In re Hajjar

385 B.R. 482

In re Joseph C. HAJJAR, d/b/a Joe's Pub & Grub, Debtor Joseph Braunstein, Chapter 7 Trustee, Plaintiff, v. Joseph C. Hajjar, Barbara A. Niles; and Lorraine M. Carlson, Defendants.

Bankruptcy No. 07-12068-JNF.

Adversary No. 07-1371.

United States Bankruptcy Court, D. Massachusetts.

April 8, 2008.

Peter H. Sutton, Steffani Jill Boudreau, Riemer & Braunstein LLP, Boston, MA, for Plaintiff.

Anthony P. Alessi, Marshfield, MA, Marjorie A. Adams, Rockland, MA, for Defendants.

Lorraine M. Carlson, pro se.

MEMORANDUM

JOAN N. FEENEY, Bankruptcy Judge.

I. INTRODUCTION

The matters before the Court are Cross-Motions for Summary Judgment with respect to the Trustee's Complaint for Authority to Conduct Sale Pursuant to 11 U.S.C. § 363(h) of Debtor's Real Property. The Trustee brought the Complaint against Joseph C. Hajjar (the "Debtor") and his two sisters, Barbara A. Niles ("Niles"), and Lorraine M. Carlson ("Carlson")(collectively, the "Defendants"). The Court heard the Cross-Motions on January 23, 2008 and took the matters under advisement.

There are no genuine issues of material fact, and the Motions are ripe for summary judgment. See Fed.R.Civ.P. 56, made applicable to this proceeding by Fed. R. Bankr.P. 7056.¹ The issues presented include whether Niles has a valid life estate in real property, a two-family home, located at 82 Edinboro Road, Quincy, Massachusetts (the "Property"), and whether the Trustee is empowered to sell the Property under § 363(h). The Court answers the first question in the affirmative and the second question in the negative, with the caveat that the Trustee is authorized to sell the Debtor's remainder interest in the Property pursuant to 11 U.S.C. § 363(b).

II. FACTS

The Debtor filed a voluntary Chapter 7 petition on April 6, 2007. On Schedule A-Real Property, the Debtor listed ownership interests in two properties as follows:

1/3 remainderman interest in 82 Edinboro Road, Quincy, MA, subject to a life estate of a 54 year old woman, the debtor's sister. The property is worth approximately $450,000; [and]

1/3 remainderman interest in 86 Edinboro Road, Quincy, MA which is the debtor's personal residence and he has a homestead exemption.

The Debtor valued his one-third remainder interest in the Property at $6,000 and his one-third remainder interest in 86 Edinboro Road at $330,000. On Schedule Secured Creditors, the Debtor did not list any mortgagees or other liens affecting the Property or the adjacent property at 86 Edinboro Road. On Schedule F-Creditors Holding Unsecured Nonpriority Claims, the Debtor listed approximately $54,000 in credit card debt.

On August 15, 2007, the Court entered an order of discharge under 11 U.S.C. § 727(a). Approximately six weeks later, the Chapter 7 Trustee commenced the above-captioned adversary proceeding seeking authority to conduct a sale of the Property pursuant to 11 U.S.C. § 363(h).

In his Complaint, the Trustee alleged that the Debtor acquired title to the Property on October 31, 1952. Forty-eight years later on May 16, 2000, by Quitclaim Deed, the Debtor "for consideration paid, and in full consideration of one dollar ($1,000), grant[ed] to Joseph C. Hajjar, Barbara A. Niles, and Lorraine M. Carlson as tenants in common with quitclaim covenants the land in that part of Quincy, Norfolk County, Massachusetts, called Welling Park." Following a metes and bounds description of the Property, the deed then provided:

The grantor hereby grants to Barbara A. Niles the right to the use and enjoyment of the above-described premises for and during her lifetime or as long as she so desires with the provision that said life tenant shall be responsible for the payment of taxes and maintenance of said premises using the period of said occupancy, specifically denying any right by the grantor to partition.

At the hearing, counsel to the Debtor made an offer of proof that both the Debtor and the attorney who drafted the deed intended that the Debtor grant his sister, Niles, a life estate. The Trustee did not rebut the offer of proof and did not argue that the offer of proof raised a genuine issue of material fact.

II. DISCUSSION

"Deeds should be `construed as to give effect to the intent of the parties, unless inconsistent with some law or repugnant to the terms of the grant.'" Commercial Wharf E. Condominium Assn. v. Waterfront Parking Corp., 407 Mass. 123, 131, 552 N.E.2d 66 (1990)(quoting Harrison v. Marcus, 396 Mass. 424, 429, 486 N.E.2d 710 (1985), and Bass River Sav. Bank v. Nickerson, 303 Mass. 332, 334, 21 N.E.2d 717 (1939)). See also Dedrick v. Commissioner of Div. of Med. Assistance, 65 Mass.App.Ct. 1120, 2006 WL 473846 at *2 (2006).

In the Quitclaim Deed executed by the Debtor, the Debtor purports to convey the Property to himself and his sisters as tenants in common. Subsequently, he purports to grant a life tenancy to his sister, Barbara Niles. In Dedrick, the court interpreted a deed with a similar problem. It stated:

Dedrick claims that the warranty deed conveyed the subject property in fee simple absolute to the Trust, leaving her without any legal interest in the subject property to which a lien may attach. In support of her claim, Dedrick argues that the granting clause did not refer to a "life estate." Rather, that phrase is located at the bottom of the deed, away from the granting clause. We note, however, that the description of the boundaries of the property follow the granting clause in different font than that of the granting clause, but that the phrase "life estate as more fully described in the contemporaneously executed ... Trust" returns to the same font and style as the granting clause. If, at the time the deed was executed, the Dedricks intended to convey a fee simple absolute to the Trust, they would not have referred to a "life estate" in a different portion of the deed.

Although the Trustee's position that the Debtor created a tenancy in common for the entire Property as opposed to a tenancy in common with respect to the remainder interests subject to the life estate is not frivolous and supports his ability to sell the Property under section 363(h), the Court finds that the language purporting to grant Niles "the right to the use and enjoyment" of the Property and the reference to her as a "life tenant" must have independent meaning. That language, coupled with the reference to Niles's obligation to pay taxes and to maintain the Property and the Debtor's relinquishment of a right to partition, compels the conclusion that the Debtor intended to, and did, create a life estate in favor of Niles.

In Bernat v. Kivior, 22 Mass.App.Ct. 957, 494 N.E.2d 425 (1986), the court was required to determine whether a valid life estate existed in the context of a petition for partition. The court framed the issue as follows with reference to the deed:

Whatever interest Helen has, she acquired under a deed dated May 10, 1963, from Walter Kivior. We proceed to analyze that instrument. Harrison v. Marcus, 396 Mass. 424, 428, 486 N.E.2d 710 (1985). The deed conveyed 207 acres and a dilapidated residence to Alice E. Hadala, Frances Varno, Celia L. Bernat, and Mildred D. Lagowski as joint tenants. Following a metes and bounds description of the property, record references, and statement that the consideration was less than $100, the deed contained the following one-sentence paragraph:

"Said premises are conveyed subject to the rights of Helen V. Kivior to occupy the granted premises for the rest of her life."

22 Mass.App.Ct. at 957-58, 494 N.E.2d 425(footnote omitted). The court began its analysis by observing that the deed was inartfully drafted, suggesting "[a] deed with a granting clause conveying to `Helen V. Kivior for life, the remainder to Alice E. Hadala, Frances Varno, Celia L. Bernat and Mildred D. Lagowski, as joint tenants' would have been a clearer manifestation of intent." Id. at 958, 494 N.E.2d 425. The court found, however, that "the reservation of `rights ... to occupy the granted premises for the rest of her life' conferred a life estate." Id. (citing Thayer v. Shorey, 287 Mass. 76, 78, 191 N.E. 435 (1934), and Langlois v. Langlois, 326 Mass. 85, 86-87, 93 N.E.2d 264 (1950)). The court then dismissed the petition for partition because Helen had an exclusive possessory interest conferred by the life estate, and, thus, there was no present, possessory interest in Helen's siblings to support the petition for partition. Id. at 958, 93 N.E.2d 264. Although the language employed in the deed examined by the court in Bernat is substantially similar to the language employed by the Debtor, the instant case is distinguishable from Bernat v. Kivior in that the Debtor conveyed the Property to himself and both of his sisters as tenants in common, rather than to himself and Lorraine only, either as tenants in common, or, more accurately, as remainderman. Nevertheless, the decision lends support to Defendants' position.

In Hershman-Tcherepnin v. Tcherepnin, 70 Mass.App.Ct. 218, 873 N.E.2d 771 (2007), the court analyzed a will in which the testator "bequeathed one-fifth of the family home and `the right to remain there for as long as she desires' to his friend and recent bride," as well as one-fifth of the family home to each of his children by an earlier marriage. 70 Mass.App.Ct. at 218, 873 N.E.2d 771. In addressing the children's argument that all five devisees had a present possessory interest, the court observed that the will was not the work of an "accomplished conveyancer" and that the testator did not use "the classic formulation of a life estate." Id. at 222, 873 N.E.2d 771. It also observed:

The testator gave one-fifth of the property to the petitioner and each of the four children. These bequests were not described as remainder interests. They appear to make a present transfer of the property to the five devisees. This would ordinarily make them tenants in common, with the right to use and occupy the...