Bakwin v. Mardirosian
6 N.E.3d 1078
Mass.2014Background
- Michael Bakwin sued attorney Robert Mardirosian after recovering seven stolen paintings and incurring over $3.4M in recovery costs; the jury found Robert liable for conversion and awarded damages, and found multiple fraudulent transfers under the UFTA (G. L. c. 109A).
- After trial, the judge entered over $4.3M in money judgments against Robert and ordered various equitable remedies (reconveyance or attachment) against family-member relief defendants who received transfers from Robert.
- Key transfers at issue: (1) Falmouth marital residence conveyed to Madeline (wife); (2) withdrawal of a Citizens Bank CD and partial deposit to a joint savings account (joint Robert/Madeline); (3) Citizens Investment Services brokerage account transferred to Madeline then to the MMM Family Trust (trustee David Barber); (4) Robert’s interest in the Mardirosian Riverside Trust allegedly transferred to son David and later dissipated.
- Bakwin appealed form of relief against relief defendants, arguing for money judgments against transferees (rather than reconveyance or dismissal) to secure recovery of assets under the UFTA.
- The appeals court affirmed in part and reversed in part: it affirmed reconveyance of the Falmouth residence and the remedy for the brokerage account, reversed the judgment as to the joint savings account (ordering judgment against Robert instead of Madeline), and reversed dismissal of claims against David re: the Riverside Trust, remanding for a money judgment subject to equitable adjustment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Form of remedy for Falmouth residence (reconveyance v. money judgment) | Bakwin: judge should enter money judgment against Madeline to avoid tenancy-by-entirety defeating collection | Madeline/Robert: reconveyance to pretransfer tenancy by entirety restores status quo and protects innocent nondebtor spouse | Affirmed: reconveyance not an abuse of discretion given UFTA discretionary remedies and tenancy-by-entirety protections |
| Relief on joint savings account after CD withdrawal (who is transferee; who bears judgment) | Bakwin: entitled to money judgment for full value of fraudulent transfers ($347,367) against Madeline | Madeline: joint-account presumptions protect her one-half interest; no transfer of her preexisting half | Modified/Reversed: plaintiff may recover one-half of attached account but judgment must enter against Robert (no transfer to Madeline of Robert’s original joint interest) |
| Remedy for brokerage account transferred to trust (value fluctuations; money judgment v. equitable relief) | Bakwin: money judgment against Madeline and trust for at least the value of the original fraudulent transfer; increases added, decreases ignored | Relief defendants: protect Madeline’s preexisting one-half interest; market losses are not dissipation by transferee | Affirmed: judge properly awarded Robert’s proportional one-half interest (equitable relief), protecting Madeline’s share; market fluctuations not treated as dissipation warranting full money judgment |
| Claim against David re: Riverside Trust (dismissal v. money judgment) | Bakwin: where transferee dissipated funds, money judgment against David appropriate | David: assets dissipated so no reconveyance possible; judge dismissed claim | Reversed: dismissal was error; money judgment against David must be entered (value at time of transfer, subject to equitable adjustment) |
Key Cases Cited
- United States v. Mardirosian, 602 F.3d 1 (1st Cir. 2010) (criminal conviction and sentence related to possession/concealment of stolen paintings)
- Verduchi v. United States, 434 F.3d 17 (1st Cir. 2006) (discussing money judgments under fraudulent-transfer law when assets dissipated)
- Scholes v. Lehman, 56 F.3d 750 (7th Cir. 1995) (upholding money judgment where transferee spent donated, fraudulently-transferred funds)
- Rivera v. Club Caravan, Inc., 77 Mass. App. Ct. 17 (Mass. App. Ct. 2010) (UFTA remedies committed to trial court discretion)
- Cavadi v. DeYeso, 458 Mass. 615 (Mass. 2011) (abuse-of-discretion standard for equitable remedies under UFTA)
- Jorden v. Ball, 357 Mass. 468 (Mass. 1970) (UFTA aids creditors in avoiding fraudulent transfers but does not create windfalls)
- Yankee Microwave, Inc. v. Petricca Commc’ns Sys., Inc., 53 Mass. App. Ct. 497 (Mass. App. Ct. 2002) (looking to other jurisdictions when Massachusetts law is silent)
- Peebles v. Minnis, 402 Mass. 282 (Mass. 1988) (tenancy by entirety protections against creditor execution)
- Coraccio v. Lowell Five Cents Sav. Bank, 415 Mass. 145 (Mass. 1993) (survivorship extinguishes attached interest on debtor’s death)
- Innis v. Robertson, 67 Mass. App. Ct. 388 (Mass. App. Ct. 2006) (attachment of debtor’s interest in tenancy by entirety yields limited remedy)
- Robinson v. Coughlin, 266 Conn. 1 (Conn. 2003) (UFTA money judgments typically for dissipated assets)