Barlett v. Fitts

• Decision Date: 17 May 2007
• Docket Number: C.A. No. PC 00-2002
• Parties: ANN STRAUSS BARTLETT, Plaintiff v. PETER C. FITTS, Defendant
• Court: Rhode Island Superior Court

ANN STRAUSS BARTLETT, Plaintiff
v.
PETER C. FITTS, Defendant

C.A. No. PC 00-2002

Superior Court of Rhode Island

May 17, 2007

DECISION

SAVAGE, J.

This action concerns a dispute between former spouses over the ownership of stock. Plaintiff Ann Strauss Bartlett^[1] claims a one-half interest in certain stock that her former husband, defendant Peter C. Fitts, transferred to the two of them jointly, without her knowledge, during their marriage and that he concealed from her prior to their divorce. She has filed an action for partition, conversion and an accounting, seeking legal and equitable relief to recover one-half of the stock, one-half of the stock dividends issued, and additional damages.

Fitts has asserted a plethora of affirmative defenses by which he seeks to defeat Bartlett's claims, including lack of subject matter jurisdiction, failure to state a claim, collateral estoppel and res judicata, laches, statutes of limitation, statute of frauds and release. Fitts also has filed a counterclaim seeking a declaration that he owns the shares exclusively, arguing that he intended to transfer the shares to his former wife only as a matter of convenience for tax purposes and not as a gift to her of a joint interest with right of survivorship. He further seeks specific performance to compel Bartlett to execute the documents necessary to remove her name from the disputed stock certificates so that he is permitted to sell, transfer or convey the shares as their exclusive owner.

For the reasons set forth in this Decision, this Court: (1) declares that Bartlett and Fitts own the disputed stock jointly; (2) orders a partition of the stock and the execution of documents to effectuate the transfer of one-half of the disputed shares to Bartlett and the remaining one-half to Fitts; (3) grants Bartlett a one-half interest in the dividends received by Fitts to date with respect to the disputed stock; and (4) denies her request for additional damages. This Court rejects all of Fitts's affirmative defenses and denies him relief with respect to his counterclaim.

I.

Factual Background and Procedural History

According to the Record of Stock, Fitts's parents gave him 82 shares of stock in the Standard Oil Company, a predecessor-in-interest to Exxon Mobil Corporation on May 1, 1963. (Pl.'s Exh. 1). On July 25, 1964, Fitts and Bartlett were married (Jt. Stip. of Facts ¶3). The Record of Stock further reflects a transfer of an additional 10 shares of Standard Oil Company stock from Fitts's parents to "Peter and Ann Xmas 1964." Id.

A Standard Oil Company stock certificate, dated December 1, 1964, certifies that Bartlett and Fitts are owners of 92 shares of stock and hold those shares as "JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON." (Jt. Exh. 2). That stock certificate further provides that the shares are "each transferable on the books of the Company in person or by duly authorized attorney upon the surrender of this certificate properly endorsed." Id.

In the Joint Statement of Facts, Fitts admits that his parents gave him certain shares of Standard Oil Company stock as a gift in 1963, that after he and Bartlett were married he placed some shares in his name and Bartlett's name jointly and that he never told Bartlett that he had placed any of the shares in their names jointly. (Jt. Stip. of Facts ¶¶1-5). This Court finds that Fitts placed, or consented to the placement of, a total of 92 shares of Standard Oil Company stock in the names of he and Bartlett jointly in 1964, during the course of their marriage, and that he did not inform his then-wife of these transfers. (Pl's Exhs. 102; Jt. Stip. of Facts ¶¶ 1-5).^[2]

The marriage between Bartlett and Fitts lasted over ten years before it ended in divorce. On December 20, 1975, the parties entered into a written separation agreement. (Jt. Stip. of Facts, Exh. A). The parties' divorce became final on March 15, 1977 through a judgment rendered by the Supreme Court of the State of New York. Fitts v. Fitts, C.A. No. 20137/76 (N.Y. S.Ct. 1977) (Jt. Stip. of Facts, Exh. B). In accordance with the parties' separation agreement, the Court awarded Bartlett custody of the two minor children of the marriage, awarded visitation to Fitts, and ordered support and maintenance to be paid by Fitts to Bartlett. Id. at 3-4. The Court decreed that the parties' separation agreement would survive and not merge into the judgment of divorce. Id. at 5. Hardly forthcoming about his assets, Fitts never disclosed the existence of the disputed shares during the proceedings that resulted in the parties' separation agreement and divorce. See Jt. Stip of Facts ¶ 8.^[3]

In 1978, however, Bartlett became aware that the disputed stock had been issued in the names of both she and Fitts. (Jt. Stip of Facts ¶8). That same year, Fitts had asked Bartlett to execute three stock powers to transfer to him the disputed shares. She declined to do so based on the advice of her counsel, Mary Benson. Id. ¶¶ 9-10, Exh. C. Since that time, Fitts has disputed Bartlett's claim of an ownership interest in the stock.

Also in 1978, Bartlett petitioned the Family Court of the State of New York for a modification of child support. See Brescia v. Fitts, C. A. No. F-1649-78 (N.Y. Fam. Ct. 1980) (Jt. Stip. of Facts, Exh. D). Fitts's child support payments had been set by the parties' separation agreement, but Bartlett complained that the financial needs of the children had outpaced the agreed upon amount. Id. The Family Court so found and increased the child support payments. Id. Fitts successfully appealed to the Appellate Division of the Supreme Court, see Brescia v. Fitts, 82 A.D.2d 803 (N.Y. App. Div. 1981) (Jt. Stip. of Facts, Exh. E), but the New York Court of Appeals reversed and remanded the case to the Appellate Division for further proceedings consistent with its decision. See Brescia v. Fitts, 56 N.Y. 2d. 132, 436 N.E.2d 518 (N.Y. 2d. 1982) (Jt. Stip of Facts, Exh. F). The parties did not litigate the issue of stock ownership or any other issue of property division at that time.

From 1978 through 1983, Bartlett was represented by attorney Douglas Hoyt and, in 1978, discussed with him the disputed shares. (Jt. Stip. of Facts ¶ 11). According to Bartlett, her attorney chose not to address that issue in the proceedings for modification of child support but intended to seek redress in a separate proceeding. In that time period, however, there is no evidence that her counsel ever pursued her legal remedies regarding the disputed shares.

In 1991, Bartlett attempted to claim her one-half interest in the stock. Id. ¶19. She obtained information from Exxon's transfer agent, First Chicago Trust Company of New York, regarding the number of shares that she and Fitts held jointly. Id.; see Def's Depo. at 9-10; Exh. 1 to Def's Depo. She then sought to have her name on the stock certificate changed to reflect her then-current name and requested that First Chicago divide the shares between she and Fitts, but to no avail.

Fitts advised her that he would not execute the form necessary to transfer to her a one-half interest in the shares, and he returned that form to her or her counsel. (Jt. Stip. of Facts ¶19). In 1991, Bartlett also engaged attorney Edward Kiley for the exclusive purpose of pursuing her stock claim. Id. ¶20. There is no evidence to suggest that she filed suit at that time. Bartlett finally filed suit in this Court on April 20, 2000. Id. ¶ 21.

Since 1963, Fitts has neither sold nor purchased any stock of Exxon Mobil Corporation or its predecessor in interest. Id. ¶ 22. Over time, by virtue of stock splits and other events, the number of the disputed shares held by him that are at issue has increased from 92 to 3136. Id. ¶ 27. These disputed shares have paid and continue to pay quarterly dividends. Id ¶ 23. The quarterly dividend checks are made payable to "Peter C. Fitts & Ann S. Fitts Jt Ten" and are delivered to Fitts's residence in Smithfield, Rhode Island. Id. Fitts has endorsed these checks typically with his name only and has deposited them into a bank account maintained in his name only; he has never signed Bartlett's name to any of the dividend checks. Id. ¶¶ 24-25. The parties have agreed, in their Joint Stipulation of Facts, to the amounts of the dividends received by Fitts annually, based on the issuance of 92 shares of stock by Standard Oil Company in 1964, from 1965 through the first quarter of 2004. (Jt. Stip. of Facts (Supp.) ¶ 1).^[4] They agree that those dividends total $55,985.06. Id. Fitts has paid and continues to pay income taxes on those dividends; Bartlett has never paid taxes on the dividends. (Jt. Stip. of Facts ¶ 26). There is no evidence before this Court as to the amount of any taxes paid.

In the instant proceeding, Bartlett asserts three claims in her second amended complaint. First, she asserts a claim for partition of the disputed shares and petitions this Court for an order directing Fitts to transfer one-half of the disputed shares to her. Second, Bartlett alleges that Fitts has converted her share of the stock dividends and wrongfully withheld those dividends from her; she seeks monetary damages to compensate her for her share of past dividends, along with interest, attorney's fees, and punitive damages. Third, and finally, Bartlett requests an accounting of the dividends, as she alleges that Fitts holds her share of the dividends in constructive trust for her as a fiduciary and that he should be compelled to return to her those dividends that are lawfully hers.

Fitts has answered her complaint, asserting twenty-one defenses. He also has asserted a counterclaim for declaratory relief, to seek to establish his right to total ownership of the disputed shares, and specific performance, to effectuate his alleged status as full owner of the stock.

Previously, the parties filed cross-motions for summary judgment, both of which...