Saturday, April 23, 2016

Equities and Expectations

In re Estate of Dezotell, 2016 VT 14

By Amy E. Davis

This case answers the question of whether a trial court is bound by the provisions of an early settlement distribution in a wrongful death case, and if not, whether the trial court need hold an evidentiary hearing to divide the settlement in proportion to the pecuniary interests suffered. Only a lawyer could love, or write, that sentence.

Decedent married wife Maria in March 2001. They met online, and he traveled to Romania where she lived, where they got married. Their child, Roger, was cooking in the womb when decedent was killed in an automobile accident in November 2001. Decedent also had a plethora of other children: four from a previous marriage (Renee, Beverly, Sammie-Jo, and Nicole), an adopted daughter (Jennifer), and a daughter from a previous relationship (Melissan).

Maria was appointed to serve as the estate’s administrator, and petitioned the superior court to distribute a combination of insurance proceeds totaling $135,000. The court issued a written ruling following an evidentiary hearing. The court noted that “pecuniary injuries suffered” were not purely economic losses, but could include loss of companionship, compensation for lost intellectual, moral and physical training or the loss of care, nurture and protection the parent provides.

Decedent had been awarded sole parental rights and responsibilities for the children after his divorce, had performed most of the household work, and was able to provide the bare essentials for them. The trial court noted that he loved each of his daughters “in his own way,” and that they returned the affection. They continued to seek his advice after they left the household, and he offered whatever wisdom he could.

In regards to his new family, the court found that Maria had a B.A. in chemistry, was fluent in English, and was a “relatively accomplished and well-known journalist.” Before decedent’s death, she worked as a para-educator, and became a full-time math and science teacher after his death.

The trial court gave the adult daughters $2500 each. The court found that minor daughters Sammi-Jo and Nicole were living without their father’s support, but still had a relationship with them, therefore they received $2500 as well. Renee was excluded because she was the beneficiary of his life insurance policy. For Melissan, the court noted that she was a minor and decedent had a statutory obligation to support her, and concluded that $25,000 seemed fair and just. The money was to be held in trust by Melissan’s mother, and only be used for “extraordinary expenses,” and the rest saved for college or educational expenses.

The balance—nearly $100,000—went to Maria and Roger—“the son he hoped for, but never saw.” The court found that decedent intended to provide them with the stable household he never had before his employment at IBM. The $100,000 was in recognition of Maria’s “resiliency” and an investment in her and Roger’s futures. The trial court issued a final judgment in November 2004.

In June 2008, decedent’s estate again petitioned the court to distribute wrongful death proceeds resulting from a settlement of a lawsuit by the estate against the University of Vermont. That settlement was about $205,000 (after deducting withholdings for a pending claim for attorneys fees, and money for creditors against the estate). The estate beneficiaries agreed to use the prior order as a basis for distribution, applying the percentages from the first distribution to the second. Jennifer, Beverly, Sammi-Jo, and Nicole would receive $3,852, Melissan $38,504, and Maria and Roger would receive $151,007. In August 2009, the trial court issued an order approving the stipulated distribution.

A year later, the attorney who represented the estate in the UVM wrongful death action, filed a complaint for attorney’s fees allegedly due and owing. The estate counterclaimed for professional malpractice, saying that the attorney’s negligent and unethical handling of the lawsuit had improperly influenced its decision to accept the settlement. This claim settled in September 2013, resulting in another $204,000 available for distribution.

In January 2014, the estate filed a third petition for distribution of the additional settlements funds. The estate wanted to distribute the money using the same percentage formula as the second distribution, but Melissan would receive the same percentage as the other four daughters since she had now become an adult. Melissan opposed the change.

In April 2014, the court ruled that it was not bound by the prior distributions, and declared that it may deviate when circumstances warrant, and, in this case, a “fresh look” at the distribution was warranted. In May 2014, the court held an evidentiary hearing at which Jennifer testified about her relationship with her dad. The court interjected that testimony should focus on things that had happened since 2004, but would find another day for Jennifer to complete her testimony.

Despite the on-the-record statement about finding another day to finish testimony, the court issued a short order after the hearing, saying the only issue was in regards to Melissan’s share. The order said that if anyone wanted another hearing, he/she must show “why further evidence is appropriate and … make an offer as to what evidence is relevant to the issues.” Counsel for the daughters went into a memo frenzy about all of the daughters, their previous distributions, level of support, etc.

Despite the memo-apocalypse, the court issued a written ruling in July 2014, explaining that it had concluded that further evidence was unnecessary, and that the original distribution order determined that none of the older kids could have “reasonably expected any financial assistance from their father.” Moreover, the court found no basis for revisiting that determination, either from Jennifer’s testimony, or anyone else’s for that matter. Thus, the court ordered each of the daughters $3,835, with the balance of $181,000 to Maria on behalf of herself and Roger.

Daughters argue that the trial court was either collaterally estopped from reducing Melissan’s share, or, if the court was not estopped, then it improperly excluded relevant evidence. The SCOV, at the outset, states that the collateral estoppel argument is unpersuasive as it applies in limited circumstances, and bars relitigation of an issue that was actually decided in a prior case. In this case, each of the prior distribution petitions was a separate issue for the court to determine. The SCOV states that, successive distributions, even in the same case, may reflect entirely different equities and expectations depending on the ages of the beneficiaries, their economic circumstances, previous awards, and amount available for distribution. Thus, the trial court was correct to conclude that a fair apportionment of the third settlement should be measured partially by the parties’ present circumstances.

However, the trial court erred in failing to apply this principle consistently to the other beneficiaries, and only to Melissan. The trial court’s ruling overlooks that the original finding was made in a specific context of a specific settlement ten years earlier. Although decedent was never able to provide much materially to his children while alive, this does not compel a conclusion that 1.88% of the third settlement was all they could ever reasonably expect.

The SCOV reverses and remands the case for additional evidence relevant to the distribution.

The SCOV notes that the dissent’s conclusion (that the ratios from the initial distribution are binding) is not supported by any statutory language or case law. According to the majority, the dissent also provides no case law or other authority “contradicting the common-sense conclusion that fairness may dictate a different distribution a decade after the initial settlement.”

Justice Robinson, singularly dissenting, believes that the majority’s framework creates some practical problems. The dissent relies on the plain language of the statute for how damages should be distributed—the personal representative is required to distribute the proceeds in proportion to the injuries suffered. In dividing the award, the proceeds should be divided among the beneficiaries “in proportion to their respective shares of the cumulative damages.” In this case, in the dissent's view, the first proceeding established these proportions.

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