November 7, 2014
JOY E.JANVIER, Plaintiff,
SHAUN JANVIER, DMD, PA, and JANVIER REALTY LLC, Defendants.
John O'N'eil Jr., Justice, Superior Court
Joy Janvier and Shaun Janvier were divorced pursuant to a Final Divorce Judgment entered on September 28, 2012. Defendant Shaun Janvier, DMD, PA ("Janvier PA" or "the dental practice") is a Maine Professional Corporation and Defendant Janvier Realty LLC ("Janvier LLC") is a Maine LLC (Janvier PA and Janvier LLC hereinafter referred to collectively as "the businesses"). The businesses are both organized under the laws of Maine; Shaun Janvier is the sole officer and shareholder of Janvier PA and sole manager of Janvier LLC. In the underlying divorce action, the District Court made findings as to the value of the businesses, which were both awarded to Shaun Janvier. (Def.'s Mot. Dismiss Ex. A.) The Law Court affirmed the District Court's conclusion that the dental practice was not marital property subject to equitable division. (Def.'s Mot. Dismiss Ex. B.) This action, brought by Plaintiff Joy Janvier, alleges the businesses engaged in economically oppressive behavior by transferring funds between them, concealing funds and income, and otherwise depriving the Plaintiff of rental income and property. (Compl. 2-3.) Before the court is Defendants' motion to dismiss. M.R. Civ. P. 12(b)(6).
A. Motion to Dismiss Standard
In ruling on a motion to dismiss, the court views the facts in the complaint as admitted, Saunders v. Tisher, 2006 ME 94, ¶ 8, 902 A.2d 830, and then considers whether the complaint "sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory." Doe v. Graham, 2009 ME 88, ¶ 2, 977 A.2d 391 (citation omitted). To dismiss for failure to state a claim, the court must determine it is "beyond doubt that [the] plaintiff is entitled to no relief under any set of facts that might be proven in support of the claim.'" Plimpton v. Gerrard, 668 A.2d 882, 885 (Me. 1995).
The Defendants move to dismiss, arguing the Plaintiffs claims were or could have been raised in the divorce action and are therefore barred by res judicata.
B. Res Judicata
"The law is plain that [parties] cannot again come forward in the same legal mission against the same parties to secure a remedy . . . previously denied." Portland Water Dist. v. Town of Standish, 2008 ME 23, ¶ 7, 940 A.2d 1097. Res judicata consists of two subsidiary doctrines: issue preclusion and claim preclusion. Issue preclusion, or collateral estoppel, "prevents the relitigation of factual issues already decided if'the identical issue was determined by a prior final judgment, and ... the party estopped had a fair opportunity and incentive to litigate the issue in a prior proceeding.'" Machias Sav. Bank v. Ramsdell, 1997 ME 20, H 11, 689 A.2d 595 (citation omitted). Claim preclusion prevents a party from relitigating the same claim where "(1) the same parties or their privies are involved in both actions; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision in the second action were, or might have been litigated in the first action." Id. Courts apply collateral estoppel "on a case-by-case basis." Beal v. Allstate Ins. Co., 2010 ME 20, ¶ 17, 989 A.2d 733.
1. Rule 12(b)(6) and Res Judicata
The Plaintiff first contends that the procedural posture of this case precludes dismissal for res judicata. (PL's Obj. Def.'s Mot. Dismiss 2.) This is incorrect. See Sargent v. Sargent, 622 A.2d 721, 723 (Me. 1993) ("A Rule 12(b)(6) motion is appropriate to raise the affirmative defense of res judicata only if the facts establishing the defense appear on the face of the complaint.") If facts in the complaint met the res judicata elements above, then dismissal under a Rule 12(b)(6) motion would be appropriate. In Sargent, the Law Court went on to note that where "matters outside the pleadings" raise facts outside the complaint, the court has discretion to convert the motion into one for summary judgment under Rule 56. Id. n.3. The posture of the Defendants' motion, by itself, does not preclude a ruling on a res judicata defense.
2. Res Judicata Does Not, At This Stage, Preclude the Plaintiffs Claims
Defendants argue the central factual issue-whether any economic misconduct
surrounding the businesses occurred-was decided by the District Court in the divorce case and is therefore barred here. The Defendants' arguments rest on a single statement from the court's spousal support analysis: "Despite suggestions to the contrary, Defendant court [sic] did not commit economic misconduct." (Def.'s Mot. Dismiss Ex. A at 7.) Extensive analysis and consideration is not necessary for res judicata to apply. See Mut. Fire Ins. Co. v. Richardson, 640 A.2d 205, 208 (Me. 1994) (passing mention of spouse's responsibility for burning down house during alimony analysis sufficient to hold issue precluded under collateral estoppel). Yet questions remain as to the scope of transactions by the businesses and the specific conduct the Plaintiff seeks to recover for in the present litigation.
The Defendants accuse the Plaintiff of attempting to circumvent the District Court's economic misconduct finding under a new legal theory: the businesses rather than Shaun Janvier committed the wrongdoing. See Norton v. Town of Long Island, 2005 ME 109, ¶ 18, 883 A.2d 889 (explaining claim preclusion can apply even where the claimant "relies on a legal theory not advanced in the first case, seeks different relief than that sought in the first case, or involves evidence different from the evidence relevant to the first case") (citation omitted). The Defendants concede that the businesses were not parties to the divorce case, but reason that because Shaun Janvier acts as sole officer and manager, the businesses "are in essence" one and the same. (Def.'s Mot. Dismiss 6.) Thus, in the Defendants' view, the District Court's conclusion Shaun Janvier did not commit economic misconduct precludes the Plaintiff from bringing claims against the businesses for fraudulent transfers, breach of fiduciary duty, and failure to pay income.
As a threshold practical matter, an "entity must be a party to a case in order for the court to have personal jurisdiction." Howard v. Howard, 2010 ME 83, If 12, 2 A.3d 318 (holding court lacked personal jurisdiction over non-party LLC in divorce action). In addition to not being parties in the divorce case, the parties agree that the businesses could not have been joined under the rules. M.R. Civ. P. 111 ("The only persons who may be joined as parties to an action under these rules are persons or entities specifically authorized to file or participate in a Family Division action by Title 19-A of the Maine Revised Statutes."); Howard, 2010 ME 83, ¶¶ 16-18, 2 A.3d 318 (noting joinder in Family Division cases would be proper under Rule 111 only where the entity in question could have independently filed the action, and ruling LLC at issue could not).
Furthermore, divorce judgments do not necessarily have res judicata effect on subsequent tort actions, even where the same issues might have been raised during the divorce case. Henriksen v. Cameron, 622 A.2d 1135, 1141 (Me. 1993) (holding cruel and abusive treatment as a grounds for divorce is separate and distinct from intentional infliction of emotional distress claim). The District Court addressed economic misconduct in the context of spousal support under the alimony statute. 19-A M.R.S. § 951-A(5)(M) (listing economic misconduct "by either party resulting in the diminution of marital property or income" as a factor in awarding spousal support). Economic misconduct within the meaning of the statute can take many forms. See, e.g., Ramsdell v. Ramsdell, 1997 ME 14, ¶ 6, 688 A.2d 918 (removing property subject to marital debt from the state); Quin v. Ouinn, 641 A.2d 180, 182 (Me. 1994) (fraudulent property transfers to third parties); Richardson, 640 A.2d at 208 (arson destroying marital property). Economic misconduct contemplates any number of misdeeds depriving a spouse of his or her interest in marital property.
Res judicata does not, at least at this stage, bar the Plaintiffs claims. The factual record in this case has yet to develop. The businesses were not a party to the divorce action, and while the doctrine can be asserted against privies and successors, the District Court did not make distinct factual findings as to the business' conduct. Cf. Mills v. Mills, 565 A.2d 323, 324 (Me. 1989) (legal and factual determination ex-spouse was not contractually entitled to alimony expressly decided in prior summary judgment and thus barred by collateral estoppel). The Divorce Judgment and Memorandum of Decision concluded Shaun Janvier, as an individual, committed no economic misconduct as defined under the spousal support statute. The Plaintiffs allegations concern the facts surrounding the separate and distinct conduct of the businesses and the law of fraudulent transfers, joint tenancy, and partnership-issues not before the District Court. Taking the allegations in the complaint as true, the Plaintiff states a claim for which relief may be granted. The Plaintiff need not prove her case at the motion to dismiss stage and should have the opportunity to conduct discovery.
Nonetheless, if after discovery the Plaintiff is unable to come forward with wrongful acts committed by the businesses apart from the allegations rejected by the District Court, summary judgment will be appropriate. Additionally, if the Plaintiff lacked a good faith basis for the allegations contained in the complaint, this court will entertain sanctions and an award of attorney's fees. M.R. Civ. P. 11; Estate of Dineen, 1998 ME 268, ¶¶ 11-13, 721 A.2d 185; Chiappetta v. LeBlond, 544 A.2d 759, 760 (Me. 1988).
The clerk will make the following entry, by reference, on the docket:
The Defendants' Motion to Dismiss is hereby DENIED.