As a matter of first impression SCOVT recognizes tort of intentional interference with expectation of inheritance, but a Divided Court holds the claims in this case of IIEI, constructive fraud and unjust enrichment involve trust administration within the exclusive jurisdiction of probate.

 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.  

How cited

SCOVT reverses and enters summary judgment in favor of employee’s attorney, holding that payment by insurer to employee’s attorney as part of settlement of employee's personal-injury lawsuit against employer was not a “common fund,” such that the law of unjust enrichment requires employee’s attorney to contribute to employer’s attorney’s fees incurred in a separate suit concerning insurance coverage for employee’s claim.)

 

WWSAF Special Partners Group, LLC v. Costello, Valente & Gentry, P.C., 2025 VT 40 [7/18/2025]

CARROLL, J.   This case involves a dispute between two law firms over attorney’s fees in separate litigation.  As relevant to this appeal, plaintiff Gravel & Shea PC sued defendant Costello, Valente & Gentry, P.C., claiming defendant was unjustly enriched for receiving attorney’s fees without compensating plaintiff for the work plaintiff did to procure a settlement from which defendant received its fees.  Defendant appeals a trial court order granting summary judgment that defendant contribute to plaintiff’s attorney’s fees under the common-fund doctrine. We agree with defendant that the trial court improperly expanded the common-fund doctrine to apply to this case and thus reverse the court’s order granting summary judgment to plaintiff and remand for the court to enter summary judgment in favor of defendant. 

 

The trial court granted summary judgment to plaintiff because defendant benefited from legal work plaintiff did that led to a settlement from which defendant received its fees, concluding that equities entitled plaintiff to a portion of defendant’s fees under the common-fund doctrine. The court reasoned that although defendant’s client (employee) was not a party to employer’s lawsuit concerning insurance coverage, defendant would not have obtained fees from a settlement with an insurer in a separate suit by the employee but for plaintiff’s attorney’s efforts representing the employer.

 

This Court applied the common-fund doctrine for the first and only time in Guiel v. Allstate Ins. Co., 170 Vt. 464, 468 (2000).In general, the common-fund doctrine allows a prevailing party—whose lawsuit has created a fund that is intended to benefit not only that party but others as well—to recover, either from the fund itself or directly from those others enjoying the benefit, a proportional share of the attorney’s fees and costs incurred in the lawsuit.   Guiel, 170 Vt. at 468

 

The common-fund doctrine arises out of the equitable theory of unjust enrichment. The threshold issue on appeal is whether the common-fund doctrine applies in this case and thus whether the court could award attorney’s fees to plaintiffs under this theory.

 

In Guiel, we held the common fund doctrine may be applied to require an insurer to pay a proportionate share of the attorney’s fees incurred by its insured in obtaining a judgment or settlement that satisfies the insurer’s subrogated interest. We decline to extend the common-fund doctrine beyond the insurance subrogation context to the circumstances before us here because there is no common fund.

 

The common-fund doctrine as an exception to the American Rule in which fees are awarded not, as in a ‘prevailing party’ case, to make the plaintiff whole by shifting all costs to the wrongdoer, but instead to spread the costs among those on whose behalf the case was brought and who benefitted from plaintiff’s efforts. Whether the doctrine applies in a particular case is not determined by a label, but rather by a proper understanding of the doctrine and its limitations. The doctrine is not limited to the context of class actions, insurance subrogation cases, or any type of case.  Guiel, 170 Vt. at 470, 756 A.2d at 781 (noting it depends on whether “it is equitable to do so because of the facts of the particular case at hand” and “the nature and extent of the [beneficiary’s] activities”).

 

The common fund doctrine is limited, however, to cases in which a party has “successfully created a ‘common fund.’”  Robes v. Town of Hartford, 161 Vt. 187,199 (1993).. Savoie v. Merchs. Bank, 84 F.3d 52, 56 (2d Cir. 1996) (The doctrine does not apply if “the fee award would not come from a common fund.”)

 

A common fund, as defined by the Restatement, is a fund that “consists of money or other property in which two or more persons (the ‘beneficiaries’) are entitled to share by reason of their common or parallel interests therein.”  Restatement (Third) of Restitution & Unjust Enrichment § 29(1).

 

Here, plaintiff argues that it should be awarded fees for the work it did for its client in one case, that benefitted the attorney of its client’s adversary in another.  Notwithstanding any benefit conferred on defendant, the common-fund doctrine cannot apply.  The client  on whose behalf plaintiff was acting, was not a beneficiary to the settlement proceeds or the fund from which plaintiff seeks compensation.  Plaintiff’s efforts on behalf of its client have not created a common fund.

 

Accordingly, plaintiff cannot maintain an unjust-enrichment claim as a matter of law under these facts.  We thus reverse the court’s order granting summary judgment to plaintiff and remand for the court to enter summary judgment in favor of defendant.

 

Reversed and remanded for the trial court to enter summary judgment in favor of defendant.

SCOVT affirms punitive damage award against landlord; reverses and remands compensatory award for further findings

Soon K. Kwon v. Eric Edson and Dina Well, 2019 VT 59 [filed 8/23/2019]

CARROLL, J. In this landlord-tenant dispute, following a bench trial, the court granted tenant Edson damages to compensate him for work he performed on landlord’s properties and tenant Well compensatory and punitive damages for breach of the implied warranty of habitability and illegal eviction.

Landlord appeals, arguing that the court erred in (1) finding that there was an oral rental agreement between the parties and that defendants were tenants; (2) awarding rent for only a portion of the period tenants occupied the property; (3) awarding tenant Edson damages because the claim was not properly pled; and (4) awarding tenant Well punitive damages.

Tenants cross appeal, arguing that the court abused its discretion in finding there was an agreement to pay rent once the building was compliant with the housing code and erred in awarding landlord back rent based on a theory of unjust enrichment. We affirm in part and reverse and remand in part.

  Unjust enrichment is “based on an implied promise to pay when a party receives a benefit and the retention of the benefit 10 would be inequitable.”  DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239, 242 (2001).  Recovery under this theory depends on “whether, in light of the totality of circumstances, it is against equity and good conscience to allow defendant to retain what is sought to be recovered.”  Id. at 243 (quotation omitted).  The existence of a contract does not preclude recovery pursuant to an unjust-enrichment claim, but the existence of a contract and the terms of that contract are “highly relevant in determining whether denying further payment . . . is unjust.”  Id.

  

We conclude that the evidence supports the court’s finding that the parties entered an oral agreement allowing tenants to stay in landlord’s apartment rent-free for some portion of time. However, because the court’s findings as to the terms of the contract are not supported by the evidence, we cannot determine if a remedy for unjust enrichment would be appropriate in this case. Therefore, the award of back rent and electricity to landlord is reversed and the matter is remanded for the court to make new findings based on the evidence presented at trial as to the terms of the parties’ agreement. Based on these findings, the court can determine if damages are appropriate either pursuant to an oral contract or as an equitable remedy for unjust enrichment.

  

We affirm the court’s award of damages to tenant Edson for the work he performed for landlord, concluding that the issue was tried by implied consent. Under the circumstances, the breach-of-contract claim was tried by “implied consent of the parties” and therefore should be treated as if it “had been raised in the pleadings.”  V.R.C.P. 15(b)

Finally, we conclude that an award of punitive damages was allowable as damages for breach of the warranty of habitability and affirm the award of punitive damages to tenant Well. There was sufficient evidence of willful and wanton conduct for the court to make an award of punitive damages.

• The trial court found that after being notified about habitability issues in the apartment, landlord took far more than a reasonable time to address those issues. See 9 V.S.A. § 4458(a) (allowing tenant to recover damages where landlord fails to make repairs “within a reasonable time”).
•  Landlord took seven days to fix the heat issue when a reasonable amount of time was two days.
• Landlord took nine days to address the lack of water when a reasonable time was twenty-four hours.
• Moreover, landlord did not offer to pay for tenant Well to stay in a hotel room while the apartment was not habitable until he was told by code enforcement that he had to do so.
• Landlord also used propane heaters in the basement of the apartment, which posed a serious fire hazard and a risk of carbon-monoxide poisoning.
• Landlord fraudulently represented to the city that the apartment was not occupied so he could avoid providing tenant with lead-paint notices.
•  Finally, landlord resorted to self-help by having Well’s car towed on two occasions to force her out of the premises without a court eviction order while the eviction proceedings were pending.

These facts are sufficient to show willful and wanton conduct and support an award for punitive damages

How cited

Restitution for Mutual mistake. Neither negligence nor imputed knowledge on part of plaintiff is a defense if there is an actual mistake and circumstances show unjust enrichment.

 Dover Corp. v. First Wisconsin Mortg. Trust, 139 Vt. 217, 425 A. 2d 97 (1980).

Plaintiff requested restitution based on a mutual mistake of fact relating to tax pro-rations at a closing. The trial court concluded that defendants had been unjustly enriched, and awarded $19,620.58 plus interest, reflecting the credits given defendants because of the mutual mistake as to the taxable year. Defendants appeal. We affirm.

Plaintiff, Dover Corporation, purchased the Mt. Snow ski area from defendants for a specific amount, subject to certain closing adjustments. The parties agreed to prorate the sewage taxes for the taxable year 1977 as of the date of closing. At the closing August 10, 1977,  defendants' agent represented that the sewage taxes had been paid in full for the fiscal year April 1, 1977, to March 31, 1978. Based on this understanding, the sewage taxes were prorated so that defendants received a credit for those taxes paid by them for the period from the date of closing to March 31, 1978.  However in fact the tax year was from January 1, 1977 to December 31, 1977, and the taxes were paid only through June 30, 1977.

Defendants challenge the court's conclusion that plaintiff was mistaken as to the proper taxable year, because  Plaintiff had received a title certificate from a local attorney noting, correctly, that the taxable year for sewage assessments ran from January 1, 1977, to December 31, 1977. Defendants argue that the knowledge of plaintiff corporation controls the issue of mistake and that the court's finding that plaintiff had received the correct facts before the closing adjustment precludes a claim of mistake.

"[A] mistake is an unintentional act or omission arising from ignorance, surprise, imposition or misplaced confidence, and it exists when a person under some erroneous conviction of law or fact does or omits to do some act which, but for the erroneous conviction, he would not have done or omitted." Ward v. Lyman, 108 Vt. 464, 472, 188 A. 892, 896 (1937). See also Restatement of Restitution § 6 (1937). The knowledge which may have been imputed to plaintiff from plaintiff's attorney is not the issue. Certainly here we have an example of misplaced confidence in the mistaken opinion of defendants' agent. We find no error.

Defendants further argue that the trial court abused its discretion in granting relief despite plaintiff's lack of care and vigilance. But negligence of the party injured should not prevent a court from correcting a mutual mistake of fact. Ward v. Lyman, supra. See also Restatement of Restitution § 59 (1937). Whether a mistake is to be corrected depends upon the circumstances of the case. Here defendants were found to be unjustly enriched and plaintiff alone would suffer injury if relief were not granted. We think the case affords a solid ground for relief.

Judgment affirmed.

Unclean hands defense precludes constructive trust as remedy for unjust enrichment claims based on an unmarried cohabitant’s investment in property owned by the other.

Shattuck v. Peck, 2013 VT 1 (Burgess, J.)  (Robinson, J., dissenting.)

Defendant appeals from a superior court judgment granting plaintiff  a writ of possession for the parties’ former residence in Cavendish and denying defendant’s counterclaim for an equitable interest in the Cavendish property and another former residence in Springfield. We affirm. 

A court may apply unclean hands doctrine, even where not set up as defense, where “the unconscionable character of a transaction” is plain. The property transfers were intended to circumvent governmental regulations that jeopardized defendants continued eligibility to receive Social Security disability benefits. Although the trial court here did not rule on this issue, there is no factual dispute concerning the intended purpose of the property transfers. The undisputed evidence demonstrates that defendant lacked the “clean hands” necessary for an award of equitable relief. Accordingly, we affirm the judgment on that basis. 

ROBINSON, J., dissenting. These parties were involved in a long-term, committed, intimate partnership. Defendant brought into the relationship substantial equity in the Springfield property and mobile home, and the trial court expressly found that she made a significant contribution to the purchase of the second parcel in Cavendish. Now that the parties’ relationship has ended with plaintiff holding legal title to both properties, the majority declines to address defendant’s claims for equitable relief on the ground that she has “unclean hands.” Because the majority relies solely on its own findings that defendant had a “guilty mind” when transferring her interests in the properties to plaintiff, without consideration of whether defendant actually benefitted from the arrangement, I respectfully dissent.

How cited