Opinion
11-P-1266
03-29-2012
RICHARD L. TUCH v. SHERYL A. GLASS.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Richard L. Tuch appeals from the dismissal of his complaint in equity against his former wife, Sheryl A. Glass. On appeal, Tuch claims that his complaint should not been dismissed as it stated a claim upon which relief could be granted. We affirm.
In count I of his complaint Tuch claimed that there was a mutual mistake in his divorce agreement with Glass. We disagree. A mutual mistake occurs where 'the language of a written instrument does not reflect the true intent of both parties.' Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747, 756 (1993). 'The mistake must involve a fact capable of ascertainment at the time the contract was entered into, and not a mere expectation or opinion about future events.' LaFleur v. C.C. Pierce Co., 398 Mass. 254, 258 (1986). We 'consider whether [Tuch] pleaded sufficient facts to support' his claim of mutual mistake. Ten Persons of the Commonwealth v. Fellsway Dev. LLC, 460 Mass. 366, 382 (2011).
The divorce agreement split, essentially down the middle, mutual assets held in Turbo Investors, LLC, and Turbo Investors, LLC Retirement plan (collectively 'Turbo Accounts'). These two companies held investments in Bernard L. Madoff Investment Securities, LLC (BMIS). After the divorce agreement was final, Glass removed her interest from the Turbo Accounts, while Tuch left most of his investments with the companies. After the divorce, it became apparent that the monies in the accounts were funds in a 'Ponzi' scheme run by Bernard Madoff. Because of this fact, Tuch claims that there was a mutual mistake between the parties and the monies divided were essentially 'phantom' funds. We disagree.
See Commonwealth v. Ponzi, 256 Mass. 159 (1926).
Tuch claims that the Turbo Accounts did not actually exist at the time of the divorce agreement. However, both Glass and Tuch withdrew funds from the Turbo Accounts. In fact, Tuch used these purported 'phantom' funds to pay Glass for her share of equity in real estate. It may be that the Turbo Accounts contained money of new investors, as is often the case in a Ponzi scheme, but he cannot now claim that the money in the Turbo Accounts did not exist at all, warranting a reformation of the agreement. The divorce agreement was drafted to ensure both Tuch and Glass received fifty percent of the Turbo Accounts, which is precisely what happened. The fact that the funds were later discovered to be a part of the Ponzi scheme does not render the agreement unfair, unreasonable, or unconscionable as Tuch asserts in his complaint. To the extent that it could be argued the accounts did not actually exist, each party received half of the nonexistent accounts, which reflects the intent of both the parties: for each to receive an equal share.
In addition, Tuch has failed to assert any facts in his pleading that this situation could be 'ascertained' at the time the agreement was made, a requirement of mutual mistake. LaFleur, supra. He does not have a right to reformation based on mutual mistake on the facts pleaded.
In count II of his complaint, Tuch claims that Glass was unjustly enriched because she removed her funds from the Turbo Accounts and received the benefit of those funds, while he did not. We disagree. 'Unjust enrichment, as a basis for restitution, requires more than benefit. The benefit must be unjust, a quality that turns on the reasonable expectations of the parties.' Community Builders, Inc. v. Indian Motocycle Assocs., Inc., 44 Mass. App. Ct. 537, 560 (1998). As the judge correctly noted, 'both [Tuch] and [Glass] have received some value for the funds that were held' in the Turbo Accounts. Furthermore, if taken as true, and the funds in the Turbo Accounts were part of Madoff's Ponzi scheme, it was not at Tuch's expense that Glass was potentially unjustly enriched. The money she received was the money of the newest investors, not Tuch. See Restatement of Restitution § 1 (1937) ('A person who has been unjustly enriched at the expense of another is required to make restitution to the other'). In his complaint, Tuch admits the monies did not belong to Glass, but to 'other investors due to Madoff's Ponzi scheme.' Tuch failed to state a claim on which relief can be granted on the basis of unjust enrichment.
In count III of his complaint, Tuch seeks indemnification based on potential 'clawback' lawsuits against investors of BMIS. At this time, Tuch is facing no suit against him that seeks monies received by Glass. His claim for indemnification is at best premature, as his only claim is that he could potentially be liable for returning funds in the future. He has therefore stated no claim on which relief can be granted.
The motion to dismiss was properly granted. Glass's request for appellate counsel fees is denied.
Judgment dated May 2, 2011, affirmed.
By the Court (Mills, Meade & Rubin, JJ.),