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[acl tle 74
November 26, 2018 - The plaintiffs seek to preclude the defendants from re-litigating certain facts that
were judicially determined in another action in which the defendants were parties. The defendants
oppose the request stating that the plaintiffs could not have been parties to the prior action the issues
were not essential to the decision in the previous litigation, and the defendants did not have a full and
fair opportunity to litigate the issues.
As discussed in Bellerman, et al. v. Fitchburg Gas and Electric Light Company, 470 Mass. 43 (2014), the
offensive use of collateral estoppel “occurs when a plaintiff seeks to prevent a defendant from litigating
issues which the defendant has previously litigated unsuccessfully in an action against another party.”
Offensive issue preclusion “does not require mutuality of parties, so long as there is an identity of issues,
a finding adverse to the party against whom it is being asserted, and a judgment by a court or tribunal of
competent jurisdiction.” Additionally, “the determination of the issues for which preclusion is sought
must have been essential to the underlying judgment.” Matter of Brauer, 452 Mass. 56, 67 (2008).
Once a plaintiff establishes these initial requirements, the “central inquiry” becomes whether the
defendant had a “full and fair opportunity to litigate the issue in the first action.” Pierce v. Morrison
Mahoney LLP, 452 Mass. at 730, quoting Matter of Goldstone, 445 Mass. 551, 559 (2005). A judge has
wide discretion in deciding whether the doctrine should apply in a particular case. Matter of Brauer, 452
Mass. at 67.
The defendants argue that application of issue preclusion would be unfair. [FJairness is the “decisive
consideration” in determining whether to apply offensive issue preclusion. Pierce v. Morrison Mahoney
LLP, 452 Mass. at 730, quoting Matter of Goldstone, 445 Mass. at 559. In making this determination, the
judge enjoys wide discretion in determining whether applying offensive collateral estoppe! would be fair
to the defendant. Pierce v. Morrison Mahoney LLP, supra at 731. The party facing preclusion bears the
burden of proof on the question of fairness. See Bailey v. Metropolitan Prop. & Liab. Ins. Co., 24 Mass.
App. Ct. 34, 37 (1987).
On the issue of fairness, the defendants contend that because the plaintiffs could not have been a party
to the other action, the defendants would not have had an adequate incentive to defend vigorously
against the claim that they intended to sell the units as residential condominiums, particularly Unit 204.
However, the judge in the other action noted that the “central issue of fact in this case is whether...set
out to develop the premises as single family year round condominiums versus converting the units to
condominium ownership but retaining the use of the premises as a motel.” Further the defendants in
this case were plaintiffs in the other case in which they sought both damages and forgiveness of
significant debt. The defendants clearly had an adequate incentive to defend vigorously against the
claim that they intended to sell the units as residential condominiums. The judge’s factual findings on
the issue of general intent bore on the outcome of the case and was essential to its judgment. See Jarosz
v. Palmer, 436 Mass. 526, 533 (2002). Whether the defendants had the same incentive with respect to
Unit 204 is a different question because determination of the issue with respect to Unit 204 was not
essential to the underlying judgment.
The plaintiffs’ motion is allowed to the extent the following are to be taken as established in this matter:
1. In 2008 when Old Wharf Village LLC applied for a loan with U.S. Alliance Federal Credit Union to
purchase the property located at 405 Old Wharf Road in Dennisport, Old Wharf Village LLCapplied for the loan intending to purchase the property and consolidate and renovate the motel
units, converting them into single family year round condominiums.
2. In 2008, at the time the defendants executed loan documents for the purchase of the property,
the term condominium meant the conversion of motel units into a lesser number of year round
single family condominiums. Only when that goal proved to be unreachable did the defendants
opt to proceed under the guise of a motel-condo.
3. Acondition of the loan the defendants received was that they provide the lender with a zoning
opinion letter pertaining to the conversion of the motel to condominiums.
The motion is denied to the different wording set forth in plaintiffs’ motion and to the extent of the
remaining requests of the plaintiffs as the court finds that the requests as worded are not supported
by the decision of the court in the other matter or that it would be unfair. For example, the
plaintiffs requested the following: “A condition of this loan was that the Defendants provide the
credit union with evidence that there was zoning approval for the use of the property as single
family year round condominiums” while the court’s decision noted a requirement of a “zoning
opinion letter pertaining to the conversion of the motel to condominiums”. Further, with respect to
plaintiffs requested finding about the deed to unit 204, the court finds it would be unfair to
determine such a fact with respect to a deed from June 2010 when the central issue of fact
identified by the judge in the other action was the intent to develop in 2008. Determination of the
issue with respect to Unit 204 was not essential to the underlying judgment.
Mark C. Gildea, J.SUPERIOR COURT
BARNSTABLE, SS 7 /
FILED! OCT 2 2 2018
COMMONWEALTH OF MASSACHUSETTS Att bo Hils.Clerk
BARNSTABLE, ss. SUPERIOR COURT DEPARTMENT
CIVIL ACTION NO. 1372CV00125
)
RICK YATSENICK and JOAL )
YATSENICK )
Plaintiffs, )
)
v. )
) .
OLD WHARF VILLAGE, LLC, ) iu lis
CHARLES EDGAR, DAVID DILLON _ ) 2 d |
D/B/A DILLON REAL ESTATE, and _) Ailrwed 1A re if a vA Pow
STACEY CURLEY, ) Hee Sul deers wer
Defendants. ) (» th Jul t
tS) By weg cour (Gilden 9)
Cidurtine aul , gy boltaw clef
PLAINTIFF'S MOTION IN LIMINE TO PRECLUDE THE DEFENDANTS [+954 Clev
FROM RE-LITIGATING ISSUES OF FACT JUDICIALLY DETERMINED IN PRIOR
LITIGATION AND TO INSTRUCT THE JURY AS TO THE PRECLUSIVE EFFECT
OF SUCH PRIOR JUDICIAL FINDINGS
The Plaintiffs, Rick Yatsenick and Joal Yatsenick (collectively “Plaintiffs”), by and
through counsel, hereby respectfully move in limine to preclude the Defendants, Old Wharf
Village, LLC and Charles Edgar (“Defendants”) from relitigating certain facts that were
judicially determined in Old Wharf Village, LLC et al. v. USAlliance Federal Credit Union,
Barnstable Superior Court, Civil Action No. CV 2011-00622. The Plaintiffs further request that
the jury be instructed that the facts judicially determined, set forth below, are to be accepted as
established fact by the jury in its deliberations.
As grounds for the present motion the Plaintiffs state both Defendants in the present
action, (Edgar and Old Wharf), were plaintiffs in the prior litigation, a lawsuit brought against a
credit union that had agreed to finance the purchase and renovation of the defunct motel that
1became the Old Wharf Village development at issue in the present litigation. The credit union
counterclaimed for repayment of the indebtedness and attorneys’ fees. After advancing some
$1.7 Million for the purchase of the property the credit union refused to advance any further loan
funds because of the failure of Old Wharf to comply with a loan condition: the submission to the
credit union of evidence demonstrating that there was zoning approval for the use of the property
as single family year round condominiums. The trial court, Nickerson, J. entered judgment
against Edgar and Old Wharf, and for the credit union on its counterclaim. No appeal was
prosecuted and the judgment became final. The trial court, Nickerson, J. made findings of fact
and rulings of law set forth in a written decision. A number of these findings of fact are highly
relevant to the issues about to be tried in the present case. In further support of the present
motion the Plaintiffs state as follows:
I. Statement of Facts Believed to Be Uncontested By the Parties
The defendant Charles Edgar and others purchased a defunct motel with a view towards
converting the individual motel rooms! into condominiums and then selling these individual
condominium units to the public. Edgar organized a limited liability company, Old Wharf
Village, LLC, to develop the property. Funding to acquire the property out of foreclosure was
accomplished in part by Edgar and his business associates investing their own funds,
(approximately $1 Million), but also with the assistance of a loan from a financial institution, US
Alliance Credit Union. The credit union loan was to be the total amount of $2.6 Million secured
by mortgage on the property, which was to be disbursed in tranches: the initial disbursement, in
the amount of 1.6 million, was to be used to partially fund the 2.6 million purchase price. The
1 Or in some cases, two combined motel rooms.remaining $1 Million to be disbursed to Old Wharf as construction draws as the renovation of the
property proceeded.
In the application Edgar submitted to U.S. Alliance he represented that the purpose of the
loan was to acquire the property and convert it to condominiums which would then be sold to the
public. At the time of the loan application the property not zoned for residential condominiums;
the only lawful permitted use of the property was as a motel. The credit union agreed to loan the
funds, but one of the conditions of the loan was that it be provided with a, “[eJoning opinion
letter pertaining to the conversion of the motel to condominiums”. Edgar was a personal
guarantor of the loan.
The loan closed in October 22, 2008 and the initial $1.6 million was disbursed even
though the credit union had not yet been provided with the zoning opinion letter. Two months
later Old Wharf requested the first construction disbursement in the amount of $100,000. The
credit union refused to disburse any further funds, asserting that Old Wharf had failed to provide
it with a zoning opinion letter demonstrating that the property was properly zoned for
condominiums. Old Wharf, Edgar and the other guarantors of the loan sued the bank for alleged
breach of its loan agreement. The bank countersued the payment of funds it was owed.2
Following the loan closing Old Wharf had managed to condominiumized the individual
motel rooms. The zoning, however, remained unchanged: residential condominiums was not a
permitted use.
The position of the parties in the credit union litigation can be succinctly summarized.
Old Wharf and Edgar asserted that the motel units had been changed into the condominium form
of ownership, and because they were still motel units they were in conformance with applicable
? Old Wharf Village, LLC et al. v. USAlliance Federal Credit Union, Barnstable Superior Court, Civil Action No.
CV 2011-00622
3zoning bylaws. U.S. Alliance claimed that it’s agreement with Old Wharf and Edgar was for the
motel units to be converted to residential condominiums. U.S. Alliance prevailed after a bench
trial before the Honorable Gary A. Nickerson who issued Findings of Fact, Rulings of Law and
Order for Judgment.
Il. Issue Presented
Should Old Wharf and Edgar Be Barred From Re-litigating Factual Issues Decided By
Judge Nickerson and Should the Jurors Be Instructed That Such Findings Are to Be Accepted By
Them as Established Facts Binding Upon Them In Their Deliberations
Ill. Governing Law
“Issue preclusion prevents re-litigation of an issue determined in an earlier action ... .”
Anusavice v. Bd. of Registration in Dentistry, 451 Mass. 786, 798 n.16 (2008). “Before
precluding a party from relitigating an issue, ‘a court must determine that (1) there was a final
judgment on the merits in the prior adjudication; (2) the party against whom preclusion is
asserted was a party (or in privity with a party) to the prior adjudication; and (3) the issue in the
prior adjudication was identical to the issue in the current adjudication.’” Kobrin y. Bd. of
Registration in Medicine, 444 Mass. 837, 843-44 (2005), quoting Tuper v. North Adams
Ambulance Service, Inc., 428 Mass. 132, 134 (1998). “Additionally, the issue decided in the
prior adjudication must have been essential to the earlier judgment.” Jd. at 844, quoting Tuper,
428 Mass. at 134-35. That is, if the issues of fact that the Plaintiffs seek to preclude the
Defendants from re-litigating were “so necessarily involved in the first action that the judgement
which was entered therein could not possibly have been entered on any grounds other than that
this issue was adjudicated adversely to the party later attempting to present it.” McSorley v. Town
4of Hancock, 11 Mass. App. Ct. 563, 567-8 (1981), quoting Wishnewsky v. Town of Saugus, 325
Mass. 191, 195 (1950). Where a party against whom offensive issue preclusion is sought had a
“full and fair opportunity to litigate the issue in the first action,” it is appropriate to preclude the
re-litigation of the facts. Bellermann v. Fitchburg Gas & Elec. Light Co., 470 Mass. 43, 60
(2014), quoting Pierce v. Morrison Mahoney LLP, 452 Mass. 718, 730 (2008).
In this case, there is no question that the Barnstable Superior Court, Nickerson, J., issued
Findings of Fact, Rulings of Law and Order for Judgment, which constituted a final judgment on
the merits of the action captioned Old Wharf Village, LLC et al. v. USAlliance Federal Credit
Union, Barnstable Superior Court, Civil Action No. CV 2011-00622. A copy of the Court’s
decision in that case is appended hereto as Exhibit A. Similarly, there is no question that both of
the Defendants, Old Wharf Village, LLC and Charles Edgar, were party plaintiffs in that action.
IV. Specific Matters Which Should Be Taken as Established Fact in the _ Present Trial
Based on The Principles of Res Judicata and Collateral Estoppel, and as to Which the Jury
Should Be Instructed Accordingly
The five italicized paragraphs that follow are findings that the Plaintiffs contend should
be taken as established in the present litigation.
1. When the Defendant Old Wharf Village, LLC applied for a loan with U. S. Alliance
Federal Credit Union to purchase the property located at 405 Old Wharf Roa in Dennisport,
which was then a defunct motel, it intended to purchase the property and convert the motel units
into single family year round condominiums.
2. Both the Defendant Charles Edgar and the Defendant Old Wharf Village, LLC, as well as
U. S. Alliance Credit Union, intended, at the time the loan documents with U. S. Alliance were
executed by these parties, that the term condominium meant the conversion of the individual
motel rooms into a lesser number of year-round single family condominiums. It was not these
5parties’ intention that the term condominium would simply refer to the form of ownership of the
individual motel rooms.
Basis: Judge Nickerson’s Decision:
“ Old Wharf applied for the loan intending to purchase the property and consolidate
and renovate the motel units, converting them into single family year round
condominiums.” [Decision, p. 11]
“To the extent the term condominium (and related terms such as condominium
permits, etc.) is ambiguous, * it is the task of this court to determine the intent of the
parties, vis-a-vis this ambiguity, and enforce their intended agreement. (citation omitted)
Determining the intent of the parties and the meaning of the term condominium in this
context is a question of fact. This jurist has resolved the factual determination and finds
the parties intended, at the time the loan documents were executed, the term
condominium to mean the conversion of the motel units into a lesser number of year
round single family condominiums. Only when that goal proved to be unreachable did
our plaintiffs opt to proceed under the guise of a motel-condo.” [Decision, pp. 13-14]
Necessity of These Findings to the Judgment Entered
Judge Nickerson found that “the central issue in this case” was whether Edgar and his
partners set out to develop the premises as single family year round condominiums versus
converting the units to condominium ownership but retaining the use of the premises as a motel”.
[Decision, pp. 3-4] Clearly, the requirement that the issue in question must have been essential to
the earlier judgment has been satisfied.
In the prior litigation Old Wharf and Edgar claimed that they always intended to develop
and sell “motel condominiums”. This assertion was soundly rejected by Judge Nickerson. Yet it
is this same exact contention that has and is being asserted by the Defendants in the present case:
that Edgar and Old Wharf Village, LLC always intended to develop and market motel
condominiums and never misrepresented to the Plaintiffs that the permitted use of the property
3 Footnote from Judge Nickerson’s Decision: This jurist finds the plaintiffs’ use of the term contorts the
generally accepted meaning of the word condominium. If a ruling is required as to the term standing alone, this jurist
is satisfied the defendant's meaning is correct. For argument's sake, the term is assumed to be ambiguous.
6was for single family year round condominiums.‘ The Defendants have at various stages of this
litigation claimed that: they have done nothing wrong because the unit sold to the Plaintiff's isa
“condominium” and it can be used “year round”. Presumably, they will also claim at trial that the
units are relatively small, and are thus a perfect fit for a “single family”, and that when motel
guests stay at the property they are residing at a motel and therefore the units are “residential”.
Relevance:
The Complaint in the instant action, (at {J 1, 12, 13, 14), alleges that this exact same
representation made by Old Wharf, LLC and Charles Edgar to U. S. Alliance Credit Union, (that
the defunct motel was to be converted to “single family year round condominiums”), was made
by these same parties to the Plaintiffs in the instant case who were duped thereby. Specifically,
the Plaintiffs allege that they stated to Edgar that the buildings at the property looked like a
motel. Edgar replied by admitting that the property was once a motel but that Old Wharf had
converted the property into year-round single family residential condominiums. (Complaint {J
22, 23, 26) Reference may also be had to Paragraph 29 of the Complaint and the deed conveying
the property to the Plaintiffs, (signed by Edgar), which describes the permitted use of the unit as
follows: “Purpose for which the Condominium and each of the units is intended for is only for
year round single family residences in each of the units...”
If Edgar and Old Wharf’s are allowed to present evidence of their judicially rejected
claim that they always intended to develop and operate the property as a motel, this would be
strong evidence to buttress their defense that they did not represent to the plaintiffs that the unit
4 In his deposition testimony Edgar claimed that, “we wanted to keep them as motels and change the form of
ownership from fee simple in Old Wharf to condominiums under 183A. We believed we could still own and operate
the property under 183A”. He claimed that he intended to continue to operate the property as a motel. Vol 1, p. 49.
See also Vol. 1, pp. 88, 89: “We wanted to develop these properties as vacation rentals, as hotel/motel units...”
Deposition excerpts cited herein are attached hereto as Exhibit B
7they purchased was a year-round residential use, It would further lend credence to their argument
that the language in the plaintiffs’ deed identifying the permitted use of all the units in the
development as single family residential was nothing but an unfortunate mistake.
The Defendants true intent in developing (and marketing) the property is important
because it comports with, and makes more likely the existence of, the representations made to
Plaintiffs regarding the nature and permitted use of the property. In this regard it is likely that the
Plaintiffs will introduce testimony from 3 other purchasers of Old Wharf condominiums who
were also lead to believe that the property’s intended and permitted use was for single family
year round residential condominiums. The Defendants’ true intent in developing the property is
thus relevant to support the Plaintiffs’ contention that the Defendants had a common plan,
scheme or design in their marketing of the units at the property, and would tend to disprove any
notion of mistake, either on the part of the defendants or on the part of unit purchasers.
3. The Defendants Old Wharf and Charles Edgar had secured funding for the Old
Wharf development project, in the amount of $2,546,650, from U. S. Alliance Federal Credit
Union. This funding agreement was based on the understanding the credit union had with the
Defendants that the Defendants would convert the property from motel use to that of single
family year round condominiums. A condition of this loan was that the Defendants provide the
credit union with evidence that there was zoning approval for the use of the property as single
Samily year round condominiums.
4, The Defendants failed to provide the credit union with evidence that there was
zoning approval for the use of the property as single family year round condominiums. The
Defendants were unable to provide the credit union with such evidence of zoning approval
because the property was not approved for this use.Basis: Judge Nickerson’s Decision:
“... The Credit Union approved their loan request in the sum of $2,546,650, to
be lent in two stages. The Credit Union loaned $1,751,115 towards the purchase
of the premises. .... The Credit Union agreed to loan the remaining $795,535
on a construction loan basis to pay for the renovations to building A. The Credit
Union's Letter of Commitment (ex. 2) contained important conditions. First, an
as built appraisal of the premises for $4,000,000 was necessary. Second, the trio
had to supply a "zoning opinion letter pertaining to the conversion of the motel
to condominiums". . . . [Decision p. 5]
The Credit Union understood the plaintiffs intended to reduce the number
of units and convert them from motel use to single family year round condos.
[Decision, p. 5]
. .. On December 10, 2008, Old Wharf submitted its first request to the
Credit Union for a draw down on the construction loan (ex. 20). The Credit Union
refused, “until the property has been approved as condominiums" (ex. 22).
[Decision, p. 7] . . . the Credit Union refused to advance funds on the expressed
basis that permits for individual condos were not in hand. [Decision p. 7, ftnt. 5]
Necessity of These Findings to the Judgment Entered
Without these findings Judge Nickerson could not have entered judgment in favor of the
credit union and against Edgar and Old Wharf., since the Court’s decision was based almost
entirely on his finding that the parties’ intention was that the property was to be developed as
single family, year-round residential condominiums. The criticality of the zoning opinion letter
and the Defendants’ failure to provide the bank with one is self-evident, for it was this failure
that Judge Nickerson found relieved the bank of its obligation to release any further funds.
Relevance:
These findings are relevant for a number of reasons. In the first instance it is relevant to
the Plaintiffs’ claim that they were duped, for the bank was duped in the very same fashion, and
by the very same representation: that the property was being “converted to condominiums” with
the Defendants purposefully failing to disclose that despite the conversion the property would
remain restricted in its use to that of a motel. It is also of critical importance to the Plaintiffs that
they prove that Edgar and Old Wharf knew, before they marketed and sold the Plaintiffs one of
the units, that the way they were representing the property and its permitted use had a capacity to
9fe
deceive. Indeed, if a sophisticated entity such as credit union would be lead to believe that the
Defendants’ use of the term “condominium” meant single family residential condominiums, was
it not likely that the plaintiffs and others, given the same information, would be lead to believe
the same thing? And since the defendants were aware of the misleading nature of their
representations once the credit union refused further funding for the project, (more than 18
months prior to the sale of unit 204 to the Plaintiffs), it is relevant to prove that the Defendants’
conduct was intentionally misleading.
5. The deed to Unit 204 given by the Defendant Old Wharf Village, LLC to the Plaintiffs,
and signed by the Defendant Charles Edgar, which is in evidence as an exhibit in this case,
demonstrates both of these Defendants’ state of mind that the development of Old Wharf Village
was intended by them to be for year round single family condominiums, not for motel-condos or
any other lesser species of condominiums.
Basis: Judge Nickerson’s Decision:
“The unit 204 deed clearly demonstrates Edgar's, and thereby Old
Wharfs, state of mind that the development was intended to be year
round single family condominiums; not motel condos or any other
lesser species of condominium.” [Decision, p. 9]
Necessity of These Findings to the Judgment Entered
This finding would seem to be a critical piece of evidence upon which Judge Nickerson
based his decision regarding “the central issue” in the case. How could the decision have been
rendered unless it was solidly grounded in such evidence? It is relevant not only to Edgar’s state
of mind, but also the fact that this was his state of mind as of the date of this conveyance. This
finding was also a critical piece of evidence that allowed Judge Nickerson to not only conclude
that it was Edgar’s intent was to develop single family condominiums and not any other species
of condominiums, but also to place this evidence into its temporal context and so find that
10“[o]nly when that goal proved to be unreachable did [Edgar and Old Wharf] . . .. opt to proceed
under the guise of a motel-condo.”
Relevance: The issue of intent was a “central issue” for decision in the prior litigation. As
discussed above, this intention is relevant in the matter now before this Court for several critical
reasons. That this intention was specifically manifested in the deed given to the Plaintiffs in the
present action heightens the relevancy of Judge Nickerson’s findings. It is also relevant to
Edgar’s claim that it was only because of an unintentional mistake or a scrivener’s error that the
deed conveying the property to the Plaintiffs contained a provision describing the “[p]urpose for
which the Condominium and each of the units is intended for is only for year round single family
residences in each of the units...”. Furthermore, later efforts by Edgar to obtain zoning approval
for “motel-condos” may be placed in their proper temporal context, as Judge Nickerson so
obviously did in rendering his decision.
WHEREFORE, for all of the foregoing reasons the Plaintiffs respectfully request that the present
motion be granted and that an appropriate Order be entered accordingly.
Respectfully submitted,
THE PLAINTIFFS,
By their Attorneys
rian K. I Kevih F. Bowen, Esquire
Esquire 1p
BBO# 566078 BBQ#051450
25 Lady Slipper Drive 395/Smith Street
Plymouth, MA 02360 Providence, RI 02908
(508)591-7811 (401) 831-1600
Fax: (508)746-1817 Fax: (401) 831-0129
bklegal@gmail.com kbowen@bbglaw.us
11CERTIFICATE OF SERVICE
Thereby certify that on the 19th day of October, 2018 I mailed the within document, postage
prepaid to the following parties or counsel of record:
Djuna Perkins, Esquire
Lynne M. Chido, Esquire
DP Law
619 High Street, Suite 103
Dedham, MA 02060
!
12
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Preview
[acl tle 74 November 26, 2018 - The plaintiffs seek to preclude the defendants from re-litigating certain facts that were judicially determined in another action in which the defendants were parties. The defendants oppose the request stating that the plaintiffs could not have been parties to the prior action the issues were not essential to the decision in the previous litigation, and the defendants did not have a full and fair opportunity to litigate the issues. As discussed in Bellerman, et al. v. Fitchburg Gas and Electric Light Company, 470 Mass. 43 (2014), the offensive use of collateral estoppel “occurs when a plaintiff seeks to prevent a defendant from litigating issues which the defendant has previously litigated unsuccessfully in an action against another party.” Offensive issue preclusion “does not require mutuality of parties, so long as there is an identity of issues, a finding adverse to the party against whom it is being asserted, and a judgment by a court or tribunal of competent jurisdiction.” Additionally, “the determination of the issues for which preclusion is sought must have been essential to the underlying judgment.” Matter of Brauer, 452 Mass. 56, 67 (2008). Once a plaintiff establishes these initial requirements, the “central inquiry” becomes whether the defendant had a “full and fair opportunity to litigate the issue in the first action.” Pierce v. Morrison Mahoney LLP, 452 Mass. at 730, quoting Matter of Goldstone, 445 Mass. 551, 559 (2005). A judge has wide discretion in deciding whether the doctrine should apply in a particular case. Matter of Brauer, 452 Mass. at 67. The defendants argue that application of issue preclusion would be unfair. [FJairness is the “decisive consideration” in determining whether to apply offensive issue preclusion. Pierce v. Morrison Mahoney LLP, 452 Mass. at 730, quoting Matter of Goldstone, 445 Mass. at 559. In making this determination, the judge enjoys wide discretion in determining whether applying offensive collateral estoppe! would be fair to the defendant. Pierce v. Morrison Mahoney LLP, supra at 731. The party facing preclusion bears the burden of proof on the question of fairness. See Bailey v. Metropolitan Prop. & Liab. Ins. Co., 24 Mass. App. Ct. 34, 37 (1987). On the issue of fairness, the defendants contend that because the plaintiffs could not have been a party to the other action, the defendants would not have had an adequate incentive to defend vigorously against the claim that they intended to sell the units as residential condominiums, particularly Unit 204. However, the judge in the other action noted that the “central issue of fact in this case is whether...set out to develop the premises as single family year round condominiums versus converting the units to condominium ownership but retaining the use of the premises as a motel.” Further the defendants in this case were plaintiffs in the other case in which they sought both damages and forgiveness of significant debt. The defendants clearly had an adequate incentive to defend vigorously against the claim that they intended to sell the units as residential condominiums. The judge’s factual findings on the issue of general intent bore on the outcome of the case and was essential to its judgment. See Jarosz v. Palmer, 436 Mass. 526, 533 (2002). Whether the defendants had the same incentive with respect to Unit 204 is a different question because determination of the issue with respect to Unit 204 was not essential to the underlying judgment. The plaintiffs’ motion is allowed to the extent the following are to be taken as established in this matter: 1. In 2008 when Old Wharf Village LLC applied for a loan with U.S. Alliance Federal Credit Union to purchase the property located at 405 Old Wharf Road in Dennisport, Old Wharf Village LLCapplied for the loan intending to purchase the property and consolidate and renovate the motel units, converting them into single family year round condominiums. 2. In 2008, at the time the defendants executed loan documents for the purchase of the property, the term condominium meant the conversion of motel units into a lesser number of year round single family condominiums. Only when that goal proved to be unreachable did the defendants opt to proceed under the guise of a motel-condo. 3. Acondition of the loan the defendants received was that they provide the lender with a zoning opinion letter pertaining to the conversion of the motel to condominiums. The motion is denied to the different wording set forth in plaintiffs’ motion and to the extent of the remaining requests of the plaintiffs as the court finds that the requests as worded are not supported by the decision of the court in the other matter or that it would be unfair. For example, the plaintiffs requested the following: “A condition of this loan was that the Defendants provide the credit union with evidence that there was zoning approval for the use of the property as single family year round condominiums” while the court’s decision noted a requirement of a “zoning opinion letter pertaining to the conversion of the motel to condominiums”. Further, with respect to plaintiffs requested finding about the deed to unit 204, the court finds it would be unfair to determine such a fact with respect to a deed from June 2010 when the central issue of fact identified by the judge in the other action was the intent to develop in 2008. Determination of the issue with respect to Unit 204 was not essential to the underlying judgment. Mark C. Gildea, J.SUPERIOR COURT BARNSTABLE, SS 7 / FILED! OCT 2 2 2018 COMMONWEALTH OF MASSACHUSETTS Att bo Hils.Clerk BARNSTABLE, ss. SUPERIOR COURT DEPARTMENT CIVIL ACTION NO. 1372CV00125 ) RICK YATSENICK and JOAL ) YATSENICK ) Plaintiffs, ) ) v. ) ) . OLD WHARF VILLAGE, LLC, ) iu lis CHARLES EDGAR, DAVID DILLON _ ) 2 d | D/B/A DILLON REAL ESTATE, and _) Ailrwed 1A re if a vA Pow STACEY CURLEY, ) Hee Sul deers wer Defendants. ) (» th Jul t tS) By weg cour (Gilden 9) Cidurtine aul , gy boltaw clef PLAINTIFF'S MOTION IN LIMINE TO PRECLUDE THE DEFENDANTS [+954 Clev FROM RE-LITIGATING ISSUES OF FACT JUDICIALLY DETERMINED IN PRIOR LITIGATION AND TO INSTRUCT THE JURY AS TO THE PRECLUSIVE EFFECT OF SUCH PRIOR JUDICIAL FINDINGS The Plaintiffs, Rick Yatsenick and Joal Yatsenick (collectively “Plaintiffs”), by and through counsel, hereby respectfully move in limine to preclude the Defendants, Old Wharf Village, LLC and Charles Edgar (“Defendants”) from relitigating certain facts that were judicially determined in Old Wharf Village, LLC et al. v. USAlliance Federal Credit Union, Barnstable Superior Court, Civil Action No. CV 2011-00622. The Plaintiffs further request that the jury be instructed that the facts judicially determined, set forth below, are to be accepted as established fact by the jury in its deliberations. As grounds for the present motion the Plaintiffs state both Defendants in the present action, (Edgar and Old Wharf), were plaintiffs in the prior litigation, a lawsuit brought against a credit union that had agreed to finance the purchase and renovation of the defunct motel that 1became the Old Wharf Village development at issue in the present litigation. The credit union counterclaimed for repayment of the indebtedness and attorneys’ fees. After advancing some $1.7 Million for the purchase of the property the credit union refused to advance any further loan funds because of the failure of Old Wharf to comply with a loan condition: the submission to the credit union of evidence demonstrating that there was zoning approval for the use of the property as single family year round condominiums. The trial court, Nickerson, J. entered judgment against Edgar and Old Wharf, and for the credit union on its counterclaim. No appeal was prosecuted and the judgment became final. The trial court, Nickerson, J. made findings of fact and rulings of law set forth in a written decision. A number of these findings of fact are highly relevant to the issues about to be tried in the present case. In further support of the present motion the Plaintiffs state as follows: I. Statement of Facts Believed to Be Uncontested By the Parties The defendant Charles Edgar and others purchased a defunct motel with a view towards converting the individual motel rooms! into condominiums and then selling these individual condominium units to the public. Edgar organized a limited liability company, Old Wharf Village, LLC, to develop the property. Funding to acquire the property out of foreclosure was accomplished in part by Edgar and his business associates investing their own funds, (approximately $1 Million), but also with the assistance of a loan from a financial institution, US Alliance Credit Union. The credit union loan was to be the total amount of $2.6 Million secured by mortgage on the property, which was to be disbursed in tranches: the initial disbursement, in the amount of 1.6 million, was to be used to partially fund the 2.6 million purchase price. The 1 Or in some cases, two combined motel rooms.remaining $1 Million to be disbursed to Old Wharf as construction draws as the renovation of the property proceeded. In the application Edgar submitted to U.S. Alliance he represented that the purpose of the loan was to acquire the property and convert it to condominiums which would then be sold to the public. At the time of the loan application the property not zoned for residential condominiums; the only lawful permitted use of the property was as a motel. The credit union agreed to loan the funds, but one of the conditions of the loan was that it be provided with a, “[eJoning opinion letter pertaining to the conversion of the motel to condominiums”. Edgar was a personal guarantor of the loan. The loan closed in October 22, 2008 and the initial $1.6 million was disbursed even though the credit union had not yet been provided with the zoning opinion letter. Two months later Old Wharf requested the first construction disbursement in the amount of $100,000. The credit union refused to disburse any further funds, asserting that Old Wharf had failed to provide it with a zoning opinion letter demonstrating that the property was properly zoned for condominiums. Old Wharf, Edgar and the other guarantors of the loan sued the bank for alleged breach of its loan agreement. The bank countersued the payment of funds it was owed.2 Following the loan closing Old Wharf had managed to condominiumized the individual motel rooms. The zoning, however, remained unchanged: residential condominiums was not a permitted use. The position of the parties in the credit union litigation can be succinctly summarized. Old Wharf and Edgar asserted that the motel units had been changed into the condominium form of ownership, and because they were still motel units they were in conformance with applicable ? Old Wharf Village, LLC et al. v. USAlliance Federal Credit Union, Barnstable Superior Court, Civil Action No. CV 2011-00622 3zoning bylaws. U.S. Alliance claimed that it’s agreement with Old Wharf and Edgar was for the motel units to be converted to residential condominiums. U.S. Alliance prevailed after a bench trial before the Honorable Gary A. Nickerson who issued Findings of Fact, Rulings of Law and Order for Judgment. Il. Issue Presented Should Old Wharf and Edgar Be Barred From Re-litigating Factual Issues Decided By Judge Nickerson and Should the Jurors Be Instructed That Such Findings Are to Be Accepted By Them as Established Facts Binding Upon Them In Their Deliberations Ill. Governing Law “Issue preclusion prevents re-litigation of an issue determined in an earlier action ... .” Anusavice v. Bd. of Registration in Dentistry, 451 Mass. 786, 798 n.16 (2008). “Before precluding a party from relitigating an issue, ‘a court must determine that (1) there was a final judgment on the merits in the prior adjudication; (2) the party against whom preclusion is asserted was a party (or in privity with a party) to the prior adjudication; and (3) the issue in the prior adjudication was identical to the issue in the current adjudication.’” Kobrin y. Bd. of Registration in Medicine, 444 Mass. 837, 843-44 (2005), quoting Tuper v. North Adams Ambulance Service, Inc., 428 Mass. 132, 134 (1998). “Additionally, the issue decided in the prior adjudication must have been essential to the earlier judgment.” Jd. at 844, quoting Tuper, 428 Mass. at 134-35. That is, if the issues of fact that the Plaintiffs seek to preclude the Defendants from re-litigating were “so necessarily involved in the first action that the judgement which was entered therein could not possibly have been entered on any grounds other than that this issue was adjudicated adversely to the party later attempting to present it.” McSorley v. Town 4of Hancock, 11 Mass. App. Ct. 563, 567-8 (1981), quoting Wishnewsky v. Town of Saugus, 325 Mass. 191, 195 (1950). Where a party against whom offensive issue preclusion is sought had a “full and fair opportunity to litigate the issue in the first action,” it is appropriate to preclude the re-litigation of the facts. Bellermann v. Fitchburg Gas & Elec. Light Co., 470 Mass. 43, 60 (2014), quoting Pierce v. Morrison Mahoney LLP, 452 Mass. 718, 730 (2008). In this case, there is no question that the Barnstable Superior Court, Nickerson, J., issued Findings of Fact, Rulings of Law and Order for Judgment, which constituted a final judgment on the merits of the action captioned Old Wharf Village, LLC et al. v. USAlliance Federal Credit Union, Barnstable Superior Court, Civil Action No. CV 2011-00622. A copy of the Court’s decision in that case is appended hereto as Exhibit A. Similarly, there is no question that both of the Defendants, Old Wharf Village, LLC and Charles Edgar, were party plaintiffs in that action. IV. Specific Matters Which Should Be Taken as Established Fact in the _ Present Trial Based on The Principles of Res Judicata and Collateral Estoppel, and as to Which the Jury Should Be Instructed Accordingly The five italicized paragraphs that follow are findings that the Plaintiffs contend should be taken as established in the present litigation. 1. When the Defendant Old Wharf Village, LLC applied for a loan with U. S. Alliance Federal Credit Union to purchase the property located at 405 Old Wharf Roa in Dennisport, which was then a defunct motel, it intended to purchase the property and convert the motel units into single family year round condominiums. 2. Both the Defendant Charles Edgar and the Defendant Old Wharf Village, LLC, as well as U. S. Alliance Credit Union, intended, at the time the loan documents with U. S. Alliance were executed by these parties, that the term condominium meant the conversion of the individual motel rooms into a lesser number of year-round single family condominiums. It was not these 5parties’ intention that the term condominium would simply refer to the form of ownership of the individual motel rooms. Basis: Judge Nickerson’s Decision: “ Old Wharf applied for the loan intending to purchase the property and consolidate and renovate the motel units, converting them into single family year round condominiums.” [Decision, p. 11] “To the extent the term condominium (and related terms such as condominium permits, etc.) is ambiguous, * it is the task of this court to determine the intent of the parties, vis-a-vis this ambiguity, and enforce their intended agreement. (citation omitted) Determining the intent of the parties and the meaning of the term condominium in this context is a question of fact. This jurist has resolved the factual determination and finds the parties intended, at the time the loan documents were executed, the term condominium to mean the conversion of the motel units into a lesser number of year round single family condominiums. Only when that goal proved to be unreachable did our plaintiffs opt to proceed under the guise of a motel-condo.” [Decision, pp. 13-14] Necessity of These Findings to the Judgment Entered Judge Nickerson found that “the central issue in this case” was whether Edgar and his partners set out to develop the premises as single family year round condominiums versus converting the units to condominium ownership but retaining the use of the premises as a motel”. [Decision, pp. 3-4] Clearly, the requirement that the issue in question must have been essential to the earlier judgment has been satisfied. In the prior litigation Old Wharf and Edgar claimed that they always intended to develop and sell “motel condominiums”. This assertion was soundly rejected by Judge Nickerson. Yet it is this same exact contention that has and is being asserted by the Defendants in the present case: that Edgar and Old Wharf Village, LLC always intended to develop and market motel condominiums and never misrepresented to the Plaintiffs that the permitted use of the property 3 Footnote from Judge Nickerson’s Decision: This jurist finds the plaintiffs’ use of the term contorts the generally accepted meaning of the word condominium. If a ruling is required as to the term standing alone, this jurist is satisfied the defendant's meaning is correct. For argument's sake, the term is assumed to be ambiguous. 6was for single family year round condominiums.‘ The Defendants have at various stages of this litigation claimed that: they have done nothing wrong because the unit sold to the Plaintiff's isa “condominium” and it can be used “year round”. Presumably, they will also claim at trial that the units are relatively small, and are thus a perfect fit for a “single family”, and that when motel guests stay at the property they are residing at a motel and therefore the units are “residential”. Relevance: The Complaint in the instant action, (at {J 1, 12, 13, 14), alleges that this exact same representation made by Old Wharf, LLC and Charles Edgar to U. S. Alliance Credit Union, (that the defunct motel was to be converted to “single family year round condominiums”), was made by these same parties to the Plaintiffs in the instant case who were duped thereby. Specifically, the Plaintiffs allege that they stated to Edgar that the buildings at the property looked like a motel. Edgar replied by admitting that the property was once a motel but that Old Wharf had converted the property into year-round single family residential condominiums. (Complaint {J 22, 23, 26) Reference may also be had to Paragraph 29 of the Complaint and the deed conveying the property to the Plaintiffs, (signed by Edgar), which describes the permitted use of the unit as follows: “Purpose for which the Condominium and each of the units is intended for is only for year round single family residences in each of the units...” If Edgar and Old Wharf’s are allowed to present evidence of their judicially rejected claim that they always intended to develop and operate the property as a motel, this would be strong evidence to buttress their defense that they did not represent to the plaintiffs that the unit 4 In his deposition testimony Edgar claimed that, “we wanted to keep them as motels and change the form of ownership from fee simple in Old Wharf to condominiums under 183A. We believed we could still own and operate the property under 183A”. He claimed that he intended to continue to operate the property as a motel. Vol 1, p. 49. See also Vol. 1, pp. 88, 89: “We wanted to develop these properties as vacation rentals, as hotel/motel units...” Deposition excerpts cited herein are attached hereto as Exhibit B 7they purchased was a year-round residential use, It would further lend credence to their argument that the language in the plaintiffs’ deed identifying the permitted use of all the units in the development as single family residential was nothing but an unfortunate mistake. The Defendants true intent in developing (and marketing) the property is important because it comports with, and makes more likely the existence of, the representations made to Plaintiffs regarding the nature and permitted use of the property. In this regard it is likely that the Plaintiffs will introduce testimony from 3 other purchasers of Old Wharf condominiums who were also lead to believe that the property’s intended and permitted use was for single family year round residential condominiums. The Defendants’ true intent in developing the property is thus relevant to support the Plaintiffs’ contention that the Defendants had a common plan, scheme or design in their marketing of the units at the property, and would tend to disprove any notion of mistake, either on the part of the defendants or on the part of unit purchasers. 3. The Defendants Old Wharf and Charles Edgar had secured funding for the Old Wharf development project, in the amount of $2,546,650, from U. S. Alliance Federal Credit Union. This funding agreement was based on the understanding the credit union had with the Defendants that the Defendants would convert the property from motel use to that of single family year round condominiums. A condition of this loan was that the Defendants provide the credit union with evidence that there was zoning approval for the use of the property as single Samily year round condominiums. 4, The Defendants failed to provide the credit union with evidence that there was zoning approval for the use of the property as single family year round condominiums. The Defendants were unable to provide the credit union with such evidence of zoning approval because the property was not approved for this use.Basis: Judge Nickerson’s Decision: “... The Credit Union approved their loan request in the sum of $2,546,650, to be lent in two stages. The Credit Union loaned $1,751,115 towards the purchase of the premises. .... The Credit Union agreed to loan the remaining $795,535 on a construction loan basis to pay for the renovations to building A. The Credit Union's Letter of Commitment (ex. 2) contained important conditions. First, an as built appraisal of the premises for $4,000,000 was necessary. Second, the trio had to supply a "zoning opinion letter pertaining to the conversion of the motel to condominiums". . . . [Decision p. 5] The Credit Union understood the plaintiffs intended to reduce the number of units and convert them from motel use to single family year round condos. [Decision, p. 5] . .. On December 10, 2008, Old Wharf submitted its first request to the Credit Union for a draw down on the construction loan (ex. 20). The Credit Union refused, “until the property has been approved as condominiums" (ex. 22). [Decision, p. 7] . . . the Credit Union refused to advance funds on the expressed basis that permits for individual condos were not in hand. [Decision p. 7, ftnt. 5] Necessity of These Findings to the Judgment Entered Without these findings Judge Nickerson could not have entered judgment in favor of the credit union and against Edgar and Old Wharf., since the Court’s decision was based almost entirely on his finding that the parties’ intention was that the property was to be developed as single family, year-round residential condominiums. The criticality of the zoning opinion letter and the Defendants’ failure to provide the bank with one is self-evident, for it was this failure that Judge Nickerson found relieved the bank of its obligation to release any further funds. Relevance: These findings are relevant for a number of reasons. In the first instance it is relevant to the Plaintiffs’ claim that they were duped, for the bank was duped in the very same fashion, and by the very same representation: that the property was being “converted to condominiums” with the Defendants purposefully failing to disclose that despite the conversion the property would remain restricted in its use to that of a motel. It is also of critical importance to the Plaintiffs that they prove that Edgar and Old Wharf knew, before they marketed and sold the Plaintiffs one of the units, that the way they were representing the property and its permitted use had a capacity to 9fe deceive. Indeed, if a sophisticated entity such as credit union would be lead to believe that the Defendants’ use of the term “condominium” meant single family residential condominiums, was it not likely that the plaintiffs and others, given the same information, would be lead to believe the same thing? And since the defendants were aware of the misleading nature of their representations once the credit union refused further funding for the project, (more than 18 months prior to the sale of unit 204 to the Plaintiffs), it is relevant to prove that the Defendants’ conduct was intentionally misleading. 5. The deed to Unit 204 given by the Defendant Old Wharf Village, LLC to the Plaintiffs, and signed by the Defendant Charles Edgar, which is in evidence as an exhibit in this case, demonstrates both of these Defendants’ state of mind that the development of Old Wharf Village was intended by them to be for year round single family condominiums, not for motel-condos or any other lesser species of condominiums. Basis: Judge Nickerson’s Decision: “The unit 204 deed clearly demonstrates Edgar's, and thereby Old Wharfs, state of mind that the development was intended to be year round single family condominiums; not motel condos or any other lesser species of condominium.” [Decision, p. 9] Necessity of These Findings to the Judgment Entered This finding would seem to be a critical piece of evidence upon which Judge Nickerson based his decision regarding “the central issue” in the case. How could the decision have been rendered unless it was solidly grounded in such evidence? It is relevant not only to Edgar’s state of mind, but also the fact that this was his state of mind as of the date of this conveyance. This finding was also a critical piece of evidence that allowed Judge Nickerson to not only conclude that it was Edgar’s intent was to develop single family condominiums and not any other species of condominiums, but also to place this evidence into its temporal context and so find that 10“[o]nly when that goal proved to be unreachable did [Edgar and Old Wharf] . . .. opt to proceed under the guise of a motel-condo.” Relevance: The issue of intent was a “central issue” for decision in the prior litigation. As discussed above, this intention is relevant in the matter now before this Court for several critical reasons. That this intention was specifically manifested in the deed given to the Plaintiffs in the present action heightens the relevancy of Judge Nickerson’s findings. It is also relevant to Edgar’s claim that it was only because of an unintentional mistake or a scrivener’s error that the deed conveying the property to the Plaintiffs contained a provision describing the “[p]urpose for which the Condominium and each of the units is intended for is only for year round single family residences in each of the units...”. Furthermore, later efforts by Edgar to obtain zoning approval for “motel-condos” may be placed in their proper temporal context, as Judge Nickerson so obviously did in rendering his decision. WHEREFORE, for all of the foregoing reasons the Plaintiffs respectfully request that the present motion be granted and that an appropriate Order be entered accordingly. Respectfully submitted, THE PLAINTIFFS, By their Attorneys rian K. I Kevih F. Bowen, Esquire Esquire 1p BBO# 566078 BBQ#051450 25 Lady Slipper Drive 395/Smith Street Plymouth, MA 02360 Providence, RI 02908 (508)591-7811 (401) 831-1600 Fax: (508)746-1817 Fax: (401) 831-0129 bklegal@gmail.com kbowen@bbglaw.us 11CERTIFICATE OF SERVICE Thereby certify that on the 19th day of October, 2018 I mailed the within document, postage prepaid to the following parties or counsel of record: Djuna Perkins, Esquire Lynne M. Chido, Esquire DP Law 619 High Street, Suite 103 Dedham, MA 02060 ! 12 ;