Defendant Barbara Lawrence is the holder of an undischarged note and mortgage on the residence at 51 Phillips Place in Northampton (the Lawrence mortgage) currently occupied by plaintiff June Turcotte. Junes interest in the property, [Note 1] acquired through her receipt (by assignment) and subsequent foreclosure (by entry pursuant to G.L. c. 244, §§ 1, 2) of a junior mortgage, is subject to the Lawrence mortgage if and to the extent Barbara is still owed money on the note.
The Lawrence mortgage was granted by the then-owners of the property, Dr. Rodolph Turcotte and his wife Claire (Junes parents), to Barbara and her mother Jorann Lawrence. The Lawrence mortgage was security for an $8,000 loan made by Jorann at Dr. Turcottes request. Dr. Turcotte, now deceased, was a psychiatrist at the time the loan was made. [Note 2] Jorann, also now deceased, was his patient.
June contends that the note secured by the mortgage has been paid in part and, to the extent it was not paid, it was more than offset by Dr. Turcottes allegedly unreimbursed services to Jorann (therapy, room, and board), the money and meals he gave her from time to time, and the occasional housekeeping, errand-running, and transportation that were provided to her by others at his request. In the alternative, June argues that the note has either been forgiven or its collection is now barred by laches, estoppel, or the statute of limitations. She thus brought this action seeking discharge of the mortgage. [Note 3] Barbara denies each of Junes contentions and seeks a declaration of the mortgages validity and the amount she is owed.
The claims outside the land courts jurisdiction were transferred to the superior court and I was interdepartmentally assigned to hear and decide them. G.L. c. 211B, § 9 (xix); Order of Assignment (Mulligan, CJAM) (Mar. 28, 2006). A trial on all issues was held before me, jury-waived. Based upon the agreed facts contained in the parties pre-trial memorandum, the testimony, exhibits, and stipulations admitted into evidence at trial, the parties admissions in their post-trial memoranda, matters of which I may take judicial notice, my assessment of the credibility, weight, and inferences to be drawn from all of the evidence, and as more fully set forth below, I find and rule that the mortgage is valid, has not been forgiven, has not been offset, and the balance owed is the original $8,000, plus interest at an annual rate of 18% from the date of the note, [Note 4] less the cash payments identified in detail below, all to be credited at the times they were made. The defendant is directed to calculate the total amount due accordingly and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010 and a hearing shall be held thereafter to resolve that disagreement. Final judgment shall enter promptly after that resolution.
Findings of Fact
The Property and the Parties
As noted above, the property at issue is located at 51 Phillips Place in Northampton. It was previously owned by the plaintiffs parents, Dr. Rodolph and Claire Turcotte, and is now owned by the plaintiff as a result of her foreclosure of a mortgage junior to the Lawrence mortgage that was assigned to her by a family friend. [Note 5] Dr. Turcotte, now deceased, was a psychiatrist whose registration was revoked in 1986 for gross misconduct in the practice of medicine. In the Matter of Rodolph Turcotte, M.D., Adjudicatory Case #85-21, Final Decision and Order at 34 (Board of Registration in Medicine, Nov. 19, 1986). After his license was revoked he still practiced as an unlicensed therapist until his death in May 2000. His wife Claire is still living, but because of severe Alzheimers, she was neither called nor competent to testify at trial.
Both the defendant and her late mother Jorann were patients of Dr. Turcotte. Jorann, who suffered from severe depression and obsessive-compulsive disorder, was seen by Dr. Turcotte from 1975 until close to the time of her death in June 1996. Barbara participated in family therapy with Dr. Turcotte from 1975 to 1979. Dr. Turcotte thus had a fiduciary duty to both of them. See, e.g., Warsofsky v. Sherman, 326 Mass. 290 , 292 (1950) (physician/patient is a fiduciary relationship); Forziati v. Bd. of Registration in Medicine, 333 Mass. 125 , 127 (1955) (noting physicians high moral duty to serve the public who seek their assistance before they serve themselves).
Joranns condition was severe. She was in and out of mental institutions when Barbara was young. She had a major nervous breakdown when Barbara was eight, received twenty-seven electrical shock treatments, and never touched or held Barbara thereafter without wearing gloves. Joranns cleansing rituals took hours. When Barbara came home from school, Jorann would force her to sit in a designated chair and not allow her to move. If Barbara cast a shadow on the wall, Jorann would scream.
Joranns condition did not appreciably improve during her treatment with Dr. Turcotte. She continued her hours-long cleansing rituals. When friends of Dr. Turcotte helped clean her apartment, she required them to wear slippers, mop and re-mop the floors, and vacuum and re-vacuum every light bulb, fixture, table, bed, curtain, sink, and even the vacuum cleaner itself watching them like a hawk, and mak[ing them] redo every task over and over again until she was satisfied. Trial Transcript, Day 3 at 13 (Mar. 8, 2007).
Dr. Turcottes treatments were unorthodox, especially with Jorann. He did not maintain a clear boundary between his roles as her psychiatrist and as her friend and it is difficult to discern when he was acting as which. Jorann, for example, lived with the Turcottes at 51 Phillips Place from late November 1976 [Note 6] to March/April 1979 and paid monthly room and board. It is not clear (there was conflicting evidence) whether this was because she needed a place to live, she and Dr. Turcotte considered it part of her therapy, or some combination of both. At least one other patient of Dr. Turcotte also lived with them during part of that time. Since Dr. Turcotte kept no notes of the length, purpose, substance, or outcome of any of his sessions, [Note 7] many sessions took place outside of his office over lunch and in other informal settings, [Note 8] and much (and perhaps all) of his therapy was conversational in nature, it is unclear which of his interactions with Jorann were mutually viewed as therapeutic counseling (and whether or not such counseling was free or was to be billed) or simply as friendly conversation. [Note 9]
This intermingling and confusion of roles continued even after Jorann moved from Dr. Turcottes home to a different residence. A July 1983 letter from Dr. Turcotte to Barbara is illustrative. In that letter (on the letterhead of the World Fathers Association [Note 10]), Dr. Turcotte wrote at length about the meals and gifts he claimed to have given Jorann, stated that he loved both Barbara and Jorann, stated that he thought of Barbara as a daughter, wondered if it would be too far [for Barbara] to come out here to visit me, as well as Jo, and ended with a request that Barbara participate in family therapy sessions. Trial Ex. 102. In addition, Dr. Turcotte would often ask his family members and friends to do things for Jorann (housekeeping, errand-running, and transportation), which they did as a favor to him. There is no record of Dr. Turcotte ever charging Jorann personally for any of his visits or sessions above any insurance or Medicare/Medicaid payments he received [Note 11] and he neither instituted a lawsuit nor made any claim in writing against Jorann or Barbara for any allegedly unpaid balances. Even his letters noting the money he spent on Jorann (e.g., Trial Ex. 102) never asked for reimbursement and were clear that he was looking to Joranns insurance and Medicare/Medicaid benefits as the sole source of payment for his therapeutic services.
The Lawrence Loan, Note, and Mortgage
Dr. Turcotte was often short of money. [Note 12] In April 1977, he approached Jorann and asked to borrow $8,000, which she lent him. [Note 13] In exchange, he and his wife Claire gave Jorann and Barbara as co-payees an $8,000 promissory note at 27% annual interest, payable on demand, and secured by a mortgage on 51 Phillips Place. Interest was due and payable twice a year (April 1st and October 1st), with the first payment due October 1, 1977. At the time, both Jorann and Barbara were patients of Dr. Turcottes and he was still a licensed psychiatrist.
Jorann and Barbara did not have legal representation at the closing, which took place at the offices of a lawyer chosen by Dr. Turcotte and lasted no more than ten to fifteen minutes. [Note 14] Based on the evidence at trial, I find that the terms of the note and mortgage were set by Dr. Turcotte and the documents were drafted in their entirety at Dr. Turcottes instruction with no substantive input by either Jorann or Barbara.
The Lawrence mortgage has neither been discharged of record nor, as more fully explained below, has a discharge or release ever been agreed to or signed.
Dr. Turcottes Payments on the Note and the Plaintiffs Claim of Offsets
There is no record of any deduction from the loan balance. Joint Pre-Trial Memorandum at 22, ¶ 27. No master ledger was kept. There are scattered records of interest payments, but they are not applied toward any recorded balance. Id. The parties stipulated that no accounting is now possible under these circumstances. Id. at 22, ¶ 28. Having considered all the evidence, however, I find that the following payments, and no others, were made by Dr. Turcotte towards the loan and that Jorann received and understood them as such. [Note 15]
|Payment Date||Amount Paid||Description (if not a check or other payment directly to Jorann|
|February 16, 1978||$250|
|April 21, 1978||$500|
|March 19, 1982||$21.50|
|March 19, 1982||$41.50|
|March 28, 1982||$41.50|
|May 5, 1982||$10|
|November 15, 1983||$41.50|
|November 22, 1983||$41.50|
|November 28, 1983||$41.50|
|December 9, 1983||$41.50|
|December 13, 1983||$41.50|
|December 19, 1983||$41.50|
|December 29, 1983||$41.50|
|January 9, 1984||$41.50|
|January 20, 1984||$41.50|
|January 20, 1984||$41.50|
|January 31, 1984||$41.50|
|February 13, 1984||$41.50|
|February 28, 1984||$41.50|
|March 12, 1984||$83|
|March 24, 1984||$41.50|
|April 9, 1984||$41.50|
|May 15, 1984||$166|
|July 30, 1984||$41.50|
|December 6, 1984||$41.50|
|December 23, 1984||$54.50|
|January 16, 1985||$41.50|
|January 29, 1985||$41.50|
|March 4, 1985||$41.50|
|June 30, 1985||$375|
|July 19, 1985||$50|
|October 3, 1985||$50|
|October 24, 1985||$50|
|October 31, 1985||$50|
|December 19, 1985||$50|
|January 13, 1986||$50|
|January 30, 1986||$100|
|February 26, 1986||$40.86||(payment of a MassElectric bill for Jorann)|
|March 12, 1986||$57.28||(payment of a MassElectric bill for Jorann)|
|March 12, 1986||$48.20||(payment of a NETelephone bill for Jorann)|
|March 19, 1986||$50|
|April 30, 1986||$50|
|February 1987||$496||(payment of a dental bill for Jorann)|
|April 15, 1987||$100|
|February 14, 1992||$50||(endorsed to MassElectric for Jorann)|
|February 14, 1992 [Note 16]||$98.43||(endorsed to NETelephone for Jorann)|
I find that the note and mortgage are neither offset in any amount by Dr. Turcottes therapeutic services nor by the services provided to Jorann by Dr. Turcottes family, friends, and patients at Dr. Turcottes request. As previously noted and discussed again below, Dr. Turcotte looked exclusively to Joranns insurer and Medicare/Medicaid to pay for her therapy and neither he nor Jorann ever intended for her to have any personal liability for any services that were not covered by insurance or Medicare/Medicaid. [Note 17] The services and small amounts of money provided to Jorann from time to time by Dr. Turcotte and his family, friends and other patients (the groups overlapped) were voluntary gifts and were neither intended nor received as payments or offsets.
I also find that the note and mortgage are not offset in any amount by Joranns room and board while she was a resident with the Turcottes for the following reasons. First, she began living there over four months before the note and mortgage were signed and the plaintiff has not shown that Jorann ever failed to make the agreed payments of $250 per month for her room and board. Indeed, the evidence is to the contrary. Barbara testified that she wrote the room and board checks for her mother and every month was paid. Such payments were initially made from Joranns savings (the original $12,000 amount and then the amount that was left after Dr. Turcotte borrowed the $8,000) and, thereafter, from Joranns monthly disability checks. Moreover, even if such room and board payments were not made (a suggestion contrary to the evidence), there is nothing in the note or mortgage that suggests Dr. Turcotte could forego interest payments in exchange for full or part payment of room and board and no witnesses testified that such an offset was discussed at the time the loan was made. [Note 18]
Second, on the occasions when an offset clearly was intended (January, February, March, and April 1978), Dr. Turcotte wrote a check to Jorann for $250 towards interest on the note (specifically noting on the check that it was for that purpose) and Barbara (signing for Jorann) immediately turned around and endorsed the check back to him with the specific notation that it was for room and board. [Note 19] These payments are likewise the only months that the rent ledger states were paid out of interest due on 2nd mortgage. Trial Ex. 97.
Third, with the exception of these four payments, there is nothing to indicate that Dr. Turcotte, Jorann, or Barbara ever considered unpaid room and board (if any, and there is no proof of any) as credits towards note and mortgage payments. Indeed, given the fact that, years later, Dr. Turcotte, [Note 20] June, [Note 21] and Jorann [Note 22] all considered the note to be unpaid, the evidence is otherwise.
Requests that the Lawrences Assign or Release the Mortgage
Jorann died on June 24, 1996 after a long battle with cancer. Beginning in 1987 and continuing through December 1995, [Note 23] June periodically asked Jorann to release the mortgage. Jorann refused on each occasion. Initially, she said she would not release it because she needed the money and was afraid that she would be abandoned without it. Later, after being assured that she would not be abandoned, she continued to refuse, claiming that Barbara would release the mortgage after Joranns death. No one contacted Barbara for confirmation of this arrangement and, indeed, Jorann never spoke with Barbara about it. [Note 24] I find that Jorann never had any intention of forgiving or releasing the note and mortgage and her statements that Barbara would release them after her death were made simply to end the conversation. She may also have made them in an attempt to retain the Turcottes and their friends attentions, but this is of no legal consequence. Jorann was a very ill woman, both physically and mentally. The Turcottes and their friends knew this and, to their great credit, went considerably out of their way to help her. [Note 25] But these were voluntary efforts and were never offered, understood, or agreed as anything other than gifts. They certainly were not payments, credits or offsets towards the note or mortgage.
In July 1996, soon after Joranns death, Barbara found the mortgage and promissory note in her own papers. That same month, based on her erroneous assumption that the loan had been repaid, she sent the mortgage and promissory note to Dr. Turcotte with a letter stating, I thought you might want to have this. Thank you for your loving support of my mother all these years. Trial Exs. 1 & 2. Based upon all of her testimony and other evidence in this case, I find that she did not intend this to be a release or discharge.
Dr. Turcotte was elated to receive the documents from Barbara, but did nothing further at that time. Trial Transcript, Day 3 at 19-20. He did not, for example, contact Barbara to ask what her intentions were. One year later (July 20, 1997), he wrote a letter to Barbara thanking her for sending him the documents (Im sure this is an act of love for Jorann and for us) and asking her as a favor to assign the note and mortgage to June. Trial Ex. 24. His explanation was as follows:
It is helpful for this mortgage to remain in place in the Registry of Deeds because it keeps other creditors back in line who might want to force a foreclosure [or] bankruptcy. In this way a member of the family might be able to collect the value of the mortgage first before these other creditors which include over $100,000 of liens by the IRS, and liens by the Electric and Gas companies currently above the $15,000 total. And a variety of other items including a $40,000 lien by the Hartford law firm which defended me from legal attacks in the 80s. . . . Enclosed are the legal papers for your signature. I will look forward to receiving them, I hope in the near future, at your convenience. . . . Sincerely, R.H. Turcotte, M.D.
Id. I conclude from this that Dr. Turcotte knew the note was unpaid and owed at the time he wrote the letter (he apparently believed that $15,000 was owed) and that he intended to use the note and mortgage, once assigned, to trump the collection efforts of his junior creditors by enabling June to foreclose. [Note 26]
Barbara was uneasy about Dr. Turcottes request for an assignment to June, did not sign the papers he enclosed with his letter (a proposed assignment to June in consideration of $1), and did not agree to assign the mortgage even after a follow-up phone conversation with Dr. Turcotte. Dr. Turcotte was not shy about exploiting his relationship with Barbara, her guilt about Jorann, [Note 27] and portraying his circumstances as dire (see Trial Ex. 25), and Barbara was willing to consider releasing the mortgage if it would help him. But he continued to insist on an assignment.
There matters stood until February 2000, when the Turcottes friend Susan Smith wrote to Barbara, enclosing assignment and release papers with a request for Barbara to sign one or the other (she pressed for the assignment). Trial Ex. 52. The letter recognized that Barbara did not want to do so (or, at least, did not want to sign an assignment) [Note 28] and contained a suggestion, intended or not, that Joranns ashes might not be forwarded to Barbara until Barbara signed and returned the assignment/release documents. [Note 29] Id. Barbaras husband Jim Mesthene certainly interpreted it as such and Jim wrote back in March demanding the ashes, stating that [n]othing is more important to Barbara than the proper disposition of her mothers ashes [Note 30] and [p]lease assemble all evidence that the debt has been repaid, as Im sure my lawyer will want to review it before advising me. Trial Ex. 57. June responded in May 2000 without providing any evidence that the loan had been repaid. Trial Ex. 53. Nor did she contend that it had been repaid. Id. Instead, she again requested the assignment of the mortgage, asking Barbara to do the right thing for Dr. Turcottes comfort and respect. Id. June also telephoned Barbara from Dr. Turcottes hospital room to make the same request. Barbara refused, lawyers were retained, Barbara commenced foreclosure proceedings, and this lawsuit was filed in response in March 2006.
Other facts pertinent are included in the analysis section below.
Payments towards the Note and Mortgage
As noted above, I find (as a factual matter) that a total of $4,055.27 was paid towards the note on the dates previously listed. The note provided for interest at 27% per annum, but because the value of the house securing the mortgage was less than $40,000 (its assessed value was $16,030 at the time, Trial Ex. 28), that interest is capped at 18% (1.5% per month). G.L. c. 140, §§ 90A & 90D. Interest is simple, not compound. Payments are to be credited first towards unpaid interest and, to the extent that no interest was owed at the time a payment was made, towards principal. This potentially is a month-by-month calculation, which, as an initial matter, the parties can far more easily accomplish than me. Accordingly, the defendant is directed to make that calculation and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010, and a hearing shall be held thereafter to resolve that disagreement.
The Mortgage Indebtedness is Not Offset by the Alleged Unpaid Room and Board
As noted above, I find (as a factual matter) that all of Joranns room and board for her residence with the Turcottes has been paid in full. Even had it not been paid, there was never an agreement (beyond the four occasions previously noted) that it would be an offset against payments due under the note. Anything unpaid was a gift to Jorann. Moreover, the statute of limitations for recovery of such a debt had long since past at the time this action commenced, and there was no demand, payment or acknowledgement of indebtedness to toll that statute. G.L. c. 260, § 2.
The Mortgage Indebtedness is Not Offset by the Allegedly Unpaid Therapeutic Services
As noted above, I find (as a factual matter) that Jorann was never, and was never intended to be, personally liable for any unpaid therapeutic services provided her. Dr. Turcotte exclusively looked to Joranns insurance and Medicare/Medicaid for any payments he deemed appropriate. Moreover, there is no credible evidence to support a claim for personal liability. All that currently exists is a list of names and dates, Junes testimony that such lists were used to submit bills to insurers, and the fact that many of those bills were paid by insurance and Medicare/Medicaid (although when, at what rates, and in what amounts is unclear). This is insufficient, both in contract and quantum meruit. A contract requires an agreement between the parties. Quasi-contract requires the unjust enrichment of one party and unjust detriment to the other party. Salamon v. Terra, 394 Mass. 857 , 859 (1985) (citations omitted). The injustice of the enrichment or detriment in quasi-contract equates with the defeat of someones reasonable expectations. Id. (internal citations and quotations omitted).
Again, there is no evidence of any written or oral agreement between Dr. Turcotte and Jorann for her to pay for therapy herself. It is stipulated that no written demand was ever made for such payment and no lawsuit was ever filed. There also is no evidence of any oral demand. Thus, a contract-based claim does not exist.
Recovery in quasi-contract against either Jorann or Barbara also is not supported by the evidence. [Note 31] There is no unjust detriment to Dr. Turcotte because there is no evidence that he ever had a reasonable expectation of being compensated by Jorann for these services and no credible evidence that they ever agreed services would be offset against the note. [Note 32] Furthermore, there is no persuasive or credible evidence that Jorann ever expected (or was ever asked) to pay for them personally.
For Barbaras part, she was not unjustly enriched because she was under no legal obligation to care for her mother. More fundamentally, there is no credible, persuasive evidence of enrichment. Judged by the evidence before me, Joranns condition did not appear to improve while she was being treated by Dr. Turcotte. Without expert testimony regarding the content, quality, professional standard, expected outcome, and value of Dr. Turcottes therapy, a claim based on either quantum meruit or unjust enrichment is not supportable.
Finally, as with the claim for allegedly unpaid room and board, the statute of limitations for recovery of such a debt had long since past at the time this action commenced and there was no demand, payment, or acknowledgement of indebtedness to toll that statute. G.L. c. 260, § 2.
The Mortgage Indebtedness is Not Offset by the Gifts and Occasional Services Provided to Jorann by Dr. Turcotte, His Friends, and His Family
While I find their claimed frequency and amount to be exaggerated, I have no doubt that Dr. Turcotte occasionally bought meals for Jorann, gave her small amounts of money, and enlisted his family and friends to help her. June herself certainly did so. But, as noted above, I find (as a factual matter) that these were voluntary gifts, understood by both sides as such. While they may create a moral obligation, they do not create a legal one.
Barbaras Delivery of the Note Did Not Discharge the Mortgage
G.L. c. 106 § 3-604 states that [a] person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument . . . by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument. . . . (emphasis added). The delivery of a promissory note to the other party thus creates a rebuttable presumption of discharge and it is the burden of the party who surrendered the note to show that it had no such intention. See NationsBanc Mortgage Corp. v. Eisenhauer, 49 Mass. App. Ct. 727 , 732-33 (2000) (construing predecessor statute). Whatever is the burden of proof to rebut the presumption either preponderance of the evidence or full, clear and decisive proof (see, e.g., Nissan Auto. of Marlborough, Inc. v. Glick, 62 Mass. App. Ct. 302 , 306 (2004) Barbara has met it. As noted above, I find (as a factual matter) that she did not intend her letter and enclosure of the note to be a release, discharge, or forgiveness of its indebtedness, but rather did so under the mistaken belief that the note had been paid. [Note 33] Joint Pre-Trial Memorandum at 21, ¶ 11.
Even Dr. Turcottes actions subsequent to receiving the note show that he did not consider it to be forgiven and, instead, show that he knew it was still due. [Note 34] For example, he never asked Barbara what she intended by sending the note and in a later letter requested Barbara to assign the note and mortgage to June, indicating his belief that $15,000 was due and owed. Joint Pre-Trial Memorandum at 21, ¶ 13; Trial Ex. 24. Similarly, Susan Smith and June also requested that Barbara assign the note and mortgage or release them. Trial Exs. 52, 53.
Barbaras mailing of the note also fails to discharge the mortgage under the theory that it was a gift. It is settled in this commonwealth that an unregistered bond, a bill of exchange, a promissory note, a policy of life insurance or a savings bank book, without an assignment, like a chattel, may be the subject of a legal gift inter vivos . . . . [and that] by an unqualified delivery and acceptance the title passes, the gift becomes perfect and carries with it an implied irrevocable power to enforce it in the name of the donor. Mangan v. Howard, 238 Mass. 1 , 5 (1921). But the recipient of a gift may renounce it, so long as the renunciation is unequivocal. Garfield v. White, 326 Mass. 20 , 27 (1950). The burden of proof is on the party claiming renunciation. Daley v. Daley, 308 Mass. 293 , 300 (1941).
Here, even if Barbara had had donative intent when she mailed the mortgage to Dr. Turcotte (which I find that she did not), Barbara has met her burden of proving that Dr. Turcotte unequivocally renounced any gift she could have made. Dr. Turcottes letter of July 1997 asked Barbara to assign the mortgage to June, thereby rejecting any alleged gift by making clear that he did not want the mortgage to be discharged. Trial Ex. 24.
Both parties argue that the doctrine of laches bars the other party from making their respective claims. [L]aches will bar a party from asserting a claim if the party so unreasonably delayed in bringing the claim that it caused some injury or prejudice to the [other party]. Polaroid Corp. v. Travelers Indemnity Co., 414 Mass. 747 , 759 (1993); see also Finney v. Madico, Inc., 42 Mass. App. Ct. 46 , 52-53 (1997) (defendant did not engage in delay that worked to the disadvantage of the plaintiff in the sense of an adverse change of position). The party claiming laches has the burden of proving a detriment. Three Sons, Inc. v. Phoenix Ins. Co., 357 Mass. 271 , 278 (1970).
Laches does not bar Barbara from contesting Junes claims that the note and mortgage should be discharged. June (and, before her, Dr. Turcotte) pressed for an assignment of the mortgage so that they could take advantage of it. Barbara never agreed. Moreover, she was entitled to presume from the Turcottes assignment request that a balance was due and the Turcottes were maintaining records of their payments. If not, they could not foreclose (except fraudulently) on the Lawrence mortgage and effectively wipe out junior liens. If June (and before her, Dr. Turcotte) now has difficulty locating and presenting payment records, that difficulty is entirely of their own making. In the circumstances of this case, particularly with the fiduciary relationship between Dr. Turcotte and Jorann and the ethical issues surrounding the making of the loan, that difficulty is not a change in position to justify the bar of Barbaras claims.
Laches also does not bar June from claiming that the mortgage has been fully paid. Barbara has no right to collect or foreclose on a fully paid note. Although the fact that June and her father failed to make an accounting on the loan for so many years made it more difficult for June to meet her burden, this injury is of Junes (and her fathers) making, not Barbaras. Barbara has not been prejudiced.
Barbara is Not Estopped from Contesting Junes Claims
For the doctrine of equitable estoppel to apply to Barbara, she must have intentionally induced Dr. Turcotte and/or June to take a course of conduct to their detriment. In re Donovans Third Case, 58 Mass. App. Ct. 566 , 568-69 (2003). June argues that Barbaras mailing of the note to Dr. Turcotte induced the Turcottes to not make an accounting while Dr. Turcotte was still alive and thus prevented June from proving conclusively that the debt was paid. But this argument is directly contrary to the Turcottes actions at the time Dr. Turcotte was alive (and shortly thereafter). As noted above, Dr. Turcotte (and June) clearly believed the note was due and owing and planned to use the mortgage (once assigned) to wipe out the liens of junior creditors (which would have required proof of an outstanding balance). It was thus their responsibility to maintain records and continue recording payments. They cannot now claim prejudice by their failure to do so simply because the debt is now being enforced against them.
The Statute of Limitations Does Not Bar Collection on the Note
June contends that Barbara cannot enforce the promissory note under G.L. c. 106, § 3-118(b), a provision of the Uniform Commercial Code adopted by Massachusetts in 1998. That statute provides the following: Except as provided in subsection (d) or (e) [neither of which is relevant to this case], if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand. If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of ten years.
G.L. c. 106, § 3-118 (b). The legislature directed that it would not apply to any causes of action that accrued before its effective date (May 13, 1998). [Note 35] St. 1998, c. 24, § 16. Here, the cause of action for the demand note accrued the day it was signed and delivered (April 12, 1977), so § 3-118(b) does not apply. See Cantor v. Newton, 4 Mass. App. Ct. 686 , 691 (1976)
Instead, the six-year statute of limitation for contracts applies in this case. G.L. c. 260, § 2. A partial payment or written acknowledgement of the debt will toll the statute of limitations, starting it anew. G.L. c. 260, §§ 13, 14; see also Kelly v. McIntyre, 323 Mass. 313 , 315 (1948) (circumstances surrounding the part payment must support a fair and reasonable inference that the debtor intended to renew his promise of payment). In this case, there was a partial payment or written acknowledgement of the continuing existence and validity of the debt at least every six years between 1977 and March 2006 when this lawsuit was commenced. [Note 36] Thus, the statute of limitations was tolled so that this lawsuit was timely filed.
Barbaras Right to Collect on the Note and Foreclose on the Mortgage is not Barred by G.L. c. 271, § 49
June asks that the note and mortgage be rescinded because the interest rate (27%) violates the criminal usury statute, G.L. c. 271, § 49. Such relief is discretionary with the court. G.L. c. 271, § 49 (c); Begelfer v. Najarian, 381 Mass. 177 , 187 (1980). But, it is not appropriate in this case. Dr. Turcotte was in control of the note and mortgage and set its terms without any substantive input from Jorann or Barbara. He had a fiduciary duty towards them and it would be a complete violation of that duty if he was allowed to retain the benefit of the bargain ($8,000 from an ill woman, representing over 70% of her savings) without the burden that he chose. The law limits recovery to 18%, G.L. c. 140, §§ 90A & 90D, which is the appropriate disposition of this issue.
The Mortgage Will Not Be Reformed to Add a Cost of Collection Provision
Barbara requests that the mortgage be reformed to add a cost of collection provision to allow her to recover her attorneys fees and other costs in the event of foreclosure. No factual basis was shown to support such a request (e.g., mistake), equity will not imply it (see, e.g., T.F., 442 Mass. at 533-34), and it is particularly inappropriate given the high interest rate on the note (18%).
For the foregoing reasons, I find and rule that the mortgage is valid, has not been forgiven, has not been offset, and the balance owed is the original $8,000, plus interest at an annual rate of 18% from and after the date of the note, less the cash payments identified in detail above, all to be credited at the times they were made. The defendant is directed to calculate the amount owed accordingly and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010 and a hearing shall be held thereafter to resolve that disagreement. Final judgment shall be entered promptly after that resolution.
Keith C. Long, Justice
Dated: 12 January 2010
[Note 1] It is not my usual practice to refer to persons by their first names, but I do so here solely for clarity of reference since there are many family members with the same last name. The Lawrences include defendant Barbara Lawrence and her late mother Jorann. The Turcottes include plaintiff June Turcotte, her mother Claire, and her late father Dr. Rodolph Turcotte.
[Note 2] Dr. Turcottes registration to practice medicine in the Commonwealth was later revoked by the Board of Registration in Medicine as a result of his extremely serious violations of the physician-patient relationship with another patient (not Jorann). G.L. c. 112, § 61; In the Matter of Rodolph Turcotte, M.D., Adjudicatory Case No. 85-21, Final Decision and Order (Board of Registration in Medicine, Nov. 19, 1986). Those violations included his evidenced lack of interest in considering the impropriety of requesting a large loan from one of his patients during the course of therapy and his continuing to request such loans, as well as failing to intervene, after learning of an inappropriate relationship between that patient and one of his minor daughters. Id. at 29-34
[Note 3] Her action was prompted by Barbaras initiation of foreclosure proceedings.
[Note 4] The note, which I find was drafted in accordance with Dr. Turcottes instructions (see discussion below), provided for interest at 27%. By statute, however, the maximum allowable rate of interest is 18%. G.L. c. 140, §§ 90A & 90D.
[Note 5] June foreclosed on her parents with the intent and result of eliminating junior liens See discussion, infra.
[Note 6] The parties pre-trial memorandum contains their agreement that Jorann began living at 51 Phillips Place in 1977 (Joint Pre-Trial Memorandum at 22, ¶ 22) (Jan 24, 2007), but Junes testimony, which I find more accurate, was that Joranns residence began in late November 1976. Trial Transcript, Day 1 at 30 (Feb. 15, 2007).
[Note 7] His surviving records consist solely of a list of patient names and dates without any associated explanation or description of any kind. Trial Ex. 23. June, who acted as Dr. Turcottes secretary/receptionist, testified that she filled out the insurance forms that Dr. Turcotte submitted for payment based solely on a list of dates. Trial Transcript, Day 1 at 27.
[Note 8] Trial Ex. 91 (letter from Barbara Turcotte to Hampshire County District Attorney Michael Ryan (undated)).
[Note 9] Jorann described Dr. Turcottes bookkeeping as a shambles and noted that many of his sessions were by no means recorded on the Doctors appointment book. Trial Ex. 91. Dr. Turcotte charged different patients different amounts and sometimes charged nothing at all. All of this was consistent with his personal philosophy, in which he saw himself a community father to whom money should be given and he would, in turn, use it to help the needy. Trial Transcript, Day 3 at 108.
[Note 10] Dr. Turcotte was the founder of the World Fathers Association, which had the stated purpose of re-establishing the father male or female. Trial Ex. 102. It is unclear why Dr. Turcotte chose this particular stationery since the content of the letter has no obvious connection to that organization, except perhaps to indicate that the expenditures referenced therein were made by Dr. Turcotte in his role as a father. See n. 9, supra.
[Note 11] Jorann had Blue Cross/Blue Shield coverage through her ex-husband until his death, and Medicare/Medicaid coverage thereafter. The July 1983 letter from Dr. Turcotte to Barbara refers to Dr. Turcottes submission of a $4,000 bill to Welfare Medical Assistance for services he provided Jorann. Trial Ex. 102.
[Note 12] His check registers never show a balance above a few hundred dollars and often show less than twenty.
[Note 13] The money was the bulk of Joranns remaining inheritance from her fathers estate. After making the $8,000 loan, Jorann had between $2,000 and $3,000 left in savings.
[Note 14] The lawyers office and Dr. Turcottes office were in the same building.
[Note 15] Each of these payments is reflected either by a cancelled check, a notation in a check register, or by some other type of contemporaneous document that I find reliable (i.e., the checks and check registers, the entries and notes on the rent ledger (Trial Ex. 97), the notation cash written on the April 30, 1986 restaurant bill (Trial Ex. 93), and Joranns February 1987 dental bill (Trial Ex. 41), all of which (but only these) I find persuasive)). In the circumstances of this case, where (1) Dr. Turcotte was in breach of the rules of ethics when he obtained this loan from a severely ill patient under his psychiatric care; (2) his fiduciary duty to his patient required him (among other things) to keep accurate, complete, and understandable records; and (3) he was certainly in a better position than his mentally ill patient to keep those records, I do not find it appropriate to go beyond such demonstrated payments. In particular, given Dr. Turcottes erratic finances, I do not find it appropriate to bridge any gaps by inferring the existence of undocumented missing payments or credits. Moreover, I do not consider Dr. Turcottes statements in his July 18, 1983 letter to Barbara of having spent hundreds of dollars paying for meals [for Jorann], giving [Jorann] $80/wk and more, and having lost other BIG BUCKS [on the Lawrences] to be sufficiently specific or credible to use as the basis for any credit or payment towards the note and mortgage. Trial Ex. 102. Among other things, even assuming Dr. Turcotte made such expenditures (his frequent lack of funds suggests that these claims are exaggerated), there is no evidence that they were made for the purpose of paying down the note (even he makes no such claim in the letter), and certainly no evidence that either Jorann or Barbara agreed to accept them as such payments. Nor do I consider persuasive Dr. Turcottes handwritten notes on various restaurant bills that they were considered as interest payments towards the mortgage. He clearly liked to dine out and enjoyed company while doing so. There is nothing to suggest that Jorann ever saw these handwritten notes or considered his payment of a restaurant bill to be anything other than friendship. There is also nothing to suggest that she did not reciprocate by buying meals or doing favors for Dr. Turcotte on other occasions.
[Note 16] There are two later checks, one dated May 6, 1992 and the other dated May 27, 1992 that were both endorsed to MassElectric and were clearly marked gift and thus cannot be considered payments towards the note.
[Note 17] Even if some services were not covered, there is also a complete lack of proof on what this therapy was, what it accomplished (or could reasonably be expected to accomplish), and what (if anything) it was worth. Joranns condition does not appear to have improved while she was under Dr. Turcottes care and no expert testimony was proffered regarding the content, efficacy, professional standard, or monetary value of Dr. Turcottes therapy either in general or on any particular occasion. In the circumstances of this case, I do not find it appropriate to make any inferences regarding the value of the services from the fact that Dr. Turcotte received Blue Cross/Blue Shield or Medicare/Medicaid reimbursement for the bulk of them. There is no indication that any of these providers ever performed any investigation of the substance of Dr. Turcottes therapy and Junes own testimony established that (1) she was the person who filled out the forms submitted to the insurers and (2) she did so based solely on a list of dates she was given. Trial Testimony, Day 1 at 27.
[Note 18] Furthermore, the payment schedule and other circumstances are not consistent with such an arrangement. The 27% interest rate on an $8,000 note is only $180 per month, not the $250 Jorann was charged for room and board. Also, Joranns room and board was a monthly bill. Interest on the note was payable only twice a year (April and October).
[Note 19] Interestingly, it was Dr. Turcotte who insisted that this be done on these occasions, saying we need to have some record of these transactions. Trial Transcript, Day 1 at 108-09. The absence of such records for other occasions is thus telling.
[Note 20] See Dr. Turcottes July 20, 1997 letter, recognizing the continuing existence of the debt and reflecting Dr. Turcottes belief that the amount still owed was approximately $15,000. Trial Ex. 24.
[Note 21] As June testified (regarding a 1987 conversation between herself and Jorann), both of us knew that the loan still existed. Trial Transcript, Day 1 at 129.
[Note 22] See n. 21, supra.
[Note 23] Joranns mental state after December 1995 deteriorated to such a state that a guardian was appointed to supervise her medical treatments. She died while still under guardianship.
[Note 24] In fact, Jorann and Barbara were so estranged that the two neither saw each other nor spoke from 1987 until just before Joranns death in 1996 when they had a brief conversation on the telephone. Trial Transcript, Day 3 at 110-118.
[Note 25] June in particular was very kind to Jorann running errands for her, helping with her cleansing rituals, taking her to chemotherapy, and frequently dining with her.
[Note 26] This was subsequently accomplished when Father Joseph Quigley (a Turcotte family friend, now deceased) assigned his $30,000 mortgage to June and June foreclosed on it, ending the liens of all creditors junior to the Lawrence mortgage (the Lawrence mortgage was immediately senior to Quigleys). G.L. c. 244, §§ 1, 2.
[Note 27] Barbara was also in the depths of alcoholism at the time and did not begin to recover until 2003.
[Note 28] In fact, Barbara wrote back almost immediately stating her willingness to continue to hold the mortgage or sign off for him if Dr. Turcotte needs to have a lien on the property to keep from foreclosure, but reiterated, I cannot, however, sell the mortgage to June because my husband forbids it. He doesnt feel comfortable legally and I have to go by his judgment. Trial Ex. 10.
[Note 29] Barbara was under the impression that her uncle, Arnold Harum (Joranns executor), had taken Joranns ashes after the cremation. In fact, they were in the possession of the Turcotttes friends Andrew and Donna Chambers.
[Note 30] June learned of this only after Susan Smiths letter had been sent and personally ensured that Joranns ashes were given to Barbara immediately.
[Note 31] Junes theory against Barbara is that Barbara was unjustly enriched because Dr. Turcotte, his family, and his friends provided caretaking that Barbara was otherwise legally obligated to provide. I know of no authority imposing such an obligation on Barbara (the adult child of an adult parent receiving full social security disability benefits) and June cites to none. See T.F. v. B.L., 442 Mass. 522 , 533-34 (2004) (Equity is not an all-purpose judicial tool by which the right thing to do can be fashioned into a legal obligation possessing the legitimacy of legislative enactment.).
[Note 32] June was asked if there was ever such an agreement and answered yes, claiming she had been so told by both Dr. Turcotte and Jorann. Trial Transcript, Day 1 at 258-259. But she gave no details (dates, times, places, participants, context, and what was said by whom) and was increasingly vague and unclear as her testimony continued. She was not present during any discussion on this topic between Dr. Turcotte and Jorann and thus has no direct knowledge of what they said to each other, much less what they agreed. As best I can discern, the supposed agreement was not relayed to June in a single, definitive comment, but rather in a series of informal comments by Dr. Turcotte (dates and content unknown) from which June claims to have drawn that conclusion. Simply put, I do not believe her. Her account is too vague and contrary to the contemporaneous documents (in none of which did Dr. Turcotte or, for that matter, June ever claim the mortgage had been paid, even in part, through services and in all of which they clearly believed the mortgage to be due and owed) to give it any credibility. See, e.g., Trial Ex. 102 (A 1983 letter to Barbara from Dr. Turcotte, which indicates that Dr. Turcotte believed the money and services he provided to Jorann were gifts, not repayment for the loan. In the letter, after citing therapy services to Jorann and various payments he had made on her behalf, Dr. Turcotte writes that he has lost money on the Lawrences BIG BUCKS [sic] and that this may be incorrect when figured down to the penny but not by much. He does not mention the mortgage or any agreement regarding the mortgage, as one would expect him to do when taking account of how much Jorann had cost him. Also, if the services had paid the mortgage, as June claims, he would not have had reason to complain to Barbara about how much Jorann was costing him); Trial Ex. 17 (the checks marked interest that Dr. Turcotte continued to send to Jorann long after the date (April 1979) plaintiff contends these services would completely have paid off the note).
With respect to the supposed agreement that June attributes to Jorann, again Junes testimony was too vague to be believed and was contradicted by contemporaneous documents. I suspect the reference was to her conversations requesting Jorann to release or assign the mortgage. But, as discussed above, Jorann refused to do so on each of these occasions. Had it truly been agreed that the mortgage would be offset by services, the request would have focused on (or at least mentioned) that offset. There also would have been at least some reference to it in the various letters requesting assignment/release. In short, the theory of offsets is very much an afterthought, never mentioned until the lawyers became involved. See Trial Ex. 17 (letter to defendants attorney Barry Finkel from the plaintiffs then-attorney Joseph Wilhelm III (Aug. 1, 2005).
[Note 33] Her mistake was understandable. Barbara knew that Dr. Turcotte had been making payments on the note while Barbara was still in the Northampton area and assisting Jorann with her finances (January April 1978), may have known of his subsequent payments up until the time Barbara cut off all contact with her mother (1987), and could reasonably assume that Dr. Turcotte continued to make payments in the nine years prior to Joranns death (the period in which Barbara and Jorann were not speaking).
To address plaintiffs argument that Barbara should have known that sufficient payments had not been made during this nine year period, I should explain the reason for the lack of contact between Barbara and Jorann and why it (and the resulting lack of knowledge) cannot be held against Barbara. In their last conversation (except for the one, nine years later, just before Joranns death), Jorann told Barbara that she (Jorann) had had an affair at the time she became pregnant with Barbara and thus could not be sure that the man Barbara had always considered her father (Joranns then-husband) was in fact her father. Trial Transcript, Day 3 at 112-113. Coupled with Joranns previous statement (truthful or not Barbara believed it to be true) that Jorann had been having a sexual relationship with Dr. Turcotte (id. at 109-110), Barbara decided I couldnt trust her not to tell me another life-altering statement like that, so I didnt want to talk to her directly anymore. Id. at 113.
[Note 34] His reported elation when he received the note and mortgage does not indicate he considered it forgiven. In light of his later acts, I interpret it as his excitement that since the note and mortgage were still due and owing, they could be used in a foreclosure to cut off junior liens if he could convince Barbara to assign them to June (as he subsequently requested, Trial Exs. 24, 25).
[Note 35] The effective date was ninety days after its February 12 enactment. Massachusetts Constitution, Amend. Article 48, Ref., Pt. 1.
[Note 36] There were partial payments at least every six years through February 14, 1992. Thereafter, there were written acknowledgments of the debt (requests for its assignment) on July 27, 1997 (Trial Ex. 24) (Dr. Turcotte), January 22, 2000 (mailed February 17, 2000) (Trial Ex. 52) (Susan Smith, on behalf of Dr. Turcotte and June), and May 15, 2000 (Trial Ex. 53) (June, on behalf of Dr. Turcotte and herself).