Rockingham County Nursing Home v. Randolph Harnois Trust

Filing 66

Magistrate Judge Judith G. Dein: ORDER entered. MEMORANDUM OF DECISION AND ORDER granting 61 Defendant's Motion to Amend Answer and Affirmative Defenses, and denying 29 Plaintiff's Motion for Summary Judgment. (Dambrosio, Jolyne)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

ROCKINGHAM COUNTY NURSING )
HOME,
)
)
Plaintiff,
)
v.
)
)
RANDOLPH HARNOIS, AS
)
TRUSTEE OF THE HARNOIS
)
IRREVOCABLE TRUST,
)
)
Defendant.
)

CIVIL ACTION
NO. 11-11057-JGD

MEMORANDUM OF DECISION AND ORDER
ON DEFENDANT’S MOTION FOR LEAVE TO AMEND
AND ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
January 10, 2014
DEIN, U.S.M.J.
I. INTRODUCTION
The plaintiff, Rockingham County Nursing Home (“Rockingham”), has brought
this action against Randolph Harnois, as Trustee of the Harnois Irrevocable Trust, in
order to recover the cost of providing continuous nursing home care to the defendant’s
mother, Beatrice Harnois, from April 2009 until her death in September 2013. It is
undisputed that in July 2006, nearly three years before Ms. Harnois entered the nursing
home, she transferred her primary residence (“Property”) and only significant asset to the
Harnois Irrevocable Trust (“Trust”) for the benefit of her children and grandchildren. By
its Verified Complaint, Rockingham claims, in Count I, that the conveyance of the

Property to the Trust constituted a fraudulent transfer pursuant to Mass. Gen. Laws ch.
109A, § 5 because it was made with actual intent to hinder and/or delay Ms. Harnois’
future creditors, or on the grounds of constructive fraud because Ms. Harnois did not
receive reasonably equivalent value for the transfer and it occurred at a time when Ms.
Harnois believed or reasonably should have believed that she would incur debts beyond
her ability to pay as they became due. Accordingly, the plaintiff is seeking an order
setting aside the transfer and directing the sale of the Property to pay for the cost of Ms.
Harnois’ care. Alternatively, Rockingham claims in Count II of its Verified Complaint
that the Trust would be unjustly enriched if it were permitted to retain beneficial
ownership of the Property. Therefore, it asserts that if the transfer is not set aside as
fraudulent, the Property should be held in a constructive trust for the purpose of paying
Ms. Harnois’ debt to the plaintiff.
The matter is before the court on the “Plaintiff’s Motion for Summary Judgment”
(Docket No. 29) by which Rockingham is seeking summary judgment on Count I of the
complaint to the extent it alleges constructive fraud. Thus, Rockingham is not seeking
summary judgment on its claim in Count I that the transfer of Ms. Harnois’ Property was
carried out with actual intent to hinder or delay future creditors, or on its claim in Count
II for unjust enrichment. Rather, by this motion, Rockingham is claiming that it is
entitled to judgment as a matter of law on its claim in Count I that at the time of the
transfer, Ms. Harnois believed or reasonably should have believed that she would incur
debts beyond her ability to pay.
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The matter is also before the court on the “Defendant’s Motion for Leave to File
First Amended Answer and Affirmative Defenses to Plaintiff’s Verified Complaint”
(Docket No. 61) by which the defendant is seeking to amend his Answer in order to assert
a statute of limitations defense. This defense is applicable only to Rockingham’s claim of
constructive fraud. Although the defendant’s motion to amend was not filed until after
the plaintiff had moved for summary judgment, the defendant contends that his defense is
meritorious, that Rockingham will suffer no unfair prejudice if the motion is allowed, and
that justice would best be served by permitting the defendant to raise a defense, which he
neglected to assert in his original Answer due to mere oversight, inadvertence and
excusable neglect.
For all the reasons detailed herein, this court finds that there was good cause for
the defendant’s delay in seeking to amend his Answer under the circumstances presented
in this case, and that there will be no unfair prejudice to the plaintiff by allowing the
defendant to amend at this stage in the proceedings. This court also finds that the
proposed amendment has merit, and that the statute of limitations bars the plaintiff’s
claim for fraudulent transfer based on a theory of constructive fraud. Therefore, justice
requires that the defendant’s motion for leave to amend his Answer be ALLOWED.
Because this court finds that Count I is time-barred to the extent it alleges constructive
fraud, the plaintiff’s motion for summary judgment on that claim is DENIED.

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II. STATEMENT OF FACTS1
The following facts are undisputed unless otherwise indicated.
The Parties
The plaintiff, Rockingham, is a certified nursing care facility that is located in
Rockingham County, New Hampshire and offers skilled and intermediate nursing care.
(PF ¶ 1). The facility, which is owned by the County, operates as a not-for-profit
organization. (Id.). During the time period from April 14, 2009 until her death on
September 14, 2013, Rockingham provided high quality nursing care to Beatrice Harnois
at a cost of over $9,000 per month. (See id. ¶¶ 2, 15). It is undisputed that neither Ms.
Harnois nor her family has ever paid for her care, which has cost over $460,000 in total.
(Id. ¶ 16).
On July 27, 2006, Ms. Harnois created the Harnois Irrevocable Trust for the
benefit of her children and grandchildren, naming her son, defendant Randolph Harnois
(“Randolph”), and her daughter, Joyce Senno (“Joyce”), as trustees. (PF ¶¶ 17, 19; DR
¶ 17). As detailed below, Ms. Harnois had another son, Rodney, who was involved in her

1

Unless otherwise indicated, the facts are derived from the following materials: (1) the
exhibits attached to the Plaintiffs’ Motion for Summary Judgment (Docket No. 29) (“Pl. Ex. __”);
(2) the Plaintiff’s Statement of Facts Pursuant to Local Rule 56.1 (Docket No. 31) (“PF”); (3) the
Affidavit of Steven E. Woods (Docket No. 32) (“Woods Aff.”); (4) the Defendant’s Response to
Plaintiff’s Statement of Facts Pursuant to Local Rule 56.1 (Docket No. 42) (“DR”); (5) the
Defendant’s Additional Statement of Facts (Docket No. 41) (“DAF”); (6) the Affidavit of
Randolph Harnois (Docket No. 44) (“Randolf Aff.”); (7) the Affidavit of Rodney A. Harnois
(Docket No. 45) (“Rodney Aff.”); (8) the exhibits attached to the Affidavit of James P. Mitchell
(Docket No. 46) (“Def. Ex. __”); and (9) the exhibits attached to the Supplemental Affidavit of
James P. Mitchell (Docket No. 53) (“Def. Supp. Ex. __”).
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care but was not a Trustee of the Trust. Joyce passed away in September 2008.
Thereafter, Randolph became the sole trustee of the Trust. (Randolph Aff. ¶ 2). By its
claims in this action, Rockingham is challenging Ms. Harnois’ transfer of her home to the
Trust.
Ms. Harnois’ Use and Transfer of the Property
In 1984, Ms. Harnois became the sole owner of the Property, which is located in
West Barnstable, Massachusetts. (PF ¶ 3). The Property served as Ms. Harnois’ primary
residence until the Spring of 2008, when Ms. Harnois moved to New Hampshire to live
with her son, Rodney Harnois (“Rodney”). (See DAF ¶¶ 10-11; Rodney Aff. ¶ 4).
Ms. Harnois turned 80 years old in 2000. (PF ¶ 3). By that time, Ms. Harnois had
become unable to drive due to loss of vision. (PF ¶ 6; DR ¶ 6). Additionally, after 2000,
Ms. Harnois’ sole source of income was social security, and she had to rely on financial
assistance from Joyce and Randolph in order to meet her expenses. (PF ¶ 5; see also
Randolph Aff. ¶ 5). Nevertheless, it is undisputed that Ms. Harnois was able to live
independently in the Property with assistance from Joyce, who visited her mother almost
daily, drove her to regular doctors’ appointments, and supplemented the meals that Ms.
Harnois received from Meals on Wheels. (DAF ¶¶ 2-3).
In 2002 and 2003, Joyce and Randolph became concerned about the lack of any
financial planning for their mother, and in 2004, they sought advice from Stephen Jones,
a trusts and estates lawyer. (Id. ¶ 4; Randolph Aff. ¶¶ 4, 6). After consultations with
Attorney Jones, Joyce and Randolph determined that a transfer of Ms. Harnois’ home into
5

an irrevocable trust would enable them to carry out their mother’s goal of remaining in
her home, and also facilitate the sale of the Property if necessary. (Randolph Aff. ¶ 6).
Accordingly, on July 27, 2006, Joyce, acting on behalf of Ms. Harnois under a power of
attorney, executed an indenture of trust creating the Harnois Irrevocable Trust, and a
Quitclaim Deed transferring the Property to Joyce and Randolph in their capacities as
trustees of the Trust. (Id. ¶ 7; Pl. Ex. 11; Def. Ex. 2). The Quitclaim Deed, which was
recorded in the Barnstable Registry of Deeds on November 27, 2006, provides that the
Trust paid consideration of $1.00 in exchange for the Property.2 (Def. Ex. 2 at 1). There
is no dispute that the transfer of the Property, which was assessed as having a value of
$332,100 in 2012, conveyed substantially all of Ms. Harnois’ assets to the Trust. (PF
¶¶ 22-23). However, Ms. Harnois continued to live in the Property through most of 2008.

2

In support of its motion for summary judgment on its constructive fraud claim,
Rockingham argues that Ms. Harnois did not receive reasonably equivalent value for her Property
because she received no more than nominal consideration in exchange for the transfer to the
Trust. (See Pl. Reply to S.J. (Docket No. 51) at 2). However, the defendant disputes that the
Trust provided no more than nominal consideration. (DR ¶ 21). He contends that both he and
Joyce provided additional consideration, in the form of financial support, which enabled their
mother to maintain her home and to pay for her personal living expenses in excess of her social
security benefits. (Id.; Randolph Aff. ¶ 6). Rockingham responds that Randolph’s effort to
establish disputed facts on this issue is improper because his assertion that the Trust provided
anything more than $1.00 in consideration for the transfer directly contradicts his deposition
testimony. (Pl. Reply to S.J. at 2). Because this court finds that the plaintiff’s claim for
constructive fraud is barred by the statute of limitations, it is unnecessary to determine whether
the defendant has raised a genuine dispute as to whether Ms. Harnois received reasonably
equivalent value in exchange for the transfer of her Property in the context of the summary
judgment analysis. Accordingly, this matter will not be addressed further at this time. The
circumstances surrounding the transfer of the Property do, however, remain a viable issue for
trial.
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Although Ms. Harnois’ health was declining steadily as a result of her age, at the
time of the transfer in 2006, she was continuing to live independently with the help of her
daughter. (DR ¶ 6; Randolph Aff. ¶ 9). According to Randolph, Ms. Harnois also
remained generally conversant, had a very good memory for current events, and did not
appear to be suffering from any type of dementia. (Randolph Aff. ¶ 9). Moreover, up
until that point, there had been no discussions about the possibility of putting Ms.
Harnois into a nursing home, as any such discussions would have been inconsistent with
Ms. Harnois’ wishes to remain in her home indefinitely. (Id.).
Ms. Harnois’ Deteriorating Health
It is undisputed that by the spring of 2008, Ms. Harnois’ physical and mental
condition had deteriorated noticeably. (DAF ¶ 9). On April 1, 2008, Elder Services of
Cape Cod and the Islands (“Elder Services”) received a report indicating that Ms. Harnois
appeared very confused and had been found wandering alone in her neighborhood, which
was located on a busy road. (Pl. Ex. 6 at 1). Subsequently, a caseworker from Elder
Services visited Ms. Harnois’ home and found her to have “significant cognitive deficits.”
(Id.). The caseworker also discovered various signs of self-neglect, including but not
limited to, rotten food, a lack of personal care items, and no working smoke detectors in
the home. (Id. at 1-2; PF ¶ 9). Accordingly, in July 2008, Elder Services filed a petition
in the Barnstable Probate and Family Court seeking a guardianship over Ms. Harnois due
to her inability to care for herself. (PF ¶ 7). On August 4, 2008, the Court determined
that Ms. Harnois was unable to properly care for herself or to make informed decisions
7

regarding herself or her estate, and it entered a Temporary Decree of Guardianship
appointing Randolph and Rodney as temporary guardians over their mother. (Pl. Ex. 7 at
1-3).
At the time it was determined that Ms. Harnois was unable to care for herself,
Joyce’s health also was worsening. (See DAF ¶ 10). Because Randolph was unable to
provide the necessary daily care for his mother while she lived at the Property, Ms.
Harnois’ children decided to move their mother to New Hampshire to live with Rodney.
(Id. ¶¶ 10-11). According to the defendant, at the time she moved into Rodney’s home in
late 2008, Ms. Harnois was mobile, remained in reasonably good health, and was caring
for herself “for the most part[.]” (Id. ¶ 12). However, after the expiration of the
temporary guardianship order from the Barnstable Probate and Family Court, Rodney
filed a new petition for guardianship in the Rockingham County Probate Court. (Pl. Ex.
8). On February 10, 2009, that court issued an order in which it found, among other
things, that Ms. Harnois was “incapacitated,” that a guardian was necessary in order to
provide for her continuing care, and that Ms. Harnois was incapable of making decisions
on her own, including decisions about whether to consent to medical treatment and
decisions regarding her property. (PF ¶ 12; see also Pl. Ex. 8 at 1).
Ms. Harnois’ Admission to Rockingham
By the spring of 2009, Randolph and Rodney decided that it was necessary to
admit Ms. Harnois to a nursing home on a permanent basis, and on April 14, 2009, she
was admitted to Rockingham. (Randolph Aff. ¶ 19; PF ¶ 2). Ms. Harnois was 88 years
8

old at the time of her admission, and she had a number of health problems, including a
history of dementia, a history of stroke, a permanent pacemaker, hypertension, hyperlipidemia, and poor vision due to macular degeneration. (PF ¶¶ 13-14). Nevertheless,
she remained capable of walking, retained good strength in all of her extremities, was
able to answer questions and feed herself, and displayed appropriate behavior and a fairly
cheerful mood. (DAF ¶ 16).
Throughout the time period Ms. Harnois resided at Rockingham, the monthly
expenses for her care exceeded $9,000. (PF ¶ 15). As described above, neither Ms.
Harnois nor her family has ever paid for her care, even though they agreed to do so upon
her admission to the facility. (Id. ¶ 16; Woods Aff. ¶ 3). At some point, Randolph and
Rodney filed a Medicaid application with the State of New Hampshire on their mother’s
behalf, and it appeared that she would qualify for assistance. (DAF ¶ 15; Woods Aff.
¶ 6). However, Ms. Harnois’ Medicaid application was denied, both initially and again on
appeal. (DAF ¶ 15). Consequently, Rockingham has never received payment from any
source.
Procedural History
On June 14, 2011, Rockingham filed its Verified Complaint asserting claims
against the defendant for fraudulent transfer and constructive trust. (Docket No. 1).
Following an initial scheduling conference, this court issued a Scheduling Order in which
it established October 20, 2011 as the deadline for any motions for leave to amend the
pleadings, December 13, 2011 as the deadline for the completion of fact discovery, and
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January 20, 2012 as the deadline for the filing of any motions for summary judgment.
(Docket No. 10). However, on December 1, 2011, the parties filed a joint motion to
amend the scheduling order in which they sought to extend the remaining pretrial
deadlines for a period of 90 days. (Docket No. 11). In support of their motion, the
parties explained that they had been “engaged in settlement negotiations for some time,”
and believed they were close to resolving the case. (Id. ¶ 2). They further stated that
they “wish[ed] to focus their time and resources on finalizing the . . . settlement” and to
“avoid the cost of engaging in unnecessary discovery.” (Id. ¶ 3). Accordingly, this court
allowed the motion, thereby extending the pretrial deadlines for approximately three
months. (Docket Entry dated 12/02/2011).
The record shows that while the parties ultimately were unable to reach a final
settlement, they continued to focus their efforts on settling the case throughout 2012 and
into 2013. Thus, on March 9, 2012, the parties notified the court that they had continued
to engage in settlement negotiations, and that they were in the process of reviewing a
written settlement proposal. (Docket No. 12). They also stated that the final terms of the
proposed settlement were dependent upon the defendant obtaining financing, “which
Defendant has been diligently pursuing for several months.” (Id. ¶ 2). Additionally, the
parties informed the court that because they had “focused their time and resources on
finalizing the . . . settlement[,]” they intended to seek another 90-day extension of the
remaining pretrial deadlines so that they would be able to complete discovery in the event
they failed to resolve the litigation within 30 days. (Id. ¶ 3). Based on the parties’
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representations, this court issued a new Scheduling Order in which it set June 11, 2012 as
the deadline to complete fact discovery and July 18, 2012 as the deadline for filing any
motions for summary judgment. (Docket No. 13).
Although the parties encountered complications that prevented them from reaching
a settlement in the spring of 2012, they continued to pursue settlement while at the same
time engaging in fact discovery. (See Docket Nos. 14, 16). Thus, the parties reported
that as of September 5, 2012, the defendant was continuing to seek financing that would
enable the parties to resolve the dispute. (Docket No. 16 ¶ 2). Additionally, the parties
were hopeful that the defendant would receive a favorable decision on appeal from the
denial of Ms. Harnois’ application for long-term Medicaid benefits, and that the outcome
of the appeal would provide them with an alternative means of settling the litigation. (Id.
¶ 3). Following a status conference held on September 6, 2012, this court ordered the
parties to complete fact discovery by October 15, 2012. (Docket Order dated
09/06/2012). Any motions for summary judgment were to be filed by November 19,
2012. (Id.).
Thereafter, the parties filed four additional joint motions seeking to extend the
deadline for the filing of summary judgment motions. (See Docket Nos. 18, 21, 23, 26).
As explained in their most recent joint motion dated March 15, 2013, “[t]he Parties have
not pursued discovery aggressively in the past due to the prospect of potential
settlement.” (Docket No. 26 ¶ 4). Consequently, as of March 15, 2013, they were still in
the process of completing some limited fact discovery. (Id. ¶¶ 3-4). They also were
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continuing to await the outcome of Ms. Harnois’ appeal from the denial of Medicaid
benefits, and remained hopeful that a favorable decision would lead to the resolution of
the case. (Id. ¶ 2). Accordingly, on March 19, 2013, this court allowed the motion and
extended the summary judgment deadline to June 19, 2013. (Docket Entry dated
03/18/2013).
The plaintiff filed its present motion for summary judgment on June 19, 2013.
(Docket No. 29). Briefing took place over an extended period of time due in large part to
the parties’ continued efforts to reach a settlement. Thus, on July 2, 2013, the defendant
filed an assented-to motion to extend the time to respond to the plaintiff’s motion in
which he informed the court that the parties’ settlement discussions were continuing and
that he needed more time to review recently produced documents. (Docket No. 34). He
subsequently filed two additional assented-to motions in which he stated that “[d]ue to
the ongoing nature of the settlement negotiations, the parties believe that it would be in
their best interest to extend the time for the Defendant to file the Response to the
Summary Judgment Motion . . . so that the settlement negotiations can be completed and
the case resolved with an agreement for judgment.” (Docket No. 36 ¶ 6; Docket No. 38 ¶
7). Based on these representations, this court gave the defendant until September 17,
2013 to respond to the motion for summary judgment. (Docket Entry dated 08/13/2013).
Despite their efforts, the parties were unable to reach a settlement, and on
September 17, 2013, the defendant filed an opposition to the plaintiff’s motion for
summary judgment. (Docket No. 40). On November 14, 2013, following a hearing on
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the plaintiff’s summary judgment motion, the defendant filed his present motion for leave
to file an amended Answer. (Docket No. 61).
III. ANALYSIS – DEFENDANT’S MOTION TO AMEND
The defendant has moved for leave to amend his Answer in order to state an
affirmative defense based on the statute of limitations. The defendant explains that his
failure to raise this defense previously was due to the “oversight, inadvertence and
excusable neglect” of his counsel. (Def. Mot. (Docket No. 61) ¶ 4; Def. Mem. (Docket
No. 62) at 2). He further contends that his motion should be allowed because his
proposed defense has merit, and because allowance of the motion will cause no delay in
the trial of this case or unfairly prejudice the plaintiff. (Def. Mot. ¶ 2; Def. Mem. at 2-3).
For the reasons that follow, this court finds that the defendant’s delay in seeking to
amend his Answer is excusable in light of the parties’ significant focus on settling the
litigation, and that justice would best be served if the defendant’s motion to amend were
allowed.
A.

Standard of Review

Rule 15(a) of the Federal Rules of Civil procedure provides that “[a] party may
amend its pleading once as a matter of course within . . . 21 days after serving it[.]” Fed.
R. Civ. P. 15(a)(1). Thereafter, a party must obtain leave of court. See Fed. R. Civ. P.
15(a)(2). The decision whether to grant a motion for leave to amend falls within the trial
court’s discretion. Sheehan v. City of Gloucester, 321 F.3d 21, 26 (1st Cir. 2003).
Pursuant to Rule 15(a)(2), “[t]he court should freely give leave [to amend] when justice
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so requires.” Fed. R. Civ. P. 15(a). Accordingly, under the liberal amendment policy
underlying Rule 15, leave to amend “is freely given when justice so requires absent an
adequate basis to deny amendment such as futility, bad faith, undue delay or a dilatory
motive.” Transwitch Corp. v. Galazar Networks, Inc., 377 F. Supp. 2d 284, 290 (D.
Mass. 2005) (quotations and citation omitted).
As the plaintiff points out, however, where, as in this case, the court has issued a
scheduling order establishing pretrial deadlines pursuant to Fed. R. Civ. P. 16(b), “[t]hose
deadlines may be modified ‘only for good cause and with the judge’s consent.’”
Somascan, Inc. v. Philips Med. Sys. Nederland, B.V., 714 F. 3d 62, 64 (1st Cir. 2013)
(quoting Fed. R. Civ. 16(b)(4)). As a result, “‘Rule 16(b)’s good cause standard, rather
than Rule 15(a)’s freely give[n] standard, governs motions to amend filed after
scheduling order deadlines’ have passed.” Id. (quoting Flores-Silva v. McClintockHernandez, 710 F.3d 1, 3 (1st Cir. 2013)) (additional quotations omitted). “Unlike Rule
15(a)’s ‘freely given’ standard, which focuses mostly on the bad faith of the moving party
and the prejudice to the opposing party, Rule 16(b)’s ‘good cause’ standard emphasizes
the diligence of the party seeking the amendment.” O’Connell v. Hyatt Hotels of P.R.,
357 F. 3d 152, 155 (1st Cir. 2004) (internal citations omitted). Thus, “[p]rejudice to the
opposing party remains relevant but is not the dominant criterion.” Id.
B.

Application
Good Cause

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Rockingham argues that the defendant’s motion to amend should be denied
because Randolph did not move to amend his Answer for more than two years after the
October 20, 2011 deadline for doing so had passed, and because he has failed to articulate
any good cause for his delay. (Pl. Opp. Mem. (Docket No. 65) at 3-5). As described
above, the defendant has explained that his failure to raise a statute of limitations defense
earlier was due to the oversight and inadvertence of his counsel. (Def. Mot. ¶ 4; Def.
Mem. at 2). Even if this explanation is not sufficient to justify the delay in moving to
amend, this court finds that there was good cause for the defendant’s conduct, and that he
acted with sufficient diligence in light of the extensive settlement efforts in which the
parties have been engaged.
The record establishes that throughout most if not all of the pendency of this
lawsuit, the parties were engaged in negotiations aimed at settling the case. As described
above, the parties repeatedly informed the court that they were focusing their efforts on
finalizing a settlement, and that they wished to devote their time and resources toward
settlement negotiations rather than litigation. Thus, there was no reason to seek to amend
the answer to assert the statute of limitations defense. Furthermore, the parties reported
that throughout most of the pre-summary judgment period, Randolph had been working
diligently to obtain financing to cover the cost of his mother’s care, and had been
pursuing the Medicaid appeal in an effort to obtain funds to pay Rockingham. The
defendant should not be faulted for not raising a defense which would enable him to
avoid liability on at least one cause of action while working diligently to find funds to
15

satisfy Rockingham’s claim. It was not until after Rockingham moved for summary judgment and the parties’ settlement efforts failed that the defendant appropriately focused on
the merits of the legal dispute and devoted resources to responding to the legal claims
raised. Given the parties’ significant focus on achieving a mutually agreeable settlement
rather than on the pursuit of their legal dispute, this court finds that there was good cause
for the defendant’s delay in seeking to amend his Answer, and that he acted with
sufficient diligence under the unique circumstances presented here.
Unfair Prejudice
This court also finds that Rockingham will suffer no unfair prejudice if Randolph
is allowed to amend. The defendant wishes to assert his proposed statute of limitations
defense pursuant to Mass. Gen. Laws ch. 109A, § 10(b), which extinguishes claims for
fraudulent transfer based on a theory of constructive fraud “unless action is brought . . .
within four years after the transfer was made or the obligation was incurred[.]” The facts
relevant to the statute of limitations analysis are not in dispute, and, in fact, have been
known to the parties since the onset of this litigation. The allowance of the defendant’s
motion will not result in the need for additional discovery or cause delay in the trial of
this matter. Compare Acosta-Mestre v. Hilton Int’l of P.R., 156 F.3d 49, 52 (1st Cir.
1998) (affirming denial of motion for leave to amend complaint where amendment
“would have resulted in at least an additional four months of discovery and would have
delayed trial by at least an additional twelve months[,]” thereby causing prejudice to the

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defendant). If anything, Randolph’s ability to assert this defense will help focus the
issues remaining for trial.
The plaintiff contends that an amendment will cause unfair prejudice because it
will materially alter the parties’ trial strategy. (Pl. Opp. Mem. at 5-6). However, the
record does not support this assertion. While a statute of limitations defense may defeat
Rockingham’s claim for constructive fraud, it does not otherwise impact the claims or the
evidence that Rockingham must present at trial. As the plaintiff has stated in its
opposition to the motion to amend:
Even if the amendment was allowed and the Court determined that
the statute of limitations barred the constructive fraud claim, a
determination which Rockingham believes would be in error, the
case would still have to be tried on the actual fraud count which,
essentially, will include the same evidence regardless of whether the
constructive fraud count survives summary judgment.
(Id. at 7). Therefore, allowance of the amendment will impose no additional burdens on
the plaintiff.
Nevertheless, the plaintiff argues that the defendant’s delay in moving to amend is
extremely prejudicial because it somehow deceived Rockingham into believing that there
would be assets available to pay for Ms. Harnois’ care. Specifically, the plaintiff reasons
as follows:
Assuming, arguendo, that defendant’s interpretation of M.G.L. c.
109A, § 10 is correct, the proper mechanism for raising this issue
would have been to file a motion to dismiss pursuant to Fed. R. Civ.
P. 12(b)(6). Had defendant done this, Rockingham would have
known there were no assets to pay for Ms. Harnois’ care and it could
have evicted her as early as the Summer of 2011. See Affidavit of
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Steven Woods.3 It could have offered whatever assistance it could to
Ms. Harnois on the Medicare dispute or attempt to intervene in that
process. Instead, defendant intentionally allowed this litigation to
languish while his mother received free care. Time and time again,
defendant expressed a willingness to sell the Property to pay for at
least part of the debt owed to Rockingham knowing full well that, in
the interim, Rockingham continued to incur costs to care for his
mother. It was only after her death and when faced with a summary
judgment motion, that defendant belatedly raised his statute of
limitations defense. Defendant received a wrongful benefit by
failing to disclose his statute of limitations defense for more than
two years.
(Id.).
Rockingham’s argument does not demonstrate unfair prejudice. Whether or not
Rockingham’s claim for constructive fraud was time-barrred by the time it filed suit in
2011 does not alter the fact that the Property was not in Ms. Harnois’ name when she
entered Rockingham, or any time thereafter. Thus, it is not persuasive based on the
present record that Rockingham relied on the Property when it decided to admit
Ms. Harnois; rather, it appears that Rockingham was relying on Ms. Harnois’ Medicaid
application. See note 3, supra. In any event, if representations were made after suit was
filed on which Rockingham relied in deciding not to evict Ms. Harnois, those representations are not relevant to whether the suit raised a timely claim of constructive fraud. Such
3

The Affidavit of Steven Woods describes, among other things, the costs associated with
Ms. Harnois’ care while she resided at Rockingham. However, it does not support Rockingham’s
claim that it would have known, by the summer of 2011, that there were no assets available to pay
for that care. According to Mr. Woods, “Ms. Harnois had applied for Medicaid assistance and it
appeared, at least initially, that she would qualify for Medicaid.” (Woods Aff. ¶ 6). It was not
until April 2013 when “Rockingham learned that her appeal challenging the denial of benefits was
also denied.” (Id. ¶ 7). Therefore, Mr. Woods’ statements indicate that the parties remained
hopeful, at least until April 2013, that funds would be available to pay for Ms. Harnois’ care.
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post-litigation representations are no more or less enforceable depending on whether the
constructive fraud claim was timely filed. Since the statute of limitations defense does
not relate to all of Rockingham’s claims, it cannot be found that Rockingham is unduly
prejudiced by not being able to pursue an untimely claim.
Moreover, Rockingham’s argument is based on an unsupportable premise. The
defendant was not obligated to file a motion to dismiss, and it is far from clear that he
would have chosen to devote any time or resources to such a motion in light of the
parties’ focus on settlement and the fact that a motion to dismiss the constructive fraud
claim based on the statute of limitations would not have disposed of Rockingham’s
claims for constructive trust and fraudulent transfer based on a theory of actual fraud.
Furthermore, there is no merit to the plaintiff’s argument that the defendant’s earlier
assertion of a statute of limitations defense would have alerted it to the fact that there
were no assets to pay for Ms. Harnois’ care. The entire premise of Rockingham’s lawsuit
is that the Property was allegedly fraudulently conveyed before Ms. Harnois entered
Rockingham and began incurring costs for her care. There is nothing in the record to
suggest that Rockingham would have litigated its case any differently if Randolph had
included a statute of limitations defense in his Answer or had moved to amend within the
time period set forth in this court’s initial Scheduling Order. Finally, the fact that the
defendant may have expressed a willingness to sell the Property during the parties’ settlement negotiations does not foreclose him from raising appropriate legal defenses in the

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context of litigation. Therefore, this court finds that Rockingham has not been prejudiced
by the defendant’s delay in moving to amend his Answer.
Interests of Justice and Judicial Economy
This court also finds that there is no merit to Rockingham’s argument that the
interests of justice and judicial economy would best be served by the denial of the motion
to amend. (See Pl. Opp. Mem. at 7-8). As described below, this court finds that the
defendant’s proposed statute of limitations defense has merit, and disposes of Rockingham’s claim of constructive fraud. Therefore, even if the defendant’s ability to pursue its
statute of limitations defense will do little to alter the complexity of the case or the
evidence that will be introduced at trial, justice requires that the defendant be allowed to
amend his Answer. See Martin v. Sands, 62 F. Supp. 2d 196, 199 (D. Mass. 1999)
(finding that justice required that defendants be allowed to amend where proposed
amendment was supported by the evidence).
This court’s conclusion is not altered by the plaintiff’s argument that “denial of the
motion would support the strong public policy in favor of ensuring the payment of
nursing home costs for the elderly which is embodied in our statutes.” (Pl. Opp. Mem. at
7-8). First of all, allowing the defendant to assert a statute of limitations defense will not
prevent Rockingham from pursuing its surviving claims at trial. Secondly, the claim
either was or was not timely asserted by Rockingham. There is no public policy issue
involved in whether the plaintiff can belatedly assert claims. Finally, “[t]he Federal
Rules reject the approach that pleading is a game of skill in which one misstep by counsel
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may be decisive to the outcome and accept the principle that the purpose of pleading is to
facilitate a proper decision on the merits.” Foman v. Davis, 371 U.S. 178, 181-82, 83 S.
Ct. 227, 230, 9 L. Ed. 2d 222 (1962) (quoting Conley v. Gibson, 355 U.S. 41, 48, 78 S.
Ct. 99, 103, 2 L. Ed. 2d 80 (1957)). Accordingly, the policies embodied in the Federal
Rules would best be served by allowing the defendant’s motion.
Futility
Finally, Rockingham argues that leave to amend should be denied because the
defendant’s proposed statute of limitations defense is futile. The “futility” assessment is
governed by the standard for motions to dismiss under Fed. R. Civ. P. 12(b)(6). See
Transwitch Corp., 377 F. Supp. 2d at 290. Therefore, an amendment will not be deemed
futile unless it fails to support a “plausible entitlement to relief.” Rodriguez-Ortiz v.
Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir. 2007) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 559, 127 S. Ct. 1955, 1967, 167 L. Ed. 2d 929 (2007)). In the instant case,
this court finds that Rockingham’s claim for fraudulent transfer based on constructive
fraud is time-barred under the applicable statute of limitations. Accordingly, the defendant’s proposed amendment states a claim for relief and is not futile.
The Applicable Statute of Limitations
Rockingham has brought its claims for fraudulent transfer under the Massachusetts
Uniform Fraudulent Transfers Act, Mass. Gen. Laws ch. 109A, §§ 1, et seq. (“UFTA”),
which provides in relevant part:

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(a) A transfer made or obligation incurred by a debtor is fraudulent
as to a creditor, whether the creditor’s claim arose before or after the
transfer was made or the obligation was incurred, if the debtor made
the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor
of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor ... (ii)
intended to incur, or believed or reasonably should have
believed that he would incur, debts beyond his ability to pay
as they became due.
Mass. Gen Laws ch. 109A, § 5(a). Thus, Section 5 of the UFTA makes a transfer or
obligation fraudulent as to both present and future creditors “if there is actual intent to
hinder, delay or defraud.” Norwood Coop. Bank v. Gibbs, Civil Action No. 10-11647JCB, 2012 WL 4094328, at *6 (D. Mass. Sept. 13, 2012). It also makes certain transfers
and obligations fraudulent, “regardless of the ability to prove actual intent[,]” where there
is “constructive fraud[.]” Id.
Section 10 of the UFTA, entitled “Limitation of actions,” establishes one- and
four-year periods of limitations on actions brought under Section 5. It provides in
relevant part as follows:
A cause of action with respect to a fraudulent transfer or obligation
under this chapter shall be extinguished unless action is brought:
(a) under paragraph (1) of subsection (a) of section five, within four
years after the transfer was made or the obligation was incurred or, if
later, within one year after the transfer or obligation was or could
reasonably have been discovered by the claimant;
(b) under paragraph (2) of subsection (a) of section five ... within
four years after the transfer was made or the obligation was incurred
....
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Mass. Gen. Laws. ch. 109A, § 10. Accordingly, fraudulent transfer claims based on the
debtor’s actual intent to defraud must be brought within four years following the transfer
or obligation, or within one year after such transfer or obligation was discovered or could
reasonably have been discovered by the claimant. However, claims based on constructive
fraud must be brought “within four years after the transfer was made or the obligation
was incurred[,]” regardless of the claimant’s knowledge or ability to discover the
challenged transaction. Id.
Untimeliness of Rockingham’s Claim
The undisputed facts presented in this case show that the transfer of Ms. Harnois’
Property to the Trust occurred, at the latest, in November 2006 when the Quitclaim Deed
to the Property was recorded in the Barnstable Registry of Deeds. (See Def. Ex. 2).
Because Rockingham did not initiate this action until June 14, 2011, more than four years
after the allegedly fraudulent transaction occurred, the plaintiff’s claim for constructive
fraud is barred under Section 10(b) of the Massachusetts UFTA.
The plaintiff does not dispute that the transfer of the Property occurred more than
four years prior to the start of the litigation. Nevertheless, it argues that the action is
timely. According to Rockingham, the limitations period set forth in the UFTA “runs
from the later of either a ‘transfer’ or an ‘obligation.’” (Pl. Opp. Mem. at 8). It further
asserts that because “the underlying ‘obligation’ (Ms. Harnois’ care) did not commence
until April 14, 2009[,]” the date when Ms. Harnois was admitted to Rockingham on a

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permanent basis, the action was commenced “well within the applicable four year statute
of limitations.” (Id.).
This court finds that Rockingham’s reading of the term “obligation” to mean “Ms.
Harnois’ care” reflects a misinterpretation of the limitations provision, and is inconsistent
with the manner in which “obligation” is used throughout the UFTA. Where a court is
called upon to interpret a statute, it must “look first to the plain meaning of the statutory
language. Where the language is clear and unambiguous, it is to be given its ‘ordinary
meaning.’” Commonwealth v. Mogelinski, 466 Mass. 627, --- N.E. 2d ---, 2013 WL
6697770, at *4 (Dec. 23, 2013) (quoting Commonwealth v. Brown, 431 Mass. 772, 775,
730 N.E.2d 297 (2000)) (internal citations omitted). “Of course, this meaning must be
reasonable and supported by the purpose and history of the statute.” Id. (quoting Wright
v. Collector & Treas. of Arlington, 422 Mass. 455, 457-58, 663 N.E.2d 572 (1996)).
Moreover, the court must “look to the language of the entire statute, not just a single
sentence, and attempt to interpret all of its terms ‘harmoniously to effectuate the intent of
the Legislature.’” Id. at *9 (quoting Commonwealth v. Hanson H., 464 Mass. 807, 810,
985 N.E.2d 1179 (2013)).
Although the term “obligation” is not defined in the UFTA, the plain language of
the term, as used in Section 10 and throughout the statute, refers to the transaction that is
being challenged as fraudulent, and not, as Rockingham argues, to the financial obligation
for which the claimant is seeking compensation. Thus, Section 10 of the statute establishes limitations periods for causes of action brought under Section 5. See Mass. Gen.
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Laws ch. 109A, § 10(a)-(b). As described above, Section 5 defines when “[a] transfer
made or obligation incurred by a debtor is fraudulent as to a creditor[.]” Mass. Gen.
Laws ch. 109A, § 5(a) (emphasis added). As it pertains to actions for constructive fraud,
Section 5 requires the claimant to establish, inter alia, that “the debtor made the transfer
or incurred the obligation . . . without receiving a reasonably equivalent value in
exchange for the transfer or obligation[.]” Id. § 5(a)(2) (emphasis added). Therefore,
under the plain language of the statute, the term “obligation” refers to a fraudulent
transaction that was made by the debtor and occurred without receiving reasonably
equivalent value in exchange. It does not refer to the debt owed to the claimant, for
which the claimant is seeking compensation in the litigation. In this case, the transaction
that Rockingham challenges as fraudulent was the transfer of the Property that took place
in 2006. Under Section 10(b) of the UFTA, its claim for constructive fraud based on that
transaction is time-barred.
This court’s interpretation of the term “obligation,” as used in Sections 5 and 10 of
the statute, is consistent with the use of that term in other provisions of the UFTA. For
example, Section 6 of the statute, which addresses situations in which a creditor’s claim
arose before the alleged fraudulent transfer or obligation, provides in relevant part that
[a] transfer made or obligation incurred by a debtor is fraudulent as
to a creditor whose claim arose before the transfer was made or the
obligation was incurred if the debtor made the transfer or incurred
the obligation without receiving a reasonably equivalent value in
exchange for the transfer or obligation and the debtor was insolvent
at that time or the debtor became insolvent as a result of the transfer
or obligation.
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Mass. Gen. Laws ch. 109A, § 6. As in the case of Section 5, Section 6 defines when an
“obligation incurred by a debtor is fraudulent as to a creditor[.]” Therefore, the term
“obligation” pertains to the alleged unlawful transaction and not to some other obligation
for which the claimant is attempting to recover.
The remedies provisions of the UFTA, which can be found at Section 8 of the
statute, further confirm this interpretation. Thus, Section 8 provides in significant part
that “[i]n an action for relief against a transfer or obligation under this chapter, a creditor
. . . may obtain . . . avoidance of the transfer or obligation to the extent necessary to
satisfy the creditor’s claim[.]” Mass. Gen. Laws ch. 109A, § 8. Accordingly, Section 8
further demonstrates that the term “obligation” refers to the challenged transaction undertaken by the debtor, which the plaintiff contends is fraudulent. Indeed, by its claims in
this action, Rockingham is seeking to set aside the transfer of the Property to the Trust,
pursuant to Section 8, so that it can be sold in order to pay for Ms. Harnois’ nursing home
care. (See Pl. S.J. Mem. (Docket No. 30) at 10). It is not challenging Ms. Harnois’ care
or the defendant’s obligation to pay for that care.
Rockingham’s reliance on Grassmueck v. Bensky, N. C04-2016P, 2005 WL
1076533 (W.D. Wash. May 5, 2005), does not support an alternative conclusion. In that
case, the court considered the parties’ arguments as to whether the statute of limitations
barred a fraudulent conveyance claim challenging an agreement to purchase all of the
assets of a company for $3.3 million. Grassmueck, 2005 WL 1076533, at *1. The
purchase agreement, which was assigned to the plaintiff, was carried out through a series
of transfers to the defendant, who was the president and controlling member of the
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company. Id. The plaintiff claimed that the company was significantly overvalued, and
that it received virtually nothing in return for its purchase. Id. At issue was whether the
statute of limitations began to run when the purchase agreement was signed or when the
fraudulent transfers effectuating the purchase agreement were consummated.
As in the case of the Massachusetts UFTA, the limitations provision at issue in
Grassmueck provided that “a cause of action is extinguished unless the action is brought
‘within four years after the transfer was made or the obligation was incurred ...’” Id. at
*3 (quoting RCW 19.40.091(a) and (b)) (emphasis in original). Based on the provision’s
use of disjunctive language, the court rejected the defendant’s proposed reading of the
statute, “that requires the clock to start running from the earliest possible date, which in
this case would be the date the obligation was incurred.” Id. Instead, the court agreed
with the plaintiff’s argument “that the four-year period should be calculated from the
latest possible date, which would be the transfer of funds” that occurred approximately
one month after the date of the agreement. Id. Accordingly, the court found that the
plaintiff’s position was consistent with the statute’s plain language. See id.
Nothing in Grassmueck undermines this court’s interpretation of the term
“obligation,” as used in Mass. Gen. Laws ch. 109A, § 10. In that case, both the
obligation to purchase the company, and the transfers made by the debtor in order to
carry out that obligation, were part of a single transaction, which the plaintiff alleged was
fraudulent. Therefore, although the Grassmueck court confirmed that the limitations
period begins to run either at the time the challenged transfer was made or at the time the
challenged obligation was incurred, it does not support Rockingham’s reading of
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“obligation” as something other than the alleged fraudulent transaction. Rather, it
provides further support for this court’s conclusion that an “obligation,” as used in the
limitations provision, refers to the challenged transaction, which the claimant is seeking
to set aside. Therefore, the defendant’s proposed statute of limitations defense is not
futile, and his motion to amend his Answer is allowed.
IV. ANALYSIS – PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
Rockingham has filed a motion for summary judgment, pursuant to Fed. R. Civ. P.
56(a), by which it is seeking judgment as a matter of law on its claim for fraudulent
transfer based on a theory of constructive fraud. In ruling on a motion for summary
judgment, the facts must be viewed in the light most favorable to the non-moving party.
See Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008). Summary judgment is
appropriate where the “materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations . . . admissions,
interrogatory answers, or other materials” show that “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a), (c); Soc’y of the Holy Transfiguration Monastery, Inc. v. Gregory, 689 F. 3d 29,
39 (1st Cir. 2012). “[A]n issue is ‘genuine’ if it ‘may reasonably be resolved in favor of
either party.’” Vineberg, 548 F.3d at 56 (quoting Garside v. Osco Drug, Inc., 895 F.2d
46, 48 (1st Cir. 1990)). “A fact is material only if it possesses the capacity to sway the
outcome of the litigation under the applicable law.” Id. (quotations, punctuation and

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citations omitted). In the instant case, as described above, the undisputed facts
demonstrate that the transfer giving rise to Rockingham’s claim for constructive fraud
occurred more than four years before this action was filed. Consequently, the claim for
constructive fraud is time-barred under Mass. Gen. Laws ch. 109A, § 10, and
Rockingham’s motion for summary judgment must be denied.
V. CONCLUSION
For all the reasons described above, the “Defendant’s Motion for Leave to File
First Amended Answer and Affirmative Defenses to Plaintiff’s Verified Complaint”
(Docket No. 61) is ALLOWED. The defendant shall file an amended Answer within 10
days from the date of this Memorandum of Decision and Order. The “Plaintiff’s Motion
for Summary Judgment” (Docket No. 29) is DENIED.

/ s / Judith Gail Dein
Judith Gail Dein
United States Magistrate Judge

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