967 F.3d 27
1st Cir.2020Background:
- Janet and Robert Foisie divorced after ~50 years; their 2011 settlement required full disclosure of assets.
- Robert allegedly concealed a Swiss "Vaduz Trust" (~$4.5M) and a set of promissory notes (> $10M), later admitting nondisclosure in 2016 discovery.
- After the divorce Robert made large charitable gifts to Worcester Polytechnic Institute (WPI) — alleged transfers totaling at least $39M, including the Vaduz Trust (Mar. 2016) and ~$3M collected on promissory notes (Dec. 2015–2016).
- Janet moved to reopen the Connecticut divorce on fraud grounds and sued Robert and later WPI (in federal court) under Connecticut law and the Uniform Fraudulent Transfer Act (UFTA) and common law fraudulent transfer theories.
- The district court applied Massachusetts law, concluded Janet was not a "creditor" under the UFTA, found her common-law claims preempted, and dismissed; Janet appealed.
- The First Circuit vacated and remanded: it held Article III standing/ripeness satisfied, the UFTA claims survived, the choice-of-law ruling was premature, and the complaint met pleading standards.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing & ripeness | Janet suffered concrete economic injury traceable to WPI transfers; relief would redress injury | District court suggested unresolved CT divorce reopening might make claims unripe | Standing and ripeness satisfied; claims concrete and redressable |
| Choice of law (CT v. MA) | Connecticut law governs (deception and divorce in CT; underlying claims under CT law) | Massachusetts law applies (WPI located in MA; assets presently in MA) | Choice-of-law decision premature at motion-to-dismiss; record needs discovery |
| UFTA "creditor" status (statutory standing) | Janet had a "claim" (right to payment) under UFTA — tort/contract claims and motion to reopen divorce gave contingent rights | WPI: ex-spouse not a creditor unless divorce was imminent at time of transfers (invoking Welford) | Janet qualifies as a creditor under UFTA; district court erred to dismiss on that ground |
| Pleading sufficiency & fraud particularity (Rule 9(b)) and common-law preemption | Complaint alleges who/what/when/where of transfers and badges of fraud (concealment, insolvency, lack of consideration) | WPI: allegations lack specificity; intent equally consistent with charitable motive; common-law claims preempted by UFTA | Complaint satisfies Rule 9(b) as to who/what/when/where; intent may be pleaded generally; constructive and actual fraud plausibly alleged; common-law preemption not resolved until law choice settled |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. 2016) (Article III standing elements)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing framework)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (U.S. 1941) (federal court applies forum state's choice-of-law rules)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (federal courts sitting in diversity apply state substantive law)
- Cavadi v. DeYeso, 941 N.E.2d 23 (Mass. 2011) (UFTA establishes statutory baseline; common law may supplement absent conflict)
- Canty v. Otto, 41 A.3d 280 (Conn. 2012) (when a claim arises for UFTA purposes)
- Welford v. Nobrega, 565 N.E.2d 1239 (Mass. App. Ct. 1991) (discusses limits on ex-spouse creditor status; fact-dependent)
- Jorden v. Ball, 258 N.E.2d 736 (Mass. 1970) (unperfected or possible claims can suffice for creditor status)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleadings)
- Alt. Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23 (1st Cir. 2004) (Rule 9(b) requires who/what/where/when for fraud allegations)