JAMES J. CARNEY, JR., v. CAMILLE M. CARNEY, MARIO LENTO, and PATRICIA NOLAN LENTO.

James J. Carney (James) and Camille M. Carney (Camille) are in the midst of a divorce. During their marriage, they lived in the three-family house on Orient Avenue in East Boston in which Camille grew up. In 1992, Camille's mother conveyed the property to Camille and her sister, subject to a life estate. After her mother's death, Camille and her sister created a trust to hold the property, but they soon ran into a dispute over the sister's obligations to pay for repairs. The solution in 2011 was for Camille's son and daughter-in-law, Mario Lento (Mario) and Patricia Nolan-Lento (Patricia) to buy out the sister's share of the property. A few months later, Camille conveyed her interest in the property to Mario and Patricia. James has never held an interest in the property.

Camille moved out of the property in 2017 and filed for divorce. James continues to live at the property. In connection with the divorce proceedings, James has brought this action, claiming that Camille's conveyance of her interest in the property to her son and daughter-in-law created a resulting or constructive trust for her benefit that includes a life estate. He also claims that he has homestead rights that preclude Mario and Patricia from seeking rent from him or evicting him. Mario and Patricia seek a declaration that they hold title free and clear of any interest of James or Camille. After trial, I find that Camille's conveyance of her interest to James and Patricia was just what they say it was: a gift intended to relieve Camille of the burden of maintaining and repairing the property, accompanied by the mutual commitment of mother and son for her to live there unless and until Mario and Patricia needed to sell the property. There are no grounds for imposing a resulting or constructive trust, there was no intent to create a life estate, and neither Camille nor James hold any legal or equitable interest in the property. Finally, while James does have a homestead in the property, that does not bar Mario and Patricia from seeking to recover possession of the property.

Procedural History

The Complaint in this action was filed in the Suffolk County Superior Court on November 21, 2017. The Amended Complaint and Plaintiff's Motion for Temporary Restraining Order and/or Preliminary Injunction were filed on December 22, 2017. The Answer of Camille M. Carney was filed on January 8, 2018. The Answer of Mario Lento and Patricia Nolan Lento and the Opposition to Plaintiffs Motion for Temporary Restraining Order were files on January 16, 2018. The motion for temporary restraining order was heard on January 16, 2018, and allowed on January 17, 2018. The Defendants' Joint Motion to Dismiss, Memorandum in Support of Motion to Dismiss, Opposition to Defendants' Joint Motion to Dismiss; and Memorandum is Support of Opposition were filed on January 29, 2018. The motion to dismiss was heard on February 7, 2018, and was denied on February 12, 2018. The Defendants' Motion to Transfer to Land Court was filed on July 16, 2018, and was allowed on July 19, 2018.

This action was transferred to the Land Court from the Suffolk County Superior Court on September 6, 2018. The Defendants' Counterclaim was filed on October 15, 2018. The Defendants' Mario Lento and Patricia Nolan Lento's Motion to Reconsider Issuance of a Bond was filed on October 22, 2018. The Plaintiff James J. Carney Jr's Opposition to Defendants' Mario Lento and Patricia Nolan Lento's Motion to Reconsider Issuance of a Bond was filed on November 1, 2018. The Answer of Defendant in Counterclaim James Carney to the Counterclaim of Mario Lento and Patricia Lento was filed on November 5, 2018. The Defendants' Mario Lento and Patricia Nolan Lento's Motion to Reconsider Issuance of a Bond was denied on November 19, 2018.

The Joint Pre-Trial memorandum was filed on December 11, 2018. The Pre-Trial Conference was held on December 14, 2018. Trial was held on January 28, 2019. Exhibits 1-35 were marked. Testimony was heard from James Carney, Jr., Camille Carney, and Mario Lento, and the deposition testimony of Ellen Grossman was admitted. On January 28, 2018, the Defendants' Motion for Involuntary Dismissal/Required Finding was filed and was denied without prejudice. The Plaintiff James J. Carney's Post-Trial Brief was filed on March 13, 2019. The Defendants' Mario Lento and Patricia Nolan Lento Post-Trial Memorandum was filed on March 20, 2019. The court heard closing arguments on March 21, 2019, and the case was taken under advisement.

Facts

1. James and Camille were married on September 16, 1984, and remain married subject to a pending divorce proceeding. Exh. 1; Tr. 1:80.

2. Mario is the son of Camille from a prior marriage and Patricia is his wife. Exh. 1.

3. During most of their marriage, with the exception of about 10 years, James and Camille resided at 98-100 Orient Avenue, East Boston, Massachusetts (the property). Exh. 1. The property is a three-unit building. Until her death, Camille's mother lived in one of the units, Camille and James lived in the other, and the third was rented out. After the mother's death, two units were rented. Tr. 1:25-28, 30, 80-81.

4. James testified that he first moved into the property in 1980, married Camille in 1984, and lived in the property until 1986. He testified that he lived in Saugus from 1986, until he moved back into the property in about 1999. He further testified that he has had no primary residence other than the property since 1999. Tr. 1:24-30. I credit James's testimony. James has never held any title in the property. Tr. 1:45.

5. By a deed dated December 16, 1992, and recorded in the Suffolk Country Registry of Deeds (registry) at Book 18004, Page 34, Josephine E. Gallo Riccioli (Josephine) conveyed the property to Camille and Anna M. Gallo (Anna), subject to a life estate in the property for the benefit of Josephine. Josephine, who was Camille and Anna's mother, died in 1998. Exhs. 1-2; Tr. 1:82-83.

6. By a deed dated October 16, 2002, and recorded in the registry at Book 27,401, Page 140, Camille and Anna conveyed the property to Camille M. Carney and Anna M. Gallo, as Co-Trustees of the 100 Orient Avenue [Family] Trust (Trust). Exhs. 1, 3, 4; Tr. 1:83-84.

7. After their mother died in 1998, Camille and her sister Anna owned the property together, first as co-tenants and then as beneficiaries of the Trust. Camille collected the rents and oversaw maintenance. Camille and Anna were supposed to share the expenses associated with the property, but Anna did not meet her end of the agreement. Tr. 1:32, 39-40, 45-46, 84-85; Exhs. 3, 4.

8. After negotiating with Anna's son, Mario and Patricia purchased Anna's fifty percent beneficial interest in the Trust for $200,000 in May 2011. Camille's attorney Ellen Grossman prepared documents in connection with the transfer of Anna's interest to Mario. Mario replaced Anna as trustee of the Trust, and Camille and Mario co-owned the property as 50% beneficiaries of the Trust. Tr. 1:33, 85-88, 109-110; Exhs. 1, 5, 35.

9. After Mario and Patricia acquired Anna's interest in the property, they replaced the roof at a cost of approximately $38,000, and began renovations on the second floor. Tr. 1:111-112.

10. By a deed dated October 26, 2011, and recorded in the registry at Book 48,666, Page 28, Camille M. Carney and Mario Lento as Trustees of the 100 Orient Avenue Family Trust conveyed the property to Mario and Patricia, husband and wife, as tenants by the entirety, for consideration of $10. Exhs. 1, 6, 7; Tr. 1:88-90.

11. Mario testified that he and Patricia took over Camille's interest in the property because it was too much of a burden on Camille, it could never bring in enough money to run itself, and required hundreds of thousands of dollars of worth of repairs, making it too expensive for Camille to live there. Tr. 1:112-113. I credit Mario's testimony.

12. Camille testified that when she conveyed her interest in the property to Mario and Patricia in October 2011, she had "an agreement with Mario that if he needed the apartment, in case that he needed me out to rent it, or he needed to sell, that I would leave." Tr. 1:95-96. Camille further testified that "what I did with my son and his wife was, I didn't have a living estate that I could stay there. I made it so in case he needed that place to sell it for whatever reason that he had, and I had to move out, I was fine with that. I didn't want to put the burden on his that I was able to stay there the rest of my life." Tr. 1:96. I credit Camille's testimony.

13. Ellen Grossman, Camille's attorney, testified at her deposition that in the context of the transfer of Camille's interest in the property, she discussed the option of reserving a life estate with Camille, and that a life estate in favor of Camille was not mistakenly omitted from the deed to Mario and Patricia. Exh. 35, pp. 39-40. However, she also testified that she had an understanding that Camille "was to be allowed to live in the apartment for the rest of her life." Exh. 35, p. 24.

14. When asked "do you have any agreement with your mother that she can live [in the property] absolutely forever," Mario testified that "I never had to give my mother an agreement…My mother knows that I love her. I love her. You know what, I have an agreement that she can come live with us…in California, but I can still sell that house, even though, like, she can't hold me to that." Tr. 1:119. Mario further testified that he put no pressure on his mother to convey her interest in the property to him and Patricia. Tr. 1:120. Finally, Mario testified that taking over Camille's interest in the property subject to a life estate for her benefit would have been too much of a burden. Tr. 1:121. I credit Mario's testimony.

15. I find that Camille transferred her interest in the property to Mario and Patricia as a gift, so that they could take over paying the expenses of maintaining the property. She did not transfer her interest in exchange for a life estate in the property. Rather, out of mutual love Mario and Patricia allow Camille to reside in the property as she has for her entire life, and Camille has agreed that if Mario and Patricia need to sell the property, they may do so and she will be allowed to live with them in California.

16. James testified that he was aware in 2011 that Mario and Patricia had purchased Anna's interest in the property but did not learn that Mario and Patricia had acquired Camille's interest until 2017. Tr. 1:35-36, 47-48, 56, 67-71. Mario testified that he had lots of conversations with James about him and his wife acquiring Camille's interest in the property. Tr. 1:113, 116-117. I credit Mario's testimony. James regularly read and printed out emails to Camille because Camille did not have email and used James's email address, including emails from Camille's attorney. Tr. 1:36-38, 76-77; Exh 17. James also communicated directly with Mario about repairs to the house. Exhs. 18-21. I find that James knew or reasonably should have known that Mario and Patricia acquired Camille's interest in the property in October 2011.

17. Since acquiring the property in 2011 Mario has filed tax returns which included expenses for the property, including capital improvements, which totaled approximately $321,000. Tr. 1:118-119.

18. After Mario and Patricia assumed Camille's interest in the property, Camille continued to look after the property in the role of a property manager. Camille continued to collect rents as she had since she and Anna owned the property. Tr. 1:40-41, 44-47, 58-59.

19. At the time of the October 26, 2011, conveyance James and Camille were married, living in the property as their primary residence, and the property was not encumbered by any mortgage. Exh. 1. James and Camille continued to live together at the property until Camille moved out on or about February 27, 2017. Exh. 1.

20. Camille filed for divorce in June 2017. Exh. 1.

21. Camille still takes care of the property by collecting rents for Mario and Patricia, dealing with contractors, and visiting the property many times each week. Tr. 1:42-43, 100-101.

22. James continues to reside at the property. Historically and continuing subsequent to the filing of the divorce action, James has paid Camille $500 per month, but such payments were not rent. Since the divorce action, James pays the oil and television bills for the property. Other than the payment of $500 per month to Camille, James has made no financial contributions to the repair or maintenance of the property. Tr. 1:46-47, 65-66; Exh. 1.

23. James has never executed a formal waiver of any homestead right pursuant to G.L. c. 188, § 10(b). Exh. 1.

24. Mario testified that he has taken the position that James owes rent for living in the property since the time that Camille moved out in 2017. Tr. 1:105-106. He further testified that he caused a Notice to Quit to be served upon James which stated that Mario claims unpaid rents in the amount of $2,500.00 per month from July 2017. Tr. 1:108.

Discussion

In Count I of the Amended Complaint James seeks a declaration that Camille's interest in the property, purportedly conveyed to Mario and Patricia in October 2011, is held by Camille in either a resulting or constructive trust, and further that Camille retains a life estate in the property. In Count II of the Amended Complaint James seeks a declaration as to whether he retains unreleased homestead rights in the property and if he does, what the extent of those rights may be. In their Counterclaim, Mario and Patricia seek to extinguish any claim of homestead James has in the property and further seek a declaration that Mario and Patricia own the property in fee simple absolute.

"A resulting trust 'is a reversionary, equitable interest implied by law in property that is held by a transferee, in whole or in part, as trustee for the transferor or the transferor's successors in interest.'" Citizens Bank of Massachusetts v. Coleman, 83 Mass. App. Ct. 609 , 612 (2013), quoting Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569 , 577 n.10 (2012). "There is no presumption of a resulting trust in" the case of "gratuitous transfers to a family member." Id. at 613. "Instead there is a contrary presumption of a gift." Id. at 614, citing Restatement (Third) of Trusts § 7 comment c, at 89-90 (2003) (Restatement). The presumption that the transfer was a gift "'may be rebutted in whole or in part by evidence of a different intention.'" Id., quoting Restatement § 7 comment c, at 89. The "presumption that a gratuitous transfer to a family member is a gift may be overcome and a resulting trust may be imposed if it is established that (1) the intent of the transferor at the time of the transfer was not to convey the beneficial interest to the transferee, and (2) there was acquiescence on the part of the transferee. There is no requirement that an agreement exist between the transferor and the transferee at the time of the conveyance, nor is it necessary to establish that the transferee promised to reconvey the property to the transferor." Id. at 616-617, citing Abalan v. Abalan, 329 Mass. 182 , 183-184 (1952) and Barche v. Shea, 335 Mass. 367 , 367, 369-370 (1957).

In 2011, Camille and Mario as trustees of the Trust conveyed their interests in the property to Mario and Patricia for consideration of $10.00. In effect, Camille conveyed her interest in the property to her son and daughter-in-law for nominal consideration. This creates the presumption that the transfer of Camille's interest was a gift. James argues that the understanding between Camille and Mario, that Camille could live in the property for the rest of her life, rebuts the presumption that the transfer was a gift and that a resulting trust should be imposed because the evidence shows that Camille intended to retain her beneficial interest in fifty percent of the property. I credit the testimony of Camille and Mario that Camille's interest in the property was transferred to Mario and Patricia so that necessary repairs and capital improvements could be made to the property. I further credit the testimony of Camille and Mario that Camille did not intend to retain a beneficial interest in the property, but rather the two understood that Camille would live in the property for the remainder of her life provided that it was economically feasible for her to do so. They understood that Mario was under no legal obligation or other agreement to allow Camille to remain in the property. I find that this transaction between Camille and her son Mario was—as it appears to be—a gift, notwithstanding the considerable financial burden it appears to have placed on the recipients. Where the facts are that Camille did not retain, and did not intend to retain, any interest in the property, no resulting trust shall be imposed.

"A constructive trust is a flexible tool of equity designed to prevent unjust enrichment resulting from fraud, a violation of a fiduciary duty or confidential relationship, mistake, or 'other circumstances' in which a recipient's acquisition of legal title to property amounts to unjust enrichment." Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235 , 246 (2007), quoting Fortin v. Roman Catholic Bishop of Worcester, 416 Mass. 781 , 789 (1994). James argues for the imposition of a constructive trust, alluding to the effect that the conveyance of Camille's interest to Mario and Patricia has on James's interest in the division of their marital estate in their pending divorce. The facts in this case show that James never had an ownership interest in the property and there is no evidence to support the finding of any fraud, mistake, or other improper action by Camille or Mario and Patricia which would result in unjust enrichment that would merit the imposition of a constructive trust. As discussed above, I find that the transfer to Mario and Patricia was a gift which had the effect of allowing necessary repairs to be made to the property so that Camille, who could no longer afford to make such repairs, could continue to live there. It is worth noting that the effect of such transfer has also been to repair the property, which James has and continues to live in, to his benefit. There are no facts in evidence which support the imposition of a constructive trust.

In addition to arguing that Camille still holds a fifty percent beneficial interest in the property, James also raises the question of whether the transfer of the property in October 2011 included unstated consideration which amounts to a life estate in the property for Camille's benefit. It may be the case that if the transfer had included such consideration, it could be enforceable by Camille even though it was not reflected in the deed from Camille and Mario as trustees to Mario and Patricia. As discussed above, however, neither Camille nor Mario understood the transfer of Camille's interest to reserve a beneficial interest or life estate in the property. Rather, the transfer conveyed Camille's unencumbered interest in the property to Mario and Patricia so that Camille could be gratuitously supported by her son and daughter-in-law through repairs and renovations performed to the property after the transfer.

There is nothing more concrete to be found in the transfer of Camille's interest than a familial relationship and a son supporting his mother. James has presented a case which suggests that in the context of the pending divorce it would benefit Camille, Mario, and Patricia for this court to find that Camille retained no interest in the property. Whether they would benefit or not, the evidence does not support James's argument for the imposition of a resulting trust, constructive trust, or life estate. Under this set of facts, Camille conveyed her entire interest in the property to Mario and Patricia in October 2011, and retains no title interest in the property today.

Count II of the Amended Complaint seeks a declaration of James's rights in the property under the Homestead Act, G.L. c. 188. James argues that the protections afforded by the Homestead Act to a spouse who is not the record title holder of their primary residence give some enduring benefit, possibly a right of possession, to said non-owner spouse as against subsequent purchasers of the property in the event that the title holder sells the primary residence out from under their spouse.

"Homestead laws are designed to benefit the homestead declarant and his or her family by protecting the family residence from the claims of creditors." Shamban v. Masidlover, 429 Mass. 50 , 53 (1999). The Homestead Act was amended in 2010, and the revised Homestead Act went into effect on March 16, 2011. See St. 2010, c. 395; Boyle v. Weiss, 461 Mass. 519 , 525 (2012). The 2010 amendment to the Homestead Act created an automatic homestead exemption in the amount of $125,000, which exists regardless of whether the homeowner records a declaration of homestead. Boyle, 461 Mass. at 525 n.13. General Laws c. 188, § 4, provides:

In the absence of a valid declaration of homestead recorded under this chapter, an estate of homestead to the extent of the automatic homestead exemption shall exist in a home for the benefit of the owner and the owner's family members who occupy or intend to occupy the home as a principal residence. The homestead rights of non-titled family members shall consist of the right to use, occupy and enjoy the home as a principal residence.

Id. The parties do not dispute that James and Camille did not record a declaration of homestead. When G.L. c. 188, § 4, took effect in March 2011, James and Camille received an automatic homestead exemption under the new law. General Laws c. 188, § 10(a), provides, in relevant part:

An estate of homestead created under section 3 or 4 may be terminated by any of the following methods:

(1) a deed to a non-family member conveying the home, signed by the owner and a non-owner spouse or former spouse residing in the home as a principal residence as of the date of the deed;

(2) a recorded release of the estate of homestead, duly signed and acknowledged by the owner and a non-owner spouse or former spouse residing in the home as a principal residence as of the date of the release;

(3) the abandonment of the home as the principal residence by the owner, the owner's spouse, former spouse or minor children, except that such abandonment shall terminate only the rights of the persons who have abandoned the home; provided, however, that no person in military service as defined in 50 U.S.C. appendix, section 511 shall be deemed to have abandoned the home due to such military service;

(4) in the case of a home the title to which is held in trust, by either: (i) the execution of a deed or a release of homestead by the trustee; or (ii) action of a beneficial owner identified in the declaration, who is not a minor child, taken in the same manner as provided in clauses (2) and (3); or

(5) the subsequent recorded declaration of an estate of homestead under section 3 on other property, except that such declaration shall terminate only the rights of the owner making such subsequent declaration and the rights of that owner's spouse and minor children who reside or intend to reside in the other property as their principal residence.

Id. James argues that as he did not execute a release of his automatic homestead rights, his homestead rights in the property under G.L. c. 188, § 4, survive to this day. As the non-titled spouse of Camille, James received an automatic homestead exemption in the property which was not released in any of the five ways enumerated in G.L. c. 188, § 10(a). The question that remains to be answered is what, if any, rights James has in the property by virtue of his unreleased homestead exemption. To this end G.L. c. 188, § 3(b), provides that an "estate of homestead shall be exempt from the laws of conveyance, descent, devise, attachment, seizure, execution on judgment, levy and sale for payment of debts or legacies" subject to certain enumerated exceptions. Id. "An estate of homestead 'is a provision by the humanity of the law for a residence for the owner and his family,' free from attachment or levy on execution by creditors up to the amount allowed by law." Ladd v. Swanson, 24 Mass. App. Ct. 644 , 646 (1987), quoting Bates v. Bates, 97 Mass. 392 , 395 (1867). Prior to the 2010 amendment the SJC stated that "[t]he obvious legislative purpose" of what is presently codified in G.L. c. 188, § 3, "is to protect the home from the claims of creditors for the benefit of the homestead declarant and his or her family." Dwyer v. Cempellin, 424 Mass. 26 , 29-30 (1996). The Homestead Act serves to protect an individual and their family's primary residence from being seized or sold by judgment creditors. Considering James's unreleased homestead, his right to possession of the property, whatever it may be, would be protected from the claims of his creditors, and likely any creditors of Camille, Mario, or Patricia, up to the automatic homestead exemption amount of $125,000. G.L. c. 188, §§ 1, 4.

James argues that as Mario claimed unpaid rents in the notice to quit he served on James in 2017, Mario is a creditor, whose claim for possession the property is somehow barred by James's unreleased homestead exemption. To the extent that James may be considered a tenant of Mario and Patricia, though that question is not properly before this court, it should go without saying that a landlord is not barred, by the Homestead Act, from recovering possession of their property though a summary process action. See G.L. c. 239, § 1. Moreover, Mario is not a creditor seeking to levy on the property to satisfy any debts attributable to James. To the contrary, he and Patricia have held record title to the property since 2011, and only in 2017, after Camille moved out of the property, did Mario begin to consider seeking rents of James or possession of the property.

A similar question was addressed by the Appellate Division of the District Court in Lufkin v. Caraker, 2016 Mass. App. Div. 98 (2016). In Lufkin, the Appellate Division considered whether the Homestead Act provided a life estate to a non-titled widow whose primary residence passed to her step-children after her husband's death. Id. In that case the step-children served their step-mother with a notice to quit after their father's death and then brought a summary process action seeking possession of the marital home. Id. The Appellate Division found that the widow had an automatic homestead exemption under G.L. c. 188, § 4, but rejected the claim that the Homestead Act prevents her eviction by summary process. Id. The Appellate Division stated that "[the widow] is not seeking an exemption from claims of creditors. She is seeking to prevent owners of property from exercising their rights to recover possession of their property. There is no indication in the Homestead Act that it may be used in this manner. Even an owner of property with a declared homestead exemption in it cannot use it to defeat the rights of other owners of the property." Id., citing Ladd, 24 Mass. App. Ct. at 646, and Hershman-Therepnin v. Tcherepnin, 452 Mass. 77 , 95 n.27 (2008) (widow's declaration of homestead would not defeat rights of deceased husband's children by previous marriage to partition as tenants in common).

The conclusion of the Appellate Division in Lufkin is applicable to the facts of this case. Here, Camille held a fifty percent interest in the property. There is nothing in the Homestead Act which creates a restraint on alienation such that the automatic homestead protection afforded to James could give him the right to interfere with Camille's disposition of her own property. That being the case, as in Lufkin, there is nothing in the Homestead Act which protects a non-titled spouse's possession of their primary residence in the event that the owner-spouse elects to sell, convey, or otherwise dispose of the property to a third party. Mario and Patricia are not entitled to a declaration extinguishing James's homestead in the property. As they are the fee owners of the property and not creditors, however, James's remaining homestead has no effect on their ability to exercise all of the rights to which they are entitled as owners of the property.

Conclusion

For the foregoing reasons, judgment shall enter dissolving the temporary restraining order issued by the Suffolk County Superior Court in this action on January 17, 2018, and declaring that Camille and James retain no title interests in the property, that Mario and Patricia own the property free and clear of any interests previously held by Camille or James, and further that James has an unreleased homestead in the property in the amount of the automatic homestead exemption under G.L. c. 188, § 1, but that the homestead exemption protects James's possession of the property only against judgment creditors who have a claim against the property and not against subsequent owners seeking to recover possession.

Judgment Accordingly.