Farm Family Life Insurance Company v. Barker

Filing 51

Judge Indira Talwani: ORDER entered. MEMORANDUM AND ORDER ADOPTING 48 Report and Recommendation, GRANTING 27 Motion for Partial Summary Judgment, and STRIKING the Trustee's Fourth Affirmative Defense set forth in her 24 First Amended Answer and Affirmative Defenses.(DaSilva, Carolina)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
FARM FAMILY LIFE INSURANCE
COMPANY,
Plaintiff,
v.
ELIZABETH BARKER, AS TRUSTEE
OF THE BARKER IRREVOCABLE
TRUST,
Defendant.

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Civil Action No. 17-cv-10377-IT

MEMORANDUM AND ORDER
September 6, 2018
TALWANI, D.J.
Plaintiff Farm Family Life Insurance Company (“Farm Family”) brought this action
seeking declaratory relief and reformation of an insurance contract. Compl. [#1]. Defendant
Elizabeth Barker, Trustee of the Barker Irrevocable Trust (“Trustee”), raised as an affirmative
defense that Farm Family’s claims were barred by its unclean hands, First Am. Answer and
Affirmative Defenses [#24], and Farm Family sought partial summary judgment as to this
affirmative defense. Mot. for Partial Summ. J. [#27]. Now before the court is the Magistrate
Judge’s Report and Recommendation on Plaintiff’s Motion for Partial Summary Judgment [#48]
recommending that the court grant Farm Family summary judgment on the Trustee’s affirmative
defense, the Trustee’s Objections [#49] thereto, and Farm Family’s Response [#50]. After de
novo review of those portions of the Report and Recommendation to which the Trustee objects,
the Report and Recommendation is adopted for the reasons set forth therein and below.
The Trustee raises three related objections: (1) that the Report and Recommendation
failed to draw an inference from Farm Family’s actions in 2016 that Farm Family fraudulently

intended to deceive the Trustee as to the Guaranteed Cash Surrender Values of the 1998 policy;
(2) that the Report and Recommendation’s purported finding that Farm Family did not attempt to
rely on the Replacement Policy to obtain relief or to benefit from the Replacement Table was
counter to the factual record; and (3) that the Report and Recommendation’s conclusion and
reasoning that the unclean hands defense does not apply was wrong, and in any event should not
be determined without a full trial record. Def.’s Objs. to R. & R. 2 [#49]. These objections are
addressed together.
Summary judgment is appropriate if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to a judgment as a matter of law. Fed. R. Civ. P.
56(a). Here, the inferences and findings sought by the Trustee are not material. Even assuming
that Farm Family fraudulently intended in 2016 to deceive the Trustee as to the 1998 policy, and
that Farm Family did so for its own benefit, the Trustee’s affirmative defense of unclean hands
does not bar the claims brought by Farm Family concerning the 1998 policy.
If the Trustee had evidence from which to infer that Farm Family engaged in fraud in
issuing the policy in 1998, such an inference would be material to the equitable claims brought
by Farm Family. See Scattaretico v. Puglisi, 60 Mass. App. Ct. 138, 144, 799 N.E.2d 1258, 1262
(2003) (giving examples of “suits to rescind transactions which are aborted and dismissed when
it turns out the plaintiff participated in the wrong that is the ground for the rescission”). And if
the Trustee had reasonably relied to her detriment on Farm Family’s 2016 actions (for example,
by accepting the lower payment), and now sought to prove a claim for promissory estoppel
(arising in 2016 or later), Farm Family’s actions and intentions in 2016 would be material. But
no such allegations of detrimental reliance or claims for promissory estoppel are at issue here.
“The doctrine of unclean hands only applies when the claimant’s misconduct is directly

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related to the merits of the controversy between the parties, that is, when the tawdry acts ‘in
some measure affect the equitable relations between the parties in respect of something brought
before the court for adjudication.’” Texaco P.R., Inc. v. Dep't of Consumer Affairs, 60 F.3d 867,
880 (1st Cir. 1995) (quoting Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245,
54 S. Ct. 146, 148, 78 L. Ed. 293 (1933)). Here, the merits of the controversy concern the
issuance of the 1998 policy. Even drawing all inferences sought by the Trustee, the “tawdry acts”
are not material to the issuance of the policy in 1998. Thus, they do not relate to the merits of the
underlying claim, and do not give rise to the affirmative defense sought by the Trustee to bar
Farm Family’s claims.
For the foregoing reasons, and the reasons set forth therein, the court adopts the
Magistrate Judge’s Report and Recommendation on Plaintiff’s Motion for Partial Summary
Judgment [#48], grants Farm Family’s Motion for Partial Summary Judgment [#27], and strikes
the Trustee’s Fourth Affirmative Defense set forth in her First Amended Answer and Affirmative
Defenses [#24].
IT IS SO ORDERED.
Date: September 6, 2018

/s/ Indira Talwani
United States District Judge

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