2020 Mass. App. Div. 172

June 26, 2020 - September 30, 2020

Appellate Division Western District

Court Below: District Court, Winchendon Division

Present: Hadley, P.J., Stark & D'Angelo, JJ.

Vincent P. Pusateri, II for the plaintiff.

Matthew T. Christensen for the defendant.

HADLEY, P.J. This appeal arises from a civil action filed in the Winchendon District Court in August, 2016. In her complaint, plaintiff Marylyn Dean asserted that in their divorce, she and defendant Robert Dean, her former husband, entered into an agreement by which the defendant promised to make all monthly payments due on a mortgage loan secured by real estate in Templeton, Massachusetts (the "Property"). The plaintiff alleged that in 2006, after the parties divorced, she discovered that she was still jointly liable for the mortgage payments on the Property. She claimed that thereafter the defendant represented that he would pay off the entire outstanding balance owed on the mortgage, but did not do so.

The plaintiff asserted that in March, 2010, the plaintiff paid the mortgage holder the outstanding balance of $17,729.51, and that the defendant subsequently represented that he would reimburse her for this payment, but did not do so. The plaintiff's complaint included seven counts: breach of contract; a claim for money had and received; a claim for money lent; unjust enrichment; a constructive trust; contribution; and promissory estoppel. A jury-waived trial took place in February, 2018. Judgment entered in favor of the plaintiff in the amount of $17,529.51 on count 2 of the complaint, the claim for money had and received. The trial judge ordered judgment to enter for the defendant on the remaining counts. [Note 1] The defendant appealed. After considering the evidence and the applicable law, we affirm the judgment for the plaintiff with the exception of a reduction of the damages amount.

The trial judge issued a written decision that included the following findings of fact. The parties were married in 1984 and divorced in 2006. As part of their divorce, they entered into a settlement agreement pursuant to which the defendant would retain the Property and pay the mortgage on the Property for the remaining life of the loan. Thereafter, the defendant made timely monthly payments to the mortgage holder in the required amount of $579.00.

In approximately March, 2010, the plaintiff moved to North Carolina and applied

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for a loan for the purchase of a new home. She was denied financing because her name was still on the mortgage loan secured by the Property.

After their amicable divorce, the parties continued to have regular phone contact. Shortly after her loan application was denied, the plaintiff called the defendant and asked him to remove her from the mortgage. The defendant told her he did not know how to do that. After making several additional requests, the plaintiff paid the entire outstanding mortgage balance, even though there were several years left on the monthly payment schedule.

On or about April 1, 2010, the plaintiff informed the defendant that she had paid off the entire debt secured by the mortgage and that she wished to be reimbursed. The defendant indicated he was upset that the plaintiff had paid off the balance without talking to him first. Thereafter, between 2010 and 2015, the parties had a number of conversations about the plaintiff's wish to be reimbursed. There were several conversations about the defendant selling his truck to pay the plaintiff, but the defendant used the proceeds from the sale of his truck to purchase another vehicle.

At some point, the plaintiff told the defendant that she did not expect to be reimbursed all at once for the total amount she had paid and that payments could be made in installments. In 2011, the defendant sent the plaintiff two checks totaling $500.00. Although the defendant testified that these payments were not made in connection with the mortgage, the trial judge found the checks were delivered in partial payment of the reimbursement the plaintiff sought.

Finally, the trial judge also found that in 2014, the parties made an agreement that the defendant would give the plaintiff the proceeds of some logging he was going to do on property he owned and that this money would be applied to the mortgage amount. The logging was done in 2016. The defendant received $5,100 for the logs, but he did not give this money to the plaintiff.

In addition to the judge's written findings, there were several uncontested documents introduced at the beginning of the trial. They showed that the defendant owned the Property before the parties were married. In 1986, two years after the marriage, he deeded the Property to himself and the plaintiff. In March, 2003, the parties borrowed $54,000 from Wachovia Mortgage Corporation ("Wachovia"). They signed a note, and the note was secured by a mortgage on the Property that identified both parties as borrowers. In November, 2003, the parties transferred the Property back to the defendant, but there was no change in the terms of the loan. The parties executed a written "Separation Agreement" that was approved by a justice of the Probate Court as a final order on January 18, 2006. Neither the Settlement Agreement nor the court order made direct reference to the loan or the mortgage on the Property. The parties, however, also filed financial statements. The defendant's financial statement listed the mortgage debt. The plaintiff's financial statement did not list the mortgage debt. At trial, both parties agreed and testified that the documents filed with the Probate Court reflected their agreement that the defendant assumed the responsibility for all the mortgage payments going forward. Finally, the uncontested documents verify that the subject mortgage was discharged on April 2, 2010.

Based on these facts, the trial judge determined that there was no enforceable contract between the parties with regard to the plaintiff's demand for reimbursement for her 2010 payment satisfying the entire debt owed to Wachovia. Accordingly, she

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issued an order for judgment in favor of the defendant on count 1 alleging breach of contract.

On count 2 of the complaint, the judge stated that a claim for money had and received does not depend on "privity of contract" between the parties, "but on the obligation to restore that which the law implies should be returned, where one is unjustly enriched at another's expense." Flavin v. Morrissey, 327 Mass. 217, 220 (1951), quoting Rabinowitz v. People's Nat'l Bank, 235 Mass. 102, 103 (1920). The judge determined that the defendant received money from the plaintiff in the form of having the balance of his mortgage paid off early, and found that the defendant had received this money "under such circumstances that in equity and good conscience it should be returned to the plaintiff." She issued an order for judgment to enter against the defendant in the amount of $17,529.51 (the original mortgage debt less the payments totaling $500.00 that were made in 2011). [Note 2] She also ordered that the judgment amount be paid in monthly installments of $579.00, with no additional interest.

As to the remaining counts of the complaint, the judge stated that recovery on a claim for money had and received is limited by and is for practical purposes identical to the doctrine of unjust enrichment, and that the plaintiff was entitled to be compensated only once. For these reasons, she found the various counts of the complaint duplicative and ordered that judgment enter for the defendant on counts 3 through 7.

On appeal, the defendant asserts that when the plaintiff paid off the subject debt and obtained a discharge of the mortgage on the Property, she did so for her own benefit with no reasonable expectation that her ex-husband would repay her. He points out there was no evidence of fraud committed by the defendant, and argues that under these circumstances the plaintiff had no right to recover money she expended to improve her credit report. He also asserts that the Probate Court judgment was final and bars any further litigation of this issue between these parties. In addition, the defendant contends the plaintiff's claims were barred by the applicable statute of limitations and by laches. The defendant also asserts that the plaintiff impermissibly "elected to bring suit at law for damages for breach of contract." Finally, the defendant asserts that several of the judge's findings of fact were clearly erroneous.

The trial judge addressed the defendant's arguments regarding issue preclusion and the statute of limitations in her decision. As to issue preclusion, she stated that although the parties had intended that the defendant would be solely responsible for the mortgage payments on the Property, the plaintiff was never divested of her joint liability on the mortgage note during the divorce proceedings. She found the issue was not litigated in the divorce.

With regard to the statute of limitations, the judge determined that in these circumstances the time for bringing a claim for money had and received is six years

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and that because the parties had ongoing discussions regarding payment of the mortgage debt continually from 2010 through 2015, the plaintiff's lawsuit was timely filed in 2016.

The judge did not address the affirmative defense of laches contained in the defendant's answer. We will address each of the defendant's arguments.

Erroneous findings of fact. In her findings, the judge stated, "Sometime around March of 2010, the plaintiff moved to North Carolina and attempted to get a loan for the purchase of a new home. Plaintiff was denied the loan due to her name still being on the mortgage of the property with the outstanding balance on that mortgage totaling $17,729.51."

The defendant correctly notes that the plaintiff testified that after the parties were divorced she moved to North Carolina in 2006, not 2010, and that when she moved she attempted to secure a loan to pay taxes owed on stock she had sold. The loan was denied, and she then realized that her name was still on the note and the mortgage secured by the Property. On the record before us, we cannot determine whether the trial judge chose not to credit the plaintiff's testimony that she realized she was still on the mortgage in 2006, but there is nothing in the record to support the finding that this happened in 2010. (We also note that the plaintiff alleged she came to the realization in 2006.)

The defendant also disputes the judge's finding that when the plaintiff paid off the mortgage in 2010, "there were several years left on the repayment schedule." According to the stipulated documents introduced at trial, the final mortgage payment was due two years and eleven months after the plaintiff paid off the mortgage. For the reasons set out below, we have determined that these apparent errors in the judge's findings do not constitute reversible error.

Laches. The plaintiff testified that over a period of years the parties exchanged e-mail communications regarding the defendant's alleged promise to reimburse her. One e-mail from 2015 was introduced at the trial, but other communications were reportedly lost or became unavailable due to the passage of time.

In order to succeed on the defense of laches, more than mere delay is required. The defendant had the burden of proving a disadvantage flowing from untimeliness. "The operation of laches generally is a question of fact for the judge, and a judge's finding as to laches will not be overturned unless clearly erroneous." A. W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 445 Mass. 502, 517 (2005). In considering a defense of laches, a judge will consider all of the circumstances. These include the length of the delay and the degree to which the defendant was prejudiced by the delay. The judge will also consider whether the delay was deliberate and calculated to prejudice the defendant, and the fairness in all the circumstances. Kenney v. Commissioner of Correction, 399 Mass. 137, 140 (1987).

In this case, other than including an affirmative defense in his answer, there is nothing in the record before us indicating the defendant raised this issue before the trial judge. Nor did he file proposed findings and rulings asking the judge to rule on this defense. He cannot raise the issue for the first time on appeal.

Simultaneous claims of breach of contract and equitable remedies. The defendant asserts that a party may not simultaneously maintain a suit at law for damages for breach of contract and assert claims for equitable remedies. This assertion is simply incorrect. Generally speaking, an aggrieved party to a contract is not entitled to

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receive both an award of damages for breach of contract and equitable relief. A plaintiff, however, may plead these claims in the alternative as the plaintiff did here. See Mass. R. Civ. P. 8(e)(2). See also Zelby Holdings, Inc. v. Videogenix, Inc., 92 Mass. App. Ct. 86, 87 (2017).

Statute of limitations. In her decision, the trial judge, citing Rubin v. Murray, 79 Mass. App. Ct. 64 (2011), ruled that the applicable statute of limitations is six years. As the plaintiff's claims do not sound in tort, but are founded on the allegation of an implied or equitable obligation, we find this determination was correct. See G.L. c. 260, § 2. See also City of New Bedford v. Lloyd Inv. Assocs., Inc. 363 Mass. 112 (1973).

The defendant asserts that the statute of limitations for the plaintiff's claims for money had and received and for unjust enrichment began to run on April 1, 2010, the day after the plaintiff paid off the mortgage debt or shortly thereafter when the defendant allegedly failed to give the plaintiff the proceeds of the truck he sold. He argues that because the plaintiff waited more than six years from those events to file suit, her claims are time-barred. The plaintiff argues that because the defendant delivered two payments to her in 2011 and made a promise in 2014 to reimburse the plaintiff from his logging proceeds, the six-year statute of limitations was tolled and the lawsuit was timely filed in 2016.

On this issue, both parties take note of the common-law partial payment rule that provides that "a party may toll or take an indebtedness out of the operation of the applicable statute of limitations by making a partial payment on a debt." Zelby Holdings, Inc., supra at 88. The defendant asserts that this rule does not apply to this case because the trial judge found that there was no contract between the parties, and therefore there could not have been a renewed promise to pay a debt that tolled the statute of limitations. The plaintiff asserts that the partial payment rule applies whether the obligation to pay is contractual or equitable.

A close reading of the Zelby Holdings, Inc. decision supports the plaintiff's position in this regard, as the Court did not limit the application of the rule to that plaintiff's contractual claims. It held that the statute of limitations applicable to the plaintiff's claim of unjust enrichment was also tolled by a partial payment made by the defendant from which the law could imply an entirely new promise to pay. Id. at 92. Although the trial judge here did not go into great detail in this regard in her decision, she found two partial payments were made in 2011. We find this supported the judge's determination that if the plaintiff had a valid cause of action in equity, it was not time-barred.

Issue preclusion. The defendant asserts that the issue of liability for payment of the mortgage was litigated in the divorce proceedings and adjudicated under the judgment of divorce. He argues that judgment was final and binding on the parties and barred them from engaging in any further litigation regarding the mortgage obligation. As the plaintiff points out, however, to defend successfully on the ground of issue preclusion, a defendant must establish that the issue of fact sought to be foreclosed actually was litigated and determined in a prior action between the parties or their privies, and that the determination was essential to the decision in the prior action. Heacock v. Heacock, 402 Mass. 21, 25 (1988).

As noted above, the trial judge found the divorce did not create any contractual obligation requiring the defendant to pay off the mortgage debt early. She also found that the issue of whether the plaintiff would be relieved of her obligation on the note she and her former husband signed was never addressed in the course of the divorce proceedings. In short, she found that the issue was not litigated. We find the trial judge ruled correctly in this regard. The plaintiff does not claim that the defendant was contractually required to refinance the mortgage or to otherwise have her name removed from the note and the mortgage. The issue in this case was whether an equitable obligation to reimburse the plaintiff arose after the plaintiff unilaterally paid off the debt. This issue was not litigated in the Probate Court, and issue preclusion does not apply.

Money had and received -- unjust enrichment. Finally, we address the defendant's contention that the facts and circumstances of this case do not support a claim for money had and received or unjust enrichment. The appellate courts of Massachusetts and federal courts applying Massachusetts law have held that an action for money had and received is a type of unjust enrichment claim limited to enrichment by money or its equivalent. Reed v. Zipcar, Inc., 883 F. Supp. 2d 329, 334 (D. Mass. 2012). In such an action, the obligation to pay money to another person must be independent of any express or implied-in-fact contract. Cooper v. Charter Communications, Inc., 945 F. Supp. 2d 233 (D. Mass. 2013), vacated on other grounds, 760 F.3d 103 (1st Cir. 2014). The obligation will be imposed in order "to restore that which the law implies should be returned, where one is unjustly enriched at another's expense." Flavin, supra at 220. See Bonina v. Sheppard, 91 Mass. App. Ct. 622 (2017). The courts have also stated that an action for money had and received is an equity action aimed at restoring wrongfully obtained moneys to the rightful owner, regardless of how the money was obtained or what the basis for the rightful owner's claim might be. Full Spectrum Software, Inc. v. Forte Automation Sys., Inc., 100 F. Supp. 3d 50, 58 (D. Mass. 2015); Frontier Mgt. Co. v. Balboa Ins. Co., 658 F. Supp. 987, 993 (D. Mass. 1986).

At the same time, a volunteer who gratuitously pays the debt of another does not create a legal obligation between himself and the other person for the repayment of the debt. Blair v. Claflin, 310 Mass. 186, 191 (1941). Moreover, the fact that a person has been enriched by another, standing alone, is not sufficient to support an order of restitution. Nonetheless, "[a] person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity from the other, unless the payor is barred by the wrongful nature of his conduct." Santagate v. Tower, 64 Mass. App. Ct. 324, 330 (2005), quoting Restatement of Restitution § 76 (1937).

The person who has benefitted will only lose the enrichment if its retention would be unjust. Keller v. O'Brien, 425 Mass. 774, 778 n.8 (1997). Restitution is appropriate "only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for [her] to retain it" (citation omitted). Id. Unjust enrichment is found when an individual retains the money of another "against the fundamental principles of justice or equity and good conscience" (citations omitted). Shea v. Cameron, 92 Mass. App. Ct. 731, 740 (2018). Whether a benefit or enrichment is unjust is determined by the reasonable expectations of the parties.

The Restatement (Third) of Restitution and Unjust Enrichment (2011) states:

"(1) If the claimant renders to a third person a performance for which claimant and defendant are jointly and severally liable, the

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claimant is entitled to restitution from the defendant as necessary to prevent unjust enrichment.

"(2) There is unjust enrichment in such a case to the extent that (a) the effect of the claimant's intervention is to reduce an enforceable obligation of the defendant to the third person, and (b) as between the claimant and the defendant, the obligation discharged (or the part thereof for which the claimant seeks restitution) was primarily the responsibility of the defendant."

Id. at § 23.

We find that this section of the Restatement is consistent with the appellate decisions cited above and applies to the facts of this case. Here, the defendant and the plaintiff were jointly and severally liable for the note they gave to Wachovia. The plaintiff rendered a performance for which the defendant agreed to be primarily responsible. By doing so, she reduced the enforceable obligation of the defendant to the mortgage holder, and thereby enriched the defendant in the amount of $17,729.51.

According to all the evidence introduced at trial, the defendant was fully complying with his obligation under the Settlement Agreement when the plaintiff unilaterally decided to pay off the entire mortgage after she grew tired of the defendant's failure to comply with her requests. The defendant's assertion that the plaintiff's claims of unjust enrichment and/or money had and received must fail in the absence of evidence of wrongdoing of fraud on his part, however, is not supported by the case law or the Restatement. Massachusetts courts, as noted above, have held that restitution is appropriate where the circumstances of the receipt or the retention of money, as between the two parties, would be unjust, regardless of how the money was obtained.

Finally, the defendant asserts that in addition to her failure to prove fraud, the plaintiff failed to establish that she had a reasonable expectation of being paid by the defendant. On the subject of reasonable expectations, in Community Bldrs., Inc. v. Indian Motocycle Assocs., Inc., 44 Mass. App. Ct. 537 (1998), the Appeals Court noted that a party looking for payment must look to "the one who was expected to pay and who in fact expected to pay or as a reasonable man should have expected to pay." Id. at 560, quoting LaChance v. Rigoli, 325 Mass. 425, 427 (1950).

In this case, it is undisputed that when the parties divorced the defendant agreed to be entirely and solely responsible for all of the mortgage payments. He was expected to pay, and he in fact expected to pay the mortgage on his own. After the debt was satisfied by the plaintiff, the only change in circumstances was the recipient of his monthly payments. We perceive no reason based on the defendant's argument concerning the parties' reasonable expectations to disturb the trial judge's equitable order directing the defendant to make monthly payments to the plaintiff in the same amount he had been paying to the lender (and which he had reasonably expected to make for the duration of the loan period). The judge's determination in this regard was supported by the evidence and was justified to avoid unjust enrichment. Given the circumstances presented in this case, the evidence was sufficient to support a finding that the plaintiff had a reasonable expectation of receiving payment from the

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defendant after she relieved him of his monthly obligation to Wachovia and that a reasonable person in the defendant's position would have expected to make monthly payments to the plaintiff when he received the benefit of the discharged mortgage. See, e.g., Bolen v. Paragon Plastics, Inc., 747 F. Supp. 103, 106-107 (D. Mass. 1990).

For all the above reasons, the judgment that entered in favor of the plaintiff on count 2 of her complaint is affirmed, except with regard to the amount of damages. The case is returned for the entry of an amended judgment in the amount of $17,229.51 for the plaintiff. The trial court shall also enter judgment for the defendant on counts 3 to 7 of the plaintiff's complaint.


[Note 1] While the judge in her decision awarded judgment to the defendant on counts 1 and 3 to 7 of the plaintiff's complaint, the court entered judgment for the defendant only on count 1. Though technically no final judgment has entered, we elect to proceed to the merits of the defendant's fully briefed appeal from the judgment for the plaintiff on count 2 of her complaint. Ramaseshu v. Board of Registration in Med., 441 Mass. 1006 n.1 (2004).

[Note 2] Although neither party has raised the point, there seems to be an inadvertent error in the judgment. The court awarded the plaintiff $17,529.51 (the amount of the remaining debt of $17,779.51 less the defendant's payment of $200), rather than $17,229.51 (the amount of the remaining debt less the defendant's payments of $200 and $300, totaling $500), which was obviously intended.