LI v. HUANG (2021)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This litigation is between two couples who are members of an extended family. Together, the couples owned a restaurant in Hyde Park, which they began operating over two decades ago. After the relationship between the couples broke down, the plaintiffs (collectively, the Lis) filed a partition action to divide the property. The parties eventually agreed that the defendants (collectively, the Huangs) would purchase the Lis’ fifty percent share for a particular sum certain, subject to potential adjustments pursuant to G. L. c. 241, § 23, for payments that one party made for insurance, mortgage payments, and the like. The agreed-to purchase money was placed in escrow, and the trial became principally about what adjustments, if any, each side was due. This task was made especially difficult given that the restaurant primarily operated on a cash basis.

Following a multi-day trial, a Land Court judge issued a decision that rejected both sides’ arguments, with one notable exception regarding an adjustment that the judge made in favor of the Huangs. That exception involved a home equity line of credit that the Huangs had taken out on their own home for the benefit of the restaurant. The Lis claimed that they too made payments on that loan by cash and occasional check, but they offered no corroboration of that claim. Hence, the trial judge expressly discredited the Lis’ claim to having made such payments and instead gave the Huangs sole credit for doing so.

On July 18, 2019, a judgment entered that divided the remaining escrowed funds in a manner that reflected the added expenses that the Huangs had incurred on the home equity loan. The judge explained his rationale in a detailed and thoughtful memorandum of decision. In that memorandum of decision, the judge noted that one factor that led him to disbelieve the Lis’ claim to have made payments on the loan is that they never deducted on their personal income returns any interest payments that they made on that loan.

Unsatisfied with their designated share, the Lis appealed from the judgment. However, after the Lis let that appeal languish -- despite being given multiple opportunities to cure the problem -- this court dismissed the appeal. The Lis then filed a motion to reinstate their appeal. After careful review, a single justice of this court denied that motion, concluding that the Lis had failed to demonstrate either excusable neglect or any issue worthy of appellate review.

The Lis did not appeal the single justice's order, which terminated the appeal. Instead, they returned to Land Court and filed a motion for relief from judgment pursuant to Mass. R. Civ. P. 60 (b) (6), 365 Mass. 828 (1974). In it, the Lis argued that the judge's reasoning was erroneous, because he incorrectly assumed that they could have deducted any interest they had paid on the Huangs’ home equity loan. According to them, under Federal law, only the Huangs could have deducted that interest. See 26 U.S.C. § 163. The trial judge summarily denied the Lis’ rule 60 (b) (6) motion both on the merits and because they already had lost their appeal. Before us now is the Lis’ purported appeal of the order denying their rule 60 (b) (6) motion.⁴

The merits of the Lis’ substantive argument are not without some limited force. If, as a matter of law, the Lis could not have taken a mortgage deduction for any payments they purportedly made on the Huangs’ home equity loan -- an issue we do not reach -- then it may have been improper for the judge to view their failure to take such deductions as some evidence that they had not made such payments. They could have raised this issue with the trial judge and asked him to reconsider his decision by filing a motion to modify the judgment pursuant to Mass. R. Civ. P. 59, 365 Mass. 827 (1974). However, based on the substance and tone of his original memorandum of decision, such a motion would have stood virtually no chance of affecting the outcome of this case. After all, the judge appears to have found that the Lis did not make any payments on the home equity loan not merely because they did not take any corresponding tax deductions, but also because they presented no corroborating evidence whatsoever to substantiate that they had made such payments. In fact, in denying the rule 60 (b) (6) motion, the judge expressly stated that he saw “no basis to change [his initial] Decision and [the] Judgment,” thereby confirming that the tax argument would not have made a difference. The judge's reaffirmation of his original findings is well supported by the trial evidence, and the Lis have not shown how the judge abused his discretion in denying the rule 60 (b) (6) motion. Thus, the current appeal fails on the merits.

The Lis’ appeal also fails for at least one independent reason, namely that under the circumstances of this case, rule 60 (b) (6) did not provide them a proper vehicle to raise their tax argument. Having not raised that argument in a rule 59 motion, the Lis still could have sought to raise the issue in their appeal. What they cannot do -- at least absent extraordinary circumstances not present here -- is abandon that appeal and then try to raise an alleged infirmity in the judgment through filing a rule 60 (b) (6) motion. See Bromfield v. Commonwealth, 400 Mass. 254, 257 (1987) (“improper to grant relief under Rule 60 [b] [6] if the aggrieved party could have reasonably sought the same relief by means of appeal” [citation omitted]). See also Soja v. T.P. Sampson Co., 373 Mass. 630, 631 (1977) (rule 60 (b) (6) not a substitute for appellate process).⁵

Order denying motion for relief from judgment affirmed.

FOOTNOTES

4.   After the Lis filed their notice of appeal, the Huangs filed a motion seeking attorney's fees and costs against both the Lis and their counsel pursuant to G. L. c. 231, § 6F, and Mass. R. Civ. P. 11, as amended, 456 Mass. 1401 (2010). The judge approved sanctions of $11,500, for which the Lis and their counsel would be jointly and severally liable. That order does not appear to have been appealed, and, in any event, no such appeal is before us.

5.   The Huangs have requested that we dismiss the appeal and impose sanctions against the Lis for pursuing a frivolous appeal. See G. L. c. 231, § 6F; G. L. c. 211A, § 15; and Mass. R. A. P. 25, as appearing in 481 Mass. 1654 (2019). In our discretion, we deny that request. Our decision to do so should not be viewed as commenting on the propriety of the trial court judge's imposing sanctions on the Lis for filing their rule 60 (b) motion (in an order the Lis have not appealed). In fact, in deciding not to impose a sanction ourselves, we considered the fact that the Lis have already been sanctioned for their litigation conduct.