Friday, August 26, 2011

Home Away from Home



Iannarone v. Limoggio, 2011 VT 91.

To say that divorce is a difficult process is misleading.  Divorce is the rending of a societal unit into its original, basic components.  It is a proposition fraught with peril given the joint assets and minors that the union has produced.  It is a math equation in which the elements do not reduce to the original sum of the parts. 


While the SCOV’s records are littered with decisions concerning the struggle of divorcing parents to work out custody over their children, there are just as many that chronicle the spy-v.-spy match of couples fighting in family court over a valuable asset.

Joining the later group are today’s husband and wife.  Parties divorced in 1996 after 13 years of marriage and engaged in extensive litigation concerning the primary marital asset, a house in Dover near Mt. Snow.  The final judgment order gave the house to wife until 2005 when the youngest child would reach 18.  It also allowed the wife to put the house up for sale after 1997 with the husband having a right of first refusal.  Finally wife was guaranteed a minimum payout of $150,000 in any sale and was entitled to receive the same amount from husband if the house did not sell by 2005 when she would title it over to husband. 

The family court also ordered husband to hold wife harmless for any payments due to husband’s father on a $200,000 note and mortgage that the father had given to the couple to purchase the house, which was coming due in 1997.  

For the next four years, wife continued to live in Dover.  In 2000, she moved to Brattleboro to be close to where the kids were attending school.  In doing so, wife essentially abandoned the Dover house, leaving it empty and unsecured.  A series of break-ins resulted in the loss of most of the appliances in the house as well as extensive damage to the building.  In April 2005, wife entered into a purchase and sale for the property for $210,000 with a third party.  But upon doing a title search, buyer found that husband’s father had never discharged his mortgage, which remained upon the property.

Wife sued husband to have the title cleaned up.  Husband counterclaimed that he had no duty to discharge the mortgage as the divorce order only required him to hold her harmless, not to discharge the mortgage, and that wife had an obligation to sell him the property for $150,000 minus unpaid property taxes. The court ruled in 2006, that husband had no obligation to discharge his father’s mortgage for the benefit of third party purchasers.  But he had no right to claim property taxes that he had previously paid but was entitled to purchase the property for the full offer price of $210,000 minus any property taxes still unpaid.  The court was silent on whether husband would be obligated to pay wife $150,000 for the house if the sale to the third party did not go through.  

Needless to say, the third party deal went south, and husband made no offer to buy.  Wife held title to the property but did nothing more.  In 2008, the property went up for tax sale, and husband purchased it for the $80,000. 

Not one to be fooled again, wife went back to family court and sought an order requiring husband to pay her the $150,000 due under the original divorce order.  Husband disputed this because wife never transferred the deed to him, and he argued that wife was precluded from asserting this claim because she did not seek a judgment on the issue in the 2005 case when she raised it and failed to obtain a ruling from the court. 

The family court ruled that the divorce order was clear.  Husband was obligated to pay wife $150,000 in exchange for a quit claim deed.  Husband could deduct any property taxes paid since 1996, and father’s mortgage was still valid, although not enforceable against wife. The parties filed for reconsideration, and the family court altered its decision.  On second thought, said the court, husband is not obligated to pay wife anything because she never delivered title to him and can no longer deliver title because of the tax sale.  It also rejected husband’s claims of damages for property taxes paid and deterioration due to wife’s neglect.  At no time did the family court consider the husband’s preclusion arguments.

This is not so on appeal.  The SCOV sweeps wife’s claims aside to address the preclusion arguments and determines that wife’s arguments are barred by the doctrine of res judicata.

The terms: issue preclusion, collateral estoppel, and res judicata are largely interchangeable concepts governing the idea of finality.  In court, you get one shot to make your argument and raise your issues.  If you do not or you think of a better one later on, you are out of luck.  Court is closed, and you cannot re-open a case because you forgot to ask for something you could have at the time.  The reason for this rule is that if parties were allowed to re-open cases over and over again, well, we would probably still be litigating Dred Scott. 

The three elements needed to establish claim preclusion is 1) a prior, final determination on the merits; 2) involving the same parties; and 3) that the claim was or could have been litigated in the prior lawsuit. 

The SCOV has no problem determining the second element.  It looks at the 2006 judgment and because it was a decision subject to appeal, the SCOV rules that it was a final judgment on the merits.  This leaves the third element, which the SCOV finds was ripe for determination in 2005 when wife noted to the family court that she had not been paid the $150,000 that came due that June.

The problem with the wife’s position in 2005, which haunts her in this appeal, is that she never asked to enforce the $150,000 provision of the 1996 divorce order.  Instead, she focused on taking the $150,000 from the expected sale, but that argument bumped up against father’s mortgage, which while not enforceable against her, was, against any third party purchaser.  In other words, wife failed to use the 2005 litigation to sort out how and when she was due the $150,000 under the 1996 order, which she should have.  Trying to revive it in 2009 is too little to late.

The SCOV rules that wife’s claims are precluded and dismisses her action.  Husband takes the house via the tax sale, and we are left to wait for the next chapter in what has now proven to be a 15-year divorce. 

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