- 4 -
thereunder. A handwritten notation that the contract was
irrevocable was added to certain of the forms, allegedly for
reasons related to Medicaid eligibility. Regardless of such
language, however, it was petitioner’s practice to indicate to
purchasers that they had the right to cancel at any time and
would receive their money back.2
The experience of petitioner has been that only a very small
percentage of preneed contracts are in fact canceled. The record
indicates that during the period from approximately 1997 through
the time of trial in 2003, six contracts were canceled.3 The
amounts paid thereon were refunded, and on certain occasions the
refunds also included an interest component based on “kind of a
guess” about prevailing rates.
During the years in issue, petitioner maintained a business
checking account and the following investments: A Putnam
Investments mutual fund account, a Merrill Lynch ready asset
account, Fleet Financial shares, Massachusetts Savings
2 The contractual notations were ineffective given their
sham nature and the explicit directives of Massachusetts law
discussed below. See Comdisco, Inc. v. United States, 756 F.2d
569, 576 (7th Cir. 1985) (“in general, a contract entered in
violation of statutory or regulatory law is unenforceable”).
3 The parties stipulated: “Of the pre-need funeral
arrangements in existence on January 1, 1996, six have been
cancelled. Attached hereto and marked as Exhibits 19-J through
24-J are copies of petitioner’s business records related to these
pre-need arrangements.” However, the referenced exhibits bear
contract dates spanning the years 1991 to 1999 and cancellation
dates spanning years 1997 to 2003.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011