Monday, June 22, 2009

Trusts and Estates. Disclaimers are irrevocable, but are voidable for duress, coercion, undue influence incompetence, or other equitable basis.

Burden of proof shifts in “suspicious circumstances” where attorney represents both sides. Carvahlo v. Estate of Carvahlo, 2009 VT 60 (Dooley, J.)

This case requires us to decide whether and in what circumstances a person who has disclaimed an interest in property under the Uniform Disclaimer of Property Interests Act, codified at 14 V.S.A. §§ 1951-1959, may revoke that disclaimer. Persons wishing to disclaim interests in property devolving to them by will or intestate succession may do so in writing within nine months of the owner’s death. Id. § 1952(a). The disclaimer “is binding upon the disclaimant,” id. § 1954(c), and the disclaimed property passes “as if the disclaimant had predeceased the decedent,” id. § 1954(a). We hold that, while statutory disclaimers are generally revocable only in limited circumstances, the superior court erred by granting summary judgment to Ms. Carvalho’s nephew who opposed revocation of the disclaimer. Accordingly, we remand the matter for the court to hold a hearing on whether the circumstances warranted allowing revocation of the disclaimer.

Agnes Carvalho appeals the superior court’s summary judgment order precluding her from revoking a disclaimer of her interest in her son’s estate. Ms. Carvalho was a ninety-two-year-old widow when her son Donald, who was her only child and had been living with her, unexpectedly died. The trial court found that she “was deeply upset and distraught after Donald’s death.” Three weeks later, nephew took Ms. Carvalho to the office of the attorney representing him in his capacity as executor of Donald’s estate. Ms. Carvalho would on that day sign her own will, and do an advanced directive and a financial power of attorney and a disclaimer, the latter of which had not been prepared or reviewed by her in advance of the meeting. The superior court found that “there are facts in dispute about how much Ms. Carvalho understood,” and that “she does not appear to have understood that the effect” of the disclaimer was to deprive her of the assets of her son’s estate during her lifetime. The court nevertheless concluded nephew was entitled to judgment as a matter of law, because Ms. Carvalho was not coerced or unduly influenced.

On appeal, Ms. Carvalho claims that the superior court erred in: (1) ruling that disclaimers are irrevocable absent incompetence, duress, coercion, or undue influence; (2) finding that there were no genuine issues of material fact as to whether she was incompetent or under duress or coercion when she executed the disclaimer.

On the weight of the case law, by virtue of our statutory text, and out of concern for the stability of property rights, we hold that disclaimers irrevocable based on claims, such as a unilateral mistake of law, that fall short of equitable claims that would support rescission of a contract or cancellation of an instrument. Disclaimers are not revocable simply because the revocation is filed within the statutory time period for filing disclaimers, even if there is no prejudice.

A disclaimer can be revoked in situations involving incompetence, fraud, undue influence, or other accepted bases for cancellation of instruments. Accordingly, if the fact finder on remand in this case were to find undue influence, coercion, or incompetence, revocation of the disclaimer would be warranted, particularly given that it was executed within the statutory time frame for disclaimers and before any property interests were affected.

The attorney testified at his deposition that he considered Ms. Carvalho to be his client, but he billed the estate for his services in having her execute the disclaimer. Thus, not only was the execution of the disclaimer facilitated by the contingent beneficiary of the estate, but the attorney who presented the disclaimer to Ms. Carvalho appeared to be representing the interests of parties with potentially conflicting interests. These facts amount to suspicious circumstances as a matter of law, which places the burden on nephew to establish affirmatively that the disclaimer was not procured by undue influence or coercion.

We conclude that the facts of this case preclude summary judgment in favor of nephew. As noted, the facts establish “suspicious circumstances” that impose upon nephew the burden of showing the absence of undue influence or coercion with respect to Ms. Carvalho’s signing of the disclaimer. On remand, the fact finder must determine, following an evidentiary hearing, whether nephew has met his burden of demonstrating a lack of undue influence, duress, or coercion with respect to Ms. Carvalho’s signing of the disclaimer. In assessing whether nephew has met this burden, the court should consider the effect of the attorney obtaining the disclaimer from Ms. Carvalho, his client, while acting as attorney for the estate and its executor. The issue cannot be decided on summary judgment.

Friday, June 19, 2009

Worker’s Compensation appeal: wrong forum in time; right forum too late.

Worker’s Comp. appeal to superior court defeated because Commissioner certified only questions of law. Mistake of forum not grounds for late appeal. Stoll v. Burlington Electric, 2009 VT 61 (Skoglund, J.) (Dooley, J., dissenting.)

Employee appeals the superior court’s dismissal of his workers’ compensation appeal for lack of jurisdiction. We affirm.

Employee further asks that we grant his motion for leave to file an untimely direct appeal from the Commissioner’s decision. We deny this motion.

The Commissioner certified two questions to the superior court: 1. Whether the Superior Court has jurisdiction to hear this appeal from the Department of Labor’s decision granting Summary Judgment, where no facts were disputed by the parties for the purpose of the summary judgment motions; and 2. Whether the Occupational Disease Act’s five year statute of repose bars Claimant’s claim for alleged work-related asbestosis disease.

The superior court’s order granting summary judgment for the insurance companies on jurisdictional grounds was appropriate because both certified questions presented pure questions of law. Section 671 does not authorize the certification of questions of law to the superior court but only questions of fact or mixed questions of fact and law.

Moreover, we decline to exercise our discretion under 21 V.S.A. § 673 to allow employee to file a direct appeal of the Commissioner’s order with this Court.

Dooley, J. dissents from the majority’s refusal to allow a direct appeal, and in its failure to recognize that a possible question of fact permits appeal to superior court on all issues, including preliminary legal issues. In Justice Dooley’s view the statute creates alternative appeal routes. If the losing party is satisfied with the fact-findings, review is by the Supreme Court on the record made before the Commissioner and under a limited standard of review. If the party is not satisfied with the Commissioner’s fact finding, the party may appeal to the superior court for “trial by jury” and review of questions of “fact . . . and fact and law.” 21 V.S.A. § 671. A claimant can raise pure legal issues in a superior court appeal as long as the claimant has also raised factual issues.

Here the employee committed to an appeal to the superior court believing that the appeal was controlled by facts—that is, the cause and nature of his disability. However, ignoring the employee’s specification of the issues, the Commissioner certified pure questions of law only. In these circumstances, Justice Dooley says the Court has discretion to take this appeal by virtue of 21 V.S.A. § 673, and should allow the late appeal to the Supreme Court so that employee is not denied access to a court because of a mistake in choice of forum.

Friday, June 5, 2009

Statute of limitations: Cause of action that accrues after decedent’s death is not limited under §557(a) to two years.

Benson v. MVP Health Plan , 2009 VT 57 (Skoglund, J.)

Brian Benson, as administrator of Alan Benson’s estate, appeals from a Windsor Superior Court order dismissing his suit against decedent’s insurer, MVP as barred by the two-year limitations period set forth in 12 V.S.A. § 557(a). We reverse and remand. We hold that the limitation period set forth in § 557(a) does not apply to causes of action that accrue to the estate after a decedent’s death.

That statute reads as follows:

"If a person, by or against whom an action may be brought, dies before the expiration of the time within which such action may be commenced as provided by this chapter or dies within thirty days after the expiration of such times, the period of limitation as to such action shall cease to operate at the date of his death. After the issuance of letters testamentary or of administration, such action, if the cause of action survives, may be commenced by or against the executor or administrator within two years, and not after."

A cause of action does not accrue until each element of the cause of action exists. A cause of action for breach of contract accrues when the breach occurs, and a cause of action against an insurance company for bad faith accrues when the company errs, unreasonably, in denying coverage.

Benson died on October 18, 2002. The administrator was appointed on December 2, 2002. The administrator filed suit on August 30, 2007, alleging that MVP breached the contract when it failed to pay a valid claim submitted by the administrator and repeatedly refused to respond to the administrator’s grievances and requests for information and relief. The complaint alleges bad faith on the grounds that MVP denied the claim without a reasonable basis. Assuming these allegations to be true, the estate’s causes of action accrued after the decedent’s death.


Based on the statutory language quoted above, MVP argues that § 557(a) applies to causes of action that accrue after death because a person who dies before a cause of action accrues necessarily dies before the expiration of that action’s limitations period. This clever reading is flawed, however, because the plain language of § 557(a) establishes a limitations period only for causes of action that could have been brought by or against the deceased during his lifetime; it does not apply to causes of action by or against an estate that accrue after the decedent’s death.

Accordingly, the trial court erred in concluding that the estate’s claim was barred by § 557(a).