Efstathiou v. The Aspinquid, Inc.

• Decision Date: 23 September 2008
• Docket Number: Docket: Yor-06-632.,Docket: Yor-07-46.,Docket: Yor-07-240.
• Parties: Merrill A. EFSTATHIOU v. THE ASPINQUID, INC., et al. The Aspinquid, Inc. v. Merrill A. Efstathiou Merrill A. Efstathiou v. Dennis A. Efstathiou.
• Court: Maine Supreme Court

956 A.2d 110

2008 ME 145

Merrill A. EFSTATHIOU v. THE ASPINQUID, INC., et al.

The Aspinquid, Inc. v. Merrill A. Efstathiou

Merrill A. Efstathiou v. Dennis A. Efstathiou.

Docket: Yor-06-632.

Docket: Yor-07-46.

Docket: Yor-07-240.

Supreme Judicial Court of Maine.

Argued: February 14, 2008.

Decided: September 23, 2008.

Michael J. Donlan, Esq. (orally), Verrill Dana, LLP, Kennebunk, ME, for Merrill Andrews Efstathiou.

Ronald P. Lebel, Esq. (orally), Marc N. Frenette, Esq., Skelton, Taintor & Abbott,

Auburn, ME, for Dennis Andrews Efstathiou.

Russell B. Pierce, Jr., Esq. (orally), Norman, Hanson & DeTroy, LLC, Portland, ME, for The Aspinquid, Inc.

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, and GORMAN, JJ.

SAUFLEY, C.J.

[¶1] In this opinion, we consider appeals from three separate judgments in cases involving related parties: Merrill A. Efstathiou, Dennis A. Efstathiou, and Dennis Efstathiou's family business, The Aspinquid, Inc. All three appeals result from the dissolution of Dennis and Merrill's marriage and involve, among other things, disputes over the ownership and possession of real property in Ogunquit, known as Beachcrest.

[¶2] In the first matter, Merrill appeals, and Aspinquid and Dennis cross-appeal, from a summary judgment entered in the Superior Court (York County, Fritzsche, J.), in favor of Dennis and Aspinquid on Merrill's complaint to quiet title to Beachcrest. We affirm that judgment.

[¶3] Merrill filed the second appeal from the Superior Court's (York County, Fritzsche, J.) denial of her motion to dismiss Aspinquid's later and separate complaint, also related to Beachcrest, in which Aspinquid alleged Merrill's trespass to land, wrongful interference/private nuisance, and slander of title. Merrill also appeals from the court's approval of attachment and trustee process in the same proceeding. We conclude that Aspinquid was required to present the complaint as a compulsory counterclaim to Merrill's original quiet title action. Therefore, Aspinquid's later, independent filing of the complaint is barred. We vacate the denial of the motion to dismiss and remand for dismissal of all three counts, and we vacate the order of attachment.

[¶4] The third matter is Dennis's appeal and Merrill's cross-appeal from the judgment entered in Merrill and Dennis's divorce proceeding in the District Court (York, Westcott, A.R.J.). We correct a technical error in the child support provision of the judgment and otherwise affirm that judgment.

I. DISCUSSION

[¶5] After nearly twenty-four years of marriage and decades of working together in the family businesses, Merrill and Dennis Efstathiou moved toward divorce in the summer of 2004. Almost immediately, they became embroiled in a litigious conflict that included the attempted eviction of Merrill and the parties' then twelve-year-old daughter from the house that the parties had shared for close to twenty years, at least two civil suits regarding that home, and a protracted divorce proceeding.¹ We address the two actions regarding the Beachcrest property, after which we address the parties' divorce.

A. The Beachcrest Actions

1. History of Ownership and Litigation

[¶6] Merrill and Dennis were married on November 29, 1980. Six years later, in April 1986, they bought property in Ogunquit known as Beachcrest. The property, purchased for operation as a bed and breakfast and restaurant, almost immediately became a financial strain on Dennis and Merrill, failing to generate a positive cash flow in its first season. Merrill and Dennis transferred Beachcrest to Aspinquid, a corporation owned and operated by Dennis's family, on December 31, 1986, with Aspinquid assuming responsibility for the mortgages and Beachcrest-related debts. Thereafter, Aspinquid paid the debts on and held title to Beachcrest while Merrill and Dennis, who continued to live there, operated a restaurant and a bed and breakfast at Beachcrest. Eventually, Beachcrest ceased to operate as a restaurant or bed and breakfast and became the family home of Dennis, Merrill, and their three children. Merrill was aware that they had transferred title to the property throughout that time.

[¶7] In July 2004, while she and her daughter were still residing at Beachcrest, Merrill filed for divorce in the District Court. Shortly thereafter, Aspinquid, acting through Dennis's brother, served a notice to quit on Merrill and, in October 2004, commenced a forcible entry and detainer action in the District Court to compel her to move from Beachcrest. Initially, the forcible entry and detainer action was dismissed without prejudice for failure to comply with notice requirements, but Aspinquid served a proper notice to quit on December 16, 2004, and filed another complaint for forcible entry and detainer on January 27, 2005.

[¶8] In response, in April 2005, Merrill filed a quiet title action in the Superior Court against Aspinquid, Dennis, and Dennis's brother, John Andrews Efstathiou, asserting that she held a property interest in Beachcrest and that Aspinquid held title to Beachcrest only because of Dennis's fraudulent conduct.

[¶9] Months later, in December 2005, Aspinquid moved for leave to amend its answer to assert a counterclaim for trespass to land, wrongful interference/private nuisance, and slander of title, all related to the Beachcrest property. In January 2006, the court denied the late filed request. The following month, Aspinquid filed a separate action in the Superior Court raising the same claims for trespass, wrongful interference/private nuisance, and slander of title against Merrill. The court declined to dismiss that action, and allowed an attachment and trustee process against Merrill.

2. Merrill's Quiet Title Action

[¶10] We begin by addressing Merrill's quiet title complaint, in which she claimed that Dennis defrauded her of her interest in the Beachcrest because, in 1986, he said that the transfer was "just on paper" and they would eventually get the property back. Alleging that Dennis acted both "individually and in his capacity as President of the Aspinquid, Inc.," she claimed that he had abused her trust and "refused to discuss the family finances with [her]," causing her "substantial damage." Specifically, she alleged that Dennis had committed fraud and constructive fraud by inducing her to transfer Beachcrest to Aspinquid. Merrill sought to quiet title, to obtain a declaratory judgment that she and Dennis are the fee simple absolute owners of Beachcrest, and to receive punitive damages. In the alternative, she alleged theories of promissory estoppel and equitable estoppel. The court dismissed Merrill's promissory estoppel and equitable estoppel claims. We find no error in that ruling and do not discuss those claims further.

[¶11] The court eventually entered a summary judgment for Aspinquid and Dennis on all remaining claims in the quiet title action, concluding that the suit was barred by the statute of limitations and the doctrine of laches. The court declined to reach Aspinquid's additional argument that the statute of frauds barred Merrill's claims. Shortly after the court's decision, the parties settled the forcible entry and detainer action, with Merrill agreeing to move out of Beachcrest by the end of October 2006.

[¶12] Before us, Merrill argues that (1) neither the statute of limitations, the doctrine of laches, nor the statute of frauds bars her claims; (2) there is a genuine issue of material fact regarding her exercise of due diligence to discover her claims; and (3) she alleged and provided evidentiary support for each element of her fraud claim, including the required elements—pecuniary loss and false representation.

[¶13] We review the grant of a motion for summary judgment de novo. Lever v. Acadia Hosp. Corp., 2004 ME 35, ¶ 2, 845 A.2d 1178, 1179. We consider the evidence in the light most favorable to the party against whom summary judgment was entered to determine if a genuine issue of material fact exists. Id. "A genuine issue of material fact exists when there is sufficient evidence to require a fact-finder to choose between competing versions of the truth at trial." Id.

[¶14] Whether a claim is barred by the statute of limitations is a question of law. Francis v. Stinson, 2000 ME 173, ¶ 56, 760 A.2d 209, 220. Generally, a civil action must be commenced within six years after the cause of action accrues. 14 M.R.S. § 752 (2007).² Merrill failed to file her quiet title action within six years after the transfer, and that action is therefore barred.

[¶15] Merrill argues, however, that her action for fraud accrued later and that she brought that claim within six years after it accrued. Fraud occurs when a defendant

(1) makes a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or to refrain from acting in reliance upon it, and (5) the plaintiff justifiably relies upon the representation as true and acts upon it to his damage.

St. Francis De Sales Fed. Credit Union v. Sun Ins. Co. of N.Y., 2002 ME 127, ¶ 26, 818 A.2d 995, 1003 (quotation marks omitted). To state a claim of constructive fraud, a plaintiff must allege a transfer of property "to the grantee, who promises or agrees to hold the property for the benefit of the [plaintiff], ... and the [plaintiff] is induced to act through reliance on a relationship of trust which may be founded on moral, social, or personal, as well as legal duties." Baizley v. Baizley, 1999 ME 115, ¶ 7, 734 A.2d 1117, 1119 (quotation marks omitted).

[¶16] Considering the facts in the light most favorable to Merrill, her fraud and constructive fraud claims accrued on December 31, 1986, when Merrill transferred Beachcrest to Aspinquid in reliance on Dennis's statements that the transfer was "just on paper" and Beachcrest would be returned to them. All of the elements of her fraud claim...