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Riley v. Crapser

United States District Court, D. Massachusetts

July 28, 2014

LYNNE F. RILEY, Chapter 7 Trustee, Plaintiff,


GEORGE A. O'TOOLE, District Judge.

In March 2009 Steven Crapser filed a Chapter 7 bankruptcy petition. The Trustee, Lynne Riley, filed an adversary proceeding against the debtor and his wife, Francine Shogel. On motion of the defendants the reference to the bankruptcy court was withdrawn as to the adversary complaint. After amendment, the complaint consisted of one count seeking to establish resulting trust in property in Maine. Particularly, the Trustee asked the Court to find that Shogel held Crapser's interest in a beach house, which was owned in Shogel's name, in a resulting trust for Crapser and thus for the benefit of the creditors of his bankruptcy estate. The Court conducted a two day bench trial in which two witnesses, Crapser and Shogel, testified. After trial, the parties each submitted proposed findings of fact and conclusions of law. Having considered the evidence and arguments of the parties, the Court now finds and concludes as follows.

I. Findings of Fact

Crapser and Shogel were married on May 27, 1990. It was the second marriage for each; both had children from their previous marriages.

In December 1990 the couple purchased their first marital residence in Holliston, Massachusetts. The property was purchased in both their names, but not in equal shares. Instead, they allocated a 60% interest to Shogel and a 40% interest to Crapser. This division of ownership was intended to allay Shogel's worry about a possible future divorce, she having been traumatized by her prior one.

Throughout the marriage the couple commingled their funds and shared income and support for each other. They maintained a joint bank account, and both joint and individual expenditures were paid from the joint account.

Crapser was the primary earner. Shogel had worked full time as a travel agent until 1998, earning approximately $35, 000 per year. In 1999 and 2000, she worked part time, earning $6, 064 and $5, 324 in those years, respectively. From 2001 to 2009, she did not work and earned no income. Between 1990 and 2001, Shogel occasionally received funds from her father, which were deposited to the joint account. In October 2001, she received an inheritance from her father of approximately $200, 000, which was also deposited to the joint account.

Over the period of years from the date of their marriage, Crapser accumulated some assets, and by 1999 had a net worth of approximately $2, 200, 000, mostly held in retirement funds. But in May 1999, Crapser was laid off from his job at Nypro, Inc. He received a total of $171, 538 in wages and severance from Nypro in 1999, all of which was deposited to the joint account. Crapser then started his own business, IQ Consulting, originally a sole proprietorship but later incorporated. He personally guaranteed the debts of IQ Consulting. In calendar year 2000, Crapser earned wages from IQ Consulting in the amount of $135, 481.00.

In 2000 Shogel became interested in purchasing a house in Old Orchard Beach, Maine, because her daughter, who had just given birth, had a vacation home there. Shogel wanted to summer near her daughter and new grandchild. Shogel, who took the lead in the search, located a property for sale at 17 Puffin Street. Shogel signed a purchase and sale agreement for the house in March 2000, agreeing to purchase it for $165, 000.

Crapser handled the loan application process with Saco & Biddeford Savings Institution. He completed the loan application and signed as the "borrower" with Shogel signing as "co-borrower." On the loan application, in response to the question "Are you relying on Co-Borrower's Income or Assets?, " Crapser answered in the negative. The loan application indicated that the property would be held in Shogel's name only.

In order to fund the down payment, Crapser deposited $51, 450 to the joint account from one of his IRAs. Ultimately, both Crapser and Shogel signed a note to the lending bank, but Shogel alone executed the mortgage, consistently with the fact that the title to the property was held by her alone.

The property required some refurbishing. Shogel supervised the work done to the house and its furnishing, while Crapser wrote the checks. The couple enjoyed the property as a vacation home for ten years. Both Crapser and Shogel invited their mutual friends to the Maine Property. Shogel often stayed at the property while Crapser was traveling. Crapser rarely, if ever, made use of the property in the absence of Shogel.

Crapser oversaw the record-keeping and maintenance for the beach house. Crapser also handled the negotiation of three subsequent amendments to the mortgage loan that lowered the interest rate, and paid the fees associated with those amendments. Both signed the amendments. Crapser also managed the maintenance of insurance on the beach house.

In June 2002 Crapser and Shogel sold their primary residence in Holliston and purchased a condominium in Ashland, Massachusetts. Unlike their prior home and the beach house, they took title to the Ashland ...

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