Opinion
21-P-779
06-01-2022
PAUL A. DEVICO & another[1] v. ANNMARIE SULLIVAN.
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 23.0
A judge of the Superior Court granted the defendant's motion to dismiss the plaintiffs' complaint on the ground that their claims are barred by the statute of limitations. We reverse the judgment of dismissal.
The plaintiffs, Paul and David DeVico, are brothers and the defendant, Annmarie Sullivan, is their sister. The plaintiffs' verified complaint asserts that in 2006, the parties' parents, as part of their Medicare and Medicaid planning, transferred their Dorchester home (the property) to the defendant upon her promise that she would transfer it to a trust for the benefit of the parents' five children. Indeed, the complaint alleges that the defendant created the "DeVico Realty Trust" [the trust] in 2006, but, contrary to her parents' instructions, made herself the sole beneficiary of the trust. She transferred the property into the trust and represented to the parents that the trust complied with their wishes. The father died on February 21, 2012, and the mother died on May 10, 2015.
The brothers commenced this action in Superior Court on May 7, 2020, alleging that they learned in 2019 that they were not beneficiaries of the trust and that the defendant had breached her fiduciary duty to them and had fraudulently induced their parents to transfer the property to her, individually. They requested that a constructive and/or resulting trust be imposed on the property "that recognizes the respective interest of the [p]laintiffs" and the other siblings.
A judge granted the defendant's motion to dismiss for failure to state a claim for which relief may be granted and dismissed the complaint, concluding that it was barred by the statute of limitations. The judge reasoned that the claimed injury occurred in 2006 when the defendant transferred the property to the trust of which the plaintiffs were not beneficiaries. Applying a three-year statute of limitations and "the discovery rule," the judge concluded that a reasonably prudent person in the plaintiffs' position should have discovered the harm by inquiring into the status of the trust --at least by 2015 when the last parent died, and the statute of limitations therefore expired at the latest in May of 2018. Id. at 42-43.
The plaintiffs filed a motion for reconsideration arguing that the judge erroneously applied the "reasonably prudent person standard" because the repudiation of a trust doctrine applies an "actual knowledge" standard and imposes no duty to inquire. The judge rejected the argument, reasoning that the defendant owed no fiduciary duty to the plaintiffs -- that familial relationships, alone, do not give rise to a fiduciary duty -- and that the complaint simply presumes, without more, that a fiduciary duty existed between the defendant and her siblings. Judgment entered following the denial of the plaintiffs' motion for reconsideration and the plaintiffs now appeal.
Discussion.
We review a decision on a motion to dismiss de novo, assuming that all the allegations in the complaint are true and drawing all reasonable inferences in favor of the plaintiff. See Meehan v. Medical Info. Tech., Inc., 488 Mass. 730, 732 (2021); Matter of the Colecchia Family Irrevocable Trust, 100 Mass.App.Ct. 504, 516 (2021). We consider whether the "well-pleaded factual allegations . . . 'raise [the plaintiffs'] right to relief above the speculative level.'" Matter of the Colecchia Family Irrevocable Trust, supra, quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008). "A complaint is sufficient against a motion to dismiss if it appears that the plaintiff may be entitled to any form of relief, even though . . . the theory on which [the plaintiff] seems to rely may not be appropriate." Lichoulas v. Lowell, 78 Mass.App.Ct. 271, 275 (2010), quoting Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15, 21 (2006) .
We conclude that although the complaint is not a model of clarity as to the claims it raises, dismissal was premature --particularly where the record has not been developed through discovery.
A. Express trust.
Viewing the allegations of the complaint in the light most favorable to the plaintiffs, they allege that the defendant took title to the parents' home with the understanding and agreement that she would hold it in trust for herself and her siblings and that she repudiated that trust. We have enforced oral promises to hold property in trust where the Statute of Frauds has not been pleaded. See Whiting v. Commonwealth, 370 Mass. 664, 673 (1976) ("It has long been the established law that even if we were dealing with an oral agreement for the sale of land, . . . the effect of the Statute of Frauds would not be considered if not pleaded"); Young v. Paquette, 341 Mass. 67, 76 (1960) (an "oral trust may be enforced . . . notwithstanding the statute of frauds . . . for that statute was not pleaded"). See also Barche v. Shea, 335 Mass. 367, 370 (1957); Abalan v. Abalan, 329 Mass. 182, 183 (1952). The Statute of Frauds has not been pleaded here.Consequently, where the facts alleged are sufficient to assert a claim that the defendant holds the property in trust for herself, the defendants, and their other siblings, at this juncture we discern no impediment to the plaintiffs' effort to enforce it. Their claims of breach of fiduciary duty relating to an express oral trust were prematurely dismissed.
As she was entitled to do, the defendant filed a motion to dismiss before she filed an answer to the complaint. The Statute of Frauds is not mentioned in the motion to dismiss. Although the plaintiffs anticipated a Statute of Frauds defense in its opposition to the defendant's motion to dismiss, the defendant did not raise it in her memorandum and it was not raised at the hearing in the Superior Court. It is raised for the first time by the defendant in her brief in this court. As this defense was not plead, we do not consider it "fairly open on the record" below, see New England Tel. & Tel. Co. v. Gourdeau Constr. Co., 419 Mass. 658, 662 n.5 (1995), and decline to address it.
The judge concluded that the plaintiffs' injury occurred in 2006 when the defendant transferred the property into a trust that did not include them as beneficiaries, but it is not clear what type of trust it is and whether the defendant retained the power to control the property.
B. Constructive/resulting trust.
We turn to the plaintiffs' alternative claim for a constructive or resulting trust. The judge dismissed their claim on the ground that it was not brought within three years of when the plaintiffs reasonably should have discovered their injury. First, because "the underlying action here is essentially equitable, not contractual, and thus the [defendant's] statute of limitations defense should be assessed as a defense based on laches, . . . which requires a showing of injury or prejudice" (citation omitted). Citizens Bank of Mass. v. Coleman, 83 Mass.App.Ct. 609, 619-620 (2013) (Citizens Bank). The facts contained in the complaint show no injury or prejudice from the timing of the plaintiffs' complaint.
Even assuming that a statute of limitation analysis is warranted, "[p]ursuant to G. L. c. 260, § 2, an action seeking the declaration of a trust based on an implied contract must be brought within six years after the cause of action accrues, i.e., when the alleged trust is repudiated or otherwise terminated to the knowledge of the beneficiary." Brodeur v. American Rexoil Heating Fuel Co., 13 Mass.App.Ct. 939, 940 (1982). See Stapleton v. Macchi, 401 Mass. 725, 729 (1988) (statute of limitation for resulting trust is six years); Citizens Bank, 83 Mass.App.Ct. at 619. The alleged facts here are that the plaintiffs did not learn that the defendant did not hold the property in trust for them (in part) until 2019. If that is considered the date of repudiation or the date of harm, the action clearly is timely -- whether a six-year statute of limitation or, as the parties suggest, a three-year statute of limitation applies. Even if the discovery rule applies and the plaintiffs had a duty to inquire, the claim was commenced within six years of the death of the last surviving parent in 2015, which, the judge reasoned, was the latest date that a reasonable person would have inquired as to the status of the home. Having commenced this action in 2020, the claim for a constructive or resulting trust was timely. While development of the facts through discovery might lead to the conclusion that the cause of action accrued before 2015, viewing the facts in the light most favorable to the plaintiffs, we cannot draw that conclusion at this stage of the litigation.
We address additional arguments the defendant makes on appeal for upholding the judgment of dismissal. The defendant argues that because the plaintiffs did not provide the purchase money for the property, they have no right to a resulting trust. Contrary to the defendant's argument, purchase money resulting trusts are not the only way resulting trusts arise. "A resulting trust may be decreed under a variety of circumstances that do not involve purchase money resulting trusts." Citizens Bank, 83 Mass.App.Ct. at 613, quoting Bogert, Trusts and Trustees § 451, at 286 (3d ed. 2005). "[T]he presumption that a gratuitous transfer to a family member is a gift may be overcome and a resulting trust may be imposed if it is established that (1) the intent of the transferor at the time of the transfer was not to convey the beneficial interest to the transferee, and (2) there was acquiescence on the part of the transferee. Id. at 616-617. At least that much is alleged here.
The Statute of Frauds does not apply to trusts that "may arise or result by implication of law," and as such, does not apply to resulting trusts. G. L. c. 203, § 1. See Citizens Bank, 83 Mass.App.Ct. at 615 n.7.
As to a constructive trust, the defendant argues that even if she misrepresented to the parents that she would hold the property in trust for all of the siblings, there was no showing the plaintiffs, or the parents, relied on that misrepresentation and that constructive trusts have not been imposed for the benefit of third parties. The Restatement (Third) of Trusts, § 24 (2) (2007) however expressly provides that a transferee who "refuses and cannot be compelled to perform as an express trust . . . holds upon a constructive trust for the intended beneficiaries if . . . the transfer was procured by fraud." The defendant's alleged misrepresentations to the parents that she would comply with their wishes only to immediately take contrary actions may give rise to a constructive trust for the benefit of the plaintiffs and their siblings. To the extent the plaintiffs raise a novel theory of recovery, the "better practice is to deny [a] motion to dismiss and allow [the] parties to develop facts through discovery." Baker v. Wilmer Cutler Pickering Hale and Dorr LLP, 91 Mass.App.Ct. 835, 850 (2017). We conclude it was premature to dismiss the claim at this early stage of the litigation.
Finally, we note that it is true that the complaint raises a direct breach of fiduciary duty claim as a count and the judge reasonably concluded on the facts alleged that the defendant did not have a fiduciary relationship with the plaintiffs. We agree that "[o]rdinarily, family relations do not suffice to create a fiduciary relationship that heightens scrutiny for fraud or undue influence." Cleary v. Cleary, 427 Mass. 286, 292-293 (1998). To the extent that the plaintiffs claim a breach of a fiduciary relationship arising solely from the party's status as siblings, we agree with the judge that there was no such fiduciary duty. Because the facts alleged are sufficient to state a claim for other theories of recovery, however, the absence of fiduciary duty arising from the parties' familial relationship does not require dismissal.
The defendant's other arguments "have not been overlooked. We find nothing in them that requires discussion." Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).
Conclusion.
We reverse the judgment of dismissal and remand the matter for further proceedings consistent with this decision.
We express no view on the likelihood of success of the plaintiffs' claims; we hold only that they were prematurely dismissed.
So ordered.
Meade, Wolohojian, & Lemire, JJ.
The panelists are listed in order of seniority.