Shattuck v. Peck, No. 11–145.

• Docket Nº: No. 11–145.
• Citation: 70 A.3d 922, 2013 VT 1
• Case Date: January 11, 2013
• Court: United States State Supreme Court of Vermont

70 A.3d 922
2013 VT 1

Victor J. SHATTUCK
v.
Donna Mae PECK.

No. 11–145.

Supreme Court of Vermont.

Jan. 11, 2013.

[70 A.3d 923]

Patricia G. Benelli and Amanda T. Rundle of Dakin & Benelli, P.C., Chester, for Plaintiff–Appellee.

Melvin Fink, Ludlow, and Michael Rose (on the brief), St. Albans, for Defendant–Appellant.

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

BURGESS, J.

¶ 1. Defendant Donna Mae Peck appeals from a superior court judgment granting plaintiff Victor J. Shattuck a writ of possession for the parties' former residence in Cavendish and denying defendant's counterclaim for an equitable interest in the Cavendish property and another former residence in Springfield. We affirm.

¶ 2. The facts as found by the trial court may be summarized as follows. The parties lived together for several years in defendant's mobile home located in Springfield, Vermont on a three-acre plot that defendant had purchased from her mother in 1988. The mobile home was purchased by defendant in 1994 with a $37,000 loan secured by the property. In 1999, some time after she was laid off from her job, defendant began to receive Social Security disability benefits of approximately $700 per month. Plaintiff worked during this time at a variety of jobs, although his primary employment was as a subcontractor installing cable services.

¶ 3. Between December 1997 and June 1999, plaintiff purchased two adjoining parcels of land in Cavendish for $8500 each. Plaintiff made most of the payments for the first parcel, but defendant made a significant financial contribution toward payment of the second parcel. In 2001, plaintiff conveyed the Cavendish properties to himself and defendant as joint tenants with rights of survivorship, and defendant conveyed the Springfield property to herself and plaintiff as joint tenants with

[70 A.3d 924]

rights of survivorship. The court found that the conveyances were made for estate planning purposes, and were “entirely donative in nature.”

¶ 4. In 2004, plaintiff invested approximately $50,000 and significant “sweat equity” in the construction of a home on the Cavendish property. Defendant contributed by cooking meals for construction crews, picking out decorative items, and doing some painting and finishing work. In July 2005, plaintiff signed a promissory note for a $90,000 loan to continue work on the house, and both plaintiff and defendant signed a mortgage as co-owners. The following month, the parties moved into the home's finished walk-out basement and rented the Springfield property to tenants. In August 2006, plaintiff obtained an additional $50,000 loan to complete construction of the residence. A month later, plaintiff took out a sizable loan that allowed him to pay off the previous two loans and provided him with an additional $30,000 in proceeds. He was the sole signer of the note and mortgage. The parties moved into the upstairs of the completed Cavendish house sometime in 2006.

¶ 5. On September 15, 2006, the same day that plaintiff signed the new loan and mortgage, defendant transferred her interests in both the Cavendish and Springfield properties to plaintiff, and the following month she quitclaimed her interest in the mobile home to him. Defendant claimed at trial that she was induced to make these transfers by plaintiff's fraudulent misrepresentation that she would lose her disability benefits if she retained title to the properties. The trial court found, however, that both parties believed that “it would be to their mutual financial advantage to transfer all of their real estate into the plaintiff's name,” as both “believed that these arrangements were likely to protect the defendant from any risk of losing her federal benefits because of having too many assets or too much income,” particularly from the rented Springfield property.

¶ 6. After the parties moved into the Cavendish property, defendant began to pay plaintiff between $600 and $700 in rent. The trial court found that, like the real estate transfers, the parties believed that the rental arrangement would benefit defendant financially by allowing her to claim a renter's rebate. Shortly after the move, plaintiff used a portion of the remaining proceeds from the loan to pay off the outstanding mortgage balance on the Springfield property, approximately $20,000. In February 2007, the parties executed wills that named each other as the residuary beneficiary of their respective estates.

¶ 7. The parties lived together in Cavendish until June 2010, when plaintiff decided to end their relationship. Following an angry confrontation, defendant obtained a relief-from-abuse order against plaintiff and was awarded sole possession of the Cavendish property. Plaintiff evicted the tenants and moved into the mobile home in Springfield.

¶ 8. Plaintiff then filed a complaint in superior court seeking to evict defendant from the Cavendish property. Defendant answered and counterclaimed, alleging that the Cavendish and Springfield properties were the subject of a partnership agreement between the parties, and requested a dissolution and accounting. Alleging that she had been induced to convey the Springfield properties by plaintiff's fraudulent misrepresentations, she also sought equitable relief through imposition of a resulting or constructive trust. She later claimed that the Cavendish property was also held in a constructive trust for her benefit.

¶ 9. Following a two-day evidentiary hearing in November 2010 and February

[70 A.3d 925]

2011, the trial court issued a written ruling in favor of plaintiff. The court found no persuasive evidence that the parties had entered into a partnership concerning the properties. Nor did the court find any basis to support the imposition of a resulting trust. Nor, finally, did the court credit defendant's claim that plaintiff had fraudulently induced the transfers, or her contention that plaintiff owed the defendant a “special fiduciary duty.” Accordingly, the court found no basis for imposition of a constructive trust. Consistent with these findings, the court issued a final judgment order granting plaintiff a writ of possession for the Cavendish property, requiring defendant to pay plaintiff rent of $560 per month until she left or was removed from the property, and denying defendant's counterclaims. This appeal followed.

¶ 10. On appeal, defendant contends that the trial court erroneously denied her request for equitable relief.¹ Our review is limited. “We review equitable remedies, like the creation of a constructive trust, for a trial court's abuse of discretion.” Weed v. Weed, 2008 VT 121, ¶ 16, 185 Vt. 83, 968 A.2d 310. This standard requires a showing that the court withheld its discretion entirely or exercised it on “clearly untenable” grounds. Id. (quotation omitted).

¶ 11. The circumstances under which a court may impose a constructive trust are broad and highly contextual. As we explained in Weed: “A court may impose a constructive trust when a party obtains some benefit that they cannot, in good conscience, retain.... Courts may employ constructive trusts to avoid unconscionable results and to prevent unjust enrichment.” Id. ¶ 17. Unjust enrichment, in turn, rests on the principle that one should “not be allowed to enrich himself unjustly at the expense of another.” Id. (quotation omitted). “[T]he inquiry is whether, in light of the totality of circumstances, it is against equity and good conscience to allow [a party] to retain what is sought to be recovered.... It must be a realistic determination based on a broad view of the human setting involved.” Id. (quotation omitted).

¶ 12. While not always clearly articulated, defendant's argument here is that the trial court abused its discretion in declining to impose a constructive trust in several respects. She asserts that the properties were conveyed to plaintiff without the requisite “donative” intent, or actual present intent to convey title, and therefore should be held in a constructive trust for her benefit. See Brousseau v. Brousseau, 2007 VT 77, ¶ 6, 182 Vt. 533, 927 A.2d 773 (mem.) (noting that the two essential elements of an inter vivos gift of property are “donative intent” and delivery). Although it is unclear whether this precise argument was expressly raised below, the trial court implicitly rejected it in finding no evidence—nor indeed any claim—of an agreement or understanding between the parties that the property would ultimately be reconveyed to defendant.

¶ 13. Defendant principally contends that the trial court failed to properly credit her “significant contributions” to the acquisition and development of the properties. While acknowledging that defendant made some contributions over the years,

[70 A.3d 926]

the court—as noted—found no grounds for the imposition of a constructive trust absent a showing that plaintiff committed fraud or owed defendant a special fiduciary duty. The court's inquiry in this regard was—arguably—unduly narrow. The parties' purpose in effectuating a transfer, their respective contributions, and the existence of a confidential relationship could all theoretically be considered a part of the totality of the circumstances in determining whether in equity and good conscience the legal titleholder should be allowed to retain the property. See, e.g., Lester v. Zimmer, 147 A.D.2d 340, 542 N.Y.S.2d 855, 857 (1989) (holding that plaintiff's participation, support, and financial contributions to construction of vacation home during ten-year relationship with defendant were relevant considerations in action for imposition of constructive trust); Rhue v. Rhue, 189 N.C.App. 299, 658 S.E.2d 52, 58–59 (2008) (upholding imposition of constructive trust on properties that parties bought and renovated together during long-term relationship). See generally, Restatement (Third) of Restitution & Unjust Enrichment § 28(1) (2011) (providing that party to relationship resembling marriage who...