United States District Court, D. New Hampshire
W. Scott Trafton
H. Michael Koplove and Lynda A. Koplove. Opinion No. 2014 DNH 249
JOSEPH N. LaPLANTE, District Judge.
Relationships between in-laws are notoriously difficult, but relationships between former in-laws can be even more difficult- particularly when money is involved. This case, which raises a question as to the application of judicial estoppel, illustrates that point. Plaintiff Scott Trafton was married to the daughter of defendants Michael and Lynda Koplove, who paid several hundred thousand dollars to have a home constructed for him and their daughter. Though Trafton claims that he understood those funds as a gift to him and his wife, he (and she) nonetheless executed a promissory note, payable to the Koploves and secured by mortgages on the newly-built home and another property that Trafton owned going into the marriage. That decision would come back to haunt him when his wife filed for divorce, and the Koploves noticed their intent to foreclose one of the mortgages due to the Traftons' failure to make payments on the note (even though, according to Trafton, they had actually rebuffed his attempts at payment).
Trafton responded to the notice by filing this action against the Koploves in Rockingham County Superior Court. He advances a number of claims challenging the validity of the Koploves' note and mortgages and arguing that the Koploves may not foreclose. The Koploves removed the action to this court, see 28 U.S.C. § 1441, which has jurisdiction pursuant to 28 U.S.C. § 1332 (diversity), because Trafton is a New Hampshire citizen, the Koploves are Massachusetts citizens, and the amount in controversy exceeds $75, 000. The Koploves have now moved to dismiss the complaint, see Fed.R.Civ.P. 12(b)(6), arguing that Trafton's claims fail for a number of reasons. Chief among these is that, in the divorce proceedings, Trafton acknowledged the existence of the loan and agreed to cooperate in the foreclosure, and the divorce court accepted these representations. As a result, the Koploves say, Trafton should be judicially estopped from taking a contrary position in this case. After carefully considering the parties' written submissions,  the court grants the motion for exactly that reason.
I. Applicable legal standard
To survive a motion to dismiss under Rule 12(b)(6), the plaintiff's complaint must allege facts sufficient to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In ruling on such a motion, the court must accept as true all well-pleaded facts set forth in the complaint and must draw all reasonable inferences in the plaintiff's favor. See, e.g., Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010). The court "may consider not only the complaint but also facts extractable from documentation annexed to or incorporated by reference in the complaint and matters susceptible to judicial notice." Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009). With the facts so construed, "questions of law [are] ripe for resolution at the pleadings stage." Simmons v. Galvin, 575 F.3d 24, 30 (1st Cir. 2009), including whether judicial estoppel operates to bar the plaintiff's claims, see, e.g., Payless Wholesale Distrib., Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir. 1993).
Trafton, as already mentioned, was previously married to the Koploves' daughter, Melanie. Before Trafton and Melanie married, he owned a home in Dover, New Hampshire, where the couple was to reside after they wed. Soon after the Traftons married and their first child was born, however, the Koploves encouraged them to move to a larger home closer to the Koploves' own home in Amesbury, Massachusetts. Although Trafton believed he could not afford the move, the Koploves told him that they would give him and Melanie the money to purchase a larger home.
In early 2010, the Koploves paid a $10, 000 deposit for a lot at 8 Terry's Way in Exeter, New Hampshire, and paid a builder $50, 000 to begin building a home on the property. Later that year, the Koploves paid approximately $430, 000 at a closing on the newly-constructed home, and a deed to the property was recorded in the names of Trafton and Melanie. At the closing, the Koploves also gave the Traftons additional funds. The plaintiff alleges that he understood all of these expenditures by the Koploves to be gifts. According to him, at no time was there any discussion about a loan relationship, and if there had been, he would have stayed in his home in Dover.
In late 2010, several months after the closing, Michael Koplove asked the plaintiff to come to the offices of law firm Ford and Associates, P.A. to "do some paperwork." There, the plaintiff was asked to sign a promissory note, payable to the Koploves, in the amount of $564, 500, and two mortgages securing its payment: one on the Exeter property, and another on the Dover property (which the plaintiff still owned). Despite his alleged understanding of the funds as "gifts, " the plaintiff obliged. Although Michael Koplove told the plaintiff not to worry about payment, and that the note and mortgages were just "paperwork, " the plaintiff nevertheless attempted to make payments to the defendants, which they refused. While Michael Koplove told Melanie to make out $1, 000 checks to him, with rare exceptions, he did not cash them.
The Traftons' marriage was tempestuous, and Melanie filed for divorce three times. On the last of these occasions, Melanie moved in with her parents, and the plaintiff also vacated the Exeter property. In connection with this divorce proceeding, on January 17, 2014, Trafton and Melanie executed a stipulation as to the division of their marital assets and the resolution of other outstanding issues related to their divorce. In relevant part, the stipulation, which was also witnessed by counsel for both parties to the divorce, provided:
The marital home located at 8 Terry's Way, Exeter, New Hampshire is currently in foreclosure and has been vacated. The parties shall cooperate with the lender to effectuate an auction or short sale of the property.
Trafton and Melanie submitted the stipulation to the 10th Circuit Court Family Division with a request that the court approve the stipulation "and incorporate all of its terms and conditions as part of the Decree of Divorce." A week later, Trafton completed a financial affidavit affirming, under oath, that the Exeter property was encumbered by a debt in the amount of $564, 000 owed to Michael Koplove. That affidavit was also submitted to the 10th Circuit Court, which approved the stipulation and entered a Decree of Divorce adopting and incorporating the stipulation's terms in their entirety in early February 2014.
Later that month, the Koploves notified Trafton of their intent to conduct a foreclosure auction of the Exeter property. Trafton responded by filing this action, in which he makes claims against the Koploves for fraudulent inducement, intentional and negligent misrepresentation, violation of the Consumer Protection Act, N.H. Rev. Stat. Ann. § 358-A, and breach of contract, and also asserts counts for injunctive relief and quiet title. The amended complaint seeks an order enjoining the Traftons from foreclosing, quieting title to the Dover ...