Imported Car Center, Inc. v. Billings

Annotate this Case
IMPORTED_CAR_CENTER_INC_V_BILLINGS.92-407; 163 Vt 76; 653 A.2d 765

[Filed:  28-Oct-1994]

[Motion for Reargument Denied 14-Dec-1994]

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. 92-407


Imported Car Center, Inc.                    Supreme Court

                                             On Appeal from
     v.                                       Chittenden Superior Court

Dorothy & Robert Billings                    February Term, 1994



Alden T. Bryan, J.

Mary G. Kirkpatrick of Lisman & Lisman, Burlington, for plaintiff-appellee

Richard R. Goldsborough of Jarvis & Kaplan, Burlington, for 
 defendants-appellants



PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



    GIBSON,  J.   Defendants Dorothy and Robert Billings appeal from the
trial court's denial of their motion for a new trial. We affirm. 

    In May 1989, Dorothy Billings was discharged from her employment as
office manager and bookkeeper for plaintiff Imported Car Center, Inc.
(ICC).  In June, ICC brought suit against Billings, alleging that she had
misappropriated ICC funds and converted them to her own use.  Billings
counterclaimed for unjust discharge and denial of employee benefits
promised by ICC. In connection with its lawsuit, ICC attached property
owned by defendant in the Town of 

 

Milton.  Subsequently, defendant transferred the property to herself and
her husband, Robert Billings, as tenants by the entirety.  In response, ICC
amended its complaint to add Robert Billings as a party defendant, alleging
that defendants had acted fraudulently in transferring the property, to the
hindrance of plaintiff's rights against Dorothy Billings. 

    Prior to trial, plaintiff deposed Dorothy Billings.  At the time,
Billings was under criminal investigation for embezzlement of funds from
plaintiff, and she responded to questions concerning her management of
funds with an invocation of the Fifth Amendment.  By the time the civil
trial began, Billings had been charged with the crime of grand larceny. 

    The civil case was tried in stages.  In phase one, the jury returned a
verdict against Dorothy Billings in the amount of $90,555: $26,795 on
account of misappropriated funds and $63,760 for consequential damages.  In
phase two, the jury awarded ICC $80,000 in punitive damages on account of
the conversion and found that a fraudulent conveyance had taken place. 
Defendants moved for a new trial, which the court denied.  This appeal
followed. 

    Consideration of a motion for new trial rests within the sound
discretion of the trial court.  V.R.C.P. 59(a); Hoague v. Cota, 140 Vt.
588, 591, 442 A.2d 1282, 1283 (1982).  To prevail, defendants must overcome
a heavy burden to show that the court abused its discretion.  Sachse v.
Lumley, 147 Vt. 584, 587, 524 A.2d 599, 601 (1987). 

    Defendants raise six issues on appeal, contending that the trial court
erred (1) in allowing the jury to draw an adverse inference from
defendant's invocation of the Fifth Amendment; (2) in its instruction that
the jury could consider plaintiff's legal expenses in awarding punitive
damages; (3) in failing to instruct the jury on issues raised in
defendants' counterclaim; (4) in its instruction regarding fraudulent
conveyance; (5) in its instruction on the presumed accuracy 

 

of the Vermont Property Transfer Tax Return; and (6) in refusing to reduce
the award for compensatory damages. 

                               I.

    Defendants' first claim is that the trial court erred in allowing the
jury to draw an adverse inference from Dorothy Billings's invocation of the
Fifth Amendment while being deposed prior to trial. During
cross-examination, plaintiff's counsel referred to the deposition
questions, and defendant testified that she had taken the Fifth Amendment
in response thereto. Subsequently, over defendants' objection, the court
instructed the jury that "you may consider her silence in determining the
weight to be given to her testimony, and you may draw from her silence such
inferences as you find logically and appropriately follow based on the
circumstances of this case."  Defendants grounded their objection to this
instruction on the Fifth Amendment. 

    On appeal, defendants argue that V.R.E. 512(a) should have barred the
instruction.  See V.R.E. 512(a) ("The claim of a privilege, whether in the
present proceeding or upon a prior occasion, is not a proper subject of
comment by judge or counsel. No inference may be drawn therefrom.").  Under
V.R.E. 1101, the Vermont privilege rules apply to both civil and criminal
proceedings.  Nevertheless, although the new ground for objection on appeal
might have had validity, "[t]he objection to the trial court's charge must
. . . relate to the claim of error on appeal."  Palmisano v. Townsend, 136
Vt. 372, 374, 392 A.2d 393, 395 (1978); see V.R.C.P. 51(b) (party must
state distinctly "the matter objected to and the grounds of the
objection").  The reason for this requirement is to allow the trial judge
to hear the objection and correct the charge before the jury retires,
Grazulis v. Curtis, 149 Vt. 371, 372, 543 A.2d 1324, 1325 (1988), thus
reducing the necessity for reversal and retrial.  Because defendants failed
to make an objection 

 

based on Rule 512(a) below, we are precluded from considering it on appeal.

    Defendants also contend that comment by plaintiff's counsel in closing
argument referring to her exercise of the privilege violated V.R.E. 512(a).
 Defendant failed to object when plaintiff's counsel referred to Dorothy
Billings's use of the Fifth Amendment privilege; therefore, that issue has
not been preserved for appeal, and we will not consider it.  See Poulin v.
Ford Motor Co., 147 Vt. 120, 125, 513 A.2d 1168, 1172 (1986) (issues not
objected to at trial will not be considered upon appellate review). 

                               II.

    Secondly, defendants contend that the trial court erred in phase two of
the trial by instructing the jury that it could consider plaintiff's legal
expenses in determining punitive damages.  In its instructions, the court
stated: 


     Included in the harm to plaintiff, you may consider the fact that 
     the plaintiff has been put to trouble and expense in the protection
     of its interests, as by the cost of legal proceedings in the course of 
     recovering its money.

       When I say that you may consider the extent of the plaintiff's 
     legal fees, I do not mean the plaintiff is entitled to recoupment of
     its legal expenses.  In this country, it is the general rule that each 
     party . . . must pay its own legal fees. . . . Although you cannot 
     award the plaintiff attorney's fees as such, you may consider what 
     the plaintiff has had to spend for legal fees in determining the 
     overall harm done to it by the defendant.


    Defendants objected, and on appeal, repeat their objection that the
instruction was misleading and erroneous in that it violated the "American
rule," under which each party to an action is required to pay its own
attorney's fees.  See Gramatan Home Investors Corp. v. Starling, 143 Vt.
527, 535, 470 A.2d 1157, 1162 (1983) (Vermont follows "American" rule, 

 

which requires each party to bear its own costs and attorney fees). 

    Plaintiff contends that the court was careful to distinguish between an
impermissible award of attorney's fees and consideration of legal expenses
in restoring plaintiff to the position it would have been in had there been
no fraud.  See Cushman v. Kirby, 148 Vt. 571, 578, 536 A.2d 550, 554 (1987)
(defrauded party entitled to benefit-of-the-bargain damages); see also
Restatement (Second) of Torts  908 cmt. e (1979) ("Included in
[determination of punitive damages] may be considered the fact that the
plaintiff has been put to trouble and expense . . . as by legal proceedings
in this or in other suits."). 

    Considering the instruction as a whole, State v. Norton, 147 Vt. 223,
235, 514 A.2d 1053, 1061 (1986), we find that the court was clear in
distinguishing an award of attorney's fees from plaintiff's burden of
expenses.  Rather than inviting a violation of the "American rule," the
instructions were a specific attempt to avoid such a result.  There was no
error. 

    Defendants also argue that malice may not be considered in assigning
punitive damages, and therefore, the court erred in instructing the jury
that it "may properly consider not merely the act itself but all
circumstances, including the motives of the wrongdoer."  Defendants
mistakenly rely on Lent v. Huntoon, 143 Vt. 539, 470 A.2d 1162 (1983), for
the proposition that malice may not be considered to enhance compensatory
damages. Contrary to defendants' assertion, however, "punitive damages may
be awarded on a showing of actual malice."  Id. at 550, 470 A.2d  at 1170;
see also Clymer v. Webster, 156 Vt. 614, 631, 596 A.2d 905, 915 (1991) ("As
a general rule, punitive damages are recoverable in any action for damages
based upon tortious acts, as long as the unlawful or wrongful acts evinced
personal ill will or showed a reckless or wanton disregard of another's
rights.") (citation omitted).  The court's instruction 

 

was not erroneous. 

                              III.

    Defendants also claim that the trial court erred by failing to charge
the jury on their counterclaim, which alleged unjust discharge and breach
of promises of employment benefits, including stocks, pension and
profit-sharing plans.  Defendants, however, failed to make a timely
objection to the charge, and the claim is therefore waived on appeal. 
V.R.C.P. 51(b); see O'Brien v. Island Corp., 157 Vt. 135, 141, 596 A.2d 1295, 1298 (1991) ("The failure of plaintiff to object to the absence of an
instruction on breach of warranty and strict liability also precludes
review by this Court."). 

                               IV.

    Defendants next claim that the court erred in its instructions to the
jury regarding fraudulent conveyance.  In phase one of the trial, the jury
found by a preponderance of the evidence that Dorothy Billings embezzled
approximately $27,000 of ICC funds during her employment, and therefore
owed ICC a debt in that amount. 

    Plaintiff alleged that defendant put the funds she had taken into the
purchase of a home, then fraudulently conveyed the home from her sole
ownership to that of herself and her husband as tenants by the entirety, in
an attempt to avoid the debt to plaintiff.  As the court instructed the
jury in phase two, "[W]here property is held by a married couple as tenants
by the entirety, it cannot be levied upon by a creditor to whom money is
owed by only one of the owners." 

    The court further instructed the jury that to prevail on its claim of
fraudulent conveyance, plaintiff must prove four elements: (1) defendant
Dorothy Billings owed a right, debt, or duty to plaintiff, (2) defendant
conveyed property that was subject to execution in satisfaction of her 

 

debt, (3) the conveyance was without fair consideration, and (4) both
Dorothy and Robert Billings acted fraudulently to the hindrance of ICC's
rights.  See 9 V.S.A.  2281 (fraudulent conveyance shall be null and void
against party whose right is attempted to be avoided); Gore v. Green Mtn.
Lakes, Inc., 140 Vt. 262, 265, 438 A.2d 373, 374 (1981) (setting forth
elements of fraudulent conveyance in case alleging that transfer was made
without consideration).  The court then charged that plaintiff must prove
each element beyond a reasonable doubt.  See Stevens v. Hart, 134 Vt. 217,
218, 356 A.2d 499, 501 (1976) (using "beyond a reasonable doubt"
evidentiary standard for fraudulent conveyance). 

    As to the existence of a right, debt, or duty, the court reminded the
jury that it had already "found that the defendant owed a debt to
[plaintiff] of approximately $27,000 in embezzled funds, plus consequential
damages."  On appeal, defendants claim this instruction erroneously led the
jury to believe it had already found the existence of the debt beyond a
reasonable doubt.  We disagree. 

    The evidentiary standard necessary for a verdict was clearly stated
twice in the instructions.  After discussing each element of the claim, the
court told the jury that "[i]f plaintiff has proved all of the essential
elements of fraudulent conveyance beyond a reasonable doubt . . . you
should find for the plaintiff.  If not so satisfied, you should find for
the defendants."  Moreover, the interrogatory submitted by the court to the
jury stated, "Do you find beyond a reasonable doubt that there existed a
right, debt or duty owed to the Imported Car Center prior to the conveyance
or transfer of the property in question?"  To this question, the jury
checked "Yes."  These instructions were clear and unambiguous.  We find no
error. 

 
                               V.

    Defendants contend that the court erred in instructing the jury that
the property tax form defendants executed was entitled to a presumption of
accuracy.  The form, signed by defendants under oath, stated that the
conveyance of the house from Dorothy Billings to her husband and herself as
tenants by the entirety was without consideration.  Lack of consideration
is one element of plaintiff's case.  Gore, 140 Vt. at 265, 438 A.2d  at 374.
 As proof that no consideration was exchanged for the conveyance of
Billings's house, plaintiff submitted Billings's property tax form into
evidence. 

    Information contained on a property tax return made under oath on the
personal knowledge of the signatory is entitled to a presumption of
accuracy, Becker v. Becker, 138 Vt. 372, 377, 416 A.2d 156, 160 (1980), but
the "presumption raised by the tax return information on the issue of
consideration may be fairly rebutted."  Id.  Here, Dorothy Billings
testified only that her husband had given money to her for the real estate
purchase.  The weight and credibility of the rebuttal evidence is a matter
for the jury.  The court's instruction was not error. 

                               VI.

    Finally, defendants claim the jury's verdict on compensatory damages
was not supported by the evidence.  In phase one of the trial, the jury
awarded plaintiff $90,555 in compensatory damages.  Of that amount, $26,795
was reimbursement for embezzled funds and $63,760 was for consequential
damages. 

    Plaintiff submitted to the jury an accounting of the consequential
damages, including salaries over a three-year period of employees who
examined and analyzed ICC books, costs of outside consultants, and expert
witnesses.  Defendants argue that this evidence supports a finding 

 

of only $50,986 in consequential damages, and that the additional $12,774
is unexplained and therefore unsupported by the evidence. 

    Unless grossly excessive, this Court will not interfere with an award
of damages where exact computation is impossible.  Lent, 143 Vt. at 553,
470 A.2d  at 1172.  Plaintiff claims that the initial finding of damages was
not a "fixed" number, that plaintiff continued to incur expenses throughout
the trial, and therefore, the exact amount of damages could not be
ascertained. The court's instructions to the jury indicate that the jury
was permitted to consider "out-of-pocket losses, i.e., the money taken by
Dorothy Billings . . . [and] the amount of any further monetary loss which
was caused by the conversion . . . and . . . interest from the time of the
conversion," which the court fixed at twelve percent.  In arguing that the
award was excessive, defendants overlook the factor of interest on the
$50,000, which could account for nearly all the "unexplained" amount of the
award.  We conclude that the award was within the evidence. 

    Taking each of defendants' issues in turn, we find no error and
therefore no abuse of discretion in the court's denial of the motion for a
new trial. 

    Affirmed. 

                                            FOR THE COURT:


                                            ___________________________________
                                            Associate Justice



-------------------------------------------------------------------------------
                         ON MOTION FOR REARGUMENT



[Filed 14-Dec-1994]

                           ENTRY ORDER

                 SUPREME COURT DOCKET NO. 92-407

                       FEBRUARY TERM, 1994

Imported Car Center, Inc.      }          APPEALED FROM:
                               }
     v.                        }          Chittenden Superior Court
                               }
Dorothy & Robert Billings      }          DOCKET NO. S737-89CnC

        In the above entitled cause the Clerk will enter:

  Defendant filed a motion to reargue on November 10, 1994, arguing that the
Court failed to address her argument that the trial court's instruction --
the jury may consider defendant's invocation of her fifth amendment privilege
and the inferences that follow -- amounted to plain error.  It is not clear
whether plain error is ground for reversal in civil cases.  Compare V.R.Cr.P.
51 (addressing both harmless and plain error) with V.R.C.P. 61 (addressing
only harmless error).  But see Varnum v. Varnum, 155 Vt. 376, 382-87, 586 A.2d 1107, 1110-1113 (1990) (reviewing issue not raised below where
fundamental rights and interests were at stake in civil case). 

  Even if plain error applies in civil cases, this is not the exceptional
case that requires reversal to prevent a miscarriage of justice.  Independent
of defendant's refusal to testify, there is ample evidence in the record
before us that defendant mishandled plaintiff's funds. Consideration of
defendant's silence did not cause a miscarriage of justice; we therefore
decline to reverse on this basis.  Cf. Varnum, 155 Vt. at 387, 586 A.2d  at
1113 (consideration of defendant's religion in determining custody of
children did not cause miscarriage of justice). 

                    BY THE COURT:

                    _______________________________________
                    Frederic W. Allen, Chief Justice

                    _______________________________________
                    Ernest W. Gibson III, Associate Justice

                    _______________________________________
                    John A. Dooley, Associate Justice

                    _______________________________________
                    James L. Morse, Associate Justice

                    _______________________________________
                     Denise R. Johnson, Associate Justice



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