Dewdney v. Duncan, 2025 VT 26 [5/23/2025]
COHEN, J.
Plaintiffs Berol and Cordelia Dewdney appeal the civil division’s
decision granting summary judgment to defendant Ralph Duncan, IV on plaintiffs’
claims for intentional interference with expectation of inheritance (IIEI),
breach of contract, promissory estoppel, unjust enrichment, and constructive
fraud. We affirm.
In October 2011, Anna created a revocable inter vivos
trust to receive the royalty income from her books. Anna designated plaintiffs and defendant as
beneficiaries of the trust with 40% of the income assigned to each plaintiff
and 20% assigned to defendant. At the
same time, defendant executed his last will and testament in which he
designated plaintiffs as his sole heirs if Anna predeceased defendant.
Thereafter, Anna amended the trust and changed the distribution of the trust
income to 25% for each plaintiff and 50% to defendant. Plaintiff’s complaint in the civil division
sought the creation of a constructive trust entitling them to all distributions
exceeding defendant’s original 20% share and restitution of any amounts
previously distributed to defendant that exceeded 20%.
The trial court ruled that IIEI was a cognizable cause
of action in Vermont but that plaintiffs were required to first seek a remedy
in the probate division. The court
determined that plaintiffs failed to establish their remaining claims
Intentional Interference with Expectation of
Inheritance
The Third Restatement, states that a defendant is
liable for IIEI when: (a) the plaintiff had a reasonable expectation of
receiving an inheritance or gift; (b)
the defendant committed an intentional and independent legal wrong; (c) the defendant’s purpose was to interfere
with the plaintiff’s expectancy; (d) the
defendant’s conduct caused the expectancy to fail; and (e) the plaintiff suffered
economic loss as a result. Restatement (Third) of Torts: Liab. for Econ. Harm §
19(1) (2020). The Third Restatement,
however, also provides that an IIEI claim “is not available to a plaintiff who
had the right to seek a remedy for the same claim in a probate court,” Id. § 19(2) (the probate exhaustion
rule.)
While we have not previously recognized the tort of
IIEI, we conclude that the Third Restatement definition of IIEI, with its
probate exhaustion requirement, is the appropriate definition to adopt.
Plaintiffs argue that the Third Restatement and cases
from other jurisdictions distinguish between wills and inter vivos trusts for
purposes of the probate-exhaustion rule.
Under Vermont law, the probate division is vested with
exclusive jurisdiction over claims brought by a trustee or beneficiary
concerning trust administration. 14A
V.S.A. § 203(a)(“ The
Probate Division of the Superior Court has exclusive jurisdiction of
proceedings in this State brought by a trustee or beneficiary concerning the
administration of a trust”); 4 V.S.A. § 35 (“The Probate Division shall have
jurisdiction of . . .(3) the administration of trusts pursuant to Title 14A”)
Other jurisdictions do not have statutory mandates
vesting the probate division with exclusive jurisdiction over the
administration of trusts as we do in Vermont. Accordingly, we hold that an IIEI
claim is not available to a plaintiff who had the right to seek a remedy for
the same claim in probate court.
Plaintiffs argue that they did not have the right to
make their claim in the probate division because their claim does not concern
the administration of the trust, but instead seeks a remedy for defendant’s
undue influence, duress, and fraud in inducing Anna to amend the trust. In Collins
v. Collins. 2017 VT 70, we held that the was the probate division was the proper
forum for challenging the settlor’s capacity to make a trust Challenging the
settlor’s ability to change the beneficiary necessarily implicates the
administration of the trust because the trustee must know to whom to administer
the trust property. Collins, 2017 VT 70,
¶ 15. Similarly, plaintiffs challenge whether Anna was unduly or fraudulently
influenced to change the trust distributions between beneficiaries involves the
administration of the trust and therefore falls within the exclusive
jurisdiction of the probate division.
Plaintiffs were barred from bringing their IIEI claim
in the civil division because they did not first pursue it in the probate
division. We therefore affirm the
court’s decision to grant summary judgment for defendant on this claim.
Unjust
Enrichment
We conclude that plaintiffs were required to bring their unjust enrichment claim in the probate division.
To succeed on a claim for unjust enrichment, a plaintiff must prove three things: "(1) a benefit was conferred on defendant; (2) defendant accepted the benefit; and (3) defendant retained the benefit under such circumstances that it would be inequitable for defendant not to compensate plaintiff for its value." Beldock v. VWSD, LLC, 2023 VT 35, ¶ 68. A recipient of a donative transfer may be liable to a claimant for unjust enrichment if the recipient diverted the donative transfer by fraud, duress, or undue influence; this includes a transfer through an inter vivos trust. See Restatement (Third) of Restitution and Unjust Enrichment § 46 (2011)
Plaintiffs asserted their claim for unjust enrichment under the theory that defendant induced Anna to amend the trust and increase his share of trust distributions through fraud and undue influence, thus reducing their expected shares and making it inequitable for defendant not to compensate them.
Like plaintiffs’ IIEI claim, this claim challenges the
administration of the trust because plaintiffs, the trust’s beneficiaries, seek
to challenge the amended distribution of the trust property, and the
distribution of the trust is a main function of trust administration. Therefore, plaintiffs were required to bring
their claim in the probate division. 14A
V.S.A. § 203(a); Collins, 2017 VT 70, ¶ 15.
Our holding should not be interpreted to mean that claims of unjust
enrichment relating to trusts will always be under probate jurisdiction. Here, however, plaintiffs’ underlying
allegations of fraud and undue influence over the amendment to the trust
distributions fall within the probate’s exclusive jurisdiction over administration
of trusts
Constructive
Fraud
Similarly. Plaintiffs’ constructive fraud claim implicates
the administration of the trust, which the Legislature has placed in the
exclusive jurisdiction of the probate division.
Our holding should not be interpreted to mean that claims of unjust
enrichment relating to trusts will always be under probate jurisdiction. Here, the underlying allegations of fraud and
undue influence over the amendment to the trust distributions fall within the
probate’s exclusive jurisdiction over administration of trusts.
Plaintiffs’ argument that they should be allowed to amend their complaint to plead actual fraud based on these same facts is moot because plaintiffs were required to seek a remedy in the probate division in the first instance for this type of challenge.
Promissory Estoppel
A plaintiff
must show the following for a promissory estoppel claim: “(1) defendant made a
promise to [the promisee] that defendant should have reasonably expected to
induce action or forbearance; (2) [the promisee] relied on the promise to [the
promisee’s] detriment; and (3) injustice can be avoided only by enforcement of
the promise.” Pettersen v. MonaghanSafar Ducham PLLC, 2021 VT 16, ¶ 11. Implicit to a promissory estoppel claim is
a showing that the defendant breached a promise. See Dillon v. Champion Jogbra, Inc., 175 Vt.
1, 9 (2002).
Here, a reasonable jury could conclude from the
evidence that defendant made a promise to Anna to make plaintiffs his sole
heirs. However, defendant did not break this promise because defendant has not
positively and unequivocally revoked his promise, nor has he removed plaintiffs
from his will. Accordingly, plaintiffs
cannot show detrimental reliance, because Anna was not harmed by any breach of
the promise. We therefore affirm the
court’s decision to grant defendant summary judgment on this claim.
WAPLES, J., dissenting. I agree with the majority that Vermont
should recognize claims for intentional interference with an expectation of
inheritance (IIEI) and adopt the definition of such claims from the Restatement
(Third) of Torts: Liability for Economic Harm § 19 (2020). I disagree, however, that defendant was
entitled to summary judgment on this claim.
The undisputed facts do not establish that plaintiffs “had the right to
seek a remedy for the same claim in a probate court.” Id. § 19(2).
I would reverse the trial court’s decision on the IIEI claim and remand
for additional proceedings. I therefore
respectfully dissent.
I do not find Collins
persuasive on the question of whether plaintiffs’ claim here “implicates the
administration of the trust.” The Restatement’s explicitly recognizes that a
probate court “is unable to provide a remedy for wrongful conduct in relation
to a nonprobate transfer, such as a transfer by inter vivos trust.” Id. § 19 cmt. c. In a similar vein, the UTC’s reference to
the probate division’s “exclusive jurisdiction of proceedings . . . brought by
a trustee or beneficiary concerning the administration of a trust” in 14A V.S.A.
§ 203(a) should not be read to conflict with the UTC’s express direction that
“[a]n action against a beneficiary or other person for intentional interference
with an inheritance or gift” is not a trust contest. Id. § 604, official cmt.
It is not clear from the undisputed facts that
plaintiffs’ “challenge to the trust amendment implicates the administration of
the trust,” as opposed to falling into
the category of “other proceedings involving a trust” for which the probate
court “has concurrent jurisdiction with other courts of this State,” 14A V.S.A.
§ 203(b). As plaintiffs explain, they
are not seeking to hold a trustee liable for misconduct or mishandling of trust
assets in their capacity as a trustee.
I believe we should draw a distinction between trusts
and wills for purposes of determining the viability of an IIEI claim. I would reverse the trial court’s summary
judgment decision in defendant’s favor and I therefore respectfully
dissent.
No comments:
Post a Comment