Cullen Enterprises, Inc. v. Massachusetts Property Ins. Underwriting Ass'n

• Decision Date: 13 May 1987
• Parties: CULLEN ENTERPRISES, INC. 1 et al. 2 v. MASSACHUSETTS PROPERTY INSURANCE UNDERWRITING ASSOCIATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 717

507 N.E.2d 717

399 Mass. 886

CULLEN ENTERPRISES, INC. ¹ et al. ² v. MASSACHUSETTS PROPERTY INSURANCE UNDERWRITING ASSOCIATION.

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Jan. 6, 1987.

Decided May 13, 1987.

Paul M. Lane, Boston, for Vincent Losinno.

Mark F. Sullivan, Dorchester, for James B. Cullen.

Francis M. Lynch (Frank T. Barber, III, Boston, with him), for defendant.

Before HENNESSEY, C.J., and WILKINS, LIACOS, ABRAMS and NOLAN, JJ.

ABRAMS, Justice.

This case involves claims of the plaintiffs--Vincent Losinno, trustee in bankruptcy of Cullen Enterprises, Inc., and James B. Cullen--against the defendant, Massachusetts Property Insurance Underwriting Association ("Fair Plan"), ³ for proceeds under a fire insurance policy issued in compliance with G.L. c. 175, § 99, by the Fair Plan to Cullen Enterprises.

The basic facts are as follows. ⁴ In May, 1973, the plaintiff James Cullen sold to William Saccone and Barbara Saccone all the shares of stock in his restaurant business, incorporated under the name Cullen Enterprises, Inc. William Saccone agreed to continue making payments to the Ipswich Savings Bank on the first mortgage. Saccone also gave Cullen a partial down payment and a promissory note secured by a mortgage in the amount of $181,000. Saccone became delinquent on his payments to Cullen, and business declined at the restaurant. In March, 1975, Saccone made his last payment to Cullen.

In the spring of 1975, Saccone sought protection from his creditors by filing a petition under c. 11 of the Bankruptcy Code of 1898 ⁵ in the United States Bankruptcy Court. The bankruptcy judge appointed the plaintiff Losinno receiver of Cullen Enterprises, Inc., in May, 1975. In addition, Saccone applied for and received from the Fair Plan a fire insurance policy in the amount of $200,000 covering the building and $50,000 covering the contents for a term of one year beginning on July 25, 1975. The Ipswich Savings Bank was named as first mortgagee on the insurance policy, and Cullen was named as second mortgagee. Losinno was listed after the two mortgagees in the mortgage interest section of the policy.

On September 29, 1975, ⁶ a fire totally destroyed the restaurant. The fire was of suspicious origin. There was evidence that Saccone had set it. In October, 1975, the Fair Plan paid Ipswich Savings Bank, the first mortgagee, the amount due on its mortgage in return for an assignment of the note and mortgage. The Fair Plan refused to pay either Cullen or Losinno, who became the trustee in bankruptcy.

Cullen and Losinno commenced this action against the Fair Plan in September, 1977. The Fair Plan in its answer raised the affirmative defense that the plaintiffs violated the fraud and concealment clause of the policy. The complaint was amended in March, 1978, by substituting Losinno as trustee in bankruptcy and by adding a count for relief under G.L. c. 93A. Cullen moved for partial summary judgment on his mortgage claim. The motion judge allowed the motion for summary judgment as to the Fair Plan's liability. Cullen was awarded the money left on the building portion of the policy after the payment to Ipswich Savings Bank and an additional $20,000, which had been paid to the Fair Plan after the trustee in bankruptcy sold the property of Cullen Enterprises. The Fair Plan filed a timely notice of appeal. The Fair Plan moved to vacate the partial summary judgment. The judge denied the motion to vacate. The Fair Plan again filed a timely notice of appeal.

In 1984, after a jury-waived trial on Cullen's c. 93A claim and on Losinno's claim, the judge concluded that there was no merit to the c. 93A claim against the Fair Plan. The judge also determined that Losinno was not entitled to recover under the insurance policy because he succeeded to Saccone's interest and Saccone was not entitled to recover any proceeds from the policy because he was involved in the arson. Cullen and Losinno appeal these rulings.

We affirm the allowance of the motion for partial summary judgment for Cullen, the denial of the Fair Plan's motion to vacate, and the denial of relief to Cullen under c. 93A. We reverse the trial judge's denial of Losinno's claim under the policy.

1. Cullen's motion for partial summary judgment. On April 20, 1982, the plaintiff Cullen filed a motion for summary judgment. The judge considered the pleadings and the affidavits of the following individuals with attached copies of correspondence: Gardner Stratton, the independent insurance adjuster retained by the Fair Plan; Frank Barber, III, the Fair Plan's attorney; Richard L. Levine, Cullen's attorney from 1970 to 1979; and Cullen. ⁷ Based on this information, the judge allowed Cullen's motion for summary judgment on the issue of liability. ⁸ On appeal, the Fair Plan argues that this ruling was erroneous. We disagree.

If the pleadings and affidavits before the judge ⁹ "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law," summary judgment is appropriate. Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). Once a motion for summary judgment is made and supported by affidavits, the "adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Mass.R.Civ.P. 56(e). "Conclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient to avoid summary judgment." Madsen v. Erwin, 395 Mass. 715, 721, 481 N.E.2d 1160 (1985), quoting Olympic Junior, Inc. v. David Crystal, Inc., 463 F.2d 1141, 1146 (3d Cir.1972). See McDonnell v. Flaharty, 636 F.2d 184, 187 (7th Cir.1980); Liberty Leasing Co. v. Hillsum Sales Corp., 380 F.2d 1013, 1014-1015 (5th Cir.1967). If the opposing party fails properly to present specific facts establishing a genuine, triable issue, summary judgment should be granted. See Community Nat'l Bank v. Dawes, 369 Mass. 550, 554, 340 N.E.2d 877 (1976).

Those issues material to Cullen's claim include (1) whether he has a valid mortgage interest and (2) whether he was responsible in any way for the fire that destroyed the building. If he has a valid interest and if he were not involved with the suspicious fire, he is entitled to judgment. See G.L. c. 175, §§ 97 and 99 (1984 ed.). There were no facts in the defendant's affidavits at the time of the motion for partial summary judgment indicating that Cullen was involved in the fire. ¹⁰ Thus, the only facts material to the partial summary judgment concerned whether Cullen's claimed mortgage interest was valid and whether the Fair Plan received adequate notice of Cullen's status as mortgagee.

On this issue, we look to the documentary evidence accompanying the affidavits submitted for the judge's consideration. On June 18, 1976, Stratton, the Fair Plan's insurance adjuster, wrote a letter to Mr. Levine, Cullen's attorney, requesting information concerning Cullen's mortgage interest. ¹¹ On February 2, 1977, Mr. Levine sent a letter back to Stratton, noting that Mr. Levine had no record of his having responded to the June 18, 1976, letter and asking that Stratton let him know if any response still was necessary. On both March 11 and April 11, 1977, Stratton again requested the information. On April 12, 1977, Mr. Levine responded, enclosing a copy of the promissory note, the mortgage, and a security agreement as to personalty.

On April 21, 1977, Stratton in a letter acknowledged receipt of Mr. Levine's April 12 letter. He requested "a photostatic copy of Mr. Cullen's records showing the dates and amounts of all payments received by him under the promissory note." He added that, "[w]hen this information has been received, this matter will be referred to counsel for [the Fair Plan]." On May 27, 1977, Mr. Levine sent copies of cancelled checks written by Saccone to the Cullen account at the Ipswich Savings Bank. ¹² Finally, on October 6, 1977, Mr. Levine sent Stratton a letter with computations as to the amount of money owed Cullen on the mortgage.

This documentary history tended to establish that Cullen supplied the insurance adjuster with all the information requested to substantiate his interest: the adjuster had the promissory note, the mortgage, the cancelled checks, and a statement of the amount owed Cullen on the mortgage. The burden thus shifted to the Fair Plan, as the opposing party on the motion for partial summary judgment, to provide some record support for its position that, in fact, Cullen did not provide information sufficient to substantiate his claim. See Brown v. Trans World Airlines, Inc., 746 F.2d 1354, 1358-1359 (8th Cir.1984); 10A C.A. Wright, A.R. Miller, & M.K. Kane, § 2727 at 143-145 (1983). The affidavits of Stratton and the Fair Plan's counsel simply contained bare assertions that they had not received the necessary information. ¹³ The Fair Plan did not file an affidavit establishing what further information it wanted and could not obtain beyond that already provided by the plaintiff. The Fair Plan's general denials do not contravene the documents before the judge. The Fair Plan made no claim under Mass.R.Civ.P. 56(f) that it was unable to present by affidavit facts essential to justify its opposition to the motion. It did not "show [any] circumstances which hamstring [it] in presenting that proof by affidavit in opposition to the motion." Kaplan, Amendments of the Federal Rules of Civil Procedure, 1961-1963 (ii), 77 Harv.L.Rev. 801, 826 (1964).

The documentary evidence before the motion judge, in sum, does not support the Fair Plan's contentions. Based on the evidence before him, the judge could conclude that the material facts which were not disputed showed that Cullen provided the documentation requested by the Fair Plan. We affirm the allowance of the motion for partial...