Opinion
0584CV02944
09-09-2019
Kanodia v. Barrett
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Cowin, Jackie, J.
MEMORANDUM OF DECISION AND ORDER ON PLAINTIFFS’ MOTION TO REACH AND APPLY FUNDS DUE THE DEFENDANT FROM THE DAVIS COMPANIES (P#48)
Jackie Cowin Associate Justice
The Plaintiffs’ Motion to Reach and Apply funds due the defendant from the Davis Companies and related entities ("Davis Companies") is ALLOWED in the amount of $2,645,244.80, for the reasons explained below.
1. Plaintiffs Can Reach the Funds on a Creditor’s Bill
This action arises out of a Judgment in the amount of $1,000,000 obtained by the plaintiffs in this Court on February 26, 2006. The Judgment arose from the defendant’s breach of an agreement for the sale and purchase of plaintiff’s interests in a certain parcel of land. Over the years, plaintiffs have made extensive efforts to collect on their Judgment, to little avail, and they now seek an Order permitting them to reach and apply funds that are due the defendant pursuant to consulting contracts he has with the Davis Companies.
At a hearing on July 25, 2019, I entered an order restraining the Davis Companies and its related entities from disbursing funds owed the defendant while the plaintiff’s motion is pending. Counsel for the Davis Companies appeared at that hearing and did not object.
Defendant has objected primarily on the grounds that plaintiffs did not bring a separate complaint against the Davis Companies as reach and apply defendants, as required by G.L.c. 214, § 3(6). However- although the plaintiffs did not assert this as a basis for relief- I find that they may pursue equitable relief in the nature of a creditor’s bill.
Specifically, a judgment creditor such as the plaintiffs may assert a reach and apply action in either statutory or non-statutory form. See Foster v. Evans, 384 Mass. 687, 689 (1981). "[N]onstatutory actions to reach and apply are equitable actions distinguished from both statutory actions to reach and apply [under] G.L.c. 214, § 3(6), and statutory actions to reach and apply fraudulently conveyed property [under] G.L.c. 214, § 3(8)." Cavadi v. DeYeso, 458 Mass. 615, 624-25 (2011). Such actions are in the nature of what was previously known as a "creditor’s bill." Creditors’ bills have long been recognized as "an aid to litigants seeking to satisfy their judgments" and "the creation of a statutory action to reach and apply did not abolish the older equitable action," Foster, 384 Mass. at 691.
"Traditionally, a creditor’s bill could be brought (i) by a judgment creditor, (ii) who had attempted to obtain satisfaction at law, and (iii) who sued in equity for the purpose of reaching property that could not be taken on execution at law." Cavadi, 458 Mass. at 625 (citing Foster, 384 Mass. at 691). However, "judgment and fruitless execution ... are not the only possible means of proof. The necessity of resort to a court of equity may be made otherwise to appear." Id. For example, a judgment creditor who alleges that the debtor has fraudulently transferred his assets to a third party is entitled to equitable relief in the nature of a creditor’s bill. Id., 384 Mass. at 694; see also Anaesthesia Assocs. of Mass., PC v. Plexus Anesthesia Servs. of Mass., PC, 2018 Mass.Super. LEXIS 32 [34 Mass.L.Rptr. 668] (Salinger, J.) (in cases involving fraudulent conveyances, "the judgment creditor need not prove a fruitless attempt at execution").
The plaintiffs did obtain a late execution on their Judgment, but not until after filing the Motion to Reach and Apply.
The plaintiffs have produced a sworn statement by the defendant himself that he transferred a home he owned in Cohasset into a trust, for no consideration, in order to remove the property from the plaintiffs’ reach. As such, plaintiffs have established a fraudulent conveyance and need not prove a fruitless attempt at execution.
Moreover, the plaintiffs have established- through their own Affidavit and signed acknowledgements by the defendant- a long history of attempts to collect on the Judgment, which have included entering into payment plans with the defendant and seeking to attach his bank accounts, but have only recovered a small fraction of what they are owed. Therefore, plaintiffs have established that execution "would be of no practical utility." Foster, 384 Mass. at 693 (quoting Maguire v. Spaulding, 194 Mass. 601, 604 (1907)) ("[t]he rule requiring both judgment and unsatisfied execution is not an absolute one, and does not apply where a judgment and execution would be of no practical utility").
Accordingly, I find that plaintiffs are entitled to nonstatutory, equitable relief in the nature of a creditor’s bill, and may reach and apply funds due the defendant from the Davis Companies.
Plaintiffs also assert they are entitled to an order to reach and apply under G.L.c. 223, § 86A. However, relief under that statute must be requested "before the expiration of the time to appeal" from the underlying Judgment, and thus is clearly not applicable here.
2. Plaintiffs Are Entitled to Postjudgment Interest
Defendant also disputes that plaintiffs are entitled to postjudgment interest, alleging that the Court, in entering Judgment in 2006, "rejected plaintiffs’ request for ... interest." I disagree.
After the Court (Brady, J.) resolved Cross Motions for Judgment on the Pleadings in favor of the plaintiffs, the plaintiffs submitted a proposed Judgment, which was signed by the clerk. A paragraph in the Judgment that provides for postjudgment interest at the rate of 12% is crossed out. I do not agree with the defendant that this deprives plaintiffs of collecting such interest. Postjudgment interest at the rate of 12% is not part of a Judgment itself, but is added to it, and the Court need not authorize it because it is awarded automatically, by law. Absent any evidence that the plaintiffs agreed to waive postjudgment interest, the crossing out of the paragraph in the proposed Judgment which referred to interest does not deprive plaintiffs of their statutory entitlement to it.
Defendant also argues that plaintiffs are not entitled to pre-judgment interest, because a space for such interest in the Judgment is left blank. Plaintiffs are not seeking pre-judgment interest (see p. 2 of plaintiffs’ memorandum), and therefore the point is moot.
Defendant also argued that the Motion to Reach and Apply should be denied because it was not served in compliance with Rule 9A. As it was unclear that the Motion had been served on the defendant’s present counsel (it had been served on prior counsel), the Court had the motion served on defense counsel in-hand at the initial hearing on the motion, then continued the hearing to allow defendant the usual time under Rule 9A to file an opposition, which he did. Therefore, there is no merit to this argument.
ORDER
Accordingly, it is hereby ORDERED that the plaintiff’s Motion to Reach and Apply Funds Due the Defendant from the Davis Companies is ALLOWED in the amount of $2,645,244.80, which includes: the underlying Judgment of $1,000,000; attorneys fees ($22,240) and costs ($1,853.24) awarded in the underlying action; and postjudgment interest of $1,621,150.06.