Foisie v. Worcester Polytechnic Inst.

• Decision Date: 24 July 2020
• Docket Number: No. 19-2090,19-2090
• Citation: 967 F.3d 27
• Parties: Janet H. FOISIE, Plaintiff, Appellant, v. WORCESTER POLYTECHNIC INSTITUTE, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

967 F.3d 27

Janet H. FOISIE, Plaintiff, Appellant,

v.WORCESTER POLYTECHNIC INSTITUTE, Defendant, Appellee.

No. 19-2090

United States Court of Appeals, First Circuit.

July 24, 2020

Campbell D. Barrett, with whom Adam S. Mocciolo and Pullman & Comley, LLC were on brief, for appellant.

Jennifer L. Chunias, with whom Roberto M. Braceras and Goodwin Procter LLP were on brief, for appellee.

Before Lynch, Selya, and Barron, Circuit Judges.

SELYA, Circuit Judge.

Over two centuries ago, Sir Walter Scott famously wrote about "what a tangled web we weave ... when first we practise to deceive." W. Scott, Marmion, canto VI, st. 17 (1808). The factual scenario that undergirds this appeal — a scenario in which a husband, embroiled in matrimonial proceedings, allegedly concealed millions of dollars in assets in order to shortchange his wife in the divorce settlement — is a poster child for Scott's discerned wisdom.

The litigation out of which the appeal arises takes the form of a suit by the allegedly defrauded ex-wife, plaintiff-appellant Janet H. Foisie, against an eleemosynary institution, defendant-appellee Worcester Polytechnic Institute (WPI), which was a beneficiary of the ex-husband's largesse. The suit seeks to recoup assets purportedly gifted for less than adequate consideration by the ex-husband, now deceased, to WPI. The district court dismissed the plaintiff's complaint for what the court deemed an absence of statutory standing. See Foisie v. Worcester Polytechnic Inst., 408 F. Supp. 3d 7, 17 (D. Mass. 2019). After careful consideration, we vacate the judgment and remand for further proceedings.

I. BACKGROUND

Because this appeal flows from the district court's order granting a motion to dismiss, we draw the relevant facts from the complaint, accepting all well-pleaded factual allegations as true. See SEC v. Tambone, 597 F.3d 436, 438, 441 (1st Cir. 2010) (en banc).

In September of 2010, Janet and Robert Foisie decided to part ways after approximately fifty years of marriage. To start unraveling the marital knot, the couple engaged a private mediator in Connecticut. The couple agreed to make complete and accurate disclosures of their assets. On two occasions during mediation, Robert listed his assets and represented that he had no offshore accounts or other undisclosed assets.

The mediation proved fruitful: Janet and Robert eventually agreed to a mutually acceptable split of assets and entered into a divorce settlement agreement (the Agreement). Under the terms of the Agreement, the couple assented to a division of assets that left each with roughly $20,000,000 in securities and some real estate. Robert also retained ownership of several corporations. The Agreement required the parties to certify that each of them had "fully disclosed all of their assets."

In January of 2011, Janet initiated a marital dissolution action in a Connecticut state court. Later that year, Janet and Robert jointly submitted the Agreement to the state court and moved for a stipulated judgment of dissolution (pursuant to the terms of the Agreement). Shortly thereafter, the court entered the stipulated judgment.

In connection with the dissolution proceedings, Janet and Robert exchanged sworn financial statements purporting to disclose all of their respective assets. Robert also testified before the state court, affirming the truthfulness of his earlier disclosures and vouchsafing that he did not intend to collect on a $700,000 promissory note executed by the couple's son — an asset that Robert had previously disclosed. In accepting the terms of the Agreement and consenting to the stipulated judgment, Janet relied on Robert's representations about his assets.

Looking back, Janet now alleges that Robert deliberately deceived her about the scope of his assets throughout the negotiations leading to the divorce. Most prominently, she says that Robert failed to disclose the existence of a Swiss trust (the Vaduz Trust), valued at approximately $4,500,000 at the time of the divorce. This allegation is not plucked out of thin air: in November of 2016, Robert acknowledged (in a discovery response related to Janet's effort to reopen the divorce case) that he had failed to reveal the existence of the Vaduz Trust during the divorce proceedings.

In addition, Robert is alleged to have concealed the existence of twelve promissory notes, collectively valued at more than $10,000,000. All of these notes were executed either by the couple's son or by corporations owned at least partially by him, and all were payable to Robert. None of these notes corresponds to the $700,000 promissory note that Robert made known during the divorce proceedings. In December of 2015, Robert accepted payment in the amount of $3,000,000 from his son against the promissory notes. He did not disclose this payment to Janet.

This flim-flam set the stage for the allegedly fraudulent transfers that lie at the heart of this litigation. After the divorce, Robert transferred the Vaduz Trust and the $3,000,000 he had surreptitiously collected from his son to WPI (his alma mater) as charitable gifts. In discovery connected with Janet's effort to reopen the divorce case, Robert appears to have acknowledged transferring the Vaduz Trust to WPI in March of 2016, ostensibly in partial satisfaction of an oral pledge that he made in 2009 to donate between $40,000,000 and $60,000,000 to the school. Janet further alleges that, in December of 2016, "Robert transferred yet more money to WPI and/or to the government of Antigua and Barbuda" to facilitate "unlimited" scholarships for prospective students from that country. In all, Janet says, Robert gave at least $39,000,000 to WPI following the divorce.

Robert died in June of 2018. Janet alleges, though, that through his fraudulent concealment of assets, Robert hoodwinked her into entering a disadvantageous divorce settlement based on a woefully inaccurate picture of his assets; that from and after the time of the divorce, she has had a claim on all of the assets Robert concealed during the divorce proceedings (inasmuch as those assets were part of the marital estate); that Robert's estate is liable to her for, among other things, fraud and breach of contract; that Robert's various transfers to WPI were made for either no consideration or for less than equivalent value to thwart her legitimate claims; and that those transfers left Robert insolvent.

Robert's deceit sparked a rash of litigation.¹ To begin, Janet moved in April of 2015 — before Robert's transfers of the Vaduz Trust and funds collected on the promissory notes — to reopen the financial aspects of the divorce case. When discovery revealed that Robert had failed to disclose the Vaduz Trust and had subsequently transferred it to WPI, she brought a parallel civil action in a Connecticut state court in January of 2017 (after some but not necessarily all of Robert's transfers to WPI) against Robert and WPI for, among other things, fraud, fraudulent transfer, and breach of contract.

After WPI moved to dismiss the fraudulent transfer action for want of in personam jurisdiction, Janet withdrew her claims against WPI without prejudice and sued WPI in the United States District Court for the District of Massachusetts. Seeking to avoid Robert's allegedly fraudulent transfers to WPI and to recoup the assets allegedly concealed from her during the divorce proceedings, Janet asserted claims of actual and constructive fraudulent transfers under both the common law and Connecticut's version of the Uniform Fraudulent Transfer Act (UFTA), see Conn. Gen. Stat. §§ 52-552e to -552f. Following some procedural skirmishing that resulted, among other things, in the filing of an amended complaint,² WPI moved to dismiss. It contended (as relevant here) that Massachusetts law governed Janet's claims; that she did not qualify as a "creditor" capable of prosecuting UFTA claims; and that her common law claims were preempted by the Massachusetts version of the UFTA. Janet opposed the motion but, after briefing and oral argument, the district court dismissed the complaint. See Foisie, 408 F. Supp. 3d at 17. This timely appeal ensued.

II. ANALYSIS

The plaintiff attacks the district court's dismissal of her complaint primarily on two fronts. First, she objects to the court's threshold determination that Massachusetts law governs her claims. Second, she assigns error to the court's determination that she does not qualify as a "creditor" for purposes of the UFTA. WPI defends the district court's rescript on both of these points. In addition, it asserts an alternative basis for dismissal: that the plaintiff failed to plead her claims with sufficient particularity. After an examination of Article III standing and ripeness, we grapple with these issues sequentially.

A. Constitutional Standing & Ripeness.

During oral argument in this court, it was suggested for the first time that the existence of a Connecticut divorce judgment, as yet unmodified, might undermine the plaintiff's Article III standing and render her claims unripe. Because this suggestion implicates our subject matter jurisdiction, ordinary waiver principles do not apply. See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 101 (1st Cir. 2014). We must, therefore, confront this suggestion head-on.

The " ‘irreducible constitutional minimum’ of standing" comprises three elements: a plaintiff "must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). To establish an injury in fact, a plaintiff must demonstrate that "she suffered ‘an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.’ "...