Opinion
BCD-CV-2018-00027
05-11-2023
FREDERIC J. POOR, et al., Plaintiffs, v. ROBERT KENNETH LINDELL, JR., et al., Defendants.
Frederick J. Poor, Christopher MacLean, Esq., Dirigo Law Group, LLP Robert Kenneth Lindell, Jr. Pro-se. Barbara Gray, Patrick Mellor, Esq. Strout & Payson, PA. Althena Latady John Simpson, Esq. Bar Harbor Trust Services, Eric Wycoff, Esq., Pierce Atwood
Frederick J. Poor, Christopher MacLean, Esq., Dirigo Law Group, LLP
Robert Kenneth Lindell, Jr. Pro-se.
Barbara Gray, Patrick Mellor, Esq. Strout & Payson, PA.
Althena Latady John Simpson, Esq.
Bar Harbor Trust Services, Eric Wycoff, Esq., Pierce Atwood
ORDER DENYING DEFENDANT ALTHEA LATADY'S MOTION FOR SUMMARY JUDGMENT
Michael A. Duddy, Judge.
BACKGROUND
Before the Court is the Motion for Summary Judgment filed by Defendant Althea Latady (f/k/a Althea Lindell) in the above-captioned matter (the "Motion"). For the reasons discussed below, the Motion is DENIED.
LEGAL STANDARD
Summary judgment is appropriate when the parties' statements of material facts and the portions of the record referenced therein "disclose no genuine issues of material fact and reveal that one party is entitled to judgment as a matter of law." Currie v. Indus. Sec., Inc., 2007 ME 12, ¶ 11, 915 A.2d 400 (citing M.R. Civ. P. 56(c)). "A material fact is one that can affect the outcome of the case, and there is a genuine issue when there is sufficient evidence for a fact finder to choose between competing versions of the fact." Longee Conservancy v. CitiMortgage, Inc., 2012 ME 103, ¶ 11, 48 A.3d 774 (quoting Stewart-Dore v. Webber Hosp. Ass 'n, 2011 ME 26, ¶ 8, 13 A.3d 773). The Court must view the record facts in the light most favorable to the non-moving party and must draw all reasonable inferences in favor of the same. Watt v. UniFirst Corp., 2009 ME 47, ¶ 21, 969 A.2d 897 (citations omitted); Levis v. Konitzky, 2016 ME 167, ¶ 20, 151 A.3d 20.
When the defendant is the moving party, it must establish that there is no genuine dispute of fact and that the undisputed facts would entitle it to judgment as a matter of law. Diviney v. Univ, of Me. Sys., 2017 ME 56, ¶ 14, 158 A.3d 5. To withstand a defendant's motion for summary judgment, the plaintiff must in turn establish a prima facie case for each element of their cause of action. Watt, 2009 ME 47, ¶ 21, 969 A.2d 897 (citations omitted). If they do not present sufficient evidence on the essential elements, then the defendant is entitled to a summary judgment. Id.
FACTS
For the limited purpose of deciding Latady's Motion, resolving all inferences in favor of the Plaintiffs, the record demonstrates the following genuine issues of material fact.
Latady married Lindell during 1991; they have three children together. (Def.'s S.M.F. ¶ 1; Pls.' S.M.F. ¶¶ 3-4.) Lindell worked as an investment advisor throughout their marriage. (Def.'s S.M.F. ¶ 4.) Latady knew that Lindell was sanctioned by securities regulators for violations he committed during 2001, and during 2009 or 2010. (Pls.' S.M.F. ¶ 4.) Lindell did not keep the sanctions or related investigations secret from Latady. (Pls.' S.M.F. ¶ 5.) Sometime during early 2017, Latady learned that Lindell was investigated and criminally charged for stealing funds from Plaintiffs' trusts. (Def.'s S.M.F. ¶ 10.)
A Senior Investigator for the Office of Maine Securities conducted the investigation involving Lindell. (Pls.' S.M.F. ¶ 43.) Her investigation revealed that Lindell stole millions of dollars, including from Plaintiffs' trusts, and that Lindell spent the money for his personal use and that of his family's. (Pls.' S.M.F. ¶ 44.) On March 1, 2017, Lindell was indicted on one count of theft by unauthorized taking or transfer and one count of securities violations. (Pls.' S.M.F. ¶ 45.)
Plaintiffs are the beneficiary and trustee, respectively, to the estate of Phyllis J. Poor and trusts established thereby: the Frederic J. Poor Special Needs Trust, the Frederic J. Poor Trust Dated August 20, 2004 (the "2004 Trust"), and The Grandchildren's Trust. (Def.'s Mot. Summ. J. 1.) In total, Lindell expended over $1,500,000 from Phyllis Poor's estate and personal accounts for his and his family's benefit. (Pls.' S.M.F. ¶ 49.) After Phyllis Poor's death, Lindell deposited over $1,700,000 into accounts held by the 2004 Trust. (Pls.' S.M.F. 50.) Lindell personally spent over $1,650,000 from those funds. (Pls.' S.M.F. ¶ 51.)
Latady filed for a divorce during January of 2018, and she began cooperating with the Maine Attorney General's investigation into Lindell. (Def.'s S.M.F. ¶ 15.) The divorce finalized during October or November of 2018. (Def.'s S.M.F. ¶ 31; Pls.' S.M.F. ¶ 62.) Plaintiffs filed their amended complaint naming Latady as a defendant in this civil matter on January 23, 2019. (Def.'s S.M.F. ¶ 17.) Plaintiffs allege that Latady has not repaid to Plaintiffs monies that were paid to her from their trusts and other accounts. (Pls.' S.M.F. ¶ 76.) Plaintiffs seek compensatory and punitive damages from Latady in connection with her marriage to Lindell and her concomitant access to and enjoyment of the following accounts and assets, the transactions related to them, and the proceeds therefrom.
I. The Frankfort and Cloverdale Properties
After their marriage, during 1992 Lindell and Latady purchased a home together in Frankfort, Maine (the "Frankfort Property"). (Def.'s S.M.F. ¶ 2; Pls.' S.M.F. ¶ 57.) They moved to California during or around 2014 after Lindell was sanctioned again by securities regulators. (Def.'s S.M.F. ¶ 4.) There, they began living in a home in Cloverdale, California, at 1850 Trimble Lane (the "Cloverdale Property"), which Lindell purchased as an investment for the Plaintiffs' trusts that he managed. (Def.'s S.M.F. ¶ 7; Pls.' S.M.F. ¶ 21.) Latady was aware that Lindell withdrew the purchase money from Plaintiffs' trust funds. (Pls.' S.M.F. ¶ 23.) According to Latady, Lindell told Latady that in lieu of him charging Plaintiffs' a substantial fee, as he was permitted to do, they could live rent-free at the Cloverdale Property. (Def.'s S.M.F. ¶ 9.) Latady lived with Lindell at the Cloverdale Property from 2014 through December of 2017. (Pls.' S.M.F. ¶21.)
Lindell and Latady made substantial renovations to the Cloverdale Property before they moved in. (Def.'s S.M.F. ¶ 8; Pls.' S.M.F. ¶ 26.) The renovations included landscaping and installation of irrigation, plantings, raised beds, a walkway, and construction of a small vineyard. (Def.'s S.M.F. ¶ 8; Pls.' S.M.F. ¶ 29.) Latady provided her input into the renovations to the home's flooring, cabinetry, and countertops. (Pls.' S.M.F. ¶ 27.) She also helped select a new sound system, which cost approximately $30,000. (Pls.' S.M.F. ¶ 28.)
These improvements were made using funds in an amount exceeding $400,000 withdrawn from the 2004 Trust. (Def.'s S.M.F. ¶ 8; Pls.' S.M.F. ¶ 24.) Latady personally neither coordinated nor contributed payment for any of the renovations. (Pls.' S.M.F. ¶ 26.) The renovations were completed by the time Latady and Lindell moved in. (Pls.' S.M.F. ¶ 25.)
Latady eventually moved out of the Cloverdale Property during December of 2017. (Pls.' S.M.F. ¶¶ 69-70.) Neither she nor Lindell paid rent to the Plaintiffs for the time they lived at the Cloverdale Property. (Pls.' S.M.F. ¶ 76.)
The parties offer alternative explanations for why Latady left the California and the Cloverdale Property. (Def.'s S.M.F. ¶14; Pls.' S.M.F. ¶ 69.) However, that dispute is not material to deciding the Motion.
On May 5, 2018, the Court granted an order of attachment in the amount of $3,000,000 against Lindell in the present action, which was recorded in the Waldo County Registry of Deeds and encumbers the Frankfort Property. (Def.'s S.M.F. ¶ 18; Pls.' S.M.F. ¶ 58.) Latady first learned about the attachment and encumbrance to the Frankfort Property on September 14, 2018. (Pls.' S.M.F. ¶ 58.)
After his indictment, on September 17, 2018, Lindell conveyed his interest in the Frankfort Property to Latady via a quitclaim deed. (Def.'s S.M.F. ¶ 20; Pls.' S.M.F. ¶ 61.) After the couple divorced later that year, Latady was awarded the Frankfort Property and other marital assets. (Def.'s S.M.F. ¶ 3 l;Pls.' S.M.F. ¶ 63.) Latady continues to own the Frankfort Property, which she rents to tenants. (Def.'s S.M.F. ¶ 34; Pls.' S.M.F. ¶ 64.)
The Frankfort Property would have a market value of about $250,000 if it were in good condition, but it needs repairs that would cost approximately $35,000, and it is encumbered by a mortgage for the approximate amount of $110,000 as well as a home equity loan for the approximate amount of $25,000. Thus, present equity in the property is valued at approximately $80,000. (Def.'s S.M.F. ¶ 3.)
II. Bank Accounts &Deposits
In California, Lindell rented an office, continued working as an investment advisor and managed investments for Plaintiffs' trusts. (Def.'s S.M.F. ¶ 5.) Latady worked full-time in various roles within the wine industry. (Def.'s S.M.F. ¶ 6; Pls.' S.M.F. ¶ 8.) She earned between $18 and $26 per hour for her work. (Pls.' S.M.F. ¶ 9.)
Throughout their marriage, Lindell and Latady shared joint bank accounts. (Pls.' S.M.F. ¶ 6.) However, Latady also maintained her own personal bank account separately from their joint accounts. (Pls.' S.M.F. ¶ 7.) Latady deposited all of her earnings from her work for her California employers into her separate, personal bank account. (Pls.' S.M.F. ¶ 10.) During their time together in California, Latady and Lindell also shared a joint Exchange Bank account, and possibly one other Virtual Bank account. (Pls.' S.M.F. ¶ 16.)
While they lived in California, Latady was responsible only for paying for her and Lindell's family's healthcare needs, and for infrequent and miscellaneous expenses like groceries or for activities for their children. (Def.'s S.M.F. ¶ 25; Pls.' S.M.F. ¶ 11.) She also paid her tuition for a certificate course, purchased wine, and made some payments on her credit card. (Pls.' S.M.F. ¶ 11.) However, she wasn't responsible for utilities or any other of the family's expenses. (Pls.' S.M.F. ¶ 12.) Her unspent income went into her savings. (Pls.' S.M.F. ¶ 13.)
Apart from Latady's income, the Office of Maine Securities' investigation revealed the following deposits into Lindell and Latady's joint bank accounts or Latady's personal bank account:
• During the period from 2014 through 2016, $5,000 was disbursed into Lindell and Latady's joint Sabadell/Virtual Bank account from the 2004 Trust. (Pls.' S.M.F. ¶ 55.)
• During the period from 2014 through 2016, $60,100 was disbursed from the 2004 Trust and deposited into Latady and Lindell's joint Exchange Bank account. (Pls.' S.M.F. ¶ 56.)
• A check in the amount of $1,120, dated February 24,2017, was paid to "Althea Lindell" from a bank account for the 2004 Trust. (Pls.' S.M.F. ¶ 42.)
Latady also had her own accounts and investments. (Pls.' S.M.F. ¶ 14.) Lindell agreed to invest $100,000 that Latady had inherited for her. (Def.'s S.M.F. ¶ 11.) Lindell admitted to spending nearly all of Latady's savings, including the funds that she inherited, without her knowledge or permission. (Def.'s S.M.F. ¶¶ 12-13; Pl.'s ¶ 67.) Latady and Lindell's divorce judgment includes specific findings that (1) Lindell spent Latady's inheritance, and (2) he conveyed to Latady his interest in the Frankfort Property to offset the amount he owed to her as a consequence of spending her inheritance. (Def.'s S.M.F. ¶ 33.)
III. Barclays U.S. L.L. Bean Credit Card
Latady also had a Barclays U.S. L.L. Bean credit card in her own name, which she mostly paid off herself but which Lindell sometimes paid for her. (Pls.' S.M.F. ¶¶ 17, 19-20.) Lindell made payments towards this credit card on two occasions when the couple lived in California because Latady was trying to put away into savings as much of her income as possible. (Pls.' S.M.F. ¶ 18.) The Office of Maine Securities' investigation revealed over $24,000 was paid towards Latady's L.L. Bean credit card from the 2004 Trust and other sources. (Pls.' S.M.F. ¶¶ 52-53.) Notably, the investigation recorded one payment on June 12,2012, in the amount of $9,000 from Phyllis Poor's personal account made by Lindell as Power of Attorney. (Pls.' S.M.F. ¶ 47.)
IV. Mortgage on the Cloverdale Property &Proceeds
During February of 2017, Lindell borrowed a mortgage on the Cloverdale Property in the amount of $450,000. (Pls.' S.M.F. ¶¶ 30-31.) Latady claims that Lindell told her that he purposed the borrowed funds for the development of a vineyard at the Cloverdale Property. (Pls.' S.M.F. ¶ 32.) However, Lindell and Latady generally used the Cloverdale Property as a typical, residential family home, and not as a vineyard. (Pls.' S.M.F. ¶ 33.)
To obtain the mortgage loan, Lindell provided the lender with a lease agreement, dated June 20, 2014, that stated that the 2004 Trust was leasing the Cloverdale Property to Latady for the amount of $3,500 per month. (Pls.' S.M.F. ¶ 34.) The lease agreement purports to contain each of Latady's and Lindell's signatures. (Pls.' S.M.F. ¶ 35.) The dates next to the signatures of Lindell and Latady appear to be written by two different individuals - they do not match. (Pls.' S.M.F. ¶ 36.) However, Latady claims that she did not sign the lease agreement. (Pls.' S.M.F. ¶ 36.)
The proceeds from the mortgage on the Cloverdale Property were deposited into an Exchange Bank checking account for the 2004 Trust, with Lindell named as the trustee. (Pls.' S.M.F. ¶ 37.) On February 28, 2017, approximately $130,000 of the funds were immediately transferred to Latady and Lindell's joint bank account. (Pls.' S.M.F. ¶ 38.) $71,000 of these funds were then used to make credit card payments. (Pls.' S.M.F. ¶ 39.)
V. Miscellaneous Disbursements From Trust Funds
As part of its investigation, the Office of Maine Securities created summaries of bank, financial, and business records relating to Lindell's criminal case. (Pls.' S.M.F. ¶ 46.) The investigation recorded the following disbursements made by Lindell from Plaintiffs' trust funds and other accounts:
• On May 10, 2012, a payment was made to John Bapst High School towards high school tuition for Latady and Lindell's son. (Pls.' S.M.F. ¶ 48.)
• Payments from the 2004 Trust to Boston University in the amount of $13,500 towards the tuition for Lindell's and Latady's child. (Pls.' S.M.F. ¶ 54.)
• On March 3, 2017, $17,189.27 was paid from the bank account for the 2004 Trust to Bank of America. (Pls.' S.M.F. ¶¶ 39, 40.) The payment was labeled "Bank of America Online Pmt, Lindell, Althea $17,189.27." (Pls.' S.M.F. ¶ 39.)
• On March 3, 2017, a mortgage payment on the Frankfort Property in the amount of $1,448.58 was made from the bank account for the 2004 Trust. (Pls.' S.M.F. ¶ 41.)
• Numerous cash withdrawals were made and checks written from the bank account for the 2004 Trust without an accompanying memo. (Pls.' S.M.F. ¶ 52.)
DISCUSSION
In their Motion, Plaintiffs stipulate to dismissal of the following counts as to Latady: Count II, breach of fiduciary duty; Count III, fraud; Count VIII, tortious interference with an expectancy; Count X, civil conspiracy; and Count XI, intentional infliction of emotional distress. Latady's Motion requests a summary judgment on Plaintiffs' Count I, conversion; Count V, unjust enrichment; Count VI, punitive damages as to all causes of action; and Count IX, fraudulent conveyance. Each issue is discussed separately below.
I. Conversion (Count I)
Conversion requires an actual and substantial interference with a party's rights to their property. Est. of Barron v. Shapiro &Morley, LLC, 2017 ME 51, ¶ 17, 157 A.3d 769 (citation omitted). The elements a plaintiff must prove to establish their claim for conversion are: (1) that the plaintiff has an interest in the property at issue; (2) that they had the right to possession at the time of the defendant's alleged conversion; and (3) that the plaintiff made a demand for the property's return, which was denied. Withers v. Hackett, 1998 ME 164, ¶ 7, 714 A.2d 798. (citation omitted). However, the plaintiff need only make a demand if the defendant took the property rightfully, hence "where the circumstances show that a demand would be useless, a demand is unnecessary." Id. (citation omitted). Further, the defendant need not intend to undertake any wrongdoing; they must merely act with an intent to exercise dominion or control over the plaintiffs property that is in actuality inconsistent with the plaintiffs rights. Mitchell v. Allstate Ins. Co., 2011 ME 133, ¶ 15, 36 A.3d 876 (citation omitted). "A mistake of fact or law is no defense." Id. (citation omitted).
In support of their conversion claim, Plaintiffs assert that Latady possessed and received the following funds, to which Plaintiffs had a property interest:
1. Over $24,000 paid towards Latady's Barclays U.S. L.L. Bean credit card from the 2004 Trust and other sources;
2. The $17,189.27 payment by the 2004 Trust to Bank of America;
3. The mortgage payment for the Frankfort Property in the amount of $1,448.58, naid from the 2004 Trust;
4. The $1,120 check paid to Latady by the 2004 Trust;
5. The $5,000 transferred into Latady and Lindell's joint Sabadell/Virtual Bank account from the 2004 Trust; and
6. The $60,100 transferred into Latady and Lindell's joint Exchange Bank account from the 2004 Trust.
The total amount of hinds subject to Plaintiffs' conversion claim is $109,150.92. (Pls.' Opp'n to Def.'s Mot. Summ. J. 11.)
The parties do not dispute Plaintiffs' property interest in these funds or their right to possess them. Latady, however, argues that she cannot be liable for conversion as a matter of law because she did not intentionally exercise dominion or control over Plaintiffs' property where Lindell, and not herself, was the person who improperly disbursed the funds from Plaintiffs' trust accounts.(Def.'s Mot. Summ. J. 4.) In the Court's view, this argument is unpersuasive in light of the hornbook rule that a defendant's use of another's property as if they own it "is conversion." Simmons, Zillman &Furbish, Maine Tort Law § 6.05 (2018 ed. 2017 &Supp. 2022). Courts may properly find that a defendant exercised the requisite dominion or control over a plaintiff s property "by simply possessing" it. Mitchell, 2011 ME 133, ¶ 18, 36 A.3d 876 (citations omitted). Here, viewing the record facts in the light most favorable to Plaintiffs, Plaintiffs have raised genuine issues of material fact concerning whether Latady exercised dominion or control over Plaintiffs' funds that were paid on her behalf to (1) Barclays U.S. and to (2) Bank of America, as well as to (3) the mortgage payment for the Frankfort Property. Those funds were used to pay Latady's debts, and she can be said to have used them as the owner. Likewise, she was in possession of (4) the funds paid to her by check and (5-6) deposited into the joint accounts for which she was an account holder.
Because neither Lindell nor Latady took Plaintiffs' money rightfully, the requirement that Plaintiffs prove they made a demand for return of their property that was rejected by Latady does not apply.
The Court is not aware whether the Law Court has considered a case in which a plaintiff asserts a conversion claim against a passive spouse who shared bank accounts with an embezzling spouse. Neither party briefed such a case. Other jurisdictions that considered such cases hold that the passive spouse, irrespective of the absence of fault, may be liable for the conversion when there is evidence that (1) they used the plaintiffs property (i.e., spent funds) and (2) they knew or reasonably should have known that they were receiving and spending monev that was not rightfully theirs to spend. See, e.g., H & MEnters, v. Murray, No. M1999-02073-COA-R3-CV, 2002 Tenn.App. LEXIS 261, at *12-13 (Apr. 17. 2002) (citing Colonia Ins. Co. v. City Nat'l Bank, 988 F.Supp. 1242, 1252 (W.D. Ark. 1997)); Fed. Ins. Co. v. Smith, 144 F.Supp.2d 507, 517-22 (E.D. Va. May 30, 2001) ("a person to whom or for whose knowing benefit converted funds are knowingly disbursed exercises dominion and control over the funds by appropriating the funds for her own benefit"); Zell & Ettinger v. Berglas, 690 N.Y.S.2d 721, 721 (N.Y.App.Div. 1999)); but see Ctr. for Pain Control v. McCall, No. 2-11-0649, 2012 Ill.App. Unpub. LEXIS 642. at *27-28 (Ill.App.Ct. Mar. 23, 2012). Tire Court finds that, viewing the record evidence in the light most favorable to them, Plaintiffs raised a genuine issue of material fact under this standard. As discussed below, Plaintiffs raised a fact dispute regarding Latady's "use" of the funds. The record evidence is otherwise sufficient to support a finding that she knew or reasonably should have known that the funds deposited into her and Lindell's joint bank accounts in four and five-figure amounts, after Lindell was sanctioned for securities violations on more than one occasion, were not rightfully hers.
Latady also argues that Plaintiffs never made, and she never denied, a demand to return Plaintiffs' property to them. (Def.'s Mot. Summ. J. 4.) Again, however, a demand is only unnecessary when the defendant rightfully took possession of the plaintiffs property. Withers, 1998 ME 164, ¶ 7, 714 A.2d 798. (citation omitted). Lindell may have rightfully taken possession of the converted funds in his fiduciary capacity as trustee and Power of Attorney. However, Latady only gained possession of them as a result of Lindell's misappropriation. Hence, a demand by Plaintiffs directed to Latady was not required in this case to generate a viable conversion claim.
For these reasons, the Court denies Latady's motion for a summary judgment on Plaintiffs' conversion claim.
II. Unjust Enrichment (Count V)
To prove their claim for unjust enrichment, a plaintiff must establish that (1) a benefit was conferred upon the defendant by the plaintiff, (2) that the defendant had appreciation or knowledge thereof, and (3) that the defendant's acceptance or retention of the benefit was under circumstances that make it inequitable for them to accept or retain it without payment of its value. U.S. Bank v. Thomes, 2013 ME 60, ¶ 14, 69 A.3d 411 (citation omitted). These elements are construed as issues of fact. See Forrest Assocs. v. Passamaquoddy Tribe, 2000 ME 195, ¶ 14, 760 A.2d 1041.
In addition to Plaintiffs' funds allegedly converted by Latady in the amount of $109,150.92, Plaintiffs allege Latady was unjustly enriched by:
1. $13,500 of Plaintiffs' funds used towards Latady's son's college tuition;
2. Rent-free occupancy of the Cloverdale Property from 2014 through 2017, quantified according to the rental's fair market value during the years at issue;
3. Renovations to the Cloverdale Property, valued according to the purchase price. (Pls.' Opp'n to Def.'s Mot. Summ. J. 14.)
First, the Court cannot definitively say that, as a matter of law, Plaintiffs did not confer the benefits upon Latady. It is true that Plaintiffs did not confer any benefit upon her themselves, directly. However, the record evidence demonstrates that Lindell's bestowal of benefits upon himself and Latady occurred when he was dutybound as a fiduciary to Plaintiffs in his role as trustee, wherein he was authorized to exercise Plaintiffs' rights as owners of the trust property. See 18-B M.R.S. §§ 815-816 (2022). Moreover, courts routinely permit claims for unjust enrichment made against innocent recipients of property or bona fide transferees who are not purchasers for value. There are no facts to permit an inference that Latady gave value to Plaintiffs for the benefits at issue.
In other jurisdictions the following facts, if found, provide an adequate basis to hold a passive spouse liable for unjust enrichment in relation to the consumption or enjoyment of funds fraudulently obtained by an embezzling spouse: (1) the funds were fraudulently obtained by the embezzling spouse, (2) consumed or enjoyed by the passive spouse, (3) to the plaintiff s detriment, (4) the passive spouse gave no valuable consideration for the funds, and (5) the passive spouse had no legal claim to the funds. Restatement (First) of Restitution § 123 (Am. Law Inst. 1937, updated through 2016); see McCall, 2012 Ill.App. Unpub. LEXIS 642, at *24 (citing Douglass v. Wanes, 458 N.E.2d 514, 521-22 (Ill.App.Ct. 1984)); Bank of Am. Corp. v. Gibbons, 918 A.2d 565, 568-74 (Md. Ct. Spec. App. Mar. 13, 2007) ("the dispositive question is whether ... the defendant transferee, paid value for the funds transferred to her by ... the culpable third party") (discussing cases); Williams v. Aloisi, No. 6:01-cv-470-Orl-31KRS, 2002 U.S. Dis. LEXIS 410, at *683-87 (M.D. Fla. Jan 15, 2002) (discussing cases); Westhoffv. Kerr S.S. Co., 530 A.2d 352, 355-56 ( N.J.Super.Ct.App.Div. Aug. 13, 1987); In re Marriage of Allen, 724 P.2d 651, 659-60 (Colo. 1986) (equating the passive spouse with a donee or gratuitous transferee, and permitting establishment of a constmctive trust or equitable lien upon embezzled property in their possession).
Next, viewing the record evidence in the light most favorable to Plaintiffs, there is a fact dispute regarding whether, as a co-accountholder, co-tenant, or a co-payor Latady had appreciation or knowledge of these benefits. Lastly, in consideration of Lindell's misconduct in the operative events underlying this suit, there is a genuine issue of material fact regarding whether Latady's acceptance or retention of the above-listed benefits was under circumstances that made it inequitable for her to accept or retain them without payment of value.
In consideration of these disputed facts in the summary judgment record, the Court denies Latady's Motion concerning Plaintiffs' unjust enrichment claim.
III. Fraudulent Conveyance (Count IX)
The Uniform Fraudulent Transfer Act ("MUFTA"), as adopted by the Maine State Legislature, provides that a transfer made or obligation incurred by a debtor may be fraudulent as to a creditor, no matter whether the creditor's claim arose before or after the transfer was made or the obligation was incurred. 14 M.R.S. § 3575(1) (2022). Such a transfer or obligation is "fraudulent" if the debtor made the transfer or incurred the obligation with "actual intent to hinder, delay or defraud any creditor of the debtor." Id. § 3575(1)(A). In determining a party's actual intent, courts may consider various factors, including, but not limited to, whether "[t]he transfer or obligation was to an insider," and whether "[t]he transfer occurred shortly before or shortly after a substantial debt was incurred." Id. § 3575(2)(A), (J). When the debtor is an individual, an "insider" may be "[a] relative of the debtor." 14 M.R.S. § 3572(7)(A)(1) (2022). An individual's "spouse" is their "relative." Id. § 3572(11).
Plaintiffs' fraudulent conveyance claim against Latady is made with respect to the Frankfort Property, which Lindell conveyed to Latady by quitclaim deed as contemplated by their divorce settlement agreement. Lindell's conveyance of his interest in the Frankfort Property occurred during September of 2018 - after his March 2017 indictment, and several months after the Court granted Plaintiffs' attachment against Lindell in the amount of $3,000,000 during May of 2018.
There are genuine issues of material fact with respect to whether this transfer is actionable under the MUFTA. Construing the record evidence in favor of Plaintiffs, a reasonable fact-finder could conclude therefrom that Lindell's conveyance of the Frankfort Property as attachmentdebtor was made with "actual intent to hinder, delay or defraud" the Plaintiffs as attachmentcreditors. The conveyance was made to Latady on or around September 17, 2018, when Latady was a "relative" and "insider" within the meaning of the MUFTA. Also, the transfer was made after Lindell was noticed by the attachment granted to the Plaintiffs that he could be liable for a substantial "debt." Because the Court concludes that the summary judgment record evidence, viewed in the light most favorable to Plaintiffs, is sufficient to support a prima facie showing of a fraudulent conveyance under section 3575(1)(A) of the MUFTA, the Court does not reach the question of whether the record supports a prima facie showing under section 3575(1)(B). See Mitsubishi Caterpillar Forklift Am., Inc. v. Superior Serv. Assocs., 81 F.Supp.2d 101, 114 (D. Me. 1999).
Latady makes two arguments in support of her Motion. First, she argues that the transfer in question is not voidable under the MUFTA because she, as transferee, took Lindell's interest in the Frankfort Property in good faith and for a reasonable equivalent value. (Def.'s Reply to Pls.' Opp'n to Def.'s Mot. Summ. J. 6-7.) This is because, according to Latady, she accepted Lindell's interest in the Frankfort Property as "a reasonable equivalent value" to offset the value of funds that she inherited and that Lindell allegedly stole from her. Latady's first argument is unavailing to her, where, as noted above, the Court does not reach Plaintiffs' MUFTA claim-in-the-altemative under section 3575(1)(B). Section 3575(1)(A) requires no showing that Lindell as debtor made the transfer without receiving a reasonably equivalent value therefore.
Second, Latady argues that the conveyance by quitclaim deed is a voidable transfer, since Lindell's property interest in the Frankfort Property was encumbered by Plaintiffs' attachment at the time of the deed's execution. (Id at 7.) In support of her position, Latady cites to section 3577, subsection (1) of the MUFTA, which provides that a transfer is made with respect to an asset that is real property "when the transfer is so far perfected that a good-faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee." 14 M.R. S. § 3577(1)(A) (2022). Irrespective of this limitation, the MUFTA includes a catchall provision, which provides that "[i]f applicable law does not permit the transfer to be perfected as provided in [section 3577, subsection (1)], the transfer is made when it becomes effective between the debtor and the transferee." Id. § 3577(3). Here, the transfer became effective upon the recordation and delivery of the quitclaim deed by which Lindell conveyed his interest in the Frankfort Property to Latady.
Finally, Latady argues that the transfer in question did not actually defraud Plaintiffs of any claim they might have had to Lindell's interest in the Frankfort Property. She claims that the home has not been sold, and the transfer is accordingly voidable and the value transferred is recoverable. See 14 M.R.S. § 3578(1) (2022). However, amoney judgment to recover for the value of the asset transferred may be enforced by the creditor against the first transferee of the asset. 14 M.R.S. § 3579(2)(A) (2022). Otherwise, section 3578 presents various remedies that a creditor may, or may not, elect to pursue. The statute does not contain any express language indicating that these remedies are exclusive relative to one another. See Klingerman v. SOL Corp, of Maine, 505 A.2d 474, 477 (Me. 1986).
Ure MUFTA's provisions are applied and construed to effectuate its general purpose to make uniform the law with respect to its subject matter. 14 M.R.S. § 3582 (2022). Other jurisdictions that adopted the Uniform Fraudulent Transfer Act do not construe section 3578 to provide remedies that are mutually exclusive. E.g., Tenn. Code Ann. § 66-3-308(a). cmt. 1 (2022) ("The remedies specified in this section are not exclusive."). Ure Court adopts this constniction of section 3578 for the purpose of deciding Latady's Motion.
The Court is not persuaded by Latady's arguments in support of her Motion with respect to Plaintiffs' Count IX. The Court declines to enter a summary judgment for Latady on Plaintiffs' fraudulent concealment claim.
IV. Punitive Damages (Plaintiffs' Count VI)
In Maine, punitive damages are available to a plaintiff only to the extent that the defendant is shown by clear and convincing evidence to have acted with malice. Tuttle v. Raymond, 494 A.2d 1353, 1361, 1363 (Me. 1985). Malice exists when the defendant's conduct is motivated by ill-will towards the plaintiff, or when the conduct is so outrageous that malice towards the plaintiff ought to be implied. Id. However, such malice cannot be established by a defendant's mere reckless disregard of the circumstances underlying the alleged wrong. Id.
Tire "clear and convincing standard" is satisfied when the fact-finder is persuaded that the evidence was proved to a high probability. Dubois v. Madison Paper Co., 2002 ME 1, ¶ 11, 795 A.2d 696.
Here, the Court finds that the record evidence, viewed in the light most favorable to Plaintiffs, is sufficient to generate a genuine issue of material fact concerning constructive malice. There are fact disputes concerning Latady's knowledge of Lindell's fraudulent treatment of
Plaintiffs and dereliction of his fiduciary duties, and whether she knowingly accepted, used and enjoyed Plaintiffs' funds fraudulently obtained by Lindell. Because, based on the record before the Court on Latady's Motion, a reasonable fact-finder could conclude that she knew of the circumstances underlying Lindell's fraud, the Court cannot grant a summary judgment to Lindell on Plaintiffs' claim for punitive damages.
CONCLUSION
For the foregoing reasons, Defendant Althea Latady's Motion for Summary Judgment is DENIED as to Plaintiffs' Counts I for conversion, Count V for unjust enrichment, Count VI for punitive damages, and Count IX for fraudulent conveyance.
So ordered.
The Clerk is instructed to enter this Order on the docket for this case by incorporating it by reference. M.R. Civ. P. 79(a).
So ordered.