2012-315, Christina M. Deyeso v. Jules R. Cavadi

are supported by the record. Deyeso and Stephen Barnes have three children The following facts are drawn from the parties’ joint statement of facts or

reverse and remand. respondent, Jules R. Cavadi, permit ting the forced sale of Deyeso’s home. We and injunctive relief, and awarding summa ry judgment in favor of the Superior Court (McHugh, J.) denying her petition for a declaratory judgment HICKS, J. The petitioner, C h ristina M. Deyeso, appeals an order of the

orally), for the respondent. Shaheen & Gordon, PA, of Dover (Christine M. Craig on the brief and

the brief and orally), for the petitioner. Drummond Woodsum & MacMahon, of Portsmouth (Keriann Roman on

No. 2012 - 315 Rockingham

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh. us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

negate [her] homestead exemption.” Deyeso appeals. behavior” and, therefore, permits the court to use “i ts equitable powers to reconsideration, Deyeso’s “conduct in this case amounts to fraudulent but the trial court granted Cavadi ’ s motion, conclud ing that, upon sufficient to “negate the homestead protection in this case.” Deyeso objected, equitable issues” he raised on summary judgment, which h e contended were arguing that the court “did not engage in any analysis or disc ussion on the prevails over Cavadi’ s equitable lien. Cavadi then moved for reconside ration, homestead protection due to his lack of ownership, her homeste ad interest favor of Deyeso, concluding that, although her husband cannot claim the summary judgment. In February p. 2 2012, th e T rial C ourt (McHugh, J.) ruled in Massachusetts trial court. Cavadi counter - sued and both parties moved for temporary relief, enjoining Cavadi from conducting the auction ordered by the litigati on. I n July 2011, the T rial C ourt (Smukler, J.) awarded Deyeso parties agree that homestead rights were not at issue in the Massachusetts mortgages, would leave no equity for Cavadi i n the event of a forced sale. The homestead protection under RSA 480:1 (Supp. 2012), which, given the prior sale of her home. She claimed that both she and her husban d were entitled to declaratory judgment and injunctive relief to prevent Cavadi from forcing the Deyeso instituted this action in superior court in June 2011, seeking a

Property to recover the amount of Barnes’ s interest. then obtained an order in Massachusetts allowing a public auction of the court’s order declaring Barnes’s interest in the P roperty to be $94, 854. Cavadi Massac husetts Supreme Judicial Court, which upheld the portion of the trial Deyeso appealed the Massachusetts trial court’s decision to the

the Property is $7 p. 2 2, p. 3 373.41. mortgages. After accounting for the mortgages, the equity value remaining in Bank. Cavad i does not contend that Barnes’s interest takes priority over the Savings Bank, and the second totaling $281,317.75 held by People’s United mortgages encumber it, the first totaling $144,808.84 held by Piscataqua dispute that finding. The fair market value of the P roperty is $498,500. Two Cavadi to an equitable lien on the Property in that amount. Deyeso does not had an equitable interest in the Property valued at $94,854, thus entitling Property. In October 2009, a Mass achusetts superior court found that Barnes in Deyeso’s name in Massachusetts and New Hampshire, including the Massachusetts trial court, alleging that Barnes paid for certain real estate held 21 N.E.2d 244, 246 - 47 (Mass. 1939), he sued Barnes and Deyeso in a in a common - law reach and apply action, see, e.g., Blumenthal v. Blumenthal, Property). Cavadi holds a 1991 judgment against Barnes. In September 2004, whom she lives in Stratham at a home that she purchased in 1997 (the together but never married. Deyeso is currently married to Keith Walsh, with 3

to law”; and (4) “the levy of executio ns as provided in this chapter.” ( p. 3 3) “the enforcement of mortgages which are made a charge thereon according for debts created in the construction, repair or improvement of the homestead”; “the collection of taxes”; (2) “the enforcement of liens of mechanics and others 480:4 (2001) lists four exceptions to the operation of the homestead right: (1) his or her homestead, or of his or her interest therein, as a homestea d.” RSA RSA 480:1 provides that “[e]very person is entitled to $100,000 worth of

will affirm the grant of summary judgment.” Id. (quotation omitted). fact and if the moving party is entitled to judgment as a matter of law, then we omitted). “If our review of that evidence discloses no genuine issue of material light most favorable to the party opposing summary judgment.” Id. (quotation well as any inferences reasonably drawn therefrom, must be considered in the Dev. Corp., 160 N.H. 690, 692 (2010). “All evidence presented in the record, as summary judgment ruling. Concord Gen. Mut. Ins. Co. v. Green & Co. Bldg. & review de novo the trial court’ s application of the law to the facts in its e.g., Town of Hinsdale v. Town of Chesterfield, 15 p. 3 3 N.H. 70, 72 (2005). We also RSA 480:1, however, present s a question of law, which we review de novo. See, N.H. 19, 24 (2007). The interpretation and application of a statute, such as unsustainable exercise of discretion. Chase v. Ameriquest Mortgage Co., 155 the trial court, and we will uphold the court’s order unless it constitutes an The propriety of awarding equitable relief rests in the sound discretion of

ownership interest in the Property. Deyeso’s husband is not entitled to homestead protectio n because he ha s no the part of Barnes and Deyeso, have preclusive effect. He also argues that Massachusetts trial court’s factual findings, including its finding of f raud on under res judicata principles. He do es contend, however, that the claim. Cavadi does not argue that Deyeso’s action is barred in its entirety enrichment, unclean hands, and in pari delicto defeat Deyeso’s homestead and/or egregious conduct; and ( p. 3 3) the equitable principles of unjust homestead right”; (2) the record support s the trial court’s finding of fraud because: (1) a trial court “may exercise equitable powers to defeat a valid trial court properly ruled that Deyeso was not entitled to the homestead right Cavadi does not challenge Deyeso’s arithmetic, but conte nds that the

homestead protection. court erred in concluding that her husband is not entitled to invoke the Cavadi to collect were a forced sale to proceed. She also argues that the trial homestead exemption exceeds the value of the ho me itself, leaving nothing for combined value of the two mortgages on her home and her $100,000 entitled to the homestead exemption under RSA 480:1. She contends that the Dey e so argues that the trial court erred in concluding that she was not

protection and claimed the property as a homestead exempt from collection by judgment became enforceable on January 2. Id. Hill later filed for bankruptcy 1019. Hill purchased a homestead property on December 30, and the out of Hill ’ s efforts to eliminate Havoco from a contract. Havoco, 790 So. 2d at obtained a $15 million judgment against Hill on December 19, 1990, arising So. 2d 1018 (Fla. 2001), a case we discussed in Chase. In that case, Havoco Instructive is the court’s decision in Havoco of America, Ltd. v. Hill, 790

that Barnes wrongfully obtained the funds used to invest in Deyeso’ s home. here: n otwithstanding Cavadi’s allegations, there is no evidence in the record used to obtain mortgage loan). No such fraud or egreg ious conduct is present refinance the homestead. Chase, 155 N.H. at 26 (noting that forgery had been had been “fraud and egregious conduct” in obtaining the funds used to to reach beyond the literal language of the homestead exceptions because there As Deyeso observes, however, in Chase we invoked equitable principles

compelling as those raised in Chase. equitable issues raised” in this case are, although not factually an alogous, as circumstances warrant.” The trial cour t, for its part, reasoned that “the act do not apply, a court may apply equity principles to defeat the home stead if to assert a “general rule that where the statut ory exemption s to the homestead defeat Deyeso’s homestead claim. Rather, he relies upon our decision in Chase Cavadi does not contend that any of the RSA p. 4 480:4 exceptions applies to

from lev y and attachment for his debts.”). lived not exceeding [the specified amount] in value, that should be exempted leave, for the upholding and support of a debtor's family, a property where they have a liberal interpretation to accomplish the object of the law, which was to (1871); see Buxton v. Dearborn, p. 4 46 N.H. 43, 44 (186 p. 5 5) (“[T]he statute should construction that can be put upon it.” Barney v. Leeds, 51 N.H. 253, 276 advancement of the remedy that can be given consistently with any “u niversally held. .. to be liberally construed[;]. . . everything is to be done in are remedial in nature, and to effectuate their public policy objective are and in the promotion of general prosperity.”). Statutory homestead protections enlis ting the individual’ s self - interest in the preservation of established rights only as a stimulus to diligence and high morals, but also as a me ans of of these laws was undoubtedly to protect and encourage home ownership, not Homestead Exemption Laws, 46 Yale L.J. 1023, 1030 - 31 (1937) (“Another aim the part of the citizen.” Id. § 4, at 385 (footnotes omitted); see Comment, State welfare of the state by encouraging property ownership and independence on Jur. 2d Homestead § 1, at 381 - 82 (2008). It also “promote[s] the stability and protect[s] society from the da nger of its citizens becoming paupers.” 40 Am. 88 (2006). The exemption “protect[s] the family from destitution, and . . . their families the shelter of the homestead roof. Stewart v. Bader, 154 N.H. 75, The purpose of the homestead exemption is to secure to debtors and 5

fortiori. debtor intends to avoid paying the creditor, is protected under this rule a purchase, invest in, or improve a homestead with the knowledge that the person who receive s non - exe mpt funds from a debtor, and uses such funds to if this is done with an actual intent to hinder, delay, or defraud creditors.”). A essence, non - exempt assets may be converted into an exempt homestead even Willis v. Red Reef, Inc., 921 So. 2d 681, 684 (Fla. Dist. Ct. App. 2006) (“In used with the intent of hindering or avoiding a creditor’s legitimate claims, s ee homestead exemption applies – e ven when a judgment debtor’s funds are so the homestead exemption is not a shield for the home buyer.”), the statutory § 89, at 472 (“When money fraudulently obtained is used to purchase a home, to purchase, invest in, or improve a homestead, see 40 Am. Jur. 2d, supra of fraud, deception, or other misconduct in the procurement of the funds used homestead. We therefore agree wi th Deyeso that, i n the absenc e of a showing money that would otherwise be subject to attachment by Cavadi – to pay for a appears that, as did Hill in Havoco, Barnes used non - exempt funds – i.e., that Barnes obtained the funds through fraud or misconduct. Rather, it 480:1 protects her homestead interest in the Property. Cavadi does not allege with the knowledge that he sought to avoid satisfying his debt to Cavadi, RSA Even assuming, however, that Deyeso accepted the money from Barnes

relating to fraud in ruling on Cavadi’s motion for summary judgment. have relied upon the Massachusetts trial court’s unnecessary factual findings fraudulent conveyance.”). Thus, the trial court in this litigation should not (“Cavadi’ s nonstatutory [rea ch and apply] claim required no proof of a apply action before it. Cavadi v. Deyeso, 941 N.E.2d 23, 37 (Mass. 2011) court’s finding of fraud unnecessary in deciding the common - law reach and note here that the Massachusetts Supreme Judicial Court deemed the trial i n the Massachusetts trial court’ s view, in an effort to “defraud” Cavad i. We non - exempt funds in the purchase of exempt homestead property. He did so, from those of Havoco. Like Hill, Barnes had a judgment against him and used For all relevant purposes, the facts of this case are indistinguishable

established equitable principles on the other. Chase, 1 p. 5 55 N.H. at 2 p. 6 6. balance between” the purposes of the homestead laws, on the one hand, and the Flo rida Supreme Court’s approach to this question “str[ikes] the proper question in the affirmative. Id. at 1021 - 28. Notably, we opined in Chase that liens to defeat the homestead protection, t he c ourt in Havoco answered that extensive r eview of the precedents in which Florida courts allowed equitable hindering, delaying, or defrauding creditors . . . ?” Id. at 1019. After an acquired the homestead using non - exempt funds with the specific intent of the Florida Constitution exempt a Florida homestead, where the debtor following question to the Flor ida Supreme Court: “Does Article X, Section 4 of Havoco. Id. at 10 19 - 20. The Eleventh Circuit Court of Appeals certified the 6

DALIANIS, C.J.