In re Mullarkey

• Decision Date: 13 August 2009
• Docket Number: Adversary No. 08-03009.,Bankruptcy No. 07-30561-HJB.
• Citation: 410 B.R. 338
• Parties: In re Matthew J. MULLARKEY and Nicole M. Mullarkey, Debtors. Christine Greene, Plaintiff, v. Matthew J. Mullarkey and Nicole M. Mullarkey, Defendants.
• Court: U.S. Bankruptcy Court — District of Massachusetts

Page 338

410 B.R. 338

In re Matthew J. MULLARKEY and Nicole M. Mullarkey, Debtors Christine Greene, Plaintiff, v. Matthew J. Mullarkey and Nicole M. Mullarkey, Defendants.

Bankruptcy No. 07-30561-HJB.

Adversary No. 08-03009.

United States Bankruptcy Court, D. Massachusetts, Western Division.

August 13, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Andrew Sirulnik, Northampton, MA, Mark A. Papirio, Springfield, MA, for Plaintiff.

Justin H. Dion, Bacon Wilson, P.C., Springfield, MA, for Defendants.

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before the Court for determination is a Complaint filed by Christine Greene ("Christine" or the "Plaintiff") in which she seeks a determination that her claim against debtors Matthew J. Mullarkey and Nicole M. Mullarkey (individually "Matthew" or "Nicole"; or together, the "Mullarkeys" or the "Defendants") is nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), (a)(4) and (a)(6).¹

I. FACTS AND TRAVEL OF THE CASE

With a renewed respect and admiration for the work done by the Massachusetts Probate and Family Court, this Court makes its findings of fact and conclusions of law pursuant to Fed. R. Bankr.P. 7052, based upon the witnesses' testimony and the exhibits admitted into the record.

What we have here is an intra-family feud. Five witnesses testified at trial— Lenore Mullarkey, Susan LeBlanc ("Susan"), Christine, and the Mullarkeys. Lenore Mullarkey is mother to three children, Matthew, Christine and Susan, in addition to five others. Matthew is married to Nicole. Christine is married to Todd Greene ("Todd"). The immediate object of the friction between Lenore Mullarkey, Matthew, Nicole, Christine, Todd and Susan is a two-family residential property located at 11 Fowler Avenue in Westfield, Massachusetts (the "Fowler Property" or "11 Fowler"). And, in addition to their differences relating to ownership of that property, that friction has played out on or in the property's porch, attic, basement, garage, yard and in-ground pool.

Lenore Mullarkey acquired the Fowler Property in approximately 1973, incident to her marital dissolution. On August 13, 1992, she executed a quitclaim deed, granting title to the property to herself and children Edward J. Mullarkey, Jr., George J. Mullarkey, Matthew and Christine as joint tenants. In 1997, title to the property was transferred to Matthew, Christine and Susan, as joint tenants, subject to the outstanding mortgage on which Lenore Mullarkey remained solely obligated.

As of 1997, Susan inhabited the second floor of the Fowler Property. The first floor was employed as a rental unit for college students. Susan was responsible for collecting the rent and paying the mortgage, oversaw property repairs, and addressed tenant concerns. In September 1999, Susan moved out of the Fowler Property and Christine and her three children relocated to the first floor. This time, the second floor was rented to others. Christine assumed the responsibilities previously undertaken by Susan and, when tenant payments were untimely, Christine would make or advance the mortgage payments from her own funds.

Soon after moving to 11 Fowler, Christine identified the roof as in need of repair. Although initially declining to help, Matthew, then in California, agreed in 2003 to come to Massachusetts to make the necessary repairs himself, so long as Christine's boyfriend and then future husband, Todd, agreed to advance payment for the Mullarkeys' family travel expenses to Massachusetts and the cost of all roofing materials associated with the repairs. Christine estimates that Todd personally contributed approximately $8,000 to $10,000, inclusive of the Mullarkeys' travel expenses, toward the 11 Fowler roof repair. In July 2003, in order to secure repayment of the funds he had advanced, Todd had an attorney draft a mortgage on the Fowler Property in the amount of $10,000. However, the mortgage was never executed by the sibling property owners.²

Late in 2003, Matthew lost his job in California, sold his residence, and permanently moved his family to Massachusetts. For approximately six months throughout the winter and spring of 2004, the Mullarkeys rented an apartment from another of Matthew's siblings in Huntington, Massachusetts.

The "Agreement": In the spring of 2004, Christine and Matthew discussed acquiring Susan's interest in 11 Fowler. Christine testified that she, Matthew and Susan had several conversations regarding this proposal. Initially, Susan was not interested in giving up her interest in the property; but, pressured by her mother, she finally agreed to convey her interest to her co-owner siblings for the sum of $15,000, less than the amount to which she thought she was entitled. According to Susan, her mother intended 11 Fowler to be thereafter held in the names of both Christine and Matthew. In her own testimony, Lenore Mullarkey confirmed that intention.

Christine testified that she and Matthew then entered into an oral agreement for the purpose, she was told, to more easily finance the property. According to Christine, Matthew represented to her that financing terms would be more favorable if she transferred her interest in 11 Fowler to him; and then, after completion of the financing and after her marriage to Todd, she would be added back as an owner. Christine testified that she did not have any credit history or any experience with mortgage applications and, believing that the Mullarkeys were more financially sophisticated then she, relied on Matthew's representations.³ Christine testified that, at all relevant times, she believed that she was a one-half owner of 11 Fowler and responsible for half of the financing arrangement.

This oral agreement, according to both Christine and Susan, required that Susan be paid $10,000 from the refinancing and then Christine and Matthew would each pay Susan an additional $2,500—for a total of $15,000. Matthew, however, maintains that the agreement was always for him to have sole ownership of 11 Fowler. He testified that there was no arrangement to share ownership with Christine; that when he moved to Massachusetts with his family, he had significant proceeds from the sale of the California residence and, in April or May of 2004, told Christine and Susan that "the only way [he] would put that money into Fowler Ave. was if [he] was the sole owner, and so it was—had to be agreed by everyone that they would sign over their part of the house in order for [him] to do that." More specifically, he testified that "[i]n order for me to move in and refurbish the house ... they would both need to sign off of the deed." Matthew testified that Susan initially wanted $20,000 for her interest in the property but eventually agreed to accept $12,500 from him. And Christine agreed to take the sum of $7,250 in full payment of the moneys that Todd advanced on roofing materials and travel expenses associated with the 2003 roof repair. According to Matthew, Christine agreed to convey her interest in the Fowler Property for (1) $7,250, (2) fixed rent until she finished nursing school, and (3) the right to choose the floor in which her family would live.

Nicole's testimony echoed that of her husband. She testified that Matthew had told her, "before he would sink any of our money into the house he was going to buy out his sisters, and then we would go ahead and he was going to remodel it, and make sure that it was okay, that he put the money that we invested." She stated there were two or three discussions "to work everything out," but only Matthew, Christine and Susan were involved in the discussions.⁴ Her recollection of the events was that Susan had advanced sums for repairs at 11 Fowler totaling about $12,000 or $12,500 and Christine and Todd had advanced similar sums totaling $7,200.

Ultimately, Nicole contacted Countrywide Home Loans, Inc. ("Countrywide") for the purpose of securing financing in Matthew's name. Matthew testified that his wife was responsible for their family finances and that although she and Matthew usually made decisions together, Nicole usually "did the footwork."

The Transfer: On June 25, 2004, Matthew, Christine and Susan conveyed 11 Fowler to Matthew for the sum of $1.⁵ And on the same date, Matthew, in turn, granted a mortgage in the amount of $115,000 to Countrywide, whose agents had appraised the property for $180,000. Of the mortgage proceeds, $80,026.21 was used to pay off the existing mortgage to United Cooperative Bank held in Lenore Mullarkey's name; $5,695.77 paid the closing costs and other settlement charges; and $29,578.02 was available to the sellers. Of that surplus, Matthew received slightly less than $13,000, Christine received $7,250⁶ and Susan received $10,000.

Also at the time of the June 25, 2004 closing, Christine provided Susan with a signed promissory note, dated June 24, 2004, which read:

I Christine N Scanlon agree to pay Susan LeBlanc an amount of $2500 on or before June 24, 2007. An amount agreed upon by both parties involved.

Matthew also provided Susan with a signed promissory note dated June 24, 2004. His note read:

I Matthew J Mullarkey agree to pay Susan LeBlanc the total amount of $12,500. $10,000 of that shall be paid at the time of closing/refinancing 11 Fowler Avenue in Westfield, MA. The remainder of the funds a total of $2500 shall be paid to her as of/or before June 24, 2007. In turn Susan has agreed to relinquish her right of ownership to 11 Fowler Avenue in Westfield MA 01085.

Both promissory notes were prepared by Nicole. She testified that Matthew and Christine separately requested that she prepare notes on their respective behalf but denies that she understood at that time the details of the underlying transaction.

Soon after the closing, Matthew and Christine opened a joint checking account for the purpose of paying the mortgage, water bills, and other property expenses at 11 Fowler. Nicole testified that...