STEPHEN L. BENOIT v. JAMES THORNHILL

This is a dispute between two former friends and business associates over 8 Linden Road in East Sandwich, Massachusetts. 8 Linden Road has been plaintiff Stephen L. Benoit's home since 1987. He used to own the property, but he lost it to foreclosure in 1994. He remained in his house only because he convinced a friend, George Howarth, to buy the house from the foreclosing bank and rent the house to Benoit. Benoit hoped to buy back 8 Linden Road once his credit improved.

Mr. Howarth kept Mr. Benoit as a tenant until October 2003 when, tired of being Benoit's landlord, Howarth sold 8 Linden Road to another friend of Benoit's, defendant James Thornhill. According to the most recent transfer certificate of title on record for 8 Linden Road, Thornhill owns the property. He nevertheless promised several times starting in October 2003, and most recently in late 2016, to sell 8 Linden Road to Benoit. Each time Benoit was obligated to close, he didn't – for reasons having nothing to do with Thornhill's conduct.

Twice a somewhat exasperated Thornhill has started proceedings to evict Benoit. The second time around, Benoit filed suit here (8 Linden Road being registered land) and asked this Court to impose a constructive trust or, in the alternative, a resulting trust over 8 Linden Road, as he claims he's been the property's rightful owner all along.

The parties tried the case to this Court on July 23 and 25, 2018. Based on the parties' admissions, the testimony at trial, and the exhibits received into evidence, the Court finds these facts in addition to those described earlier in this decision:

1. In 1987, Mr. Benoit and his then-wife Mary Benoit bought a residence at 8 Linden Road. The Benoits moved into 8 Linden Road along with their two young children soon after buying it.

2. In 1994, the holder of a mortgage on 8 Linden Road, Mansfield Cooperative Bank, began efforts to foreclose on the property. By that time, the Benoits had separated, but Mr. Benoit continued to live at 8 Linden Road.

3. Mr. Benoit is in the construction business. He has conducted business through a number of entities, one of which operated in the 1990s and was called Superior Building Associates. Superior had two owners: Benoit and George Howarth.

4. In late 1994, Mr. Benoit told Mr. Howarth that Mansfield Cooperative was planning on auctioning 8 Linden Road. Benoit feared losing his home. Benoit asked Howarth if he would try to buy 8 Linden Road at auction and keep Benoit as a tenant, with the prospect of selling 8 Linden Road to Benoit once his credit improved. Howarth agreed to the deal. While Howarth didn't buy 8 Linden Road on the day of the auction, Mansfield Cooperative eventually sold the property to Howarth for $215,000. Benoit became Howarth's tenant.

5. In 1997 or 1998, Superior Building failed. That failure put financial stress on both Mr. Benoit and Mr. Howarth. By late 1999, Howarth wanted to wash his hands of 8 Linden Road. He thought he had a solution in October 1999, when Benoit signed an agreement promising to buy the property. The stated purchase price was $185,000, close to the amount of the outstanding debt on 8 Linden Road.

6. Messrs. Howarth and Benoit were supposed to close on the sale of 8 Linden Road in January 2000. They didn't, as Benoit had bad credit. For the next three years, Howarth and Benoit tried to renegotiate their October 1999 agreement. By the fall of 2001, it became clear that Benoit didn't have the resources to buy the property. He thus tried to locate someone who could assist him with staying in the house (as Howarth had done in 1994).

7. Mr. Benoit eventually found help from a friend and business associate, Mr. Thornhill. Like Benoit, Thornhill was in the construction business, and by 2003, he was doing lucrative work on many of Benoit's projects, all on an arms-length basis. In their first conversation about 8 Linden Road, Benoit told Thornhill that Mr. Howarth was threatening to kick Benoit out of 8 Linden Road unless he came up with the money to buy it. Out of friendship and in the interests of enhancing his business relationship with Benoit, Thornhill agreed to help.

8. As of the fall of 2003, Mr. Howarth was demanding $425,000 for 8 Linden Road. Mr. Thornhill agreed to that price. Howarth required a $10,000 deposit towards the purchase price. Mr. Benoit paid $10,000 via check to Thornhill, and Thornhill used the money to pay the deposit.

9. Mr. Thornhill next applied for and received a $200,000 loan from Dean Bank, to be secured by a first mortgage on 8 Linden Road. Thornhill also convinced Howarth to take a $200,000 note, secured by a second mortgage on the property, payable in full (a "balloon" payment) at the end of three years. Interest was due in the second and third years.

10. Finally, at the closing on 8 Linden Road, Thornhill paid out of pocket the $15,000 balance of the purchase price plus all closing costs. Benoit didn't reimburse Thornhill for that balance or those costs. And while Benoit had contributed $10,000 towards the purchase price of 8 Linden Road, he introduced no evidence at trial that he and Thornhill agreed that the $10,000 payment gave Benoit a proportionate ownership share in 8 Linden Road.

11. Mr. Thornhill took title to 8 Linden Road on October 31, 2003 pursuant to a Certificate of Title on record with the Barnstable County Registry District of the Land Court as Document No. 974,088, under Certificate No. 171081.

12. In the fall of 2003, Mr. Benoit and Mr. Thornhill had the following oral agreement concerning 8 Linden Road: Thornhill would hold title to the property after he bought it from Mr. Howarth. Benoit could continue to live at 8 Linden Road, as a tenant. Benoit had to pay monthly rent equal to Thornhill's senior-mortgage payments, plus escrowed insurance premiums and real-estate taxes. (Benoit's rent didn't include Thornhill's interest expense for the Howarth balloon note.) At any time before Howarth's note was due, or at the time it was due, Benoit would have the right to buy 8 Linden Road at its then-market value.

13. Mr. Benoit agreed to the arrangement described in ¶ 12 knowingly and voluntarily. Benoit introduced no evidence at trial that, prior to entering into the arrangement, Mr. Thornhill said anything false or misleading about 8 Linden Road or the transaction. Thornhill also was not then in, and never since has been in, a fiduciary relationship with Benoit. Thornhill was not then in, and never since has been in, a relationship of trust and confidence with Benoit. Benoit introduced no evidence that Thornhill was anything in the fall of 2003 other than a friend and someone with whom Benoit conducted business on an arms-length basis.

14. From October 2003 through October 2006, Mr. Benoit paid his rent, although often late and often only after Mr. Thornhill reminded him. Maintenance was up to Benoit; if he chose to maintain the property, he had to pay for that. (Thornhill didn't make inspection or maintenance visits to the property.) Benoit paid 8 Linden Road's homeowners-association fees. He also paid for various capital improvements. In 2004, he paid $8,100 to replace 8 Linden Road's boiler. In 2005, he paid $1,920 to replace its water heater. Benoit didn't ask Thornhill for permission to incur these expenses.

15. Mr. Howarth's note came due in October 2006. Mr. Benoit told Mr. Thornhill at that time that Benoit couldn't buy 8 Linden Road. Thornhill thus returned to Dean Bank and refinanced both of 8 Linden Road's mortgages, paying off the original Dean Bank and Howarth mortgages and granting Dean Bank a new $392,000 mortgage. Thornhill paid all of the costs of refinancing his two 2003 mortgages.

16. After Mr. Thornhill refinanced his mortgages, Mr. Benoit continued as a tenant of 8 Linden Road on the same terms as before, although his rent jumped on account of Thornhill's higher mortgage costs. (As of 2015, Benoit's rent was $3500 monthly, or $100 over Thornhill's monthly mortgage/insurance/tax expenses.) Benoit continued his same rent-payment patterns as before the refinancing. His checks for rent payments sometimes bounced. He continued to pay all maintenance expenses for 8 Linden Road. He also paid for various capital items, including a well in 2007, a garage door in either 2008 or 2014, a deck in 2009, and roofing in various years. (Benoit and his children Tiffany and Daniel also testified to installing new siding and windows, but none of these witnesses said when these projects happened.) Benoit claimed to have spent $60,000 in improvements from October 2003 to the present. Benoit didn't ask Thornhill for permission to incur these expenses. Benoit also didn't obtain any building permits for any of his work, although no witness identified which projects required building permits.

17. Mr. Benoit made several substantial payments to Mr. Thornhill between May 2006 and July 2008 (see Trial Exhibits 17-23). At trial, Benoit first admitted that he did not know the purpose of the payments, but after describing his business and personal payment practices, he claimed that Trial Exhibits 17-23 may have been intended to pay down the 8 Linden Road "mortgage." The Court rejects that claim for the following reasons: (a) Benoit conceded that his testimony was speculative; (b) the checks included in Trial Exhibit 10, some of which predate and some of which postdate Trial Exhibits 17-19, show that when he made payments relating to 8 Linden Road, Benoit would note that on the check (often including the word "mortgage"), but only Trial Exhibit 23 mentions 8 Linden Road; (c) between May 2006 and July 2008, Benoit and Thornhill had an active business relationship (one that included projects whose names appear on in the memo lines of Trial Exhibits 17-19), and hence Benoit had reasons for making payments to Thornhill apart from 8 Linden Road; and (d) four of the payments (Trial Exhibits 17-20) precede the deadline for payment of Mr. Howarth's note (three of them are from September 2006), a time when Benoit claimed to lack the personal resources necessary to buy 8 Linden Road.

18. In 2015, Mr. Thornhill brought a summary-process action against Mr. Benoit in Barnstable District Court. The action is called Thornhill v. Benoit, Barnstable District Court # 1525SU245.

19. On September 17, 2015, Messrs. Benoit and Thornhill signed an agreement for judgment in Thornhill (the "Agreement for Judgment"). Counsel for Thornhill hand-wrote the Agreement and he and Benoit signed it at the courthouse. Benoit didn't have counsel, but Benoit admitted at trial that the Agreement was the result of back-and-forth negotiations between him and Thornhill's counsel.

20. The Agreement for Judgment resolved all issues through the date of the agreement concerning Mr. Benoit's unpaid rent. The Agreement for Judgment also obligated Benoit to purchase 8 Linden Road by March 31, 2016 for $593,000. The Agreement for Judgment required both parties to execute a purchase and sale agreement memorializing the terms of the Agreement for Judgment.

21. Messrs. Benoit and Thornhill negotiated a purchase and sale agreement for 8 Linden Road, which Benoit signed on November 12, 2015 (the "2015 Agreement"). At trial, Benoit claimed that he signed the 2015 Agreement under duress. The Court finds the following with respect to that claim: (a) Benoit had sufficient mental capability in 2015 to operate a thriving construction business; (b) an attorney reviewed the 2015 Agreement for Benoit's benefit prior to Benoit signing it; and (c) while negotiating with Thornhill's counsel under so-called duress about 8 Linden Road, Benoit was negotiating construction-business matters separately and directly with Thornhill; Benoit admitted that he felt no duress in those negotiations. The Court thus rejects Benoit's claims of duress.

22. Mr. Benoit also claims that Mr. Thornhill and his counsel "threatened" Benoit into signing the 2015 Agreement. Benoit identified at trial the statements he considered threatening; there were only two. Both indicated only that Thornhill would exercise his legal rights (in one statement, the right to seek Benoit's eviction from 8 Linden Road; in the other statement, the right to retain a $7,500 deposit from Benoit and keep 8 Linden Road). The Court thus rejects Benoit's claims that Thornhill used improper threats to induce Benoit to sign the 2015 Agreement.

23. Included in the 2015 Agreement is Rider "A." Paragraph 10 to Rider "A" is labeled "ENTIRE AGREEMENT," and states: "The entire transaction is contained in this Agreement. All other oral or written communications are superseded." Nowhere in the Agreement or Rider "A" do the parties agree to, or acknowledge, any trust relationship between them concerning 8 Linden Road.

24. Under the 2015 Agreement, Mr. Benoit promised to close on his purchase of 8 Linden Road on March 31, 2016. Benoit didn't close on that date. Mr. Thornhill agreed to four extensions of the closing, first to April 29, 2016; then to June 30, 2016; then to September 30, 2016; and then to December 30, 2016.

25. Mr. Benoit didn't close on December 30, 2016. At each closing date under the 2015 Agreement, Mr. Thornhill and his wife Danielle were ready, willing and able to close.

26. When it became apparent that Mr. Benoit couldn't (or wouldn't) close on December 30, 2016, the parties attempted to negotiate a new purchase and sale agreement, with an expected closing date of March 31, 2017. Benoit claimed not to have signed that agreement; in any event, he didn't purchase 8 Linden Road on March 31, 2017.

27. Mr. Benoit provided no evidence at trial concerning the current market value of 8 Linden Road or what its value would be less the improvements he made after October 2003.

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General Laws c. 259, § 1, known as the "Statute of Frauds," provides in pertinent part: "No action shall be brought . . . [u]pon a contract for the sale of lands, tenements or hereditaments or of any interest in or concerning them; . . . [u]nless the . . . contract . . . is in writing and signed by the party to be charged. . . ." See also Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703 , 710 (1992). "However plain and complete the terms of an oral contract for the sale and purchase of real estate, it cannot be enforced against a party thereto unless, as required by the statute of frauds, he, or his agent, has signed a written memorandum which recites the essential elements of the contract with reasonable certainty." Michelson v. Sherman, 310 Mass. 774 , 775 (1942). The law nevertheless recognizes that parties should not be allowed to turn the Statute's protections into a sword: a party who has agreed, perhaps orally or in a deficient writing, to a legitimate real-estate transaction shouldn't be allowed to invoke the Statute if in so doing that party would be taking unfair advantage of the other transacting party. The doctrines of constructive and resulting trusts are designed to prevent such unfairness, and Mr. Benoit claims he's entitled under both doctrines to a declaration that he's the rightful owner of 8 Linden Road.

A constructive trust is aimed at preventing unjust enrichment resulting from fraud, a violation of a fiduciary duty, mistake, or "other circumstances" in which a title holder's acquisition of legal title to property results in unjust enrichment. Fortin v. Roman Catholic Bishop of Worcester, 416 Mass. 781 , 789 (1994); see also Nessralla v. Peck, 403 Mass. 757 , 762-63 (1989). A constructive trust is not a true trust, Hatton v. Meade, 23 Mass. App. Ct. 356 , 361 (1987), but once a court determines that one exists, that court can order the unjustly enriched party (the constructive "trustee") to transfer the property to the "beneficiary" of the constructive trust.

Mr. Benoit asserts that a constructive trust has arisen in his favor for two reasons: that in connection with Mr. Thornhill's acquisition of 8 Linden Road, Thornhill breached a duty to Benoit, and also committed fraud. Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235 (2007), says this about Benoit's first argument:

The court may impose a constructive trust where one acquires an interest in property in breach of a legal duty to one who has granted that interest. The duty may be a fiduciary duty, but it need not be a fiduciary duty that is established as a matter of law, such as that of attorney to client or trustee and beneficiary. A fiduciary duty may arise from the circumstances. A constructive trust may also be appropriate to remedy the breach of duty arising from a relationship of "trust and confidence" that is not a fiduciary relationship established as a matter of law, such as a relationship in which one party confides confidential information to one who then uses that information for his own benefit and to the declarant's harm. The confidential relationship, however, must comprise more than "[m]ere respect for the judgment of another or trust in his character . . . ."

Id. at 247-48 (citations omitted), quoting Meskell v. Meskell, 355 Mass. 148 , 151 (1969). Benoit's breach-of-duty claim fails in two respects under Maffei. First, Benoit offered no proof that Thornhill owed a fiduciary or any other duty (besides contractual) to the person who granted Thornhill his interest in 8 Linden Road, George Howarth. Thornhill's relationship with Howarth was as an arm's length purchaser. Howarth also was not acting on Benoit's behalf when Howarth sold 8 Linden Road in October 2003; by then, Howarth's obligation to sell the property to Benoit had lapsed, and whatever social, business or other relationship Howarth had enjoyed with Benoit had soured. Howarth sold 8 Linden Road for his benefit, not Benoit's.

Second, even if Mr. Benoit had proven that, as of October 2003, he had some sort of equitable interest in 8 Linden Road, he failed to prove that Thornhill bought and retained 8 Linden Road in violation of a fiduciary duty toward Benoit, or by taking advantage of a relationship of "trust and confidence" with Benoit. Benoit failed to prove that Thornhill served as any sort of fiduciary toward Benoit. Thornhill was merely a friend and business associate of Benoit's. Thornhill wasn't a close family member, nor did he have any relationship of "trust and confidence" with Benoit. Thornhill's strongest legal relationships with Benoit have been contractual, and not those of a fiduciary or confidante. Thornhill's contractual relationships with Benoit don't provide a basis for imposing a constructive trust on 8 Linden Road.

Mr. Benoit's fraud claim didn't get past a request for a directed finding at trial. Benoit based his fraud allegations on Mr. Thornhill's failure to convey 8 Linden Road, despite multiple agreements to do so. Setting aside whether Thornhill had the contractual right not to sell 8 Linden Road (Benoit having failed multiple times to uphold his end of various bargains), Benoit never alleged or proved that Thornhill misrepresented any facts concerning 8 Linden Road "with the clear knowledge that they were untrue or with the false implication that [Thornhill] was speaking from personal knowledge." Maffei, 449 Mass. at 251. Even if Thornhill breached an oral agreement to hold the property indefinitely for Benoit until he was ready to buy it (there was no such agreement), a "subsequent refusal to carry out an oral promise, standing by itself, is not . . . fraud" remediable by declaring a constructive trust. Id. at 252, quoting J.R. Nolan & L.J. Sartorio, Equitable Remedies § 351, at 496 (2d ed. 1993).

Mr. Benoit thus hasn't established his right to have this Court declare that he's the beneficiary of a constructive trust in 8 Linden Road. The Court cautions the parties from reading anything into that holding. The Court hasn't reached, and won't reach, the question of whether Benoit has a claim against Mr. Thornhill for unjust enrichment, quantum meruit, or other damages theories relating to Benoit's upkeep of 8 Linden Road, his capital improvements, and his $10,000 contribution in October 2003 towards Thornhill's purchase of the property. The Court leaves those claims to a court that has jurisdiction over them.

The Court now turns to Mr. Benoit's request for a declaration of a resulting trust in 8 Linden Road. "A resulting trust in real estate arises where one party furnishes the consideration to purchase property, not intending a gift or advancement, yet title is taken in the name of another." Fortin, 416 Mass. at 789. The doctrine presumes that, "in the absence of anything to show the contrary, he who supplies the purchase price intends that the property bought shall inure to his own benefit and not that of another, and that the conveyance is taken in the name of another for some incidental reason." Quinn v. Quinn, 260 Mass. 494 , 501 (1927). A resulting trust arises at the time of the execution of the deed, see id., and thus subsequent payments by the party claiming entitlement to a trust do not create a resulting trust unless they form part of the originally contemplated consideration for the purchase. See Barnard v. Jewett, 97 Mass. 87 , 88 (1867) (no resulting trust when payments are made after conveyance).

It is Mr. Benoit's burden to "prove that he furnished himself the entire consideration or a specific and definite part thereof, for which it was intended he should receive a determinate and fixed fraction of the whole estate conveyed [and] that it was not intended at the time of the conveyance that [Thornhill] should take a beneficial interest in the property by way of gift, settlement or advancement." Pollock v. Pollock, 223 Mass. 382 , 384 (1916). "[A] general contribution of a sum of money towards the entire purchase is not sufficient to produce" a resulting trust. Quinn, 260 Mass. at 501, quoting Bailey v. Hemenway, 147 Mass. 326 , 328 (1888). "The contribution must be of a clearly defined sum of money and the share of the estate must be the whole or an exact part." Karas v. Karas, 288 Mass. 460 , 463 (1934).

Mr. Benoit bases his resulting-trust claim on his oral agreement with Mr. Thornhill in the fall of 2003, when Mr. Howarth agreed to sell 8 Linden Road to Thornhill, and the events surrounding that transaction. Taken as a whole, the facts don't give rise to a resulting trust. First, Benoit didn't provide all of the consideration for Thornhill's purchase of 8 Linden Road: Benoit contributed only $10,000. Thornhill paid the balance of the $425,000 purchase price, all closing costs, and obligated himself under two mortgages. Pollock and Karas both hold that where the party claiming a resulting trust fails to prove that he or she has provided the entire consideration for the alleged trust property, that party must prove an agreement for a commensurate partial interest in the property or else the party takes no interest. See Pollock, 223 Mass. at 384; Karas, 288 Mass. at 463. Benoit offered no evidence that his $10,000 payment was for a clearly defined share of 8 Linden Road. Instead, his payment falls into Quinn's category of a "general contribution" towards the purchase price, a contribution that might give rise to a claim for damages (say, as an unreimbursed "advancement" or loan, see Pollock, 223 Mass. at 384), but not something that triggers a resulting trust.

Even if the parties' arrangements in the fall of 2003 gave rise to a resulting trust, those arrangements (and any other agreement between the parties concerning 8 Linden Road, prior to November 12, 2015) didn't survive the parties' execution of the 2015 Purchase and Sale Agreement. Paragraph 10 of Rider "A" to that Agreement provides: "The entire transaction is contained in this Agreement. All other oral and or written communications are superseded." This clause wipes out all prior agreements between Thornhill and Benoit concerning the sale of 8 Linden Road, and leaves only the 2015 Agreement. See Frostar Corp. v. Malloy, 63 Mass. App. Ct. 96 , 104-05 (2005) (when purchase and sale agreement includes a clause that states that, once executed, it becomes the agreement of the parties, all previous agreements are superseded upon execution). The 2015 Agreement required Thornhill to sell 8 Linden Road only if Benoit performed his obligations under that Agreement. The Agreement doesn't call for the creation or maintenance of any trust or other relationship between the parties. Thus, once Benoit failed to close under the 2015 Agreement, Thornhill owed Benoit no further duty (contractual or otherwise) to sell to him 8 Linden Road.

Judgment to enter accordingly.