Feinman v. Lombardo

Decision Date27 October 1997
Docket NumberCivil Action No. 95-12065-RCL.
PartiesMichael B. FEINMAN, Chapter 7 Trustee, Plaintiff, v. Vivien LOMBARDO, Individually and as Trustee of 49 Edge Hill Realty Trust, Pio Lombardo, as Trustee of 49 Edge Hill Trust, Defendants.
CourtU.S. District Court — District of Massachusetts

COPYRIGHT MATERIAL OMITTED

Michael B. Feinman, Andover, MA, Pro se.

Jeffrey J. Cymrot, Law Offices of Michael B. Feinman, Andover, MA, for Plaintiff.

John D. Hanify, Charles, A. Dale, Karen A. Whitley, Hanify & King, P.C., Boston, MA, Richard R. Blumenthal, Silverman & Kudisch, P.C., Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (# 17)

COLLINGS, United States Magistrate Judge.

I. Introduction

A trustee in bankruptcy brings this action seeking to have an alleged property interest of the debtor in his marital residence declared to be part of the bankruptcy estate. According to the trustee, the debtor's interest in the property is held in either a resulting trust or a constructive trust.

The defendants have moved for summary judgment on the grounds that the trustee has failed to produce evidence to rebut the presumption that the debtor gifted his interest in the marital residence to his wife. In addition to faltering on its merits, the resulting trust claim is also purportedly time barred. Furthermore, the trustee's failure to bring a fraudulent conveyance action against the debtor, according to the defendants, precludes the Court from imposing a constructive trust.

With the parties' consent, this case has been referred and reassigned to the undersigned for all purposes, including trial and entry of judgment, pursuant to 28 U.S.C. § 636(c). Oral argument on the defendants' dispositive motion was heard on June 13, 1997, and now, with the record complete, the summary judgment motion is in a posture for decision.

I. Facts

A. Procedural History

On June 22, 1994, the defendant, Pio Lombardo (the "Debtor"), filed a voluntary Chapter 7 petition for relief, Chapter 7 Case No. 94-14365-WCH. (Defendants' Memorandum of Law in Support of Their Motion for Summary Judgment on the Adversary Complaint, # 18) On July 7, 1995, the Chapter 7 Trustee, Michael B. Feinman (the "Trustee"), commenced an adversary proceeding in Bankruptcy Court against the Debtor and his wife, defendant Vivien Lombardo, to determine the bankruptcy estate's interest in the defendants' residence located at 49 Edge Hill Road, Newton, Massachusetts. (# 18) In the complaint, the Trustee alleged that the bankruptcy estate holds an equitable interest in the Edge Hill property via a resulting trust or constructive trust. (Verified Complaint to Determine Estate's Interest in Property, # 1) Before answering the complaint, the defendants filed a motion to dismiss the adversary proceeding (# 5) and a memorandum opposing the Trustee's motion for authority to file a memorandum of lis pendens. (Defendants' Opposition to the Trustee's Motion for Authority to File Memorandum of Lis Pendens, # 7) The defendants' motion to dismiss was denied (# 5-1, August 7, 1995) while the Trustee's motion for authority to file a memorandum of lis pendens was granted. The defendants then filed an answer and a jury demand. (Defendant's sic Answer and Jury Demand, # 11)

Consequent to the defendants jury demand, the bankruptcy judge transferred the case to the United States District Court. (Bankruptcy Court Transmittal Sheet, # 13)1 The United States District Judge to whom the case was assigned granted the Trustee's motion to strike the defendants' jury demand but denied his motion to remand the adversary proceeding to the Bankruptcy Court.2 (Order of Lindsay, D.J., # 12-1) The defendants then filed the instant motion for summary judgment (# 17), which has been opposed by the Trustee. (Chapter 7 Trustee's Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment, # 22)

B. Historical Background

The defendants, Pio and Vivien Lombardo, are husband and wife. (Undisputed Material Facts # 18 ¶ 1; Statement of Undisputed Material Facts # 22 ¶ 1) According to the defendants' version of events, in 1980 Mr. Lombardo founded an environmental engineering and consulting firm. Five years later in 1985, Mrs. Lombardo insisted that the couple's home not be exposed to the potential liability associated with Mr. Lombardo's business. It is undisputed that thereafter on March 11, 1986, Mr. Lombardo transferred his interest in the couple's Greenwich Park property to the Greenwich Park Trust, of which he and Mrs. Lombardo were trustees and Mrs. Lombardo was the sole beneficiary. (Undisputed Material Facts # 18 ¶¶ 4, 5; Statement of Undisputed Material Facts # 22 ¶¶ 4, 5) Mr. Lombardo asserts that he agreed to support his family's financial needs, even though the family residence would remain the property of Mrs. Lombardo. (# 18 at 3-4)

On June 9, 1986, Mr. and Mrs. Lombardo individually executed a purchase and sale agreement for property located at 49 Edge Hill Road in Newton, Massachusetts, a house that had been found by Mrs. Lombardo who had then negotiated for its purchase. (# 18 at 4; # 22, Statement of Disputed Material Facts, ¶ 3) According to the agreement, a $40,000 deposit was paid to the sellers that day. (# 22, Exh. 1, Standard Form Purchase and Sale Agreement) The Lombardos subsequently submitted a residential loan application to the Boston Safe Deposit and Trust Company ("Boston Trust") on which Mr. and Mrs. Lombardo reported their monthly earnings as $17,575 and $1,650, respectively. (# 22, Statement of Disputed Material Facts, ¶ 4)

On November 18, 1986, Mr. and Mrs. Lombardo established the Edge Hill Road Realty Trust of which both are trustees, but only Mrs. Lombardo is a beneficiary. (# 18, Exh. 2B, Declaration of Trust Establishing 49 Edge Hill Road Realty Trust) That same day, Mr. and Mrs. Lombardo, individually, executed an adjustable rate note in favor of Boston Trust in the amount of $390,000. (# 22, Statement of Disputed Material Facts, ¶ 7) Boston Trust issued a check in this amount to the Lombardos; Mr. Lombardo paid the loan origination fees and attorney fees due to Boston Trust. (# 22, Statement of Disputed Material Facts, ¶¶ 6, 8) On November 18th the sellers conveyed the Edge Hill property to the defendants, as trustees for the Edge Hill Trust, for $780,000. As consideration for the conveyance, the Lombardos gave the sellers a $390,000 mortgage. This mortgage to the sellers was ultimately satisfied by the proceeds of the sale of the Greenwich Park property, i.e., three condominiums, by the Greenwich Park Trust during the period of late 1986 into early 1987. (# 18; # 22, Statement of Disputed Material Facts, ¶¶ 11, 12) The mortgage in favor of the Boston Trust is being paid in the usual course.

Since at least 1986, Mr. and Mrs. Lombardo have maintained separate bank accounts. Mr. Lombardo periodically transfers money from his bank account to that of Mrs. Lombardo; according to the defendants, the funds are intended to support Mrs. Lombardo and the couple's two children. From her own account, Mrs. Lombardo pays the mortgage and other carrying expenses on the Edge Hill property. (# 18 at 5)

In order to secure loans needed by Mr. Lombardo's business, the Edge Hill Trust gave two mortgages—one for $200,000 in 1987 and the other for $50,000 in 1988—to Raymond C. Green & Co., Inc. (# 18; # 22, Statement of Disputed Material Facts, ¶¶ 14, 16) The loans were repaid and the mortgages discharged. (# 18 at 5)

This recitation of facts is enough to establish the context for the defendants' summary judgment motion.

III. Summary Judgment Standard

When considering whether to grant summary judgment, the court must determine whether:

... the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is a genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c).

In making this assessment, the court must "accept all reasonable inferences favorable to the nonmovant." Int'l Ass'n of Machinists and Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 205 (1st Cir. 1996); see also Lawton v. State Mut. Life Assurance Co. of America, 101 F.3d 218, 222-23 (1st Cir.1996); Borschow Hospital and Medical Supplies v. Cesar Castillo, Inc., 96 F.3d 10, 12 (1st Cir.1996); Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 253 (1st Cir.1996); One Nat'l Bank v. Antonellis, 80 F.3d 606, 608 (1st Cir.1996).

A factual dispute which is neither "genuine" nor "material" will not survive a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In deciding whether a factual dispute is "genuine", the court must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id.; see also Serrano-Cruz v. DFI Puerto Rico, Inc., 109 F.3d 23, 25 (1st Cir.1996); Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.1996); Roche, 81 F.3d at 253. In weighing whether a factual dispute is "material", the court must examine the substantive law of the case, because "only disputes over the facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; see also Vinick v. Commissioner of Internal Revenue, 110 F.3d 168, 171 (1st Cir.1997); Sanchez, 101 F.3d at 227; Roche, 81 F.3d at 253. "Thus the substantive law defines which facts are material." Sanchez, 101 F.3d at 227 (citing Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2509-10).

Rule 56 does not permit the party opposed to the summary judgment motion to rest upon the mere allegations or denials in its own pleadings. See Int'l Ass'n of Machinists and Aerospace Workers, 103 F.3d at 205 (quoting Wynne v. Tufts Univ. School of...

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