Mueller v. Mueller

• Decision Date: 27 July 2012
• Docket Number: No. 11–235.,11–235.
• Parties: Evelyn O. MUELLER v. Juliann H. MUELLER, Individually, and as Executrix and Beneficiary of the Estate of Joseph F. Mueller, and/or Trustee and Beneficiary of the Joseph F. Mueller Revocable Trust, et al.
• Court: Vermont Supreme Court

54 A.3d 168

2012 VT 59

Evelyn O. MUELLER

v.Juliann H. MUELLER, Individually, and as Executrix and Beneficiary of the Estate of Joseph F. Mueller, and/or Trustee and Beneficiary of the Joseph F. Mueller Revocable Trust, et al.

No. 11–235.

Supreme Court of Vermont.

July 27, 2012.

Allen C.B. Horsley of Barr & Associates, P.C., Stowe, for Plaintiff–Appellant.

Jesse D. Bugbee of Kissane Associates, St. Albans, and Brad A. Compston of Konowitz & Greenberg, P.C., Wellesley Hills, Massachusetts, for Defendant–Appellee.

Present: REIBER, C.J., DOOLEY, SKOGLUND, BURGESS and ROBINSON, JJ.

DOOLEY, J.

¶ 1. This case derives from a separation agreement made thirty-seven years ago between a now-deceased husband and plaintiff, his first wife. Plaintiff contends that her ex-husband promised to devise to her certain assets upon his death, and she brings various claims for equitable relief against defendant, her ex-husband's second wife, who survived him. The superior court concluded that plaintiff's claims were barred by the statute of limitations. On appeal, plaintiff argues that this conclusion was erroneous because, under the governing Massachusetts law, claims based on a contract to make a will do not accrue until the promisor's death. Although we accept plaintiff's legal premise, we do not accept that it governs this case. Accordingly, we affirm.

¶ 2. Plaintiff Evelyn Mueller is the first wife of the late Joseph Mueller. The couple was married for thirty-one years, and they had nine children. During their marriage, Joseph was an employee, and at some point the president, of a Massachusetts company called Adolph Bauer, Inc. (ABI). The couple was divorced on September 22, 1975. In July 1976, Joseph married defendant Juliann Mueller.

¶ 3. Evelyn and Joseph's divorce order from the Massachusetts Probate Court was based on—and incorporated—the terms of a separation agreement entered into on August 8, 1975. The current dispute arises out of Article II of the separation agreement, entitled “Support of Wife and Children.” The relevant portions of this article read:

As long as the Wife shall remain unmarried, the Husband shall pay to her during her lifetime as alimony for her support and the support and education of their children, the sum of Four Hundred dollars ($400) per week plus an additional amount sufficient to pay Federal and State income taxes....

If at any time while Husband is alive, he sells any or all of his stock in Adolph Bauer, Inc., its successors or assigns or any corporation from the partial or complete sale, distribution or liquidation of said assets, Husband agrees that he will include in his will and/or any trust a provision devising all his rights, title and interest in such assets, i.e., Adolph Bauer, Inc., to Evelyn Mueller and, if Wife does not survive Husband, then in equal shares to his surviving children....

¶ 4. In addition, the separation agreement included, among other things, a conveyance of the marital home, and a division of personal property. The agreement also stated, “This agreement is executed in the Commonwealth of Massachusetts and shall be construed to take effect under and in accordance with the laws of said Commonwealth.”

¶ 5. In 1983, plaintiff filed a contempt claim in the Massachusetts Probate Court, alleging that Joseph was in violation of the divorce order—in particular, Article II of the separation agreement—by failing to set up a trust to receive and administer the proceeds of any sale of his ABI stock. Because Joseph was still employed at ABI and he had not sold his ABI stock, the complaint was dismissed without prejudice as premature.

¶ 6. Not long after this suit, however, Joseph did begin the retirement process. On January 30, 1985, Joseph entered into a stock redemption agreement with ABI, in accordance with which he agreed to sell his stock back to the company for a price of $700,128. ABI paid him $50,000 up front with the balance payable in monthly installments of $10,214.49 over eight years (ninety-six months at eleven percent interest). ABI made these monthly payments until it paid off the balance a few months early, in late 1992. When Joseph retired in 1985, he also cashed in a realty trust that he held in connection with property owned by ABI for an estimated payout of $193,000. Additionally, he rolled over his retirement accounts, then worth $218,394.

¶ 7. Sometime in 1984, as Joseph and defendant began the transition into retirement, defendant purchased land in Stowe, Vermont. They built a new home there, which was completed in 1986. Title to the land and house remained solely in defendant's name. The cost of these acquisitions was roughly $350,000, part of which was financed by a mortgage and part of which may have come from proceeds of the ABI stock buyback. The superior court found that Joseph used at least part of the stock sale proceeds for living expenses at some point or another.

¶ 8. After Joseph stopped receiving income from the ABI note in late 1992, he began to claim “financial difficulties” and repeatedly requested that plaintiff agree to a reduction in alimony. In January 1993, Joseph wrote to plaintiff seeking a 29% reduction. In seeking this modification, Joseph explained,

As of January 1993, the Bauer payments to me came to an end. My income has been reduced by 58% and I will not have sufficient funds to continue the payments to you at the current level.

....

... [W]ith-in a year of my retirement, the capital gain tax increased by 13%. This inflated the taxes on the Bauer payments substantially.

¶ 9. In a follow-up letter, Joseph further explained, “[t]he pre-payment by Bauer is ballooning my taxes.” The superior court concluded that this exchange would at least have put plaintiff on “inquiry notice” that Joseph may have sold his ABI stock.

¶ 10. Plaintiff never agreed to a reduction, and Joseph continued to pay alimony as agreed. In 2003 and 2004, plaintiff and Joseph again exchanged letters concerning the monthly payments. During this exchange, plaintiff twice described her understanding of the separation agreement. In May 2003, plaintiff stated, “ [A]ll money from A. Bauer, Inc., was agreed to come to me .... You should have put it in a trust, immediately, and you could have lived comfortably off the interest.” In April 2004, plaintiff again explained,

According to the terms of the Separation Agreement, the principal of your equity interest in Adolph Bauer was to be either held in trust or outlined in your will for one sole purpose only: to assure the continuation of your obligation to me, and in the event of my death to be split among the remaining of our children. The principal was to be used for no other purpose.

Although he replied in writing several times, there is no evidence that Joseph ever commented on plaintiff's description of the applicable provisions in the separation agreement.

¶ 11. Joseph died in December 2007. Under his 2003 will, Joseph left certain personal articles to defendant,¹ a bequest of $1000 to each of eight of his children with plaintiff, and the remainder to a revocable trust created at the same time the will was signed. The will did not mention ABI stock or the proceeds from the sale of ABI stock and left nothing to plaintiff. Joseph never put any ABI stock sale proceeds in trust to hold for plaintiff. The will was never probated because defendant represented that there were no assets of the estate. There were, however, joint accounts with defendant and accounts in which defendant was the named beneficiary so the funds went directly to defendant without going through probate. Defendant put all these funds into the Juliann Mueller revocable trust, which had been created at the time of the signing of Joseph's will in 2003 but contained no assets except for ownership of the Stowe home and land. Following Joseph's death, the revocable trust had net assets, excluding the real property, of $392,742. The home and land are estimated to have a value of $550,000, subject to $112,000 in outstanding loans.

¶ 12. Plaintiff brought suit against defendant personally, as trustee and beneficiary of the Juliann Mueller revocable trust, as trustee and beneficiary of the Joseph Mueller revocable trust, and as executrix of Joseph's estate. ² In essence the complaint alleged that defendant had assets from the sale of the ABI stock and is unjustly enriched by them and that plaintiff is entitled to restitution for “any property which should have been property of Evelyn, but which has been retained by Juliann.” The complaint therefore sought various equitable remedies, including declaratory relief, imposition of a constructive trust, and equitable accounting.

¶ 13. After holding a trial, the superior court entered judgment for defendant on two primary grounds and an alternate ground. First, the superior court concluded that the complaint was barred by the statute of limitations. The court reasoned that plaintiff should have known by 1993 that something had happened regarding the ABI stock that implicated her rights under the separation agreement. Because the claims asserted were for equitable relief under Vermont law, the court applied the Vermont statute of limitations. Applying Vermont law, the court held that a cause of action had accrued at that time, and that the suit was required to be commenced within six years therefrom under 12 V.S.A. § 511.

¶ 14. Second, the superior court stated that, even if the statute of limitations did not control, it would reach the same result under the equitable doctrine of laches. The court determined that plaintiff had “no cogent, or persuasive explanation for the delay of 15 years before seeking legal relief in court.” This delay, the court reasoned, caused defendant substantial prejudice in that it was now virtually impossible to determine the intentions of the parties in 1975 or to unravel the financial transactions in order to trace the proceeds of the ABI stock sale.

¶ 15. A central...