Opinion
No. 12–P–408.
2013-08-6
Francis J. GIORDANO v. Stephen F. GIORDANO & others.
By the Court (KANTROWITZ, KATZMANN & HANLON, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This appeal arises out of extensive litigation among family members relating to the ownership of a family home in Taunton. In 2001, the plaintiff, Francis J. Giordano, conveyed the property to his son Stephen. , In 2004, Stephen conveyed the property to his sister, Giovanna. In 2006, Francis filed suit against Stephen, Giovanna, and Stephen's wife Heather, seeking, among other things, to recover title to the property. There were bifurcated trials in the Superior Court, one before a jury and one jury-waived. We affirm.
We use given names because all of the litigants are surnamed Giordano.
There was evidence that, in exchange for title to the property, Stephen agreed to improve it, sell it, and use the proceeds to finance a “family compound.”
Background. We take the underlying facts from the findings of the trial judge and the special verdicts of the jury, supplemented by uncontested trial testimony. Francis owned a two-family home located at 144 Fremont Street in Taunton (property), and encumbered by a mortgage of approximately fifteen thousand dollars. In 2001, he filed for bankruptcy because of credit card debt; in his bankruptcy petition, he listed the value of the property as $150,000. After his discharge from bankruptcy, Stephen approached Francis and suggested that Francis sell the property to him; Giovanna was not involved in this discussion although she was present at a “family meeting” that Francis organized at a local restaurant. At this meeting, Francis informed his children that he was going to transfer the property to Stephen; Giovanna was amenable, although her sister, Melissa Hensley, “appeared to be upset.” , On October 17, 2001, Francis went to the registry of deeds and transferred title to Stephen. There were no conditions placed on the deed at the time it was conveyed or recorded. In early 2004, after consistently paying the mortgage and making improvements to the property, Stephen began experiencing financial difficulties, including receipt of a letter from the mortgage holder on the property, threatening foreclosure. Stephen asked Giovanna if she would purchase the property; he told her only that he could not afford the house and did not tell her about the extent of his debt or the impending foreclosure. Giovanna then agreed to purchase the house. Both Stephen and Giovanna entered into the 2004 transaction intending to keeping the home in the family and maintain Francis's residence. The purchase price was $300,000; Giovanna secured her own mortgage for $165,000, after receiving a $135,000 gift of equity from Stephen in order for her lender to approve the loan. The proceeds of Giovanna's loan paid off Stephen's mortgage. At certain times after the purchase, Giovanna obtained additional loans on the property, and then refinanced in order to consolidate the loans. For a period of time after Giovanna purchased the property, both Stephen and his wife, and Melissa and her husband, resided in the home, each paying rent to Giovanna; the plaintiff has lived in the home rent-free since the time of the 2001 transaction.
Francis's counsel at trial and on appeal is Melissa's husband.
The defendants did not recall any discussion at this meeting about the creation of a “family compound”; Stephen came away from the meeting with the understanding that in exchange for the property he “was pretty much just going to take care of [his] father for the rest of his life.”
Giovanna testified that she discussed with Francis her proposed purchase of the property from Stephen.
With some of the proceeds of the second loan, Giovanna paid the plaintiff a $200 monthly stipend for approximately sixteen months, until the plaintiff informed her that he “didn't want any more money from her.”
Francis now appeals from the final judgment, which incorporates rulings on the defendants' motion to dismiss and the verdicts and findings from the bifurcated trials. At the first trial, regarding Francis's constructive trust claim the jury found that there was no antecedent fraud, but that Stephen had breached a fiduciary duty owed to Francis. The jurors also found that Stephen had breached a contract with Francis, and that he therefore owed his father $136,285 in restitution. However, the jury found codefendant Giovanna to have been a bona fide purchaser of the property for value when she bought the property from Stephen, thus negating Francis's claim that a constructive trust could be enforced.
On December 11, 2006, an order entered on the defendants' motions to dismiss, dismissing Francis's claims for declaratory judgment and injunctive relief as they related to an alleged resulting trust arising out of the 2001 transaction. The motion judge declined to dismiss his claims for breach of contract, for an accounting, and for a declaratory judgment and injunctive relief under theories of constructive trust and G.L.c. 109A,
known as the Uniform Fraudulent Transfer Act.
Although Stephen filed a timely notice of appeal, his appeal was dismissed on February 23, 2012. He is a party to this appeal only as an appellee, not as a cross-appellant. Giovanna was the only appellee to file a brief in the appeal.
Stephen's posttrial motion for judgment notwithstanding the verdict and motion for new trial were both denied on March 10, 2010. As noted above, Stephen has no appeal before us.
At the second (jury-waived) trial, the judge found that Stephen's 2004 conveyance of the property to Giovanna was not fraudulent and therefore not voidable. As a result, Giovanna, as the legal owner of the property, was also not liable for conversion; nor did she owe Francis an accounting. Giovanna's counterclaims against Francis were dismissed. On January 13, 2011, the final judgment entered.
In her answer and counterclaim dated February 5, 2007, Giovanna raised against Francis claims of quantum meruit, unjust enrichment, and abuse of process.
On appeal Francis claims error in both trials. As to the first trial, he argues primarily that the judge's instructions to the jury on the constructive trust claim were erroneous and that evidence of falsified loan documents, offered to impeach the defendants, was wrongfully excluded. As to the second trial, he argues principally that the judge erred in determining that Stephen had no intent to defraud his creditors, and thus in foreclosing Francis's argument that the conveyance to Giovanna was fraudulent. He also argues that both judges erred in not imposing a constructive trust upon the property “as a matter of equity.” Finally, Francis maintains that his elder abuse claim was wrongfully dismissed.
As to the elder abuse claim, Francis's brief states, “On motion of the defendants, that count was dismissed on grounds that there is no private right [of action].” There is no record citation for that claim. This is not surprising as the judge in the second trial noted in his findings that, at the hearing on the motions to dismiss, Francis had agreed orally to have his claims for elder abuse and larceny dismissed. Particularly on this record, we accept the judge's finding.
Discussion. Constructive trust. Francis first argues that, in his instructions on constructive trust, the jury trial judge erroneously defined the terms “bona fide purchaser” and “value.” For support, he relies on Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 551–552 (1997), maintaining that when defining value, the judge should have instructed the jurors that in order to find Giovanna to be a bona fide purchaser they must find that the consideration she paid for the conveyance in the deed was “reasonably equivalent” or “proportionate” to the value of the property, not just any value. He also contends that substituting one mortgage note for another, both secured by the property, should not be considered value in accordance with Jones v. Swift, 300 Mass. 177, 185–187 (1938). This argument is not persuasive.
“The trial judge maintains discretion in charging the jury, and a charge is to be read as a whole in determining whether the jury were properly instructed.” Commonwealth v. B & M Fitzgerald Builders, Inc., 71 Mass.App.Ct. 486, 489 (2008), quoting from Sarvis v. Boston Safe Deposit & Trust Co., 47 Mass.App.Ct. 86, 100 (1999). “We review objections to jury instructions to determine if there was any error, and, if so, whether the error affected the substantial rights of the objecting party.” Ibid., quoting from Hopkins v. Medeiros, 48 Mass.App.Ct. 600, 611 (2000).
Here, the judge carefully explained to the jury the special jury questions and the necessary terms. He told them that, if they found “the basis for a constructive trust” they should then proceed to determine whether Giovanna was a bona fide purchaser for value in connection with the 2004 transaction. He thoroughly defined “bona fide purchaser,” including an explanation of value and notice. Specifically, he said that a buyer may give value for property under three scenarios, including by providing “a payment used by [the] seller to pay off a mortgage, a note, or any debt. Indeed, a buyer provides value if she makes ... any payment of money to [the] seller.” See Jones v. Swift, 300 Mass. at 185 (“[W]here the transferee pays or agrees to pay to the transferor's creditor a debt of the transferor, the transferee has given value”).
The judge also told the jury that “where a buyer before providing value or taking title has any knowledge of any fact sufficient to put him on inquiry that there may be an outstanding right in conflict with the title he is about to acquire he cannot be considered to be a bona fide purchaser.” See Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. at 552 (two specifically named Market Basket shareholders “were not bona fide purchasers because they did not act in good faith and because they were on notice of an adverse claim concerning the ownership of Market Basket”). It appears that the definitions given for bona fide purchaser and value were taken from Black's Law Dictionary and the Restatement, respectively. See Black's Law Dictionary 161 (5th ed.1979); Restatement (Second) of Trusts § 298 (1959). We see no error in the instructions.
Finally, Francis argues that the judge should have found that Stephen's breach of fiduciary duty created a constructive trust. See Collins v. Guggenheim, 417 Mass. 615, 618 (1994), citing Barry v. Covich, 332 Mass. 338, 342 (1955). However, the remedy of a constructive trust may not be imposed upon a bona fide purchaser. See Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. at 546. Here, the jury answered “yes” to a special jury question asking whether Giovanna had proven that she was a bona fide purchaser for value when the property was conveyed to her. As the factfinder, “[t]he weight and credibility of the evidence is the province of the jury.” Commonwealth v. Dubois, 451 Mass. 20, 28 (2008). Based on the record as a whole, there was ample evidence to support this finding. See Devine v. Nantucket, 449 Mass. 499, 512 (2007). We see no error in the judge's decision not to impose a constructive trust where Giovanna gave value for the property and had no notice of Stephen's breach of fiduciary duty. See Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235, 248 (2007).
Fraudulent conveyance. The plaintiff next argues that the bench trial judge erred in finding that Stephen had no intention to defraud his creditors when he conveyed the property to Giovanna in 2004. Specifically, in careful and thorough findings, the trial judge determined that it was Stephen and Giovanna's intent at the time of the 2004 transaction to keep the property in the family in order to provide a home for Francis. This conclusion is supported by the fact that Giovanna's loan proceeds were used immediately to discharge Stephen's debt and avoid foreclosure rather than to defraud his creditors. See G.L.c. 109A, § 5( a )(1). “We recognize that the judge, who has a firsthand view of the presentation of evidence, is in the best position to judge the weight and credibility of the evidence.” Lily Transp. Corp. v. Royal Institutional Servs., Inc., 64 Mass.App.Ct. 179, 181 (2005), quoting from Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. at 509–510. We see no reason to disagree with the judge's findings. ,
The judge did find that Giovanna's status as an “insider” was an example of a “badge of fraud” under UFTA, see G.L.c. 109A, §§ 2, 5( b )(1); however, he dismissed this fact because Stephen's “actual intent in conveying the property to Giovanna was not to ‘hinder, delay or defraud’ Francis.”
Although the judge was unclear as to whether Stephen received “reasonably equivalent value” for the property as required under G .L.c. 109A, § 6( a ), the record supports his conclusion that, based on the evidence presented, the plaintiff failed to meet his burden of proving that the consideration paid by Giovanna was not sufficient. See First Fed. Sav. & Loan Assn. of Galion, Ohio v. Napoleon, 428 Mass. 371, 381 (1998). The plaintiff offered in evidence only the last page of the appraisal report pertaining to Giovanna's loan, and failed to call as a witness the performing appraiser to testify as to how the appraisal value of the property was determined. Based on the foregoing, we see no error in the judge's conclusion that Stephen received a “reasonably equivalent value” for the conveyance in the deed and that Giovanna held legal title to the property.
Nor did the second judge err by not imposing a constructive trust on the property.
In addition, because the 2004 transaction was not voidable under the UFTA, Giovanna is the legal owner of the property and, therefore, cannot be held liable for conversion. To establish the elements of conversion it must be shown that “one person exercised dominion over the personal property of another, without right, and thereby deprived the rightful owner of its use and enjoyment.” Matter of Hilson, 448 Mass. 603, 611 (2007). “Similarly, there is no evidence to raise a genuine issue whether there was a fiduciary relationship between [Giovanna and Francis]. This is an essential element of the cause of action for an accounting.” Go–Best Assets Ltd. v. Citizens Bank of Mass., 79 Mass.App.Ct. 473, 489 (2011). The judge was correct in finding that Giovanna has no fiduciary obligation to provide an accounting to Francis regarding the use of funds that she drew from the equity of the property.
To the extent the plaintiff raises other issues here, including, particularly, challenges to the judges' evidentiary rulings, we have considered them and find them to be without merit.
Judgment affirmed.