Posts Tagged: statute of limitations

T&E Litigation Update – Cheney v. Flood; Johnson v. Kindred Healthcare; Rockingham County Nursing Home v. Harnois

Author:  Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

Cheney v. Flood

In the recent Rule 1:28 decision Cheney v. Flood, 2014 Mass. App. Unpub. LEXIS 154 (February 7, 2014), the Appeals Court reviewed the dismissal of a malpractice claim brought against an attorney on the grounds that the attorney should have known that the decedent – the attorney’s former client and plaintiff’s stepfather – wanted the plaintiff and her children to be his only beneficiaries.

Although the plaintiff did not properly appeal the dismissal of the malpractice claim, the Appeals Court noted that had she done so, the decision in Miller v. Mooney, 431 Mass. 57, 61 (2000), would have been dispositive of her claim.  In Miller, the Supreme Judicial Court held that the surviving relatives of a decedent could not bring claims against a lawyer based on allegedly erroneous statements the lawyer made to one of the relatives concerning the terms of the decedent’s will because they could not establish that they had an attorney-client relationship with the lawyer.  Miller, 431 Mass. at 61 (holding that the duty of care owed by an attorney arises only from an attorney-client relationship).

The complaint also asserted a claim for quantum meruit seeking payment from the decedent’s estate for services that the plaintiff and her family provided during the last years of his life.  However, the plaintiff could not establish any express agreement with the decedent for such payment and instead only offered evidence that she assumed she would be a beneficiary of the estate because she “always hoped that he would eventually have a little bit to pay [her] back.”

The Appeals Court distinguished the plaintiff’s case from situations in which a decedent had expressly agreed to make someone a beneficiary in exchange for the performance of services prior to the decedent’s death (e.g., a wealthy bachelor who promised to leave a plaintiff one-half of his estate in exchange for services).  In affirming the lower court’s dismissal of the plaintiff’s claim, the Court quoted Congregation Kadimah Toras-Moshe v. DeLeo, 405 Mass. 365, 366-367 (1989) for the proposition that “moral obligation is not legal obligation [and a] hope or expectation, even though well founded, is not equivalent to either legal detriment or reliance.”

Johnson v. Kindred Healthcare

In Johnson v. Kindred Healthcare, Inc., Case No. SJC-11335, 2014 Mass. LEXIS 7 (January 13, 2014), the Supreme Judicial Court answered the question of first impression in Massachusetts of whether a health care agent’s agreement with a health care facility to arbitrate disputes arising from the principal’s stay at the facility constitutes a “health care decision” binding on the principal pursuant to the health care proxy statute, G.L. c. 201D, § 5.

The brief background is that the administrators of the decedent’s estate brought a wrongful death action in Superior Court against a nursing home and related entities and individuals.  In response, the defendants sought to enforce the mandatory arbitration provision in the nursing home agreement.  The decedent’s health care agent (his wife) had signed the agreement on his behalf.

The estate argued that the health care agent’s entering into the agreement, and specifically the mandatory arbitration provision, was not binding because it was not a “health care decision” as that term is defined and used in the health care proxy statute.  The Court agreed, explaining that the Massachusetts Legislature intended to distinguish between a health care proxy, which limits an agent’s decision-making authority on behalf of an incapacitated person to health care decisions, and a durable power of attorney, guardianship or conservatorship, each of which authorizes much broader decision-making power on behalf of an incompetent person.  “Unlike a health care proxy, a durable power of attorney can authorize an agent to make decisions affecting the principal’s business, estate, finances, and legal relationships in a variety of contexts unrelated to health care.”

In support of this conclusion, which comports with the majority view in other jurisdictions that have considered similar issues, the Court pointed to the history of the health care proxy statute, where the Legislature considered but rejected an alternative bill that would have combined the roles of health care agent and attorney-in-fact, and noted that the statutory scheme ultimately enacted by the Legislature maintains a distinction between these fiduciary roles.  The Court also reasoned that if it were to define “health care decisions” more broadly, then many decisions made by a health care agent would override the more expansive powers allocated to an attorney-in-fact, guardian or conservator.

Rockingham County Nursing Home v. Harnois

In Rockingham County Nursing Home v. Harnois, Civil Action No. 11-11057-JGD, 2014 U.S. Dist. LEXIS 3042 (January 10, 2014), the United States District Court for the District of Massachusetts addressed a nursing home’s fraudulent transfer claim against the trustee of an irrevocable trust.  The nursing home alleged that the settlor transferred to the trust her primary residence, which was also her primary asset, with the intent of avoiding her payment obligation to the nursing home, and that she did not receive equivalent value in return.  The nursing home also claimed that the trust would be unjustly enriched if it were permitted to keep the property.

The Court’s decision includes a lengthy discussion of the facts and certain procedural matters arising from the nursing home’s motion for partial summary judgment and the trust’s motion for leave to amend its answer to assert the statute of limitations as an affirmative defense.  Of particular note is the Court’s finding that the nursing home’s fraudulent conveyance claim is barred by the statute of limitations.  The Court explained that the Massachusetts Uniform Fraudulent Transfers Act (G.L. c. 109A, §§ 1, et seq.) provides that a claim must be brought within four years following the transfer or obligation, or within one year after the transfer or obligation was or could have been reasonably discovered by the claimant, and that a claim based on constructive fraud must be brought within four years after the transfer or obligation, regardless of the claimant’s knowledge.  Here, the Court found the nursing home’s claim to be time-barred, because the claim was based on constructive fraud and more than four years had passed.  Accordingly, the Court did not address the substance of the allegedly fraudulent transfer to the trust.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – The FPE Foundation v. Solomon; Berkowitz v. Berkowitz

Author:
Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

While the Red Sox were marching toward victory, the following decisions were reported enforcing an arbitration clause in a trust and addressing statute of frauds and statute of limitations questions in a case involving alleged breaches of an oral trust.

The FPE Foundation v. Solomon

In The FPE Foundation v. Solomon, Civil Action No. 12-11342-GAO, 2013 U.S. Dist. LEXIS 134120 (D. Mass. Sept. 19, 2013), the charitable remainder beneficiary of a QTIP trust brought suit against the trustees and the estate planning attorney for alleged mismanagement of the trust, asserting tort and contract claims in the U.S. District Court.  The Court dismissed the claims and compelled arbitration of the dispute pursuant to the arbitration clause in the trust instrument.  In doing so, the Court assumed the enforceability of the clause and focused its discussion on whether the defendants had waived their right of enforcement.

Berkowitz v. Berkowitz

In Berkowitz v. Berkowitz, Civil Action No. 11-10483-DJC, 2013 U.S. Dist. LEXIS 134791 (D. Mass. Sept. 20, 2013), Samuel Berkowitz sued his daughter Bonnie Berkowitz for breach of fiduciary duty, claiming that she was holding certain real property and securities for his benefit pursuant to an oral trust, and that she repudiated the oral trust in 2008.  Bonnie moved for summary judgment, arguing in part that Samuel’s claim is barred by the statute of frauds and the statute of limitations.  Her motion was denied.

The U.S District Court acknowledged that the statute of frauds applies to contracts for the conveyance of land, and that no trust concerning land, except a trust that may arise or result by implication of law, shall be created or declared unless by a written instrument.  The Court held, however, that one such trust that arises by implication of law (and thus does not require a written instrument) is a resulting trust, and that a genuine issue of fact exists as to whether a resulting trust was created when Samuel transferred the real property to Bonnie.

Similarly, the statute of frauds does not apply to the securities that were allegedly held pursuant to the oral trust, because it was not a contract to make or revoke a will or codicil.  Even if the oral trust were made in contemplation of Samuel’s death, and thus arguably fell within the statute of frauds, the statute of frauds would not apply to a constructive trust, and Samuel brought forth sufficient evidence to raise a genuine issue of fact as to the existence of a constructive trust.

Finally, the Court held that Samuel’s claim was not barred as a matter of law by the statute of limitations.  A claim for breach of fiduciary duty does not accrue until the trustee repudiates the trust and the beneficiary has actual knowledge of the repudiation.  Here, although there is evidence that Samuel knew he had been “swindled” as early as 2002, there was no evidence that Bonnie specifically repudiated the trust until 2008, when Samuel requested an accounting.  For the same reason the Court rejected Bonnie’s argument under the doctrine of laches.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.