Townsend v. Shannon

100 Mass.App.Ct. 1105

173 N.E.3d 56 (Table)

Keith A. TOWNSEND¹

v.Matthew R. SHANNON & Others.²

20-P-1077

Appeals Court of Massachusetts.

Entered: August 17, 2021.

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The troubled development of a set of townhouses led to litigation initiated by the contractor against the developer. Two defendants, developer Matthew Shannon and his company 589 Jerusalem Realty, LLC, brought counterclaims against the contractor Keith A. Townsend and cross claims against his wife Janice Kelleher Townsend, individually and as trustee of the JKT Family Trust (trust), alleging violations of G. L. c. 93A, breach of contract, negligence, misrepresentation, conversion, and fraudulent transfer.⁴ These claims largely focus on tortious conduct by Keith Townsend, but also allege that Janice Townsend shares liability with him as a general partner in his contracting business, Townsend Construction. See G. L. c. 108A, §§ 13 - 15. The Townsends moved to dismiss, and a judge of the Superior Court dismissed all claims against Janice Townsend. After Keith Townsend passed away during the pendency of the litigation, the defendants (plaintiffs in counterclaim and cross claim) obtained a separate and final judgment as to the dismissal of the claims against Janice Townsend and the trust. On appeal, the defendants assert that they pleaded sufficient facts regarding Janice Townsend's partnership status to survive dismissal, and separately ask us to restore their fraudulent transfer claim as against her and the trust.⁵ We reverse the judgment and remand the case for further proceedings.

Standard of review. We review the grant of a motion to dismiss de novo. See Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011). In determining whether these claims can survive dismissal under Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), "[t]he ultimate inquiry is whether [the claimants] alleged such facts, adequately detailed, so as to plausibly suggest an entitlement to relief." Greenleaf Arms Realty Trust I, LLC v. New Boston Fund, Inc., 81 Mass. App. Ct. 282, 288 (2012). We accept as true well-pleaded factual allegations and reasonable inferences drawn therefrom, but "legal conclusions cast in the form of factual allegations" are insufficient to stave off dismissal. Iannacchino v. Ford Motor Co., 451 Mass. 623, 633 (2008), quoting Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000). Though certain claims must be pleaded with particularity, allegations of partnership need not be. See Mass. R. Civ. P. 9 (b), 365 Mass. 751 (1974).

Allegations of partnership. "A partnership is an association of two or more persons to carry on as co-owners a business for profit." G. L. c. 108A, § 6 (1). The Legislature has enacted a set of rules for determining whether a partnership exists. See G. L. c. 108A, § 7 (4) (jointly owning property or sharing gross returns insufficient alone to establish partnership, but "[t]he receipt by a person of a share of the profits of a business is prima facie evidence" of such). Courts have supplied additional factors that may be considered as evincing a partnership, "includ[ing], among others, (1) an agreement by the parties manifesting their intention to associate in a partnership (2) a sharing by the parties of profits and losses, and (3) participation by the parties in the control or management of the enterprise." Sullivan v. Lawlis, 93 Mass. App. Ct. 409, 413 (2018), quoting Fenton v. Bryan, 33 Mass. App. Ct. 688, 690-691 (1992). Notably, a partnership may be inferred from the words and conduct of the partners and does not require a written partnership agreement. See Kansallis Fin. v. Fern, 40 F.3d 476, 479 (1st Cir. 1994). Ultimately, "[t]he existence of a partnership is a question of the intent of the parties." Sullivan, supra at 414.

The counterclaim and cross claim complaint's allegations, taken as true and given the benefit of all reasonable inferences, suffice -- albeit barely -- to make out a claim that Janice Townsend was a partner in Keith Townsend's construction business.⁶ The defendants allege that Janice Townsend provided "substantially [sic] ... direction" to the business. Specifically, they allege that she helped negotiate the defendants’ hiring of Henry Holmes, a framer who would be supervised by Townsend Construction, and prepared the contract between Holmes and defendant 589 Jerusalem Realty, LLC. Viewed in the light most favorable to the defendants, these allegations "plausibly suggest" that Janice Townsend, via her participation in the business's affairs, intended to carry on with her husband as its coowner, and was therefore his partner.⁷ Curtis, 458 Mass. at 676. The adequacy of facts supporting the existence of a partnership may be tested more appropriately following discovery.

Fraudulent transfer. Count seven of the defendants’ counterclaim and cross claim alleges that the Townsends fraudulently transferred a condominium in Florida to the trust shortly before the filing of the underlying lawsuit, seeking to shield the condominium from a possible judgment. We agree with the defendants that the Townsend parties’ argument below -- that the defendants had no claim against her or Keith Townsend at the time of transfer -- is incorrect. See G. L. c. 109A, §§ 2, 5 (a ). Perhaps sensing its infirmities, Janice Townsend and...