Opinion
BCD-CV-2019-00021
02-10-2022
RICHARD P. OLSON, Trustee of the Promenade Trust, Plaintiff v. PAMELA GLEICHMAN, et al., Defendants
ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE JURY DEMAND
M. MICHAELA MURPHY JUSTICE
Before the Court is Plaintiffs Motion to Strike Jury Demand on the grounds that the claims in question primarily seek equitable remedies. For the following reasons, the Court grants Plaintiffs Motion.
Background
The claims before the Court include Plaintiffs Amended Complaint and Defendant Hancock's Counterclaim against Plaintiff and Cross-Claim against Defendant General Holdings. Plaintiff s Amended Complaint alleges fraudulent transfer as to Defendants Gleichman and Hancock. Plaintiff Richard Olson alleges that he is trustee of the Promenade Trust, which holds several judgments against Defendant Gleichman. He further asserts that while owing over 11 million dollars to the Promenade Trust and while she was insolvent within the meaning of 14 M.R.S. § 3573, Defendant Gleichman made transfers of several partnership interests to Defendant Ellen Hancock in violation of 14 M.R.S. §§ 3575 and 3576, Maine's fraudulent transfer statutes. Plaintiff requests relief including voiding the allegedly fraudulent transfers, a provisional remedy against the asset transferred or other property, enjoining further dispositions by Defendants, and damages not to exceed double the value of property transferred.
Plaintiffs claim against Defendant General Holdings was resolved in the Court's Order on Summary Judgment issued 7/7/2021.
Defendant Ellen Hancock's counts, as to both Plaintiff and Defendant General Holdings, include unjust enrichment, conversion, breach of fiduciary duties and aiding and abetting, breach of contract, and a request for an accounting. According to Hancock, General Holdings, under agreement as general partner of several housing projects, has been required to pay certain assets to two trusts for which she serves as trustee and to the Promenade Trust, for which Plaintiff serves as trustee. Hancock alleges that General Holdings has improperly paid sums to the Promenade Trust and that the Promenade Trust retained those assets which were rightfully owed to her trusts. As relief, she requests damages, an accounting, costs and attorney fees, and dismissal of the Amended Complaint.
Legal Standard
The Maine Constitution grants parties the right to trial by jury "[i]n all civil suits, and in all controversies concerning property ... except in cases where it has heretofore been otherwise practiced ...." Me. Const, art. I, § 20. The Law Court has construed that provision to provide the right "unless it is affirmatively shown that a jury trial was unavailable in such a case in 1820." North School Congregate Housing v. Merrithew, 558 A.2d 1189, 1190 (Me. 1989). In 1820, legal claims in Maine were entitled to jury trials, while equitable claims were not. See DesMarais v. Desjardins, 664 A.2d 840, 844 (Me. 1994). To determine whether a claim is legal or equitable, the Law Court has instructed "appraisal of the basic nature of the issue presented, including the relief sought." Id. at 1016. "Where a plaintiff seeks damages as full compensation for an injury, the claim is legal and the plaintiff is entitled to a jury trial. On the other hand, when the primary recovery pursued is equitable, the inclusion of a request for money damages does not convert the proceeding into an action at law." Id. at 844 (citation omitted).
Analysis
Plaintiff's Complaint
Plaintiff argues that no jury right is available because his claims primarily seek equitable relief, with the "thrust of Plaintiff s action [being] to 'avoid' the purported transfer either because it was a juridical nullity as never legally effectuated or because, if a transfer occurred at all, it violated Maine's fraudulent transfer statute." Plaintiffs Motion to Strike at 1.
Defendants reply that Plaintiff has not carried his burden to show that there is no right to jury trial, that historically fraudulent transfer claims were not exclusively heard in equity, that Plaintiffs claims seek legal relief and have factual elements requiring a jury's fact finding, and that the issue of what relief is primarily sought is irrelevant.
To succeed on his Motion, Plaintiff must prove that his fraudulent transfer action would have been tried to a court of equity in 1820. The Court finds that Plaintiff has carried this burden. Defendant is incorrect that the primary remedy sought is irrelevant; Plaintiff may meet his burden by showing the primary recovery he requests is equitable. See DesMarais, 664 A,2d at 844. The right to a jury trial is not so broad that it applies to ancillary legal claims in suits at equity. Id.
Both parties cite to a Superior Court opinion, WCP Me. Loan Holdings, LLC v, Norberg, 2019 Me. Super. LEXIS 4 (Jan. 16, 2019), addressing a similar issue. This Court finds that case persuasive. In that case, the Superior Court (Hancock County, R. Murray, J.} held that a fraudulent transfer claim seeking equitable relief and damages did not carry a jury trial right under the Maine Constitution. Defendants in the case at hand make a similar argument to that made in Norberg. They point to cases involving fraudulent transfer claims heard by juries in Maine in an attempt to show that juries have historically been available for fraudulent transfer cases. As addressed in Norberg, the fraudulent transfer claims in those cases were ancillary to claims at law, which did afford the jury right. When fraudulent transfer claims seeking equitable relief constituted the primary concern in a case, the case was heard in equity without a jury.
Compare Ricker v. Ham, 14 Mass. 137 (1817) (jury trial where primary claim was trespass at law), and Blake v. Howard, 11 Me. 202 (1834) (jury trial where primary claim was trespass at law), and Whitehouse v. Bolster, 95 Me. 458, 50 A. 240 (1901) (jury trial where primary claim was for writ of entry at law), and Blanchard v. Baker, 8 Me. 253 (1832) (jury trial where primary claim was trespass at law), and Eastman v. Fletcher, 45 Me. 302 (1858) (jury trial where primary claim was for writ of entry at law), with Stover v. Poole, 67 Me. 217 (1877) (action in equity to remove cloud on title due to a fraudulent deed), and Dana v. Haskell, 41 Me. 25 (1856) (fraudulent transfer claim seeking return of property heard in equity), and Whitmore v. Woodward, 28 Me. 392 (1848) (fraudulent transfer claim seeking compelled conveyance of property heard in equity), and Traip v. Gould, 15 Me. 82 (1838) (fraudulent transfer claim seeking compelled conveyance of property heard in equity). Defendants also cite to Huber v. Williams, 2005 Me 40, 869 A.2d 737 as an example of a modern case in which a jury heard a fraudulent transfer case seeking equitable relief. The Superior Court considered this argument in Norberg'.
The Court does not find this case to be helpful in the current context because there is no discussion in the Law Court decision regarding the constitutional right to a jury trial in fraudulent transfer cases. As noted above, for equitable claims, "an advisory jury or trial by consent is available," Cyr v. Cote, 396 A.2d 1013, 1016, and it is not clear whether either of those options were used in Huber.2019 Me. Super. LEXIS 4, at *11 n.9. This Court finds the reasoning quoted above compelling and finds that it addresses Defendants' argument in the instant case.
In Norberg, the Superior Court found that the primary issues were whether the transfer should be voided, whether Defendants should be enjoined from further transfers, and whether a receiver should be appointed to oversee the property, 2019 Me. Super. LEXIS 4, at * 12. It held these were equitable issues. Similarly, the issues in Plaintiffs Amended Complaint are whether the transfers should be voided, whether a provisional remedy should be granted against the transferred property, and whether the Defendants should be enjoined from further transfers. The Court finds these issues to be equitable.
Defendants rely on the request for damages and the existing factual issues in claiming that a jury right exists. The Court finds that Plaintiffs damages request is not of primary concern here, see DesMarais, 664 A.2d at 844, and factual issues do not convert an equitable case to a legal one. Therefore, the Court finds Plaintiffs claims carry no right to a jury trial.
Defendant Hancock's Counterclaim and Cross-Claim
Plaintiff argues in the Reply Memorandum that Defendant Hancock's claims are primarily for a partnership accounting, "an inherently equitable proceeding without a jury." At 5-6. Defendants assert that a jury trial is available because the claims seek legal relief including damages. The Court finds that Plaintiff has shown that a jury trial would not have been available for an action like Hancock's in 1820.
Hancock's claims are both legal and equitable, but the Court finds that the legal claims -conversion and breach of contract - arise from the partnerships between General Holdings and Hancock as trustee. On their face, Hancock's claims belie both a fiduciary and a contractual relationship between Hancock and General Holdings. A deeper analysis shows that all the claims are based in partnership. Hancock's Exhibit A shows four Assignment and Assumption Agreements, in which Hancock as trustee appears to enter a partnership relationship with General Holdings (formerly known as Gleichman &Company, Inc.). These documents make no reference to General Holdings's duty to pay into a trust. Hancock asserts this duty comes from the partnership agreements. Counterclaim and Cross-Claim at ¶ 41.
No exception to the rule that partners may not maintain an action at law for damages against other partners until there has been a settlement or accounting of partnership affairs applies here. See Dalton v. Austin, 432 A.2d 774, 777-78 (Me. 1981). Moreover, breach of a partnership agreement is not generally an action at law. 59A Am. Jur. 2d 390 (1987). Hancock's claims assert that General Holdings diverted fund to the Promenade Trust in breach of its partnership duties. The damages r the amount wrongfully transferred to the Promenade Trust.
In sum, the legal elements of Hancock's claims all rely on an acco of partnership duties. An accounting seeks "equitable relief against aper s relationship to recover profits taken in breach of the relationship." Ocean Cove, LLC, 2016 ME 34, ¶ 38, 133 A.3d 1021. Although the evidence do is in a partnership with Hancock - only that General Holdings is - Hancoc surround the partnership accounting. Thus, the primary issue sounds in ec not carry a jury right.
Conclusion
The Court concludes that Plaintiff has shown that both his own am primarily equitable. The Court hereby grants Plaintiffs Motion to Strike.
The entry shall be:
Plaintiffs Motion to Strike Jury Demand is GRANTED.
The clerk is directed to incorporate this order in the docket by reference pursuant to M.R. Civ. P. 79(a)