Court Opinion

ID: 4235130
Source: CourtListenerOpinion
Date Created: 2018-01-09 16:11:54.018767+00
Date Added: 2024-06-11T14:43:16.756948
License: Public Domain

MAINE	SUPREME	JUDICIAL	COURT	                                       Reporter	of	Decisions	
Decision:	 2018 ME 1 
Docket:	   Pen-17-233	
Argued:		  November	15,	2017	      	     	     	    	      	
Decided:	  January	9,	2018	
	
Panel:	    SAUFLEY,	C.J.,	and	ALEXANDER,	MEAD,	GORMAN,	JABAR,	HJELM,	and	HUMPHREY,	JJ.	
	
	
                           ESTATE	OF	STEPHEN	E.	LIBBY	
	
	
GORMAN,	J.	

      [¶1]	 	 Sherryl	 L.	 Albert,	 individually	 and	 as	 personal	 representative	 of	

the	 Estate	 of	 Stephen	 E.	 Libby	 (Stephen	 Sr.),	 appeals	 from	 a	 purported	

judgment	of	the	Penobscot	County	Probate	Court	(R.	Bradford,	J.)	adopting	the	

report	of	a	referee	and	imposing	a	constructive	trust	on	her	interests	in	real	

property.		Sherryl	argues	that	the	court	erred	 because	there	was	insufficient	

evidence	to	support	the	referee’s	conclusion	that	she	committed	constructive	

fraud.	 	 We	 hold	 that	 the	 court	 did	 not	 err	 in	 adopting	 the	 referee’s	 report	

imposing	 a	 constructive	 trust,	 but	 we	 remand	 to	 the	 Probate	 Court	 with	

direction	to	enter	an	effective	judgment.	

                                   I.		BACKGROUND	

      [¶2]		Stephen	Sr.	died	in	November	of	2013	and	his	will,	which	named	

Sherryl	as	personal	representative	of	his	estate,	was	filed	with	the	Penobscot	

County	 Probate	 Court	 in	 January	 of	 2014.	 	 Stephen	 Sr.	 identified	 his	 five	
2	

children,	including	Sherryl,	in	his	will.		At	issue	in	this	appeal	are	transfers	of	

real	 property	 that	 took	 place	 in	 2001,	 2011,	 and	 2013	 from	 Stephen	 Sr.	 to	

Sherryl.		As	a	result	of	these	transfers,	upon	Stephen	Sr.’s	death,	Sherryl	was	

the	 sole	 legal	 owner	 of	 two	 properties,	 and	 she	 owned	 a	 one-half	 interest	 in	

six	 additional	 properties	 as	 a	 tenant	 in	 common	 with	 Nancy	 Libby,	 Sherryl’s	

mother	and	Stephen	Sr.’s	estranged	wife.	

         [¶3]	 	 While	 the	 probate	 of	 Stephen	 Sr.’s	 estate	 was	 underway,	 Sherryl	

filed	 a	 complaint	 against	 Stephen	 E.	 Libby	 II	 (Stephen	 Jr.),	 her	 brother	 and	

Stephen	 Sr.’s	 son,	 and	 he	 responded	 by	 filing	 a	 nine-count	 counterclaim	

against	 Sherryl.	 	 By	 agreement	 of	 the	 parties	 and	 an	 order	 dated	

February	9,	2016,	the	Probate	Court	assigned	a	referee	to	hear	Sherryl’s	claim	

and	 Stephen	 Jr.’s	 counterclaim.1	 	 14	 M.R.S.	 §	 1151	 (2017);	 M.R.	 Prob.	P.	53;	

M.R.	Civ.	P.	53(b)(1).	

         [¶4]	 	 Stephen	 Jr.’s	 counterclaim	 alleged,	 in	 part,	 that	 Stephen	 Sr.	

conveyed	his	property	interests	to	Sherryl	conditioned	on	her	agreement	that	

she	 would	 hold	 the	 property	 for	 the	 benefit	 of	 all	 his	 children	 and	 would	

convey	 her	 interests	 back	 to	 the	 estate	 or	 into	 an	 appropriate	 trust	 after	

Stephen	Sr.’s	death.		Sherryl	refused	to	convey	her	interests	after	Stephen	Sr.’s	

     1	 	 Sherryl’s	 complaint	 consisted	 of	 three	 counts,	 none	 of	 which	 is	 at	 issue	 in	 this	 appeal.	 	 The	

parties	agreed	to	proceed	on	Stephen	Jr.’s	counterclaim,	which	forms	the	basis	for	this	appeal.	
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death	 and	 Stephen	 Jr.	 argued	 that	 her	 refusal	 constituted	 constructive	 fraud.		

Stephen	 Jr.	 requested	 a	 judgment	 imposing	 a	 constructive	 trust	 on	 the	

property	at	issue.2	

       [¶5]	 	 The	 referee	 held	 a	 two-day	 testimonial	 hearing	 regarding	

Stephen	Jr.’s	 counterclaim	 on	 December	 14	 and	 16,	 2016.	 	 The	 referee’s	

report,	dated	January	17,	2017,	found	in	pertinent	part	that	Stephen	Sr.	“held	

his	 daughter,	 Sherryl	 Albert,	 in	 a	 position	 of	 trust,”	 and	 found	 “by	 clear	 and	

convincing	 evidence	 that	 all	 of	 the	 Maine	 real	 estate	 conveyed	 to	 Sherryl	 for	

no	consideration	or	payment	was	conveyed	to	her	to	hold	in	trust	for	[Stephen	

Sr.’s]	 children.”	 	 The	 referee	 concluded	 that	 Sherryl	 committed	 constructive	

fraud	 and	 recommended	 the	 imposition	 of	 a	 constructive	 trust	 on	 all	 of	 the	

Maine	real	estate	Stephen	Sr.	conveyed	to	Sherryl	in	2001	and	thereafter.	

       [¶6]	 	 Sherryl	 filed	 a	 timely	 objection	 to	 the	 referee’s	 report.	 	 See	 M.R.	

Civ.	P.	53(e)(2).		The	Probate	Court	held	a	hearing	on	Sherryl’s	objections	and,	

finding	no	errors,	adopted	the	referee’s	report	and	ordered	judgment	“entered	

in	 the	 record.”	 	 See	 14	 M.R.S.	 §	1155	 (2017);	 M.R.	 Civ.	 P.	 53(e)(2).	 	 Sherryl	

appeals.		18-A	M.R.S.	§	1-308	(2017);	M.R.	App.	P.	2	(Tower	2016).	

   2		The	referee	found	and	the	parties	do	not	appear	to	dispute	that	Stephen	Sr.	was	motivated	to	

make	the	property	transfers	to	Sherryl,	at	least	in	part,	to	prevent	his	estranged	wife	from	getting	
his	property	when	he	died.	
4	

                                   II.		DISCUSSION	

      [¶7]		“When	a	trial	court	accepts	a	report	of	a	referee,	the	findings	of	the	

referee	 become	 the	 trial	 court’s	 findings,	 and	 we	 review	 those	 findings	

directly.”	 	 Wechsler	 v.	 Simpson,	 2016 ME 21,	 ¶	 12,	 131 A.3d 909  (quotation	

marks	 omitted).	 	 The	 referee’s	 “findings	 are	 entitled	 to	 very	 substantial	

deference	 because	 of	 the	 referee’s	 opportunity	 to	 observe	 and	 assess	 the	

witnesses’	 testimony.”	 	 Karamanoglu	 v.	 Gourlaouen,	 2016 ME 86,	 ¶	 11,	

140 A.3d 1249  (quotation	 marks	 omitted).	 	 We	 review	 the	 referee’s	 factual	

findings	for	clear	error	and	the	application	of	the	law	to	the	facts	de	novo.		Id.	

      [¶8]	 	 A	 trial	 court	 may	 impose	 a	 constructive	 trust	 on	 real	 property	

when	a	grantee	commits	constructive	fraud.		Baizley	v.	Baizley,	1999 ME 115,	

¶	7,	734 A.2d 1117.		We	have	explained	that	

        [c]onstructive	 fraud	 occurs	 when	 the	 grantor	 transfers	 property	
        to	 the	 grantee,	 who	 promises	 or	 agrees	 to	 hold	 the	 property	 for	
        the	 benefit	 of	 the	 grantor	 or	 a	 third	 party,	 and	 the	 grantor	 is	
        induced	 to	 act	 through	 reliance	 on	 a	 relationship	 of	 trust	 which	
        may	 be	 founded	 on	 moral,	 social,	 or	 personal,	 as	 well	 as	 legal	
        duties.	 	 In	 such	 situations,	 the	 grantee	 abuses	 the	 resulting	
        fiduciary	 relationship	 if	 he	 fails	 to	 perform,	 and	 he	 will	 then	 be	
        treated	by	the	court	as	a	constructive	trustee	for	the	beneficiary.	
        	
Id.	 (citations	 omitted)	 (quotation	 marks	 omitted).	 	 To	 impose	 a	 constructive	

trust	 on	 this	 basis,	 the	 court	 must	 find	 that	 “there	 is	 clear	 and	 convincing	

evidence	 of	 an	 agreement	 between	 the	 grantor	 and	 the	 grantee	 to	 benefit	
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another	 party.”	 	 Id.	 ¶	 8.	 	 When	 the	 standard	 at	 trial	 is	 clear	 and	 convincing	

evidence,	 we	 consider	 on	 appeal	 “whether	 the	 factfinder	 could	 reasonably	

have	been	persuaded	that	the	required	factual	finding	was	or	was	not	proved	

to	be	highly	probable.”		Id.	(quotation	marks	omitted).	

       [¶9]	 	 Contrary	 to	 Sherryl’s	 contentions,	 the	 record	 contains	 evidence	

from	 which	 the	 referee	 “could	 reasonably	 have	 been	 persuaded	 that	 it	 was	

highly	 probable,”	 Baillargeon	 v.	 Estate	 of	 Daigle,	 2010 ME 127,	 ¶	 17,	

8 A.3d 709,	 that	 (1)	 a	 relationship	 of	 trust	 existed	 between	 Stephen	 Sr.	 and	

Sherryl	 and	 (2)	 Stephen	 Sr.	 and	 Sherryl	 agreed	 that	 she	 would	 “hold	 the	

property	 for	 the	 benefit”	 of	 all	 of	 Stephen	 Sr.’s	 children.	 	 See	 Baizley,	

1999 ME 115,	¶¶	7,	9,	734 A.2d 1117.		“Because	clear	and	convincing	evidence	

existed	 of	 a	 constructive	 fraud,	 the	 court	 did	 not	 err	 when	 it	 imposed	 a	

constructive	trust	on	the	property.”3		Id.	¶	9.	

       [¶10]	 	 Although	 we	 conclude	 the	 court	 did	 not	 err	 in	 adopting	 the	

referee’s	report,	the	court’s	docket	entry	does	not	comply	with	Rules	58	and	

79	of	the	Maine	Rules	of	Probate	Procedure	regarding	the	entry	of	judgment.		

See	M.R.	Prob.	P.	58,	79(a).		The	docket	entry	stated	merely,	“THE	REFEREE’S	

   3		Because	we	conclude	the	court	did	not	err	regarding	the	constructive	fraud	count,	we	do	not	

address	Sherryl’s	arguments	relating	to	the	referee’s	findings	and	conclusions	on	the	count	alleging	
abuse	of	a	fiduciary	relationship.	
6	

REPORT	IS	HEREBY	ADOPTED	AND	JUDGMENT	IS	HEREBY	ENTERED	ON	THE	

RECORD.”		Because	imposing	a	constructive	trust	would	affect	Sherryl’s—and	

her	 sibling’s—rights	 and	 duties	 regarding	 the	 properties	 at	 issue,	 “[t]he	

docket	entry	in	this	instance	does	not	specify	the	form	of	[equitable]	relief	and	

thus	 does	 not	 constitute	 an	 effective	 entry	 of	 judgment.”	 	 See	 Rossignol	 v.	

Raynes,	 650 A.2d 935,	 936	 (Me.	 1994);	 York	 Mut.	 Ins.	 Co.	 of	 Me.	 v.	 Mooers,	

415 A.2d 564,	 566	 (Me.	 1980)	 (“An	 order	 to	 the	 clerk	 to	 enter	 ‘judgment	 for	

the	 defendants’	 does	 not	 adjudicate	 what	 the	 respective	 rights,	 duties	 and	

liabilities	of	the	various	parties	.	.	.	may	be.”).	

      [¶11]		While	we	normally	dismiss	appeals	lacking	an	effective	entry	of	

judgment,	see	Town	of	Freeport	v.	Ocean	Farms	of	Me.,	Inc.,	600 A.2d 402,	403	

(Me.	 1991);	 Dufour	 v.	 Silsby,	 405 A.2d 737,	 739	 (Me.	 1979),	 in	 this	 case	 we	

conclude	that	the	court	intended	to	“reflect[]	an	adjudication	of	the	dispute[s]	

before	 the	 court”	 when	 it	 adopted	 the	 referee’s	 report.	 	 Murphy	 v.	 Maddaus,	

2002 ME 24,	¶	12,	789 A.2d 1281 (quotation	marks	omitted);	see	Bank	of	Me.	

v.	Giguere,	309 A.2d 114,	117	(Me.	1973)	(“We	believe	that	the	language	of	the	

Justice—although	somewhat	equivocal—was	intended	to	be	his	judgment	that	

the	rights	of	the	parties	are	as	the	Referee	has	determined	them	.	.	.	.”).		“When,	

as	 here,	 the	 issue	 is	 clearly	 presented	 and	 neither	 party	 has	 questioned	 the	
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sufficiency	 of	 the	 court’s	 order,	 we	 determine	 that	 judicial	 economy	 is	 best	

served	 by	 affirming	 the	 court’s	 clear	 intention.”	 	 3	 W	 Partners	 v.	 Bridges,	

651 A.2d 387,	389	(Me.	1994);	see	4	M.R.S.	§	57	(2017).		While	we	affirm	the	

court’s	 adoption	 of	 the	 referee’s	 report	 recommending	 the	 imposition	 of	 a	

constructive	trust	based	on	constructive	fraud,	“we	must	direct	that	the	court	

enter	an	appropriate	judgment	on	remand.”		3	W	Partners, 651 A.2d	at	389.	

         The	entry	is:	

                            Order	 adopting	 referee’s	 report	 affirmed.		
                            Remanded	 with	 direction	 that	 the	 court	 order	
                            entry	 of	 judgment	 as	 outlined	 in	 the	 referee’s	
                            report,	 describing	 with	 particularity	 the	
                            property	 subject	 to	 a	 constructive	 trust,	 the	
                            interests	of	the	parties	in	that	property,	and	the	
                            obligations	 of	 the	 parties	 pursuant	 to	 the	
                            judgment,	and	that	the	clerk	enter	the	judgment	
                            on	the	docket	in	accordance	with	Rules	58	and	
                            79	of	the	Maine	Rules	of	Probate	Procedure.	
	
	     	       	      	        	      	
	
Thomas	 L.	 Douglas,	 Esq.	 (orally),	 and	 Sarah	 A.	 McDaniel,	 Esq.,	 Douglas	
McDaniel	 &	 Campo	 LLC,	 PA,	 Westbrook,	 for	 appellants	 Sherryl	 L.	 Albert	 and	
the	Estate	of	Stephen	E.	Libby	
	
Charles	 E.	 Gilbert,	 III,	 Esq.	 (orally),	 Gilbert	 &	 Greif,	 P.A.,	 Bangor,	 for	 appellee	
Stephen	E.	Libby	II	
	
	
Penobscot	County	Probate	Court	docket	number	2014-040-4	
FOR	CLERK	REFERENCE	ONLY