# Landry v. Bacon

> Superior Court of Maine · January 29, 2018

URL: https://www.frixlaw.com/law-library/cases/10811740

## Case

- **Court:** Superior Court of Maine
- **Decided:** January 29, 2018
- **Precedential status:** Unpublished
- **Opinion:** Opinion
- **Judges:** Nancy Mills
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10811740

## How later opinions describe it (automated extraction)

- holding that there was no evidence in the record on which a justice, presiding over a hearing on a motion for a new trial, could base a finding of witness unavailability

## Opinion text

STATE OF MAINE SUPERIOR COURT
CUMBERLAND, ss CIVIL ACTION
DOCKET NO . CV-14-263 /

DONALD LANDRY,

Plaintiff

v. JUDGMENT Cumt:;,~~~, ss,
~FClerk's
MAINE
f\lJ:

WILLIAM BACON,
JAN vmc;e
)J, 2 9 2018

Defendant RECl ffn:0
On November 6-7, 2017, jury-waived trial was held on plaintiff's complaint, in which

plaintiff alleges defendant committed fraud and conversion. Both parties appeared and were

represented by counsel. For the following reason,judgment is entered in favor of defendant

FACTS

Plaintiff is 53 years old and lives in Falmouth . His employment has centered on computer

information systems. He has been employed at UNUM, Wright Express, Dartmouth Hitchcock

Medical Center and, currently, at Berry Dunn. Plaintiff is twice divorced. His second wife was

Tanya Bacon, defendant's sister. During that marriage, which took place in 2006, plaintiff got to

know defendant and became familiar with his voice.

Plaintiff did not perform any credit or background checks on Ms. Bacon prior to the

marriage. He did not inquire about the financial details of her prior divorce. She was employed

at a school, rented her home, owned her car, and had $30,000.00 in the bank. He had no reason

not to trust her. The two discussed finances and she wanted to manage their finances. Ms.

Bacon stated she had bookkeeping experience. Plaintiff was the principal income earner but
agreed to Ms. Bacon's proposal because it would be one fewer thing he had to do. Ms. Bacon

monitored the bank accounts, paid the bills, handled the taxes, and took care of the mail.

Plaintiff and Ms. Bacon lived in Windham. Ms. Bacon began working for her parents in

their hearing aid business and earned approximately $40,000.00 annually. Plaintiff worked for

Wright Express from 2004 until 2009 and earned $95,000.00 annually. They shared bank

accounts at TD Bank North and USAA. When statements from these institutions arrived in the

mail, plaintiff left them on the kitchen table for Ms. Bacon.

Plaintiff opened a 401K retirement plan with Fidelity Investments in early 1987 while

employed at UNUM. He made no further contributions to the plan after he left that employment

in 2004 and did not contribute during the marriage. Plaintiff did not give Ms. Bacon his user

identification or password for the Fidelity account. On March 14, 2007, plaintiff rolled over the

401K plan to an IRA and withdrew $100,000.00 to pay off the home equity line of credit. (Pl.'s

Ex. 2.) He made no further withdrawals. Plaintiff called Fidelity and accessed his account on

October 18, 2007 but did not remember the reason for doing so and did not look at the details of

the account at that time. (Pl.' s Exs. 6, 8, 27 .)

The Fidelity account was accessible on line. Plaintiff specified he wanted to receive

statements electronically. (Pl.' s Ex. 26, 1757 .) There was no beneficiary designation for the

Fidelity account. (Pl.' s Ex. 26, 1757 .) Dividends were reinvested.

From 2007 to 2010, plaintiff had many things to deal with, including five children. He

was working around the clock at Wright Express. In 2008, Ms. Bacon told plaintiff she had a

pituitary tumor that required chemotherapy. Plaintiff did not believe her because she "lied

profusely" but he was not allowed to meet with her doctors. Also in 2007-2008, he faced a

custody dispute with his first wife with regard to his three daughters. He was required to

2
disclose to the court all of his assets. He assumed that Ms. Bacon prepared the disclosure

document and he signed it. His children began living with their mother after the dispute. Until

June 2018, plaintiff is ordered to pay to his first wife child support of $900.00 per month. He

never checked his account balance and did not pay attention to the account.

The Fidelity account was to be used for his retirement, twenty years in the future, and

then left to his daughters in his will. Even during the 2008 stock market crash, plaintiff did not

review his investments in the Fidelity account, even though his friends complained they had lost

substantial amounts of money from their investment accounts.

Plaintiff and Ms. Bacon moved to New Hampshire so she could be closer to her

grandmother, who was ill. Plaintiff began employment at Dartmouth Hitchcock. He made a

round trip to Maine every other weekend to see his daughters. One of Ms. Bacon's sons was

diagnosed with Aspberger's and had difficulty in school. In 2010, Ms. Bacon was "supposedly"

diagnosed with bi-polar disorder and engaged in bizarre behavior toward plaintiff. He wanted to

leave her and suffered from depression. They attended marriage counseling briefly. Plaintiff saw

a counselor with his daughters. Plaintiff and Ms. Bacon separated in late 2012.

Plaintiff saw his counselor, Faith Caplan, frequently. At her suggestion, plaintiff set up

his own bank accounts and arranged his own budget. In September 2012, he called Fidelity

about his retirement account but was unable to access the account. He was told to go to a branch

of Fidelity because he had no information about the account. He went to the Portland branch. He

called Fidelity again in late September 2012, explained the situation and asked for, at least, the

balance, which was $215.00. (Pl.'s Ex. 16.) Plaintiff responded that there was more than

$200,000.00 in the account.

3
After learning about the Fidelity account balance, plaintiff changed his address to his

employment address for mail from Fidelity and made other requests. (Pl.'s Exs. 17, 19-20.)

Plaintiff was unaware that Ms. Bacon had changed the email address on the Fidelity account

from plaintiff to Ms. Bacon or that the pin had been changed. (Pl.'s Exs. 3-4.) Plaintiff learned

about these events when he received documents from Fidelity after he learned the Fidelity

account had been drained. He also learned that on November 5, 2007, Ms. Bacon called Fidelity

but was unable to access the account and was told her husband had to call Fidelity. (Pl.' s Ex.

28 .) On November 7, 2007, a male called Fidelity and identified himself as plaintiff and

reestablished the pin for the account. Plaintiff identified the voice on the recording of the call as

defendant's voice. (Pl.'s Ex. 29.) Defendant denied making the call. During their depositions,

Lee Julich, defendant's aunt, and Aaron Green, Ms. Bacon's first husband, also identified the

voice on the recording as defendant's voice. (Julich Dep. 21, 23-24, 35-36; Green Dep. 16, 19­

20 .) Plaintiff first heard these recordings in March 2013.

As a result of the calls to Fidelity on March 5 and 7, 2007, the pin for the Fidelity account

was reestablished and the email address was updated to Ms. Bacon's address. (Pl.'s Exs. 12-13.)

On January 25, 2008, Ms. Bacon was named as beneficiary for the account. (Pl.'s Ex. 14.)

Plaintiff did not know about any of these changes until he began his investigation after he

learned the account balance in 2012. After the November 7, 2007 call until August 13, 2008,

$193,700.00 was removed from the Fidelity account. (Pl.'s Ex. 21; Sikowitz Dep. 30.) At the

time plaintiff accessed his Fidelity account on October 18, 2007, $83,250.00 had been withdrawn

from the accmwt. (Pl.'s Ex. 21.)

If the funds had remained in the account, the value of the account would have been

$304,398.00 as of January 17, 2014. (Sikowitz Dep. 36.) The actual value of the account on that

4
date was $277.26. (Sikowitz Dep. 37 .) The total lost opportunity to plaintiff's Fidelity account

was $304,121.00. as of January 17, 2017 and $305,255.00 as of April 25, 2017. (Sikowitz Dep.

40, 57 .)

The funds were transferred to TD Bank North or USAA. (Def.'s Ex. 4.) The TD Bank

North account# 9952 was solely in plaintiff's name. (Def.'s Ex. 4.) The USAA account was in

the names of plaintiff and Ms. Bacon. (Defs.'s Ex. 5.) Although plaintiff challenged at trial the

payments made from these accounts, household bills clearly were paid from the accounts. Two

checks were written to defendant in 2007 from the USAA and TD Bank North accounts. One

check was for a birthday present for defendant's son and one was for a medical procedure for

defendant's wife. He received no other funds from the Fidelity account.

Plaintiff expected the expenses for his family of seven to be paid from the approximately

$5,000.00 deposited each month from his employment. He did not recall ever discussing

household expenses with Ms. Bacon. She ran the finances and "that's the way it was."

Plaintiff did not review the Fidelity records of withdrawals from the account or the

records from the TD Bank North or USAA accounts until 2012, when he learned the balance of

the Fidelity account and began his investigation. He agreed the records were sent to his address

and he had the opportunity to review the records, including records of overdraft fees assessed.

Plaintiff also did not receive emails from Fidelity about his account, although he agreed notices

were to be sent monthly to his email address . The email address given was his UNUM address

and he had left that job and not changed the address. He did not recall seeing tax statements from

Fidelity for 2007 and onward. He did not review W2s or tax returns before they were submitted.

Plaintiff did not review any ATM receipts , which show the amount of the withdrawal and the

balance in the account. Plaintiff was unaware until 2012 that there were ongoing disputes with

5
the Internal Revenue Service during 2007-2008 and 2010 through 2013. Plaintiff did not change

his password for the Fidelity account until 2012.

In 2013, plaintiff sued Fidelity in a Financial Industries Regulatory Authority dispute.

(Def.'s Ex. 9.) Plaintiff alleged that there was no reason "why Fidelity should have allowed

anyone other than Mr. Landry to access the Account, make trades, change account information,

or make withdrawals." Plaintiff stated he "was not managing or monitoring the Account."

Plaintiff further alleged:

Fidelity had inadequate compliance policies and procedures to prevent
unauthorized account activity, failed to follow its compliances policies and
procedures, or both. Either there was no account supervision or if there
was supervision it was inadequate. Fidelity's failure to stop unauthorized
withdrawals from the account and to notify Mr. Landry in a timely manner
is inexcusable. The duty of the broker-dealers to obtain customer
authorization before making trades is among the most basic duties of a
broker-dealer. Similarly, the duty to prevent unauthorized access by a
third party to trade a customer's funds, much less misappropriate those
funds, is among those basic duties as well.

(Def.'s Ex . 9; see Def.'s Exs. 10,. 12.) Plaintiff sought actual damages of $272,450.00, punitive

damages, interest, attorney's fees, and costs. (Def.'s Ex. 9.) Plaintiff received a gross arbitration

award of $125,140.78 plus interest at the New Hampshire statutory rate. (Pl.'s Exs. 33-34.) The

other relief requested was specifically denied. (Pl.'s Ex. 33.) After attorney's fees were paid,

plaintiff received $78,000.00. (Pl.'s Ex. 35.) Plaintiff agreed at trial that Fidelity did not follow

appropriate procedures in allowing access and changes to plaintiff's account and its actions were

not justifiable.

When plaintiff and Ms. Bacon divorced, the divorce decree provided that she would pay

$65,000.00 to plaintiff over twelve years. (Pl.'s Ex. 36.) She has made no payments. Plaintiff

intends to proceed in court against Ms . Bacon with an attorney in New Hampshire.

6
Ms. Bacon was not present to testify at trial. Plaintiff and his attorneys attempted to

locate her through search engines and background checks to determine her physical location.

New Hampshire attorneys attempted unsuccessfully to serve her at her residence in Concord,

New Hampshire. Phone calls were made to her but she did not respond. The New Hampshire

attorneys sent an email on the first day of trial and indicated she worked for Phillips Academy in

Massachusetts.

Raymond Williams is a patrol sergeant with the Windham Police Department. In

February 2013, he received a complaint from plaintiff regarding the Fidelity account. On August

15, 2013, he met with Ms. Bacon, along with Detective Hanover. Sergeant Williams recorded

the conversation about plaintiff's Fidelity account. It was his regular practice to record

interviews during an investigation. He kept the recording in a folder on his computer in the

course of his regularly conducted investigative duties as a law enforcement officer.

During the interview, Ms. Bacon admitted that she asked defendant to call Fidelity

because she could not access the funds. She did not know why she did not ask plaintiff to access

the account. She withdrew the Fidelity account funds and used them to supplement plaintiff's

income and to pay household expenses. She said the custody dispute with plaintiff's first wife

was becoming expensive with two attorneys and a guardian ad litem. She stated she had not

spoken to defendant in three years because they do not get along but that he did not benefit from

the Fidelity funds. Sergeant Williams was given the audio tape from Fidelity of the call

purportedly from plaintiff requesting to reestablish his pin number and played that for Ms.

Bacon. She identified the voice as her brother's voice. Nothing about the recording of the

interview with Ms. Bacon indicates a lack of trustworthiness.

7
CONCLUSIONS

1. Sergeant Williarns' s Testimony about Toyna Bacon's Statements

Under the Rules of Evidence, a witness is unavailable when she "is absent from the

hearing and the proponent of a statement has been unable to procure the declarant's attendance ..

. by process or other reasonable means." Fed. R. Evid. 804(a)(5). Maine Rule of Evidence

804(a)(5) "requires that the proponent of [an out of court] statement make a showing of

reasonable effort or good faith attempt to procure the attendance of the witness before that

witness may be declared unavailable . . . ." State v. Preston , 521 A.2d 305, 307 (Me. 1987)

(holding that there was no evidence in the record on which a justice, presiding over a hearing on

a motion for a new trial, could base a finding of witness unavailability); see also NLRB v.

A ugusta Bakery Corp., 957 F.2d 1467, 1480 (7th. Cir. 1992) (witness's affidavit was

inadmissible pursuant to Fed. R. Evid. 804(a)(5) because defendant's conclusory offer of proof

provided nothing except the plain assertion that the witness was unavailable; defendant failed to

explain why the witness was unavailable, or to show that defendant had attempted to procure the

witness's presence). The burden is on the offering party to supply such justification. See Moore

v. Mi ssissippi Valley State Uni versity , 871 F.2d 545, 552 (5th Cir. 1989) (plaintiff offered

nothing except the plain assertion that a witness was unavailable, made no effort to explain the

unavailability, offered no explanation to the trial court, and thus failed to meet her burden; trial

court did not err in excluding the witness's testimony by deposition) .

On this record, Ms. Bacon was unavailable for trial. Sergeant Williams was qualified to

establish that the tape of his interview with Ms. Bacon was a record of a regularly conducted

activity by the Windham Police Department. M.R. Evid. 803(6). Additionally, Ms. Bacon's

statements were against her interest. M.R. Evid. 804(b)(3)(A).

8
The court took de bene esse the testimony of Sergeant Williams about Ms. Bacon's

statements. That testimony is admissible.

2. Assessment of Credibility

Both plaintiff and defendant described Ms. Bacon's character very negatively, using

words such as "unstable," "incredibly dishonest," and "snake" and noted that she "lied

profusely." Plaintiff did not believe the medical diagnoses Ms. Bacon told him she had been

given. Plaintiff now, however, asks the court to accord significant weight to her out of court

statements; the court declines to do so. Further, although plaintiff succeeded in offering into

evidence the deposition testimony of Lee Julich and Aaron Green, judging credibility from the

written page is difficult. Finally, the hostility plaintiff demonstrated toward defendant at trial,

which resulted on one occasion in the court's admonishment of plaintiff, did not enhance his

credibility with the court.

3. Statute of Limitations

In general, all civil actions "shall be commenced within 6 years after the cause of action

accrues and not afterwards." 14 M.R.S. § 752 (2017). "If a person, liable to an action

mentioned, fraudulently conceal the cause of action from the person entitled thereto, or if a fraud

is committed which entitles any person to an action, the action may be commenced at any time

within 6 years after the person entitled thereto discovers that he has just cause of action." 14

M.R.S. § 859 (2017). Pursuant to section 859, the statute of limitations begins to run "when the

existence of the cause of action or fraud is discovered or should have been discovered by the

plaintiff in the exercise of due diligence and ordinary prudence." Kobritz v. Severance, 2007

ME 3, ~ 13,912 A.2d 1237.

9
The Law Court has employed the concept of inquiry notice when determining whether a

plaintiff exercised reasonable diligence in discovering fraud. See Drilling & Blasting Rock

Specialists. Inc. v. Rheaume, 2016 ME 131, ~~ 26-27, 147 A.3d 824. "One will not be charged

with knowledge of fraud merely because he has had the opportunity or power to investigate the

fraud; he must be cognizant of facts that would have caused an ordinary, reasonable person to

investigate." Id.~ 27 (quoting L.C.L Theatres, Inc. v. Columbia Pictures Indus., Inc., 566 F.2d

494,497 (5th Cir. 1978)) (emphasis omitted).

In J. Geils Band Employee Benefit Plan v. Smith Barney Shearson. Tac., plaintiffs alleged

fraud and breach of fiduciary duty under the Employment Retirement Security Act. That Act has

a six-year statute of limitations unless plaintiffs demonstrated fraudulent concealment, which

tolls the statute until plaintiffs, in the exercise of reasonable diligence, discovered or should have

discovered the alleged fraud. See J. Geils. Band Employee Benefit Plan v. Smith Barney

Shearson, Inc., 76 F.3d 1245, 1251-52 (1st Cir. 1996). The court determined plaintiffs were on

discovery or inquiry notice of the alleged violations more than six years before plaintiffs filed

their complaint. J. Geils Band, 76 F.3d at 1250, 1260. The court concluded that plaintiffs'

receipt of prospectuses put plaintiffs on notice of the alleged misrepresentations of the

transactions. J. Geils Band, 76 F.3d at 1256.

In Cook v. Avien, Jnc., the court determined plaintiffs' action to recover the purchase

price of securities was barred by the statute of limitations. The financial data available to

plaintiffs would have alerted a reasonable person to the possibility of misleading statements or

omissions with regard to the sale of the notes. See Cook v. Avien. Inc., 573 F.2d 685,697 (1st

Cir. 1978). The court stated: "[t]he exercise of reasonable diligence requires an investor to be

reasonably cognizant of financial developments relating to his investment, and mandates that

10
early steps be taken to appraise those facts which come to the investor's attention ... even where

facts are fraudulently withheld a plaintiff cannot be allowed to ignore the economic status of his

or her investment." Cook v. Avien, Inc ., 573 F.3d at 698.

In Salois v. Dime Sav. Bank, FSB, plaintiff s_ecured residential loans from defendants and

claimed defendants fraudulently concealed the negative amortization feature of the loans. Salois

v. Dime Sav. Bank. FSB, 128 F.3d 20, 24 (1st Cir. 1997). The court concluded that plaintiffs'

contract and fraud claims were barred by the statute of limitations because the loan documents

and the monthly statements sent to plaintiffs contained the information necessary to put plaintiffs

on inquiry notice of fraudulent conduct. Salois, 128 F.3d at 26. The court stated that tolling a

federal statute of limitations is "appropriate only when the circumstances that cause a plaintiff to

miss a filing deadline are out of his hands." Salois, 128 F.3d at 25.

The call to access plaintiff's Fidelity account was made on November 7, 2007. The funds

were withdrawn between November 9, 2007 and August 13, 2008. Plaintiff learned the funds

had been withdrawn in late September 2012. Plaintiff listened to the recording of the November

7, 2007 call in March 2013. Plaintiffs complaint was filed on June 5, 2014.

The court disagrees with plaintiff's argument that the facts of this case are "entirely

distinguishable" from the facts in the J. Geils Band case. Throughout this time period, Fidelity

sent electronically to plaintiff monthly statements that showed the withdrawals from the account.

Plaintiff did not change his email address with Fidelity when he changed jobs but he would not

have reviewed those statements if he had received them. Additionally, Fidelity statements could

have been accessed on line. Statements from USAA and TD Bank North that showed deposits

and checks written were sent monthly. Plaintiff left these on the table for Ms. Bacon. Plaintiff

did not review tax statements from Fidelity, tax returns, W2s, ATM receipts, or documentation

11
regarding his assets required to be filed in court. All of the information to alert plaintiff that his

Fidelity account balance was decreasing was available to him at any time from March 7, 2007

onward. See J. Geils Band, 76 F.3d at 1256. Plaintiff's fraud claim is barred by the six-year

statute of limitations. 14 M.R.S. § 752.

4. Judicial Estoppel

"To judicially estop an entity from asserting a position in a subsequent legal action (1)

the position asserted in the subsequent legal action must be clearly inconsistent with a previous

position asserted; (2) the party in the previous action must have successfully convinced the court

to accept the inconsistent position; and (3) the party must gain an unfair advantage as a result of

their change of position in the subsequent action." Linneban Leasing v. State Tax Assessor,

2006 ME 33,, 25, 898 A.2d 408-,-4-M (citing New Hampshire v. Maine, 532 U.S. 742, 750-51

(2001)). These factors are "neither inflexible prerequisites nor an exhaustive formula." Me.

Educ. Ass'n v. Me. Comty. College Sys . Bd. of Trs ., 2007 ME 70,, 17,923 A.2d 914 (citing

New Hampshire v. Maine, 532 U.S. 742, 749-51 (2001)). "The purpose of the [judicial estoppel]

doctrine is to protect the integrity of the judicial process." Id.

Other jurisdictions have applied the doctrine of judicial estoppel to prevent a party in a

civil suit from making an argument contrary to one made in an arbitration proceeding. See Lydon

v. Boston Sand & Gravel Co., 175 F.3d 6, 12-13 (1st Cir. 1999) (dual goals of judicial estoppel

are "to maintain the integrity of the judicial system and to protect parties from opponents' unfair

strategies"); Speroni S .P.A. v. Percept.ran. Inc., 12 Fed. Appx. 355, 358-59 (6th Cir. 2001)

(inconsistencies between plaintiff's positions was "a knowing assault upon the integrity of the

judicial system"); Blanchette v. School Comm., 692 N.E.2d 21, 27-28 (Ma. 1998) (not

inconsistent for plaintiff to seek damages in court that were not available to her in arbitration).

12
In this case, plaintiff appears to allege that defendant made a false statement of material

fact to Fidelity, plaintiff's agent; defendant knew at the time the statement was false; defendant

intended that Fidelity would act on the false statement; and Fidelity justifiably relied on the false

statement, resulting in injury to plaintiff. See USA Flea Mkt., LLC v. EVMC Real Estate

Consult.ants, Inc ., 2006 U.S. Dist. LEXIS 71326 * 9; Grover v. Minette-Mills, Inc. 638 A.2d 712,

716 (Me. 1994). This is inconsistent with plaintiff's position in the complaint against Fidelity,

which resulted in an arbitration award in plaintiff's favor for damages. Plaintiff is judicially

estopped from asserting that Fidelity justifiably relied on any statement by defendant.

5. Fraud

Plaintiff has failed to prove the elements of fraud by clear and convincing evidence:

(1) that defendant made a false representation, (2) of a material
fact, (3) with knowledge of its falsity or in reckless disregard of
whether it is true of false, (4) for the purpose of inducing plaintiff
to act in reliance upon it, and (5) plaintiff justifiably relied upon
the representation as true and acted upon it to the plaintiff's
damage.

Rand v. Bath Iron Works Corp., 2003 ME 122,, 9, ~32 A.2d 771.

6. Conversion

Plaintiff has failed to prove the elements of conversion,1 which include:

(1) a showing that the person claiming that his property was
converted has a property interest in the property; (2) that he has the
right to possession at the time of the alleged conversion; and (3)
that the party with the right to possession made a demand for its
return that was denied by the holder.

Withers v. Hackett, 1998 ME 164,, 7, 714 A.2d 798. In any event, 14 M.R.S. § 859 "extends

only to causes of action sounding in fraud or fraudulent concealment." Drilling & Blasting Rock

Specialists, Inc., 2106 ME 131,, 33, 147 A.3d 824; 14 M.R.S. § 859. Plaintiff's claim for

1
Plaintiff labels count II as "Conversion/Theft" but specifies conversion in the summary of the complaint.
(Comp!.! 2.)

13
conversion does not benefit from section 859 and is barred by the six-year statute of limitations.

14 M.R.S. § 752.

The entry is

Judgment is entered in favor of Defendant William Bacon and
against Plaintiff Donald Landry on Plaintiff's Complaint.

Date: January 29, 2018
Nancy Mills
Justice, Superior Court

CUM CV-14-263

14

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10811740. Public record. Not legal advice.