Opinion
No. 11–P–1718.
2012-05-24
LI HUA ZHOU v. Brandon KWAN & others.
By the Court (KANTROWITZ, KAFKER & MEADE, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendants, brothers Brandon, John, Peter, and Anthony Kwan (Kwans), appeal a judgment in favor of their stepmother, plaintiff Li Hua Zhou (Zhou), declaring the Kwan Family Trust (trust) null and void due to fraud and dismissing their counterclaims. They contend primarily that the evidence and the trial judge's findings were insufficient to sustain the judgment, and that the action should have been barred by laches. Because the judge's findings were sufficient to sustain the judgment and laches was not timely raised and its application would have been inequitable, we affirm. Factual sufficiency. The parties all agree that Zhou's claim for fraud on marital rights is appropriately governed by Allen v. Allen, 213 Mass. 29 (1912), Kavanaugh v. Kavanaugh, 279 Mass. 238 (1932), and Gedart v. Ejdrygiewicz, 305 Mass. 224 (1940). This cause of action applies to void as fraudulent a conveyance made by the plaintiff's then-fiancé, “without consideration, for the purpose of preventing the plaintiff from acquiring any rights in ... property upon her marriage....” Kavanaugh, supra at 240. Fraud may be established either through affirmative misrepresentations by the decedent spouse, see Allen, supra at 34, or by inference due to the “purposed concealment” of a conveyance. Gedart, supra at 228 (quotation omitted). The trial judge, sitting without a jury, found that Chung Tin Kwan (Chung) defrauded his second wife, Zhou, by conveying interests in real property to the trust one month before their wedding. The judge specifically credited Zhou's testimony that Chung had used promises of financial stability to induce her to move from China to the United States and marry him, and that he represented before and after they married that he owned the properties in question.
The defendants also assert that the trial judge's reference to “the outdated belief that women may not inherit property” violates Federal and State constitutional protections for the free exercise of Confucianism and traditional Chinese beliefs. This argument is raised for the first time on appeal and is therefore waived. See Porter v. Treasurer & Collector of Taxes of Worcester, 385 Mass. 335, 338 n. 5 (1982); Boston v. Back Bay Cultural Assn., Inc., 418 Mass. 175, 178 n. 6 (1994). Furthermore, as we read the judge's decision, her reference to “outdated belief” was not essential to her reasoning.
The validity of this aspect of the cause of action has not been challenged by the defendant and the issue is not before us.
Although the defendants state their disagreement with certain of the judge's findings, they do not provide reasoned appellate argument that any of the findings are clearly erroneous. See Mass.R .A.P. 16(a)(4), as amended, 367 Mass. 921 (1975).
The Kwans contend that there was no evidence or finding that Chung possessed a fraudulent intent, or that he purposefully concealed the conveyances or made fraudulent statements. However, it is not necessary for the plaintiff to demonstrate that Chung intended to commit fraud, only that he intended “to deprive the plaintiff of [her] marital rights and [her] just expectations.” Id. at 229. Moreover, the trial judge concluded that Chung “concealed the conveyances from [Zhou] and continued to represent to her that he was the owner of these properties both before and after their marriage.” Fraud can be inferred from this concealment. See id. at 228–229. See also Chandler v. Hollingsworth, 3 Del. Ch. 99, 113 (1867) (such concealment constitutes constructive fraud), cited in Allen, supra at 32–33. In addition, the judge found that Chung wrote to Zhou before their marriage that “he would provide her with financial security if anything happened to him as there would be income from the rental properties and a place for her to live.” Although the trust document did provide Zhou with a life estate of up to twenty years in the marital home if Chung passed away, it did not allocate any rental income to her. The promise of income was therefore a material misrepresentation that constituted fraud on the plaintiff's marital rights. See Allen, supra at 34.
The defendants also argue that, because John and Anthony Kwan lacked knowledge of any fraud by Chung, they cannot be held responsible for it. See ibid. It is true that the transfer in Kavanaugh was made “with the full knowledge of the grantee.” 279 Mass. at 240. However, where the conveyance is made voluntarily and not in satisfaction of a legal obligation, “the grantee stands in the shoes of the grantor, and it is not necessary to prove that the grantee had knowledge or notice of the grantor's fraud.” Allen, supra at 33. Cf. Gedart, supra at 228.
Laches. The defendants assert that laches should have barred relief due to the eighteen-year period during which no activity took place in this matter. The trial judge declined to address laches on the basis that the defendants had not raised it as a defense in their answer. See Mass.R.Civ.P. 8(c), 365 Mass. 749 (1974). The defendants “were required, at the very least, to raise [laches] in a timely fashion.” Aronovitz v. Fafard, 78 Mass.App.Ct. 1, 8 (2010). They could have moved to amend their answer to assert laches at any point over the years, just as they could have taken action to pursue their counterclaim. Aside from casting aspersions on the trustworthiness of the plaintiff's testimony, which the judge credited, the defendants identify no real prejudice from the delay. Cf. Massachusetts Broken Stone Co. v. Planning Bd. of Weston, 45 Mass.App.Ct. 738, 741 (1998) (in context of motion for dismissal for lack of prosecution, “[o]ne indication of actual prejudice is the extent to which the moving party has been pressing for trial”), S. C., 430 Mass. 637 (2000).
The defendants for the first time on appeal also raise waiver and estoppel as additional grounds for relief, but these were not presented to the trial court and so we do not consider them.
Although this claim would more appropriately have been cast as lack of prosecution, it is noteworthy that the defendants never in more than twenty years moved to dismiss the action on that basis. See Mass.R.Civ.P. 41(b)(2), 365 Mass. 803 (1974). Nor, in light of the defendants' equal failure to pursue their counterclaims during this time, is it clear that a motion to dismiss for lack of prosecution would have succeeded. See Massachusetts Broken Stone Co. v. Planning Bd. of Weston, 45 Mass.App.Ct. 738, 741 (1998) (after six years of no activity, dismissal “is not compelled”), S. C., 430 Mass. 637 (2000).
Apart from timeliness issues, laches, as an equitable defense, is not available to those with unclean hands. See Santagate v. Tower, 64 Mass.App.Ct. 324, 334 (2005), and cases cited. The judge found that the defendants, in violation of a temporary order entered in 1989, had not escrowed any rental income from the subject properties for over twenty years. She also found that Peter Kwan had possession of Chung's will, but refused to produce it or to probate Chung's estate until specifically ordered to do so. These findings, in conjunction with other inequitable conduct found by the judge, would independently have sufficed to reject the laches defense.
Judgment affirmed.