Stanley S. Stroup and Sylvia Stroup
Peter Doran and Peter Doran Landscape Design, LLC
Motion for Reargument Denied September 2, 2014
This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40
On Appeal from Superior Court, Bennington Unit, Civil Division. John P. Wesley, J.
Robert E. Woolmington and Merrill E. Bent of Witten, Woolmington, Campbell & Bernal, P.C., Manchester Center, for Plaintiffs-Appellants.
Lawrin P. Crispe of Crispe & Crispe, and Mark L. Zwicker of Mark L. Zwicker, P.C., Brattleboro, for Trustee-Appellee Brattleboro Savings and Loan Association.
Present: Reiber, C.J., Dooley, Skoglund, Robinson and Crawford, JJ. DOOLEY, J., dissenting.
[¶1] Plaintiffs Sylvia and Stanley Stroup appeal from an order of the superior court, civil division, denying their motion for default judgment against trustee Brattleboro Savings and Loan Association (BSL). We affirm.
[¶2] In 2007, plaintiffs sued defendants Peter Doran and Peter Doran Landscape Design, LLC for breach of contract, fraud, and consumer fraud after defendants failed to perform landscaping for plaintiffs. Plaintiffs obtained a judgment against defendants in Bennington Superior Court. Defendants failed to pay the judgment. Plaintiffs obtained a writ of execution, and the court approved plaintiffs' motion for trustee process to attach funds owned by defendants and held by BSL.
[¶3] BSL disclosed to plaintiffs that it held a balance of $2,853.05 in a checking account titled in the name of one of the defendants. A few days later, the parties stipulated that BSL would release $750 to plaintiffs, and that BSL would then be discharged as a trustee and defendant's account would be free of any lien or charge benefitting plaintiffs. Defendants further agreed to pay $3,500 to plaintiffs before January 31, 2008. BSL paid plaintiffs
$750. Plaintiffs claim that defendants never paid the remainder of their debt.
[¶4] On July 22, 2013, plaintiffs served BSL with another trustee summons. BSL did not reply within thirty days, and on August 27 plaintiffs moved for default against BSL and entry of judgment against it as trustee for $24,155.12, the balance due under the judgment. On September 12, the court ordered the clerk to schedule a hearing on plaintiffs' motion, and directed that a copy of plaintiffs' motion and the notice of hearing be served on BSL.
[¶5] On September 16, BSL filed a trustee disclosure indicating that it did not have any of defendants' property in its possession. The court subsequently entered an order denying plaintiffs' motion for default judgment against BSL. The court stated that " [a]lthough Trustee failed to make a timely disclosure, its disclosure now made in response to Plaintiff[s'] motion for default shows that it holds no assets for the benefit of Defendant[s]. Default judgment under these circumstances would be inequitable." Plaintiffs appealed.
[¶6] Plaintiffs argue that the trial court erred in denying their motion for default because applicable Vermont law makes default mandatory when a trustee fails to serve a disclosure within thirty days. Plaintiffs did not contest the information contained in the trustee's disclosure form or request an evidentiary hearing below. See V.R.C.P. 4.2(g) (stating that party who intends to contest information contained in trustee's disclosure is entitled to evidentiary hearing upon written request). Nor do they contest the information on appeal. Their sole argument before this Court is that default was mandatory under 12 V.S.A. § 3062 and V.R.C.P. 4.2(f).
[¶7] Vermont's trustee process statute provides that " [w]hen a person summoned as trustee does not serve his disclosure within such time as the supreme court may by rule provide, he shall be defaulted, and adjudged a trustee." 12 V.S.A. § 3062. Civil Rule 4.2(f) requires a trustee to serve a disclosure " within 30 days after the service of the trustee summons upon the trustee, unless the court otherwise directs." A person who is adjudged trustee by default is liable " for the amount of damages and costs recovered by the plaintiff in the action, and payable in money at the time the judgment is rendered against the principal defendant." 12 V.S.A. § 3063.
[¶8] Thus, " [o]nce process has been served, heavy responsibilities rest on the trustee." First Wisconsin Mortg. Trust v. Wyman's, Inc., 139 Vt. 350, 355, 428 A.2d 1119, 1123 (1981). We explained in First Wisconsin that:
If a trustee fails to disclose as the statutes require, it may be defaulted. In such case, the goods, chattels and estate of the trustee itself are chargeable for the amount of the judgment recovered by the plaintiff. Thus, the trustee has ... a very direct interest in proper disclosure for the protection of its own assets from assessment. This result may follow not only from ...