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Wilmington Savings Fund Society v. Collart

United States District Court, D. Massachusetts

March 29, 2019



          Richard G. Stearns, United States District Judge.

         Wilmington Savings Fund Society, FSB (Wilmington), brought this lawsuit against Nina Collart (Nina) and Thomas Mann, Jr. (collectively defendants).[1] At issue is the validity of a mortgage executed by Lucien Collart, Jr. (Lucien) on the Collart family property in Harwichport, Massachusetts. The Amended Complaint alleges fraudulent transfer (Count IV) and seeks a declaratory judgment (Count I), an equitable lien (Count II), and a constructive trust (Count III). Both parties have moved for summary judgment. For reasons that will be explained, the court will allow defendants' motion on Counts III and IV, enter a declaratory judgment invalidating the Mortgage, and grant Wilmington an equitable lien.


         The following facts are not disputed by the parties. On March 26, 1999, Anne Collart (Anne) and Lucien, together with their daughter Nina, acquired a real property interest in 679 Route 28, Harwichport, Massachusetts (the Property), as joint tenants with right of survivorship. On May 18, 1999, the Collarts executed three nearly identical Declarations of Trust establishing the Anne Trust, the Nina Trust, and the Lucien Trust, in which each family member was the sole beneficiary of the Trust bearing his or her name. Anne was the initial Trustee of the Lucien and Nina Trusts. Lucien was the initial Trustee of the Anne Trust. That same day, the Collarts granted each Trust an undivided, one-third interest in the Property and an adjacent lot (681 Route 28, Harwichport, Massachusetts) as tenants in common.[2]

         Anne died on April 18, 2002.[3] Anne's will bequeathed Lucien certain personal property and distributed the remainder of her estate into two trusts: the Tax Shelter Trust Fund and the Marital Trust Fund (the Estate Trusts). The terms of the Estate Trusts entitled Lucien to the net income of the Trusts, but permitted him to access the principal only if he was otherwise unable to maintain his standard of living. Upon Lucien's death, Nina was to receive the remaining corpus of the Estate Trusts. Despite the explicit instructions of Anne's will, Lucien did not transfer any of Anne's estate to the Estate Trusts, nor did he appoint a successor Trustee for the Lucien Trust. Nina, however, appointed Mann as the successor Trustee of the Nina Trust on March 8, 2006, and recorded the appointment on September 17, 2007.

         Several years after Anne's death, Lucien - at the behest of his friend, Brenda Tri - undertook the purchase of an additional property located at 299 Main Street in South Dennis, Massachusetts (the Bass River Property) for $2.3 million.[4] On April 17, 2007, Lucien closed on the property and paid the sellers, Edward and Debbie Crowell, a deposit of $230, 000.[5] To satisfy the remaining balance, Lucien liquidated assets from Anne's estate and her Individual Retirement Account (IRA), as well as his own portfolio and IRA. Still short of funds, Lucien executed a mortgage (the Mortgage) against the Property with Bank of America, N.A. (BOA) on June 13, 2007, to secure a $500, 000 home equity line of credit (HELOC).[6] The Mortgage was recorded with the Registry of Deeds on August 7, 2007 and identifies the Grantor as “LUCIEN R. COLLART JR., AN UNMARRIED PERSON.” Defs.' Ex. I (Dkt # 40-9) at 2. Lucien subsequently completed his purchase of the Bass River Property using the full HELOC.

         Expressing concern for her father's mental health (and Tri's influence on his financial affairs), Nina petitioned the Probate Court to appoint a conservator for Lucien on July 29, 2008.[7] The Probate Court approved the petition and appointed John Conathan II as Lucien's guardian, responsible for managing all of Lucien's property, finances, assets, and obligations. Between July 30, 2008, and July 30, 2010, Conathan made regular payments on the HELOC account, totaling $23, 358.10. On counsel's advice (that the Mortgage was invalid), Conathan stopped making payments on the HELOC.

         During this time, Conathan negotiated a settlement of the Bass River Property litigation, which included a sale of the property for $1.75 million. The settlement also required the Crowells to pay Lucien $250, 000. To approve the sale, Conathan sought the appointment of a Guardian ad Litem in May of 2009. The Probate Court's appointee, Carol Kenny, determined that selling the Bass River Property was in Lucien's best interest. On November 17, 2009, the Probate Court approved the sale after receiving Kenny's report.[8] Conathan used the proceeds of the sale to fund a securities account on behalf of Lucien, Anne's estate, and Nina. Despite Kenny's recommendation, Conathan did not use any of the proceeds to satisfy the balance owed on the HELOC.

         Lucien passed away on August 28, 2013. On June 15, 2015, the Probate Court entered an Order of Final Settlement granting Nina the balance of Lucien's estate - approximately one million dollars. Nina subsequently recorded her appointments as the successor Trustee of the Anne Trust and the Lucien Trust. BOA assigned the Mortgage to Wilmington on September 16, 2015.[9] In a letter dated November 2, 2016, Nina, acting through counsel, requested that Wilmington discharge the Mortgage. On June 17, 2017, acting in her capacity as Trustee of the Anne and Lucien Trusts, Nina conveyed the Property to herself in her individual capacity.[10]

         On November 9, 2017, Wilmington initiated this lawsuit. Both parties moved for summary judgment on January 4, 2019.[11] The court heard argument on February 27, 2019.


         Summary judgment is appropriate when the record, viewed in the light most favorable to the nonmoving party, reveals “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248 (1986) (emphases in original). This standard does not change on cross-motions - the court views each motion separately and draws all reasonable inferences in favor of the non-moving party. Pac. Indem. Co. v. Deming, 828 F.3d 19, 23 (1st Cir. 2016).

         The Validity of the Mortgage

         In Count I, Wilmington seeks a declaratory judgment acknowledging the Mortgage as a valid encumbrance and first priority lien on the Property. Because the validity of the Mortgage turns on the facts as they existed in June of 2007 and is central to a resolution of the dispute between the parties over the $500, 000 HELOC, the court is satisfied that Count I presents an actual controversy ripe for judicial resolution. See Verizon New Eng., Inc. v. Int'l Bhd. of Elec. Workers, Local No. 2322, 651 F.3d 176, 188 (1st Cir. 2011) (reciting the “fitness” and “hardship” standards for declaratory judgment).

         The Mortgage was Executed in Lucien's Individual Capacity

         Defendants maintain, and the court agrees, that Lucien had no authority to execute the Mortgage in his individual capacity.[12] A trustee may only bind the trust estate if he is acting in his capacity as trustee. Rogaris v. Albert, 431 Mass. 833, 836 (2000), citing Restatement (Second) of Trusts § 271 cmt. b (Am. Law Inst. 1957). “[W]hatever authority the signer may have to bind another, if he does not sign [in that capacity], he binds himself, and no other person.” Id. (alterations in original), quoting Stackpole v. Arnold, 11 Mass. 27, 29 (1814). A trust cannot be bound by a conveyance that makes no reference to the trust or to a party's role as trustee. See Id. Where a grantor “has nothing to convey . . . [t]he purported conveyance is a nullity, notwithstanding the parties' intent.” Bongaards v. Millen, 440 Mass. 10, 15 (2003).

         Here, the Mortgage was made between “LUCIEN R COLLART JR., AN UMARRIED PERSON . . . and Bank of America, N.A.” Defs.' Ex. I (Dkt # 40-9) at 2. Lucien signed the Mortgage in his own name and did not indicate that he was signing in his capacity as the Trustee for any Trust.[13]Moreover, the Mortgage makes no reference to any of the nominee Trusts, nor does it otherwise indicate that Lucien was acting on behalf of their interests. The parties do not dispute that as of June 13, 2007, Lucien owned no part of the Property individually. Accordingly, when Lucien executed the Mortgage in his individual capacity, he had nothing to convey to BOA and the purported encumbrance was a nullity. See Bongaards, 440 Mass. at 15 (invalidating a conveyance because the trustee had no authority to convey the property in her individual capacity).

         Lucien's Authority to Mortgage the Property

         In response, Wilmington first argues that the Mortgage is nonetheless valid because Lucien “possessed complete authority over the Lucien Trust and the Anne Trust.” Pl.'s Opp'n (Dkt # 52) at 2. I disagree. “The interpretation of a written trust is a matter of law to be resolved by the court. The rules of construction of a contract apply similarly to trusts; where the language of a trust is clear, we look only to that plain language.” Ferri v. Powell-Ferri, 476 Mass. 651, 654 (2017) (citations omitted). In Massachusetts, nominee trusts are trusts created to hold title to real property in which the trustee has “only perfunctory duties.” Roberts v. Roberts, 419 Mass. 685, 687 (1995). The defining feature of a nominee trust ...

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