408 F.Supp.3d 7
D. Mass.2019Background:
- Janet Foisie and Robert Foisie divorced after ~50 years; they entered a mediated Settlement Agreement and Robert submitted a sworn Financial Affidavit representing full asset disclosure.
- Robert knowingly concealed significant assets (including a Swiss "Vaduz Trust" and multiple promissory notes from family-related entities) and later acknowledged the Vaduz Trust value in post-judgment discovery.
- After the divorce, Robert transferred substantial sums (at least $39 million in purported donations and related transfers) to Worcester Polytechnic Institute (WPI) and to fund scholarships, allegedly for little or no consideration.
- Janet sued WPI under the Uniform Fraudulent Transfer Act (UFTA) and common-law fraudulent conveyance theories seeking to avoid those transfers as made to defraud her marital claim.
- WPI moved to dismiss arguing (inter alia) that Massachusetts law governs, common-law fraud claims are preempted by the UFTA, Janet lacks standing because she is not a "creditor" under Massachusetts law, pleading defects, and issue preclusion from a Nevada judgment.
- The court applied Massachusetts choice-of-law rules, held Massachusetts law governs, dismissed Janet’s common-law fraud claims as preempted by the UFTA, rejected WPI’s preclusion and pleading-technical defenses, but granted dismissal for lack of standing under Massachusetts precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | Connecticut law should apply because the alleged fraud occurred during Connecticut divorce proceedings | Massachusetts law should apply because the assets are now located in Massachusetts | Court applied Massachusetts choice-of-law rules and concluded Massachusetts law governs |
| Preemption of common-law claims | Common-law fraudulent conveyance claims remain available (esp. under Connecticut law) | Massachusetts UFTA preempts common-law fraudulent conveyance claims | Court held under Massachusetts law common-law fraudulent-conveyance claims are preempted and dismissed those claims |
| Standing / "creditor" status under UFTA | Janet is a creditor because hidden assets were part of the marital estate at the time of the divorce judgment | Under Massachusetts precedent (Welford) a divorced spouse is not a UFTA creditor long after divorce; Janet lacks standing | Court found Janet is not a "creditor" for UFTA purposes under Massachusetts law (distinguishing some factual nuances) and dismissed her UFTA claims for lack of standing |
| Other defenses (fraud particularity; issue preclusion) | Complaint pleads fraud with requisite particularity; Nevada judgment does not preclude this suit | WPI argued Rule 9(b) failure and that the Nevada judgment precludes claims | Court denied WPI's motions on these grounds, finding pleading adequate and no issue preclusion |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishes the plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (clarifies Twombly pleading requirements)
- Cavadi v. DeYeso, 458 Mass. 615 (Mass. SJC holding that UFTA preempts common-law fraudulent-conveyance claims)
- Welford v. Nobrega, 30 Mass. App. Ct. 92 (Mass. App. Ct. ruling that a divorced spouse is generally not a "creditor" under c.109A long after divorce)
- Hoult v. Hoult, 862 F. Supp. 644 (D. Mass. discussion that UFTA rights are available only to persons who qualify as "creditors")
- Smith v. Marshview Fitness, LLC, 191 Conn. App. 1 (Conn. appellate decision explaining that common-law fraudulent-transfer claims can be considered alongside the UFTA)