Case Title: Copper v. Cooper

Citation: 173 Vt. 1, 783 A.2d 430

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2001-09-21T00:00:00Z

Document:
Cooper v. Cooper (99-421); 173 Vt. 1; 783 A.2d 430

[Filed 21-Sept-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 1999-421

Beatrice Cooper	                                 Supreme Court

                                                 On Appeal from
     v.	                                         Addison Superior Court

Karen Wenig Cooper, Brian Cooper and	        January Term, 2001
Herman Cooper

Dean B. Pineles, J.

James C. Foley, Jr., of Deppman & Foley, P.C., Middlebury, for 
  Plaintiff-Appellant.

James A. Dumont of Keiner & Dumont, P.C., Middlebury, for Defendant-Appellee.

Frank H. Langrock of Langrock Sperry & Wool, LLP, Middlebury, for D
  efendant-Appellant.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       SKOGLUND, J.  This case, which began as a foreclosure action and which
  culminated in a  jury award to an original mortgagee for emotional
  distress, lost income and punitive damages,  illustrates the fundamental
  concept that co-tenants to real estate bear fiduciary obligations to each 
  other.  We affirm the trial court's decision to grant summary judgment to
  Karen Wenig in the  foreclosure action, and affirm its holding that Herman
  Cooper committed a breach of fiduciary duty  against Karen Wenig, his
  co-tenant.  Further, we affirm the jury award of damages for emotional 
  distress against both Herman Cooper and his wife, Beatrice Cooper, and the
  punitive damages award 

 

  against Herman Cooper.  We reverse and remand on the issue of Herman
  Cooper's contribution  claim.

                           I.  Procedural History

       The property involved was purchased in April of 1983 by Herman Cooper,
  his son Brian  Cooper and Brian's now ex-wife, Karen Wenig, as joint
  tenants.  In May of 1994, Beatrice Cooper,  wife of Herman and mother to
  Brian, purchased the mortgage on this property and, in July of 1996, 
  instituted foreclosure proceedings against the owners.  Karen
  counterclaimed against Beatrice and  cross-claimed against her co-tenants. 
  The trial court granted Karen's motion for summary judgment  in the
  foreclosure action, finding that Herman and Beatrice acted together to
  purchase the mortgage  on behalf of the remaining co-tenants.  The court
  granted partial summary judgment to Karen on her  violation of fiduciary
  duties counterclaim and cross-claims.  It found, as a matter of law, that
  Herman  violated his duty to his co-tenant and that, as a matter of law,
  Beatrice was acting as Herman's agent  when she purchased the mortgage. 
  The court also found that Karen and Brian owed to Beatrice and  Herman a
  duty of contribution with respect to the amounts paid by Beatrice and
  Herman to buy the  mortgage, but reserved the contribution claim until
  after trial on Karen's claim for damages.  The  matter proceeded to trial
  on Karen's claim for damages for Herman's breach of fiduciary duty as a 
  result of the commencement of the foreclosure action; on the claim that
  Beatrice was liable for aiding  Herman's breach of fiduciary duty; and on
  whether Brian had breached his fiduciary duty to Karen.   At trial the
  court directed a verdict in favor of Brian on Karen's claims against him. 
  With respect to  Herman, the case went to the jury on damages for emotional
  distress, lost income and punitive  damages.   As to Beatrice, the case
  went to the jury on the issue of her liability for aiding Herman's  breach
  of fiduciary duty and on the emotional distress and lost income damage
  claim.   

 

       As against Herman, the jury awarded Karen $20,000 for emotional
  distress damages and  $239,000 in punitive damages.  Karen was awarded
  $20,000 from Beatrice for her participation in  Herman's breach of
  fiduciary duty and for the emotional harm suffered by Karen.  This appeal 
  followed.  

       On appeal, Beatrice claims that the trial court erred in denying her
  request for a directed  verdict on the claim that she knowingly
  participated in the breach of Herman's fiduciary duty and in  denying her
  claim for contribution or reimbursement.  Herman claims on appeal that the
  court erred  in its summary judgment decision in finding that he breached
  his fiduciary duty to his co-tenant,  Karen, and that the co-tenant was
  entitled to a trial on damages.  Further, he argues that the trial court 
  erred in instructing the jury on the issue of emotional distress and on
  punitive damages.  Finally, he  argues that the trial court erred in
  deferring to a New York divorce court the question of his right to 
  contribution from his co-tenants. 

                    II.  Ownership and Relational History

       A history of the litigants is required to understand the land
  ownership and contribution issues  presented in this case.  Brian and Karen
  were married in the early 1980's.  In early 1983, Karen and  Brian, who
  lived in New York City, decided they wanted a second home and located
  property in  Lincoln, Vermont.  Herman helped Brian and Karen purchase the
  Lincoln property by providing a  portion of the purchase price.  Title to
  the property was deeded to all three, with Herman having a  50% interest as
  a joint tenant with rights of survivorship as to Brian and Karen, who held
  their 50%  share as tenants by the entirety. 

       As part of the purchase, the parties assumed a note and mortgage to
  the Lomas and Nettleton  Company, a mortgage company.  Initially Herman
  paid the monthly mortgage, taxes and expenses 

 

  associated with the property, but sometime in 1986, Brian commenced making
  these payments for  the three owners. 

       In 1992, Karen and Brian began divorce proceedings in New York City. 
  At approximately  the same time, Brian stopped paying the mortgage on the
  Lincoln property.  In 1993, Cateret Savings  Bank, the mortgagee of the
  Lincoln property as successor in interest to Lomas and Nettleton, 
  commenced foreclosure proceedings on the property.  Karen, through her
  attorney, filed a motion to  dismiss the foreclosure action, challenging
  the validity of the mortgage.  Co-tenant Herman  consulted with his wife
  and their attorney about how to respond to the foreclosure action, and it
  was  decided by the three that Beatrice should purchase the mortgage in her
  name, which she did for  $75,000 in May of 1994. The foreclosure action
  initiated by Cateret terminated.  At this time,  Herman and their attorney
  executed a straw transfer, to the effect of converting the joint tenancy to
  a  tenancy in common, thus destroying Karen's right of survivorship in
  Herman's interest. 

       Upon learning that Beatrice had purchased the mortgage, Karen, through
  her attorney, sent  two letters to Beatrice's attorney.  The first
  requested information and documentation regarding  Beatrice' purchase of
  the mortgage, and queried as to what claims, if any, were retained by the 
  previous mortgagee against Karen and the extent of any claims Beatrice had
  against Herman, Brian  and Karen.  Karen's second letter, dated three
  months later, requested a meeting to discuss the  property.  Karen received
  no response to either letter.  During this period, no demand for payment on 
  the mortgage was made to Karen.

       Then, in July 1996, Beatrice notified Herman, Brian and Karen that the
  mortgage was in  default and that the total due on the mortgage,
  $97,177.70, was due and payable within thirty days.   When payment was not
  forthcoming, Beatrice filed the foreclosure action.

 

       Other facts pertinent to the case will be provided in the decision
  that follows.  

                       III.  Breach of Fiduciary Duty

       We first address Herman's claim that the court erred in granting
  Karen's motion for partial  summary judgment against him and determining
  that he was liable for damages for a breach of  fiduciary duty to his
  co-tenant because of his participation in the foreclosure action.

       On appeal, we review a court's disposition of a summary judgment
  motion by applying the  same standard as the trial court.  Rennie v. State,
  __ Vt. __, __,