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Breen v. Green

United States District Court, D. Rhode Island

September 13, 2019

CATHERINE BREEN, Plaintiff,
v.
LINDA GREEN and HOWLAND GREEN, Defendants.

          REPORT AND RECOMMENDATION [1]

          PATRICIA A. SULLIVAN, UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Catherine Breen has moved to reopen this settled case, to vacate the Consent Order entered pursuant to the settlement and instead to enter the Consent Judgment that the settlement provided would be destroyed if Defendants Howland and Linda Green[2] complied with all of the settlement's less draconian terms. ECF No. 31. The practical ramifications of granting Ms. Breen's prayer for relief are as follows: the case will terminate, but by a Consent Judgment in Ms. Breen's favor rather than by a stipulation of dismissal; the Greens will be subject to execution of a Judgment for the additional sum of $130, 000 (the Consent Judgment's $250, 000 less the $120, 000 that the Greens have already paid); the Judgment amount will be for punitive damages, which the Greens will be unable to discharge in bankruptcy; the case will no longer be sealed; and Ms. Breen is entitled to recovery of her reasonable attorneys' fees and costs as the prevailing party on the motion to reopen.

         Ms. Breen filed her motion to reopen immediately upon discovering from the South Kingstown Land Records that, between the day that the settlement was entered and the signing of the settlement agreement, the Greens discharged the so-called Liberty Lane Property mortgage and forgave the underlying loan worth $100, 000. The Greens had pledged both of these assets as security in the settlement; their materiality to the parties' bargain is expressly stated in the agreement. Ms. Breen contends that this conduct unambiguously amounts to a “transfer [of] assets which have been pledged as collateral” under the settlement agreement, which entitles her to access the larger recovery of punitive damages provided by the Consent Judgment. She also argues that this conduct amounts to a breach and fraud in the inducement.

         The Greens responded to Ms. Breen's motion by immediately sending her a cashier's check for $117, 000, the balance owed in the absence of a transfer of pledged security or a breach, for a total of $120, 000 paid. Among other arguments, they contend that, whatever may have happened with the Liberty Lane Property mortgage and the related $100, 000 loan, their payment in full of the $120, 000, which Ms. Breen accepted, satisfies all of their obligations under the settlement agreement, entitling them to compel the destruction of the Consent Judgment, the filing of the stipulation of dismissal and the release of the remaining security. For the same reasons, the Greens have filed a counter motion to enforce the settlement. ECF No. 35.

         The motions of Ms. Breen and the Greens have been referred to me and I address both through a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). Based on the parties' submissions and the argument presented at a hearing, I found that the facts derived from the public record and Mr. Green's deposition in another case (the authenticity of which are not in issue), coupled with the plain meaning of the unambiguous language of the settlement agreement, permit the Court to determine the motions without the need for an evidentiary hearing. For the reasons that follow, I recommend that Ms. Breen's motion be granted and that the Greens' motion be denied.

         I.BACKGROUND

         A. Underlying Litigation and Settlement Agreement

         On June 13, 2018, Ms. Breen sued the Greens, her aunt and uncle, on whom she had relied as a child for love, care and advice. ECF No. 1. She alleged that, when her husband, who was serving in the military, died unexpectedly, leaving her with three young children, the proceeds of a $200, 000 life insurance policy and a wrongful death recovery, she turned to the Greens for help. She claimed that Mr. Green made representations to induce her to turn over some or all the insurance proceeds and wrongful death recovery to him for investment, that he invested inappropriately, misappropriated some of the funds and lied to cover up his malfeasance and that his wife, Mrs. Green, aided and abetted in what amounted to reckless and criminal fraudulent conduct. Ms. Breen's sixteen Count complaint asserted securities fraud, breach of contract and common law fraud (among other claims) against the Greens; it alleged an injury in the amount of $300, 000, and claimed entitlement to interest, punitive damages, double and treble damages, attorneys' fees, civil penalties and disgorgement. The Greens vigorously denied all of her allegations. ECF No. 25.

         After the Court entered a temporary attachment based on consent (ECF No. 17), the parties chose a mediator (Patricia Rocha, Esq., of Adler Pollock & Sheehan PC) and entered mediation. On December 6, 2018, the parties signed a handwritten memorialization of their agreement to enter into a mutually acceptable settlement agreement. ECF No. 38-1 (“Mediation Agreement”). This document roughly outlined terms, including the requirement that a punitive damage-based Consent Judgment (then described to be in the amount of $200, 000) would be held in escrow and that any proceeds from the sale of what has become known as the Liberty Lane Property would go immediately to Ms. Breen. The parties then turned to the negotiation of what became the Settlement Agreement and Mutual Release. ECF No. 31-2 at 2-45 (“Settlement Agreement”). Reciting December 6, 2018, as its date of formation (the day when the parties reached their agreement with the mediator), the Settlement Agreement was fully drafted and ready for execution by the end of December 2018. It was signed by Ms. Breen on December 31, 2018. Id. at 2, 21. The Greens signed it on January 15, 2019. Id. at 22.

         In Section 1 of the Settlement Agreement, the Greens agreed to pay Ms. Breen $130, 000, over a three-year period, with the right to pay less ($120, 000) if paid within fifteen months. Settlement Agreement § 1. Because of the risk posed by such extended payment period, much of the Settlement Agreement is focused on security: as pertinent here, the Greens pledged a mortgage they held on the Liberty Lane Property given by an individual named Angelo Capra, together with Mr. Capra's related promise to pay the Greens $100, 000 by May 10, 2019. Id. § 5; ECF No. 38-2. The Capra loan was secured by the Liberty Lane Property mortgage. ECF No. 38-2. The Settlement Agreement specifically recites that if either of these assets should be monetized or liquidated, all proceeds would go immediately to Ms. Breen, and that the “[f]ailure of the [Greens] to pay any money received by them from the Liberty Lane Property or Angelo Capra shall be a material breach of the agreement.” Settlement Agreement § 5.

         The Settlement Agreement includes the agreement of the Greens to a Consent Judgment in the amount of $250, 000 in punitive damages (reduced by any payments) to be held in escrow by the mediator. Id. § 9; ECF No. 31-2 at 40-41. Section 9 of the Settlement Agreement sets out the three circumstances in which the Consent Judgment may be withdrawn from escrow and filed:

• Breach and failure to cure the breach of the Greens' obligation to pay $130, 000 (or $120, 000 if paid sooner);
• Bankruptcy, receivership or other liquidation proceeding initiated by the Greens; or
• “[I]n the event the [Greens] shall transfer or attempt to transfer assets which have been pledged as collateral under this Agreement.”

         Settlement Agreement § 9. If none of these three events intervenes, and after the Greens comply fully with the payment obligations in Section 1, the Settlement Agreement requires that the Consent Judgment be destroyed, and the case be dismissed with prejudice. Id.

         B. Greens' Simultaneous Dealings with Jane and Angelo Capra, Maureen and Edward Grove and the Liberty Lane Property[3]

         On March 1, 2019, acting for the executors for the Estate of Edward Grove, Attorney Thomas Tarro filed In re Grove as a miscellaneous petition in Kent County Superior Court seeking leave to conduct the depositions of the Greens for the perpetuation of testimony. ECF No. 31-2 at 69-75. As grounds, the petition alleged that, since early 2017, the Greens had handled the financial affairs of the decedent, Mr. Grove (who died on January 4, 2019), and his deceased wife, Maureen Grove, and that they had withdrawn approximately $400, 000 from the Groves' accounts. Among the topics of concern, the petition notes that Mr. Grove's name appears on a December 28, 2018, deed for real estate located on Liberty Lane, purporting to transfer to him a one-third interest in the Liberty Lane Property just days before his death, with the other two-thirds going to the Greens. Id. at 70-71, 79-80. The petition states, “[t]he circumstances surrounding the transfer are in question.” Id. at 71.

         Pursuant to this petition, the deposition of Mr. Green was taken on June 14, 2019. The transcript of his testimony (but not the exhibits) is in the record. See Green Depo. The documents that Mr. Green discusses in his testimony include the following:

• ECF No. 38-2 (May 31, 2018, mortgage for Liberty Lane Property from Angelo Capra to Howland Green based on loan of $100, 000 to be paid by May 10, 2019);
• ECF No. 38-5 (December 18, 2018, discharge of mortgage for Liberty Lane Property given by Howland Green); and
• ECF No. 31-2, 66-67 (December 28, 2018, trustee's deed of Jane Capra, wife of Angelo Capra, as Trustee of Jane Capra Trust, conveying Liberty Lane Property to Greens and Edward A. Grove).

         The lattermost document (trustee's deed) recites that the consideration for the conveyance of the Liberty Lane Property by Angelo Capra's wife (as trustee of her own trust) to the Greens and Edward Grove was the forgiveness of a debt of $150, 000 owed by Angelo Capra to Howland Green. ECF No. 31-2 at 67.

         The deposition of Mr. Green is a confusing muddle. To the extent that it makes sense, it appears to establish that, purporting to act pursuant to powers of attorney, the Greens were deeply involved in the financial affairs of at least four senior citizens seemingly nearing the end of their lives - Jane and Angelo Capra, and Maureen and Edward Grove.[4] It also establishes that, since 2014, the Greens had been deeply invested in a tree cloning operation to develop deer-resistant evergreen trees and that they had been working on a plan to use the Liberty Lane Property for this endeavor. Green Depo. at 27-28. However, until the end of December 2018, apart from Mr. Green's interest as mortgagee, the Greens did not own the Liberty Lane Property; rather, the Property was owned by Angelo Capra. He and his wife, Jane, had lived in a residence located on the Property. Green Depo. at 12, 21.

         Pertinent to this case, Mr. Green testified that he had a power of attorney for Mr. Capra (the mortgagor on the Liberty Lane Property mortgage and the ostensible recipient of the $100, 000 loan referenced in the Settlement Agreement), and that he used the money of Mrs. Grove, for whom he also had a power of attorney, to pay Mr. Capra's nursing home and other expenses, and further that all of the $100, 000 supposedly loaned to Mr. Capra had come from Mrs. Grove. Id. at 12, 15, 17-18, 42-43, 48-49. Mr. Green explained that, after Mrs. Grove's death, Mr. Grove (whose power of attorney the Greens also held) was put on the Liberty Lane Property deed to expunge the debt owed by the Greens to the Groves. Id. at 50-51. Further, even though Mr. Green held powers of attorney for both Angelo and Jane Capra, he professed ignorance regarding how the Liberty Lane Property was transferred from Mr. Capra to his wife as Trustee for the Jane Capra Trust, before being transferred by Jane Capra, as Trustee, to the Greens and Mr. Grove. Id. at 51-52. Regarding the discharge, Mr. Green testified, “that mortgage was - was discharged before the property was put - was transferred to Jane. Laura [Angelo Capra's attorney] discharged that mortgage. She couldn't transfer it to Jane, unless the mortgage was discharged. . . . I had to discharge it so the property can be transferred.” Id. at 52. And in addition to the recitation in the trustee's deed that the transfer of the Liberty Lane Property was in consideration for the forgiveness by Mr. Green of a $150, 000 debt owed by Mr. Capra, Mr. Green also testified that the plan was for him to use the “value” derived from Liberty Lane Property to continue to pay for Mr. Capra's nursing care and to pay a “gift” of a share of the Liberty Lane Property income to Mrs. Capra. Id. at 48. It is unknown how much of this promised “value” Mr. Capra received from the transfer of the Liberty Lane Property, as he died in the Spring of 2019. Id. at 42. However, Mr. Green testified that, as of the date of the deposition in June 2019, “I give her [Jane Capra] money every month, ” $400, “just to gift, ” to “[h]elp her support herself.” Id. at 48.

         This testimony reveals that Mr. Green was intimately involved in planning the complex sequence of transfers culminating in the end of 2018 to solve the problem of the money he had taken from Maureen and Edward Grove and to get control of the Liberty Lane Property on which he had been planning to continue the nursery business. Id. at 27-28, 53. Thus, he arranged for Jane Capra to include Mr. Grove (just days before his death) on the Liberty Lane Property deed to expunge whatever financial obligations the Greens owed to the Groves (amounting to at least $128, 000). Id. at 49-51. Mr. Green acquired control of the Liberty Lane Property for himself and his wife in consideration for forgiveness of a $150, 000 debt owed by Mr. Capra, coupled with the commitment to pay some of the “value” or “income” from the Liberty Lane Property to Mr. Capra so he can “self-pay his nursing care” and to pay some to “gift a share of income” to Mrs. Capra “for the rest of her life.” Id. ...


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