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Lamson v. Lamson

Supreme Court of Vermont

May 12, 2017

Frank Lamson
Roger Lamson

         On Appeal from Superior Court, Windsor Unit, Civil Division, Theresa S. DiMauro, J.

          W.E. Whittington of Whittington Law Associates, PLLC, Hanover, New Hampshire, for Plaintiff-Appellee.

          Shannon A. Bertrand and John C. Newman of Facey Goss & McPhee P.C., Rutland, for Defendant-Appellant.

          PRESENT: Dooley, Skoglund and Robinson, JJ., and Kupersmith and Morris, Supr. JJ. (Ret.), Specially Assigned.

          ROBINSON, J.

         ¶ 1. This case involves a revocable trust established by Virginia Newman. Her two sons, Roger and Frank Lamson, were both beneficiaries and trustees of the trust during the relevant time periods. Roger filed an action in the probate division alleging breach of trust by Frank. The court ruled in Roger's favor on his claim arising from Frank's personal use of Virginia's vehicles. Frank appealed and the civil division granted Frank summary judgment on that claim. Roger filed this appeal, arguing that the civil division erred in concluding Frank did not violate his fiduciary obligation and in failing to award damages for Frank's use of the vehicle. We affirm.

         ¶ 2. This case began in 2012, when Roger filed a petition for an accounting of the trust. At the time, Roger, Frank, and a bank were all co-trustees. Roger subsequently amended his complaint and alleged that Frank had committed breach of trust and acted in his own self-interest by distributing trust funds for his own benefit. In March 2013, the probate division removed Roger as trustee, Frank withdrew as trustee, and the probate division appointed both an independent institutional trustee and a guardian for Virginia.

         ¶ 3. Roger's subsequent amended petition alleging various breaches of trust by Frank included a claim based on Frank's personal use of Virginia's cars, a 2000 Subaru and a 2009 Subaru. Roger alleged that trust funds were used to purchase the 2009 Subaru even though Virginia already had a car, and that additional trust funds were used to pay for the operation and maintenance of both vehicles. Roger claimed damages of $44, 580 for "Frank's personal use of" these cars. The damage claim relied on an accountant's report that Roger attached to his complaint. This report included a section on "Personal Use of Virginia Newman Automobiles." The alleged breach of trust described in the report was that Frank used both of these cars for his and his family's personal use. In particular, the accountant concluded that from the time of the January 2009 purchase of the second Subaru until Frank resigned as trustee in July 2012, the car was driven 55, 556 more miles than necessary for Virginia's care and pleasure. At the federal mileage rate, the value of the excess use for Frank's benefit was $30, 000. The accountant opined that during the same period the 2000 Subaru was driven about 27, 000 miles, "at largely Virginia Newman's expense." The accountant valued the benefit associated with this additional use of the car for the benefit of Frank and his family at $14, 580.

         ¶ 4. Virginia Newman died in February 2014.[1] The probate division held a hearing on Roger's petition over two days in May and July 2014.

         ¶ 5. The probate division made lengthy factual findings. On almost all of Roger's claims, the court found in Frank's favor. The court explained that Virginia lived close to Frank and was dependent on him and his wife for her daily needs. The court found that although Frank's funds and his mother's funds were commingled, the transactions were fair to Virginia and that any extra benefit to Frank was a gift from mother to son.

         ¶ 6. With respect to Roger's claim concerning Frank's use of the Subarus, the probate division ruled in Roger's favor. The probate division found that Virginia withdrew $25, 000 from the trust principal to purchase the 2009 Subaru. The court stated that because the car "involved" trust principal, the court employed the "no further inquiry" rule, which assumes that transactions involving trust property entered into by a trustee for the trustee's own personal account are voidable without further proof. The court explained that Virginia's purchase of the car was voidable in light of the facts that trust property was used to purchase the vehicle, the vehicle accrued excessive mileage while Frank was caring for his mother, and the vehicle was ultimately transferred to Frank in the fall of 2011. The court concluded that Frank's good faith was immaterial. The court ordered Frank to pay damages of $44, 580.[2]

         ¶ 7. Frank appealed the award of $44, 580 to the civil division. Roger appealed other aspects of the probate division order to the civil division. Roger's appeal to the civil division was docketed separately and is not part of this proceeding.

         ¶ 8. As to Frank's appeal, both parties moved for summary judgment. In his motion and statement of undisputed facts, Frank argued that the 2009 Subaru was purchased from funds in a non-trust joint account in Virginia's and Frank's names, and was not a trust asset. Frank noted that the probate division made no finding that Frank breached the trust in connection with the purchase of the Subaru, and did not order Frank to repay any part of the $25, 944 purchase price. Roger did not appeal this aspect of the probate division's order. The only claim at issue on appeal, then, was Roger's claim for Frank's excessive personal use of Virginia's cars, for which the probate division awarded damages based on the value of that use. Because there was no evidence that these cars were trust assets, Roger's breach of trust claim based on Frank's use of the cars failed. Frank further asserted that there was no evidence that trust funds were used to pay for expenses for the vehicles.

         ¶ 9. In answer to Frank's assertion that the case did not cover the purchase of the car, Roger claimed that his separate appeal of the probate division order put all of his breach of trust claims before the court, and that his claims encompassed the purchase of the 2009 Subaru as well as Frank's use of Virginia's cars.[3] Roger also argued that the probate division implicitly found that the car was purchased with trust assets and therefore that this transaction was within the scope of Frank's appeal.

         ¶ 10. The civil division considered the motions and relied on the following undisputed facts. As amended in 2003, the trust was self-settled and revocable during the lifetime of Virginia Newman. It provided that Florida law controlled. During the relevant time period, there were four co-trustees: Virginia, Frank, Roger, and a bank. The trust provided that all income would be paid to Virginia during her lifetime. The trust further explained that the trustee "shall pay to the Grantor such portions of the principal of the trust estate as the Grantor from time to time may direct in writing" and "may in its discretion pay to the Grantor, or use for the Grantor's benefit, such portions or all of the principal of the trust estate as the Trustee may determine to be required for the Grantor's support, maintenance and welfare or for any other purpose which the Trustee may determine to be in the Grantor's best interest."

         ¶ 11. On January 26, 2009, $25, 941 was transferred from a trust account to a personal account held jointly by Virginia and Frank. The bank files indicate that the funds were transferred "per client request on file Virginia B Newman." There is an internal bank email from a bank trust officer directing that the funds be transferred to an account at the Randolph National Bank. The email included the following statement, "Also, if you need to talk with Mrs. Newman or Frank Lamson, she is with him today and his cell number is (802) [***-****]." At the time, Virginia already owned a 2000 Subaru. On January 27, 2009, $25, 941 was withdrawn from the joint account and paid to Subaru for a 2009 Subaru Outback. Virginia signed the bill of sale for the car, which identifies her as the purchaser. Virginia did not drive, but others used the vehicle to transport her. Frank used the Subaru occasionally for his personal use. In 2011, Virginia transferred title of the 2009 Subaru to Frank. Roger ...

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