction, it depended entirely on proof of a fraudulent conveyance, and thus, the reach and apply claim fell within the parameters of the UFTA such that it was preempted by statute. I_d. at 635-636.
Here, Cahill's claim regarding the defendants' sale of their company, Exodus, aligns with the claim regarding the sale of the South Boston property in Cavadi. Cahill obtained a valid judgment against Exodus, and sought to collect on that judgment. In his complaint, he alleged that the sale of Exodus was a fraudulent transaction, as the defendants made the sale without receiving reasonably equivalent value in exchange for the transfer of Exodus's assets, so as to defraud Cahill as a creditor. Like Cavadi's claim over the South Boston property, Cahill's reach and apply claim depends entirely on his proof that the defendants' sale of Exodus was fraudulent, such that the imposition of a constructive trust is necessary to shield him, as the defendants' creditor, from the fraudulent conveyance. See Id. Therefore, where Cahill's claim depends on proof of a fraudulent transfer, it is preempted by the UFTA, and thus, the only applicable reach and apply claim is the statutory claim under G. L. c. 109A.
In much of his brief, Cahill claims that the failure to include a common-law reach and apply claim was not fatal to his complaint, because Massachusetts is a notice-pleading jurisdiction, and one need not state the specific legal theory on which the claim for recovery is based. See 15 LaGrange St. Corp. v. Massachusetts Comm'n Against Discrimination, 99 Mass.App.Ct. 563, 568 (2021). Cahill could have sought to amend his pleadings to include the common-law claim, and generally, leave is freely given when justice so requires, to allow a party to amend his complaint. See Mass. R. Civ. P. 15 (a), 365 Mass. 761 (1974). However, where the common-law reach and apply claim is preempted by the UFTA, we need not address this argument, as any amendment to his pleading would have been futile. See Johnston v. Box, 453 Mass. 569, 582-583 (2009). See also Nguyen v. Massachusetts Inst, of Tech., 479 Mass. 436, 461 (2018).
2. Statute of limitations for Cahill's remaining claims.
Cahill also claims that the judge erred in dismissing his remaining claims for civil conspiracy, fraudulent transfer in violation of G. L. c. 109A, fraudulent transfer under the doctrine of corporate disregard, and violation of c. 93A, pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), where the relevant statute of limitations for each was twenty years. We disagree.
Where the complaint essentially was one to enforce the previous 2012 judgment, Cahill argues that the relevant statute of limitations period ought to have been twenty years, such that the complaint was timely filed. See G. L. c. 260, § 20. In his brief, Cahill struggles to characterize his complaint as one merely for the enforcement of the previous judgment secured against the defendants; however, a party may not escape the consequences of the relevant statute of limitations through an artful characterization and distortion of the legal basis for his cause of action. See Passatempo v. McMenimen, 461 Mass. 279, 292 (2012).
Cahill cites no case law to support his argument that the statute of limitations is determined by the factual essence of a claim, i.e., being one for essentially the enforcement of a valid prior judgment, and thus, such argument does not constitute sufficient appellate argument. See Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1628 (2019). See also Halstrom v. Dube, 481 Mass. 480, 483 n.8 (2019) (cursory argument made without citation to supporting legal authority constitutes insufficient appellate argument).
Here, as properly noted by the judge, the relevant statute of limitations for each cause of action is clear. A claim for civil conspiracy is subject to a three-year statute of limitations. See Pagliuca v. Boston, 35 Mass.App.Ct. 820, 823 (1994). The same is true for the fraudulent transfer claim under the doctrine of corporate disregard, where such claim is by its nature a tort claim. See G. L. c. 260, § 2A. Furthermore, Cahill's claim for unfair and deceptive trade practices, in violation of G. L. c. 93A, carries with it a four-year statute of limitations period, as does the claim for fraudulent transfer in violation of G. L. c. 109A, where Cahill alleged in his complaint that the defendants acted with "the actual intent to hinder, delay, or defraud" him, as a creditor of the defendants, in violation of G. L. c. 109A, § 5 (a.) (1) . See G. L. c. 260, § 5A (c. 93A statute of limitations). See also G. L. c. 109A, § 10 (a.) (statute of limitations for fraudulent transfer under G. L. c. 109A, § 5 [a.] [1]) . Thus, the judge properly calculated the statutes of limitations in dismissing Cahill's claims.
We note that to the extent Cahill's reach and apply claim is considered a statutory claim under G. L. c. 109A, it also is subject to a four-year statute of limitations.
Undeterred, Cahill claims that even if the judge properly used the three-year and four-year statutes of limitations for his claims, he argues that each cause of action, at the earliest, began to accrue on September 22, 2014, when a panel of this court issued an appellate decision that rendered his prior 2012 judgment final. See Cahill v. Exodus Med. Transp., Inc., 86 Mass.App.Ct. 1112 (2014). We disagree. In his brief, Cahill points to no legal support that suggests that each of these causes of action began to accrue only after the 2012 judgment became final. Rather, the facts giving rise to Cahill's claims were known to him no later than 2012, at which point Cahill had secured the Superior Court judgment, and also had knowledge of the transfer of Exodus. Furthermore, as the judge found, for a claim of fraudulent transfer pursuant to G. L. c. 109A, § 5 (a.), to be timely, the claim must be brought within four years of the date of the fraudulent transfer. G. L. c. 109A, § 10 (a.) . Where the record is clear that the transfer occurred at some point prior to July of 2012, Cahill's complaint on August 9, 2018, was not timely. See id.
In his opposition to the defendants' motion to dismiss, Cahill argued that according to Mass. R. A. P. 27.1, the statute of limitations on his claims did not accrue until the judgment was final. We, like the motion judge, are unpersuaded by this argument, as the rule is entirely devoid of any connection to the statute of limitations. See Mass. R. A. P. 27.1, as amended, 441 Mass. 1601 (2004).
With regard to his claim for civil conspiracy, the three-year statute of limitations began to run when Cahill knew or should have known of the fraudulent transfer of Exodus. See Pagliuca, 35 Mass.App.Ct. at 823-824. The same is true for both Cahill's remaining c. 93A claim, and his tort claim for fraudulent transfer under the theory of corporate disregard. See id. See also Lambert v. Fleet Nat' 1 Bank, 449 Mass. 119, 126 (2 007); Schwartz v. Travelers Indem. Co., 50 Mass.App.Ct. 672, 678 (2001) (where c. 93A claim is tortious in nature, statute of limitations accrues where plaintiff knows or should have known of harm resulting from defendant's actions). Therefore, where Cahill discovered the sale of Exodus at the earliest in July of 2012, or at the very latest sometime in 2013, the complaint filed in August of 2018 was not timely as to these three remaining causes of action. See Pagliuca, supra. See also Schwartz, supra.
During the pendency of the prior civil action, Cahill raised the alleged fraudulent transfer in his court filings in 2013.
Judgment affirmed.
The panelists are listed in order of seniority.
Individually, and in his capacity as corporate officer and owner of Exodus Medical Transportation, Inc.