Deyeso v. Cavadi, 165 N.H. 76

Background

Deyeso and Barnes have three children together but never married; Deyeso is married to Keith Walsh and lives in a home purchased in 1997 (the Property).
Cavadi holds a 1991 judgment against Barnes and pursued a reach-and-apply claim in Massachusetts, alleging Barnes paid for real estate in Deyeso’s name including the Property.
In October 2009, a Massachusetts court found Barnes had an equitable interest in the Property worth $94,854, creating an equitable lien in that amount for Cavadi.
The Property is valued at $498,500 with two mortgages totaling $426,126.59, leaving equity of $72,373.41; Cavadi concedes no mortgage priority issues.
Massachusetts SJC upheld Barnes’s $94,854 interest; Cavadi obtained an order permitting a public auction to recover that amount.
Deyeso filed in New Hampshire (June 2011) a declaratory judgment and injunction to prevent the sale, asserting her and her husband’s homestead rights under RSA 480:1; the NH trial court enjoined the Massachusetts auction temporarily.
The NH trial court eventually granted summary judgment for Deyeso (Feb. 2012), holding her homestead exemption prevails over Cavadi’s lien, and later stated equitable conduct could negate the exemption; Cavadi sought reconsideration and appeal.
The NH Supreme Court reversed the grant of summary judgment, declining to apply equitable defenses absent fraud or misconduct, and remanded for further proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Deyeso’s homestead exemption applies	Deyeso is entitled to RSA 480:1 homestead protection.	Homestead exemptions can be defeated by equity where misconduct or applicable exceptions apply.	Deyeso's homestead protection applies; Cavadi cannot defeat it absent fraud/misconduct.
Whether Barnes’s funds used to purchase the homestead can be used to defeat the homestead	Non-exempt funds used to acquire a homestead may still be protected absent fraud.	Equitable defeat applies where funds were used to hinder creditors and fraud or egregious conduct occurred.	Absent fraud/misconduct in procuring funds, homestead exemption applies; Cavadi loses to the extent of the exemption.
Whether the court may apply equity to defeat the statutory homestead exemptions	Chase allows limited equity when fraud/egregious conduct exists.	Equity may defeat the exemption beyond statutory exceptions when warranted by fraud and similar conduct.	Equity cannot defeat the exemption here because there is no fraud/egregious conduct proven; statutory protections prevail.
Whether the Massachusetts factual findings preclude NH consideration	Massachusetts findings should bind the NH court on issues of fraud and related conduct.	Massachusetts findings are not controlling in NH and not necessary to decide homestead here.	Massachusetts findings were not binding; NH must decide under NH law and the record.
Whether Deyeso's husband is entitled to the homestead exemption	Husband’s occupancy and potential rights affect the exemption.	Husband has no ownership; exemption should be limited to Deyeso.	Court declines to address husband’s status since Deyeso is protected; remand leaves open husband’s potential rights.

Key Cases Cited

Chase v. Ameriquest Mortgage Co., 155 N.H. 19 (2007) (equitable considerations under homestead exemptions when applicable)
Havoco of America, Ltd. v. Hill, 790 So.2d 1018 (Fla. 2001) (equitable liens may defeat homestead exemptions in certain fraud contexts)
Willis v. Red Reef, Inc., 921 So.2d 681 (Fla. Dist. Ct. App. 2006) (non-exempt funds used to purchase a home may be protected absent fraud)
Cavadi v. Deyeso, 941 N.E.2d 23 (Mass. 2011) (Massachusetts reach-and-apply action; nonstatutory findings discussed)