Civil practice – Attachment – Loan guaranty

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Where a plaintiff assignee of a lender has moved for an attachment of real property owned by the defendant guarantor’s girlfriend, the motion should be allowed based on a reasonable likelihood that the plaintiff will recover against the defendant on the guaranty.

“The case is now before the Court on plaintiff’s Motion to Attach property located at 34 Highview Drive in Uxbridge, Massachusetts (the Uxbridge House). [Defendant Patrick] Hannon lives there with his girlfriend, Sofia Gagua, named in this case both as a defendant and a reach and apply defendant. Title to the property is in Gagua’s name. According to the Amended Verified Complaint, the Uxbridge House was purchased with funds from Hannon, giving rise to a claim against Gagua under the Uniform Fraudulent Transfer Act, G.L.c.109A section2. After careful review of the documentation and affidavits submitted by the parties — both in connection with this motion and earlier in this litigation — this Court concludes that plaintiff is entitled to an attachment in the amount of $258,226.22. The Motion is therefore allowed.

“This is the third time that plaintiff has requested such an attachment. …

“This third attempt is not exclusively premised on a theory of reverse veil piercing and is supported by additional information. That information shows that Hannon himself did indeed make a substantial payment toward the purchase price and that funds used to renovate the Uxbridge House following the purchase were drawn from an entity wholly owned by Hannon. Moreover, the circumstances leading up to and surrounding the purchase of the Uxbridge House support the conclusion that plaintiff will indeed be able to prevail on its claim against Gagua. …

“… Plaintiff is reasonably likely to obtain a judgment against Hannon in an amount that exceeds $200,000. As to its claim against Gagua based on the Uxbridge House, there is a reasonable likelihood that plaintiff will be able to show that investments in that house came from Hannon’s funds and that the purpose was to place those funds out of reach of his creditors, among them the plaintiff. Plaintiff also has a reasonable likelihood of prevailing on its direct claim against Gagua, who appears to have aided and abetted Hannon in an attempt to defraud his creditors, including plaintiff.

“… The evidence before this Court supports a finding that Hannon transferred money to Gagua when he contributed $41,500 toward the purchase price and that the purpose of this transfer was to place it out of reach of creditors, including the plaintiff. As to the money coming from Agritech [Inc.], this Court does not have to conclude that Agritech is Hannon’s alter ego. Rather (as plaintiff argued), an attachment can be supported by viewing Agritech as an asset of Hannon. Hannon as its sole shareholder has the exclusive right to monies in Agritech’s bank account, which essentially represents Hannon’s equity interest in the company. Hannon used that bank account as his own personal piggy bank, drawing down funds to improve on the Uxbridge House. Title to the house was placed in the name of Gagua in an effort to keep this asset out of the hands of creditors.

“This Court is also more inclined than it had been previously to conclude that there is no real distinction between Agritech and Hannon. Although it had previously dismissed Agritech from the case, it is becoming more and more apparent to this Court that Hannon is using the corporate structure as a way to place his assets out of reach. In essence, the company appears to serve as a repository for monies that, if they went to Hannon directly, would be subject to a trustee process attachment. Hannon then uses these monies to pay personal expenses and to enhance the value of an asset ( Uxbridge House) which he effectively controls, at the same time that he arranges to have title to this asset placed in the name of his girlfriend Gagua. Gagua appears only too willing to assist Hannon in this apparent fraud, exposing herself to direct liability in this case as a defendant. At this point, this Court has reason to question the credibility of both Hannon and Gagua. Their denials of any wrongdoing are thus becoming increasingly hard to swallow.”

ABCD Holdings, LLC v. Hannon, et al. (Lawyers Weekly No. 09-035-17) (7 pages) (Sanders, J.) (Suffolk Superior Court) (SUCV2016-1840-BLS2) (Oct. 20, 2017).