Beal Bank, SSB v. Pittorino
| Decision Date | 03 February 1999 |
| Docket Number | No. 98-1029,98-1029 |
| Citation | 177 F.3d 65 |
| Parties | BEAL BANK, SSB, a Texas Corporation, Plaintiff, Appellee, v. Felix J. PITTORINO, etc., et al., Defendants, Appellees. Ralph P. Amelia, Anna L. Amelia, Loryann K. Amelia, Defendants, Appellants. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Robert O. Berger and John Lamb for appellants.
David D. Pavek, with whom David Pavek & Associates, William V. Sopp, and Finnegan, Hickey, Dinsmoor & Johnson, P.C., were on brief for appellee.
Before SELYA, STAHL and LIPEZ, Circuit Judges.
Defendant-appellant Ralph P. Amelia appeals the district court's entry of judgment against him in this fraudulent conveyance action. 1 After considering Amelia's arguments, we affirm.
This case finds its genesis in a number of loans issued by Vanguard Savings Bank to Felix J. Pittorino from 1989 to 1991. Several of the loans were guarantied by property of Pigeon Hill Estates Trust ("Pigeon Hill Trust"), for which Pittorino and Amelia were trustees. Vanguard went into receivership in March 1992, and the Federal Deposit Insurance Corporation ("FDIC") was appointed liquidating agent. Then, in November 1995, the FDIC assigned its Vanguard loans to plaintiff-appellee Beal Bank. On March 22, 1996, Beal Bank sued Pittorino individually, Pittorino and Amelia as trustees of Pigeon Hill Trust, and other related entities to collect on the unpaid loans.
The 1996 action was bifurcated: the claims against Pittorino individually were severed from the claims against Pittorino and Amelia as trustees. The former were tried before a jury. On April 8, 1996, the jury returned a verdict against Pittorino in the amount of $7.8 million. The trial against Pittorino and Amelia as trustees was scheduled to begin on September 17, 1996. Prior to that date, the trustees entered settlement negotiations with Beal Bank and reported to the district court that they had agreed to a settlement. The court memorialized the parties' settlement agreement by entering a January 7, 1997 judgment directing Pigeon Hill Trust to pay Beal Bank $3 million. 2
After entry of the final order, Beal Bank initiated Fed.R.Civ.P. 69 discovery upon judgment defendants Pittorino and the trustees of Pigeon Hill Trust. Through discovery, Beal Bank learned that Pittorino and Amelia had transferred the bulk of Pigeon Hill Trusts's assets to Pitt Construction Corporation ("Pitt") and ALA Realty Trust ("ALA"). Pittorino was the president, treasurer, and controlling shareholder of Pitt. 3 Amelia was the sole trustee of ALA, and his wife was the sole beneficiary. These transfers occurred on May 10, 1996, after the jury verdict had been rendered against Pittorino and while the claims against Pittorino and Amelia as trustees were still pending.
Alleging that the May 10 conveyances were fraudulent and therefore voidable under Massachusetts law, on April 28, 1997, Beal Bank filed the instant action against Pigeon Hill Trust, Pittorino, and Amelia.
On June 6, 1997, Beal Bank moved for summary judgment. After a hearing, the court granted summary judgment with respect to Amelia's defense of estoppel, ordered a jury trial with respect to Amelia's defense of mutual mistake, and ordered a bench trial with respect to the remainder of the fraudulent conveyance claim. The jury rejected Amelia's mutual mistake defense, and, after the bench trial, the district court ordered the conveyances set aside as fraudulent.
On appeal, Amelia essentially contends that the district court (1) erred in awarding Beal Bank summary judgment on his estoppel defense; (2) made a number of errors in its application of Massachusetts's fraudulent conveyance statute; and (3) delivered an erroneous jury instruction. We consider each argument in turn.
Amelia alleges that the district court, during a hearing on Beal Bank's summary judgment motion, improperly "str[uck] various standard contract defenses." Yet, the only defense discussed in Amelia's brief is the defense of estoppel. Therefore, we consider only whether the district court erred in striking this defense. All other arguments have been waived. See King v. Town of Hanover, 116 F.3d 965, 970 (1st Cir.1997) ().
A district court may dispose of a particular claim or defense by summary judgment when one of the parties is entitled to judgment as a matter of law on that claim or defense. See, e.g., FDIC v. LeBlanc, 85 F.3d 815, 820-21 (1st Cir.1996). We review the district court's ruling de novo, see Terry v. Bayer Corp., 145 F.3d 28, 34 (1st Cir.1998), drawing all inferences in the light most favorable to Amelia, see LeBlanc, 85 F.3d at 817.
The basis for Amelia's argument that Beal Bank should be estopped from enforcing the guaranty on the Pittorino loans seems to be that: (1) the FDIC (Beal Bank's predecessor in interest) had stated that it would not enforce the guaranty against Pigeon Hill Trust; 4 (2) based on this statement, Amelia expended legal fees litigating an earlier state court action against Pittorino to obtain an equity interest in the Pigeon Hill Trust property; and (3) Amelia therefore suffered a detriment as a result of the FDIC's representations. 5 Cf. Clickner v. City of Lowell, 422 Mass. 539, 544, 663 N.E.2d 852 (1996) ().
Because the FDIC's alleged statement was not committed to writing, it cannot form the basis for an estoppel defense. See D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942); 12 U.S.C. § 1823(e). The D'Oench, Duhme doctrine prevents a party from asserting an oral agreement as the basis for either a claim or defense against the FDIC, see LeBlanc, 85 F.3d at 821, or against any of its assignees, see NCNB Texas Nat. Bank v. Johnson, 11 F.3d 1260, 1268 (5th Cir.1994); Community Bank of the Ozarks v. FDIC, 984 F.2d 254, 257 (8th Cir.1993); UMLIC-Nine Corp. v. Lipan Springs Dev. Corp., 168 F.3d 1173, 1179 (10th Cir.1999). Similarly, section 1823(e) "bars anyone from asserting against the FDIC any 'agreement' that is not in writing and is not properly recorded in the records of the bank." LeBlanc, 85 F.3d at 821.
During the hearing, the court asked counsel whether Amelia had any document memorializing the alleged agreement by the FDIC. Amelia introduced an affidavit that had been executed by an attorney for the FDIC, which stated that there existed an internal memorandum from the FDIC legal department to the credit file indicating that the legal department had determined the guaranty to be void because of a mutual mistake. Neither the affidavit nor the memorandum, however, constitutes an agreement that the FDIC would not enforce the guaranty against Pigeon Hill Trust. 6 Nor do they satisfy the other requirements of section 1823(e). See 12 U.S.C. § 1823(e). The district court thus correctly entered summary judgment on Amelia's estoppel defense.
Amelia also contends that the court, during the bench trial, made two errors in its application of the Massachusetts fraudulent conveyance statute. Amelia's first argument, that the court erred by applying the Uniform Fraudulent Conveyance Act ("UFCA"), see Mass. Gen. Laws ch. 109A (West 1990) (repealed), rather than the Uniform Fraudulent Transfer Act ("UFTA"), see Mass. Gen. Laws ch. 109A (effective Oct. 8, 1996), has no merit. The transfers occurred on May 10, 1996. The case therefore is governed by the UFCA, which was in effect at that time. See First Federal Savings & Loan Ass'n of Galion, OH v. Napoleon, 428 Mass. 371, 373, 701 N.E.2d 350 (1998) (). 7
Amelia's second argument, that the district court erred in finding that the May 10 conveyances were made with an actual intent to defraud Beal Bank, also fails. A finding of fraudulent intent is a finding of fact, which we will not disturb absent clear error. See Max Sugarman Funeral Home, Inc. v. ADB Investors, 926 F.2d 1248, 1255 (1st Cir.1991). We find no clear error here.
Under the UFCA, a "conveyance made ... with actual intent ... to hinder, delay or defraud either present or future creditors, is fraudulent." Mass. Gen. Laws ch. 109A, § 7. It is the rare case in which a transferor admits that he intended to make an impermissible transfer. Thus, courts often infer fraudulent intent by considering certain "badges of fraud," the most common of which are
(1) actual or threatened litigation against the debtor; (2) a purported transfer of all or substantially all of the debtor's property; (3) insolvency or other unmanageable indebtedness on the part of the debtor; (4) a special relationship between the debtor and the transferee; and (5) retention by the debtor of the property involved in the putative transfer.
Palmer v. Murphy, 42 Mass.App.Ct. 334, 345-46, 677 N.E.2d 247 (1997) (citing FDIC v. Anchor Properties, 13 F.3d 27, 32 (1st Cir.1994) ( the UFCA)). "The presence of a single badge of fraud may spur mere suspicion, the confluence of several can constitute conclusive evidence of an actual intent to defraud." Max Sugarman Funeral Home, Inc., 926 F.2d at 1254-55; accord Anchor Properties, 13 F.3d at 32.
The May 10 conveyances show each of these common badges of fraud. They occurred after a jury had rendered a $7.8 million verdict against Pittorino and while the claims against Amelia and Pittorino as trustees were still pending. Thus, the trustees faced actual litigation in which their co-defendant had already been held liable. Next, it is undisputed that Pittorino and Amelia transferred almost all of the trust property. The conveyances therefore constituted a "transfer of all or substantially all of [debtor Pigeon Hill Trust's] property." Third, the transfers left Pigeon Hill Trust with little-to-no assets, yet potentially liable for the outstanding guaranty on the unpaid Pittorino loans. This...
To continue reading
Request your trial
-
Patterson v. Barney
...by summary judgment when one of the parties is entitled to judgment as a matter of law on that claim or defense." Beal Bank, SSB v. Pittorino, 177 F.3d 65, 68 (1st Cir. 1999). Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the ......
-
McIntosh v. Geithner
...by summary judgment when one of the parties is entitled to judgment as a matter of law on that claim or defense." Beal Bank, SSB v. Pittorino, 177 F.3d 65, 68 (1st Cir. 1999). Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the ......
-
Armstrong v. Wright-Pearson
...by summary judgment when one of the parties is entitled to judgment as a matter of law on that claim or defense." Beal Bank, SSB v. Pittorino, 177 F.3d 65, 68 (1st Cir. 1999). Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the ......
-
Esparza v. Burlington Ins. Co.
...by summary judgment when one of the parties is entitled to judgment as a matter of law on that claim or defense." Beal Bank, SSB v. Pittorino, 177 F.3d 65, 68 (1st Cir. 1999). Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the ......