JOE MARTINEZ v. CENAIDA HERRERA

This case concerns a property at 150 Grove Street in the West Roxbury neighborhood of Boston, Massachusetts. Two lots, one that's registered land and the other not, make up 150 Grove Street. According to the certificate of title for the registered parcel and the record title of the unregistered parcel, 150 Grove Street's owners are plaintiff Joe Martinez and his mother-in-law, defendant Cenaida Herrera, as tenants-in-common. But land records don't always tell the full story. In this case, Ms. Herrera claims she owns all of 150 Grove Street, and that Mr. Martinez holds his half merely in a "resulting trust" for Herrera. Herrera thus contends that Martinez doesn't have the right under M.G.L. c. 241, §1 et seq., as a normal tenant-in-common would, to a court-supervised partition of 150 Grove Street.

The parties appeared for trial on September 16, 2019 concerning Ms. Herrera's resulting-trust claim. Having heard the parties' witnesses, having reviewed the exhibits admitted into evidence, having accepted the parties' stipulations of fact, and having considered the arguments of counsel, this Court finds the facts set forth above as well as these:

1. Ms. Herrera was born and raised in San Salvador, El Salvador. Spanish is her native language. She arrived in the United States with her infant son and then-husband in 1986. In 1994, she and her husband bought a two-family residence in Waltham, MA.

2. In 2008, Ms. Herrera's daughter, Nuria, began dating Mr. Martinez. At that time, Martinez was (and still is) a Boston police officer. At some point in the late 2000s, Martinez began sharing a room with Nuria, rent-free and without the benefit of a lease, at the Herrera residence in Waltham. (At the time, the Herreras occupied the second and third floors of their residence, and rented out the first floor.) Martinez nevertheless told his employer that his residence was at the address of his parents, who lived Boston. Martinez furnished his parents' address in an attempt to comply with the Boston Police Department's ("BPD") requirement that officers in their first ten years of service reside within Boston's city limits. From 2008 to the present, officers subject to the residency requirement had to certify their residency annually.

3. In 2011, Mr. Martinez and Nuria Herrera married (henceforth, this Decision will call them the Martinezes) and they witnessed the birth of a daughter, Joe's first child and Nuria's second. The Martinezes and their two children moved out of the third-floor room they'd shared in the Herrera residence and moved to the Herreras' first-floor apartment. At that point, the Martinezes started paying rent to the Herreras, albeit without a written lease. That rent began at $1000 monthly. At some point, the Martinezes started struggling to pay that amount. The Herreras responded by lowering the rent, first to $900 monthly, and later $800 monthly. All the while, Mr. Martinez told BPD that he resided at his parents' Boston address.

4. In 2013, Mr. Martinez's parents decided to sell their Boston property and move out of the city. Martinez thus needed to locate, by the time he needed to re-certify to BPD his residency status, a new Boston address. The Martinezes thus began searching for a home in Boston.

5. While the Martinezes were searching for a Boston home, the Herreras were getting divorced. In February 2014, as part of the divorce, Mr. Herrera deeded to Ms. Herrera his entire interest in their Waltham property, leaving Ms. Herrera as its sole owner. Ms. Herrera also became responsible at that point for paying the property's mortgage. As of early 2014, Ms. Herrera was considering refinancing or selling the property to lower her monthly mortgage payments.

6. In early 2014, the Martinezes were unsuccessful in locating a suitable home in Boston that they could finance on their own. Mr. Martinez had steady income as a police officer, but Ms. Martinez wasn't working, and the couple couldn't provide a down payment on any home requiring a down payment.

7. Eventually in early 2014, Ms. Herrera and the Martinezes agreed that they should move to 150 Grove Street, which had two living quarters (the larger one, suitable for the Martinez family, and the smaller one, suitable for Ms. Herrera). Ms. Martinez was the first to learn that 150 Grove Street was on the market. The amount eventually due at closing on a purchase of the property was $491,270.15, which was more than what the Martinezes could afford. Ms. Herrera agreed to sell her Waltham property in advance of the purchase of 150 Grove Street, and use $107,270.15 of the proceeds of that sale towards a down payment and closing costs on 150 Grove Street. Ms. Herrera and the Martinezes agreed that the Martinezes would contribute nothing towards the down payment or the closing costs. Ms. Herrera and Mr. Martinez also agreed to apply jointly for a $384,000 home loan, as neither Ms. Herrera nor Mr. Martinez, standing alone, had sufficient income or a suitable credit history to obtain a loan in that amount. Ms. Herrera and Mr. Martinez agreed to be jointly responsible for the loan and to split the loan payments, projected to be approximately $2500 monthly. They also agreed that the Martinezes would pay the property's water and sewer bills. The foregoing promises were oral, and not written.

8. Ms. Herrera and the Martinezes did not discuss, at any time prior to the closing on 150 Grove Street, who would be the legal owner(s) of the property. Accordingly, Ms. Herrera never agreed that Mr. Martinez would become a co-owner of 150 Grove Street, and Mr. Martinez never asked to be a co-owner either. Before this dispute arose, neither of them had any knowledge of the law regarding tenancies in real property. Ms. Herrera also had no intention in early 2014 of providing Mr. Martinez with a gift of an interest in 150 Grove Street.

9. From the evidence presented at trial, the Court finds that Mr. Martinez's name came to be placed on the deed for 150 Grove Street as set forth in ¶¶ 10-15 below.

10. Ms. Herrera and Mr. Martinez did not hire an attorney to represent them, at any time, in connection with the purchase of 150 Grove Street. They thus accepted, no questions asked, the loan and purchase documents drafted by their mortgage lender, Citibank, N.A. Herrera and Martinez selected Citibank as their lender because Ms. Martinez knew someone who worked there.

11. Ms. Herrera and Mr. Martinez applied for their Citibank loan by telephone in early May 2014. Each spoke separately to the same Citibank loan originator.

12. The completed Citibank loan application is Trial Exhibit 8. Mr. Martinez's name appears first on Exhibit 8, as "Borrower." He told the loan originator that his present address was 85 Fiske Street (the address of the first floor of Ms. Herrera's Waltham building), that he was "married," and that he had "owned" 85 Fiske Street for two years. He told the originator that "No" part of the down payment for 150 Grove Street was borrowed. He told the originator that "Yes," he had "an ownership interest in a property in the last three years," that he owned his "principal residence," and that he held title to the home "jointly with [his] spouse." Of the statements described in this paragraph, the only ones that were correct were Martinez's present address, his marital status, and that the down payment wasn't borrowed.

13. Ms. Herrera's name appears second on Exhibit 8, as "Co-Borrower." She told the Citibank originator that she lived at 87 Fiske Street (the address of the second and third floors of her Waltham building), that she was "married," and that she had "owned" 87 Fiske Street for two years. She too told the originator that "No" part of the down payment was borrowed. (Elsewhere the application stated that the down payment would come from the sale of 85 Fiske Street.) She also told the originator "Yes," she had "an ownership interest in a property in the last three years," that she owned her "principal residence," and that she held title to the home "jointly with [her] spouse." All of the statements described in this paragraph were correct.

14. From the information provided by Mr. Martinez and Ms. Herrera, the Citibank loan originator wrote on Exhibit 8 that title to 150 Grove Street would be held in "Joe Martinez and Cenaida Herrera," as "Joint Tenants," and that "their" assets included "85 Fiske Street." The Court cannot tell from the evidence whether Mr. Martinez told the originator to place this information on Exhibit 8, or whether the originator drew his own conclusions as to that information and placed it on Exhibit 8 without consulting Martinez or Herrera. Exhibit 8 bears no indication that Martinez or Herrera reviewed the application prior to signing Citibank's loan documents.

15. Citibank prepared its loan and mortgage documentation for the purchase of 150 Grove Street consistent with the information in Exhibit 8. Ms. Herrera sold her Waltham property on July 10, 2014. One week later, she and Mr. Martinez attended the closing of the purchase of 150 Grove Street. They did not have an attorney at the closing. Both signed a mortgage for 150 Grove Street. Both signed a promissory note in favor of Citibank. Both received a HUD-1 statement after the closing, but the statement didn't identify the new owner(s) of 150 Grove Street. Herrera and Martinez also received, after the closing, statements from a loan servicer, but it too did not identify the owner(s) of 150 Grove Street. And neither Herrera nor Martinez signed the two deeds for the two parcels comprising 150 Grove Street, both of which named Herrera and Martinez as the grantees, with the words "joint tenants" written by hand after their names. Herrera did not receive copies of the two deeds after the closing, but Martinez did, on a compact disc. Martinez didn't share the disc with Herrera until the dispute giving rise to this case began.

16. After the closing, consistent with the parties' agreement before the closing, the Martinezes started paying Ms. Herrera between $1260 and $1300 monthly. Herrera in turn paid approximately $2600 monthly (inclusive of principal, interest, property taxes and insurance premiums) to the servicer of the mortgage, via electronic withdrawals from Herrera's bank account. The Martinezes didn't always pay on time, and at least three times they missed their payment. On one of those occasions, Herrera incurred overdraft charges.

17. In 2015, when it came time for the parties to file their 2014 federal income-tax returns, the parties agreed to split 50/50 a deduction for the interest paid on their 150 Grove Street loan.

18. Since July 2014, Ms. Herrera has paid for all of 150 Grove Street's capital improvements. Those improvements cost her approximately $25,100.

19. Mr. Martinez's Boston-residency obligation was set to expire sometime in 2018. The Martinezes wanted to move out of Boston once that obligation ended, but their finances weren't good. In July 2017, the Martinezes asked Ms. Herrera to sell 150 Grove Street. She refused. The Martinezes told Herrera that they were co-owners of the property. This was the first Herrera learned that Mr. Martinez was a joint tenant of 150 Grove Street.

20. Ms. Herrera introduced no evidence that she ever reposed trust or confidence in Mr. Martinez, or relied on him regularly in conducting her financial affairs. To the contrary: at least since her divorce, if not before, Herrera has controlled her own financial affairs, and has a good grasp of her finances. She also has been skeptical of the way the Martinezes manage their finances.

21. English is Ms. Herrera's second language. She often speaks to her family in Spanish, but understands when they respond to her in English. She also is employed as a Spanish-English medical interpreter. She knows enough English to understand when a document is important, and when she needs the help of a translator or interpreter.

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The sole issue tried is whether Mr. Martinez is holding his share of 150 Grove Street in a "resulting trust" for Ms. Herrera. "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 v. Roman Catholic Bishop of Worcester, 416 Mass. 781 , 789 (1994). The doctrine rests on the assumption that, "in the absence of anything to show the contrary, [the person] 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). See also McPherson v. McPherson, 337 Mass. 611 , 613-614 (1958) (discussing the Quinn assumption).

It's the burden of the party who claims a resulting trust to "prove that [she] furnished [herself] the entire consideration or a specific and definite part thereof, for which it was intended [she] 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 [the other party holding title] should take a beneficial interest in the property by way of gift, settlement or advancement." Pollock v. Pollock, 223 Mass. 382 , 384 (1916). Ms. Herrera easily passes the second of these tests: it's undisputed that she and the Martinezes never discussed the issue of who would own what percentages of 150 Grove Street, and she had no intent to gift Mr. Martinez an interest in the property.

Ms. Herrera has a harder time with the first prong of the test. It's true that she furnished the entire down payment for 150 Grove Street and paid all closing costs. But that amount ($107,270.15) wasn't the entire consideration for 150 Grove Street: $491,270.15 was due at closing, and $384,000 of that came from Citibank, as the proceeds of a note she and Mr. Martinez willingly agreed to co-sign. In the absence of a further agreement by Herrera to pay Martinez's share of the Citibank mortgage, or to reimburse him for his mortgage payments, or to indemnify him in the event of any loss under the mortgage, Massachusetts law deems Martinez (by having co-signed the Citibank note and mortgage) to have provided some of the consideration for 150 Grove Street. See Carroll v. Markey, 321 Mass. 87 , 89 (1947); see also Gerace v. Gerace, 301 Mass. 14 (1938) (father and other relatives who co-signed mortgage on property that son wished to purchase held not to have furnished consideration for the property, and to hold property in resulting trust, where parties had agreed that father and relatives would take title in their names, but where son provided down payment and agreed to make everyone else's mortgage payments).

Where does that leave Ms. Herrera? The Supreme Judicial Court has looked to the Restatement (Third) of Trusts (2003) and the Restatement (Second) of Trusts (1959) for guidance on resulting-trust issues. See, for example, Cavadi v. DeYeso, 458 Mass. 615 , 631-632 (2011). Under both Restatements, it's presumed that parties own property that's subject to a resulting trust in proportion to each owner's contribution towards acquiring it. See Restatement (Third) at §9, comment (d); Restatement (Second) at §454 ("Where a transfer of property is made to one person and a part of the purchase price is paid by another, a resulting trust arises in favor of the person by whom such payment is made in such proportion as the part paid by him bears to the total purchase price . . . . "); id. at §454, comments (b) and (f). That means that Ms. Herrera owns a share of 150 Grove Street that acknowledges her cash contribution to the purchase ($107,270.15) plus her agreement to be a co-borrower on the Citibank loan (equal to one half of the loan, $192,000). That totals $292,270.15. Dividing that number by 150 Grove Street's purchase price ($491,270.15) gives Ms. Herrera, under Massachusetts law, a 60.9% share of the property at the time of its purchase. Mr. Martinez owns the remaining 39.1%.

At times Ms. Herrera has made arguments that echo a second doctrine, that of "constructive trust." Under Massachusetts law, a court may declare that one person holds property for another via a constructive trust so as to prevent unjust enrichment resulting from fraud, a violation of a fiduciary duty, mistake, or "other circumstances." Fortin, 416 Mass. at 789; see also Nessralla v. Peck, 403 Mass. 757 , 762-63 (1989). The facts of this case don't support a conclusion that Mr. Martinez holds his 39.1% interest in 150 Grove Street in constructive trust for Ms. Herrera. While the Citibank loan application contains misstatements concerning Martinez, Herrera hasn't proven that Martinez engaged in a fraud aimed at depriving Herrera of 39.1% of 150 Grove Street (as opposed to, say, depriving Citibank of a creditworthy debtor). Herrera also hasn't proven that Martinez was her fiduciary at the time of the 150 Grove Street purchase. "It is settled in this Commonwealth that a fiduciary relationship does not arise merely because the parties to a conveyance are members of the same family, even if the transferee promised to hold the land in trust." Kelly v. Kelly, 358 Mass. 154 , 156 (1920). Herrera provided scant proof at trial that she relied on Martinez for anything.

Ms. Herrera also hasn't proven any of the other grounds for a constructive trust. She hasn't proven mistake, that the deed to her and Martinez erroneously stated the parties' agreement as to 150 Grove Street's ownership. That's because the parties didn't have an agreement over ownership (they never even discussed the issue). Herrera also hasn't proven that Martinez would be unjustly enriched in the absence of a declaration that he holds his 39.1% share of 150 Grove Street in a constructive trust for Herrera: after all, his agreement to co-sign the Citibank loan allowed Herrera to buy 150 Grove Street. Martinez's smaller ownership share fully adjusts for his not contributing to the down payment or closing costs for 150 Grove Street, and she'll be able to recover under M.G.L. c. 241, §23 the value of any improvements to the property. Herrera's English-language deficiencies likewise don't serve as grounds for asserting a constructive trust: Martinez didn't prevent Herrera from hiring an attorney, or an interpreter, to assist her at closing. See also Wilkisius v. Sheehan, 258 Mass. 240 , 243 (1927) ("in absence of fraud, one who signs a written agreement is bound by its terms whether [she] reads and understands it or not").

What does today's ruling mean for Mr. Martinez's request for partition? It means that he and Ms. Herrera are joint tenants, and thus he's entitled to a partition of 150 Grove Street. It means that in addressing the issues that might arise in connection with partition, the Court will be treating Herrera as owning 60.9% of the property and Martinez as owning 39.1%. The Court also has found the amount of the parties' improvements ($25,100 paid by Herrera and none paid by Martinez). The Court hasn't ruled definitively on any other accounting or reimbursement issues, such as when and how often after the closing one party paid the other's monthly mortgage obligations. And the Court hasn't determined how 150 Grove Street shall be partitioned.

The Court thus ORDERS the parties to appear for a telephonic status conference on November 20, 2019 at 10:00 a.m. to discuss how this case should proceed from here. A separate notice of conference will issue.

SO ORDERED.