MEMORANDUM
I. INTRODUCTION
The matter before the Court is the Defendants’ Motion for Summary Judgment (the “Motion”) and the Chapter 11 Trustee’s objection to the Motion. The issue raised by the Motion is whether Massachusetts’ version of the Uniform Fraudulent Transfer Act (the “UFTA”), which was enacted after the Debtor filed his bankruptcy petition, should apply retroactively to time bar the avoidance action brought by the Trustee. The material facts necessary to decide the Motion are not in dispute. See Fed.R.Civ.P. 56(c), made applicable to this proceeding by Fed. R.Bankr.P. 7056.
II. PROCEDURAL BACKGROUND
The Debtor filed a voluntary Chapter 11 petition on September 1, 1995. Over one year later, on February 27, 1997, the United States Trustee filed a motion to appoint a Chapter 11 trustee, which this Court granted. Thereafter, M. Ellen Carpenter was appointed the Chapter 11 Trustee (“Trustee”).
*672 On July 10, 1997, seeking to set aside a transfer of property as a fraudulent conveyance, the Trustee commenced an adversary proceeding against Vernard M. Granderson (the “Debtor”), individually, and against the Debtor’s non-debtor spouse, Lillian B. Granderson, individually, and as trustee of both the Arrow Realty Trust and the E & L Realty Trust. On July 24,1997, the Trustee filed a Motion for Leave to File a Memorandum of Lis Pendens (the “Lis Pendens Motion”). The Defendants objected to the Lis Pendens Motion and moved to dismiss the Trustee’s complaint. The Court heard both motions on August 14, 1997 and continued the Lis Pendens Motion generally. At the conclusion of the hearing, the Defendants agreed to file a motion for summary judgment.
On August 20, 1997, the Defendants filed their Motion for Summary Judgment. Additionally, the parties filed a Statement of Agreed Facts. On September 12, 1997, the Trustee filed an Objection to the Motion for Summary Judgment. Both the Trustee and the Defendants filed briefs in support of their respective positions.
III.FACTS
The parties have stipulated to the material facts in their Statement of Agreed Facts. On or about March 17, 1974, the Debtor and his spouse acquired a residence located in Duxbury, Massachusetts (the “Property”) for a purchase price of $72,500.00. They held title to the Property as tenants by the entirety for 17 years until July 12,1991, when they transferred it to Lillian Granderson, as trustee of the Arrow Realty Trust (“Arrow”), for consideration of less than one dollar. Later that same day, Arrow transferred the Property to Lillian Granderson as trustee of the E & L Realty Trust, also for consideration of less than one dollar. On September 1, 1995, the Debtor filed his voluntary petition under Chapter 11 of the Bankruptcy Code.
IV. APPLICABLE LAW
On July 8,1996, the Massachusetts legislature enacted the UFTA. Codified at Massachusetts General Law chapter 109A, the UFTA became effective on October 6, 1996. Mass. Gen. Laws Ann. ch. 109A, §§ 1-12 (West Supp.1997). In replacing the Uniform Fraudulent Conveyance Act (the “UFCA”) with the UFTA, the legislature stated, “[t]he General Laws are hereby amended by striking out chapter 109A and inserting in place thereof the following chapter....” 1996 Mass. Legis. Serv. ch. 157 (West). The UFTA provides for both a four-year and a one-year limitations period depending upon the section of the UFTA under which an action is brought.
1
In contrast, the UFCA was governed by the general six-year statute of limitations applicable to breach of contract actions under Mass. Gen. Laws ch. 260, § 2 (West 1948)
2
.
See Desmond v. Moffie,
V. ARGUMENTS OF THE PARTIES
A. Should the UFTA Be Applied Retroactively?
The Defendants contend that the UFTA should be applied retroactively. They
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rely upon the only reported case to address the retroactivity of the UFTA in the First Circuit,
In re Carroll Industries, Inc.,
The Trustee urges the Court to adopt the majority rule: the UFTA should not be applied retroactively. The Trustee cites numerous decisions from around the United States in which courts have held that the law in effect at the time of the transfer is controlling, not the subsequently enacted UFTA.
See, e.g., U.S. v. Bacon,
B. Under Massachusetts Law is the Statute of Limitations under the UFTA Procedural or Substantive?
In support of their Motion for Summary Judgment, the Defendants argue that the Trustee’s complaint is time-barred as it was filed more than four years after the alleged fraudulent transfer. According to the Defendants, because statutes of limitations are procedural in Massachusetts and because current procedure controls a prior cause of action, the statute of limitations period included in the UFTA should be applied retroactively to preclude the avoidance of the 1991 transfer. Citing
Anderson v. Phoenix Investment Counsel of Boston, Inc.,
The Trustee argues that the UFCA is the applicable statute. She distinguishes the cases cited by the Defendants from the present facts and claims that the issue in the Defendants’ cases was merely whether an amendment to a statute of limitations should be applied retroactively. The Trustee argues that because the UFTA entirely replaced' the UFCA and because the UFTA contains many provisions that differ from the UFCA, the UFTA created a new statutory scheme. While conceding that remedial or procedural statutes may be applied retroactively, the Trustee argues that the UFTA is a wholly new statute dealing with substantive rights, not a mere alteration of a limitations period. Citing
Moakley v. Eastwick,
YI. DISCUSSION
The Trustee’s complaint is predicated upon § 544(b) of the Bankruptcy Code, which provides in relevant part the following:
(b) The trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title or that is not allowable only under section 502(e) of this title.
11 U.S.C. § 544(b). Accordingly, applicable law is either Massachusetts’ version of the UFCA or its version of the UFTA, depending upon which version of the statute applies to the alleged fraudulent transfer.
No courts in Massachusetts have addressed the issue of whether the UFTA should be applied retroactively. Therefore, this Court must predict what the Supreme Judicial Court would hold.
In re Miller,
In determining whether a statute should be applied retroactively, the Supreme Judicial Court has consistently utilized the following standard:
The general rule of interpretation is that all statutes are prospective in their operation, unless an intention that they shall be retrospective appears by necessary implication from their words, context or objects when considered in the light of the subject matter, the preexisting state of the law and the effect upon existing rights, remedies and obligations____ It is only statutes regulating practice, procedure and evidence, in short, those relating to remedies and not affecting substantive rights, that commonly are treated as operating retroactively, and as applying to pending actions or causes of action.
Child Support Enforcement Division of Alaska v. Brenckle,
Additional support for the majority rule is provided by the substantive provisions of the UFTA that differ from those of the UFCA and by the inclusion of provisions in the UFTA which are not included in the UFCA. In particular, the UFTA, unlike the UFCA, contains its own statute of limitations, which has been determined to be a statute of repose in some jurisdictions.
See In re Princeton
-New
York Investors, Inc.,
A statute of limitations does not begin to run until the date of the injury or the date when the injury is or reasonably should have been discovered. A statute of repose ... places an absolute time limit on liability ‘even if the plaintiff’s injury does not occur, or is not discovered until after the statute’s time limit has expired.’
Decisions from other jurisdictions support the view that the UFTA is substantive, not remedial.
See Bacon,
Finally, the cases cited by the Defendants to support a retroactive application of the UFTA are not persuasive. The first case,
Gherman,
has been criticized by both state and federal courts.
See Smith,
VII. CONCLUSION
In view of the overwhelming weight of authority and the absence of compelling analyses in the decisions cited by the Defendants, this Court predicts that the Supreme Judicial Court would conclude that the legislature intended the UFTA to apply prospectively. Accordingly, the Court denies the Defendants’ Motion for Summary Judgment.
Notes
. Section 10 provides in relevant part the following:
A cause of action with respect to a fraudulent transfer or obligation under this chapter shall be extinguished unless action is brought:
(a) under paragraph (1) of subsection (a) of section five, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
(b) under paragraph (2) of subsection (a) of section five or subsection (a) of section six, within four years after the transfer was made or the obligation was incurred; or
(c)under subsection (b) of section six, within one year after the transfer was made or the obligation was incurred.
Mass. Gen. Laws Ann. ch. 109A, § 10.
. Section 2 provides in relevant part the following:
Actions of contract, other than those to recover for personal injuries, founded upon contracts or liabilities, express or implied, except actions limited by section one or actions upon judgments or decrees of courts of record of the United States or of this or of any other state of the United States, shall except as otherwise provided, be commenced only within six years next after the cause of action accrues.
Mass. Gen. Laws Ann. ch. 260, § 2.
. In Anderson, the Supreme Judicial Court considered whether an amendment to a general statute of limitations (Mass. Gen. Laws ch. 260) applied to ch. 93A claims that had already accrued. While the Supreme Judicial Court held that the new limitations period could not be applied against the plaintiffs to time-bar their claim because the new statute did not afford them a full and ample time to commence their suit, it observed the following:
The general rule is that if a statute of limitations does not contain language clearly limiting its application to causes of action arising in the future, then it controls future procedure in reference to previously existing causes of action. If a statute of limitations restricts the time for enforcing such accrued rights, it is constitutional if there is a reasonable time after the enactment of the statute for enforcing these rights.
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387 Mass, at 453-54,
. In Cioffi, the Supreme Judicial Court examined the interaction between a new, three-year statute of limitations (Mass. Gen. Laws ch. 231, § 60D) for medical malpractice and the previous, more general statute of limitations (Mass. Gen. Laws ch. 260, § 7), which required the commencement of an action within three-years of a minor reaching majority. The court commented that the new statute applied because the plaintiffs were granted a reasonable time to commence their suit.
. In
Moakley,
the Supreme Judicial Court held that works of art created before the effective date of the Art Preservation Act were not affected by provisions of the act. In comparing substantive to procedural rights, the court commented that "only statutes regulating practice, procedure and evidence, in short, those relating to remedies and not affecting substantive rights ... commonly are treated as operating retroactively.” 423 Mass, at 57,
.In holding that a newly implemented statutory provision did not override a preexisting contrary provision in a
Massachusetts Bay Transportation Authority
collective bargaining agreement, the Supreme Judicial Court stated, "[a] statute dealing with substantive rights operates prospectively when there is no clear legislative intent that it be retroactive.” 414 Mass, at 328,
. These commentators further state the following:
The important changes include new provisions making transfers to insiders voidable; generally enhanced creditors’ remedies against transferees; a new, generally applicable statute of limitations; a new, more objective definition of insolvency than the one in the Bankruptcy Code ...; elimination of the ‘good faith’ requirement contained in the UFCA’s definition of ‘fair consideration;' a statutory enumeration of ‘badges of fraud;' and certain new defenses for fraudulent transfer defendants.
62 Am.Bankr.L.J. at 87-88.