Shahi v. Donnelly ( 2010 )

Shahi v. Donnelly, No. 496-9-06 Wrcv (Eaton, J., Apr. 14, 2010)
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
STATE OF VERMONT
WINDSOR COUNTY
KAVEH SHAHI and LESLIE SHAHI )
) Windsor Superior Court
v. ) Docket No. 496-9-06 Wrcv
)
DEIRDRE DONNELLY )
DECISION RE: CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
Plaintiffs Kaveh and Leslie Shahi recovered a substantial jury verdict in 2006
against defendant’s husband, Daniel Madden, for a variety of torts including timber
trespass and invasion of privacy. Plaintiffs now seek to establish that defendant Deirdre
Donnelly is liable for the same harm under theories of conspiracy, negligent supervision,
and agency. The present question before the court is whether the 2006 jury verdict has
any preclusive effects in this case.
Both parties have filed cross-motions for partial summary judgment. Plaintiffs
seek a ruling that Donnelly is precluded from relitigating any of the issues that were
decided adversely to her husband in the 2006 jury trial. Plaintiffs concede that Donnelly
was not a named party in the jury trial but nevertheless argue that the verdict settled both
the amount of damages and the fact that Madden committed the underlying torts. In
plaintiffs’ view, the only issue in this case is whether Donnelly should be held liable for
the same harm.1
Donnelly argues that she was not a party to the 2006 jury trial. She points out that
plaintiffs filed two different motions seeking to join her as a party to that proceeding, but
that plaintiffs withdrew both motions before jury draw. She therefore seeks application
of the general rule that “one is not bound by a judgment in personam in a litigation in
which [s]he is not designated as a party or to which [s]he has not been made a party by
service of process.” Taylor v. Sturgess, 128 S. Ct. 2161, 2166–67 (2008) (quoting
Hansberry v. Lee, 311 U.S. 32, 40 (1940)). Donnelly also argues that the 2006 judgment
precludes plaintiffs from pursuing any of their current claims against her because
plaintiffs should have raised these claims during the previous lawsuit.
For the following reasons, the court rules first that plaintiffs are not entitled to the
application of issue preclusion in this case since Donnelly was neither a named party nor
in privity with a party during the 2006 jury trial; the policy interests against duplicative
litigation are outweighed here by the more general and “deep-rooted historic tradition that
everyone should have his own day in court.” 18A Wright, Miller & Cooper, Federal
Practice and Procedure: Jurisdiction 2d § 4449. The court then concludes that the
1
There are two other claims in the complaint (fraudulent conveyance and a request for declaratory
judgment) that do not depend upon establishing Donnelly’s liability for the underlying torts. Those claims
are not relevant to this decision.
doctrine of claim preclusion does not prevent plaintiffs from bringing consecutive
lawsuits against separate parties under the circumstances presented here.
I.
The first issue is whether plaintiffs are entitled to the application of issue
preclusion in this lawsuit. Plaintiffs argue that the 2006 jury verdict resolves both the
amount of damages and the fact that Madden committed the underlying torts. Plaintiffs
acknowledge that defendant was not a named party during the jury trial but nevertheless
contend that she participated in the case to such an extent that she became bound by the
verdict.
The following facts are taken as true for the purposes of plaintiffs’ motion for
summary judgment.2 Donnelly and Madden used to live at a townhouse in West
Woodstock. During their time there, they were issued a no-trespass order preventing
them from engaging in timber trespass in the common areas. There were also several
incidents that resulted in complaints and criminal allegations against Madden. Donnelly
was aware of the incidents and even went so far as to sue one of the complainants.
Donnelly and Madden then purchased the Densmore Hill property. Donnelly
financed the work and Madden oversaw the construction. Madden’s presence on the
property resulted in damage to plaintiffs and the filing of two different lawsuits. The
first, referred to here as Shahi I, settled out of court. Madden and Donnelly were
represented by the same attorney in that lawsuit.
Madden was the only defendant named in the original complaint in the second
lawsuit, known as Shahi II. Donnelly eventually entered an appearance in the case,
however, in order to oppose plaintiffs’ discovery requests for the couple’s mortgage
records. Donnelly was represented by a lawyer who also entered an appearance on behalf
of Madden (even though Madden had previously represented that he was without funds to
hire an attorney). Donnelly’s attorney filed discovery motions, and she was treated in the
2
Plaintiffs’ motion for partial summary judgment was accompanied by a request for enlargement
of time based on claimed deficiencies in defendant’s responses to discovery. The background here is as
follows. The case was commenced by filing in 2006. After a number of lengthy delays, the parties agreed
to file any substantive motions on the preclusion issues by September 1, 2009. Both parties then filed
cross-motions for partial summary judgment on the issue as well as responsive pleadings. Numerous other
motions concerning discovery matters were also filed, and plaintiffs now contend that the discovery
disputes have prevented them from establishing certain facts relevant to their arguments on the issue of
privity. Plaintiffs accordingly seek a ruling that the present cross-motions should be denied as prematurely
filed. See Poplaski v. Lamphere, 152 Vt. 251, 254–55 (1989) (explaining that summary judgment motions
should be decided after there has been “an adequate time for discovery”). Plaintiffs have set forth the facts
that they wanted more time to support, however, and it does not appear to the court that these facts would
change the outcome of the cross-motions even if plaintiffs had more time to develop factual support for the
allegations. The court has therefore assumed the allegations to be true for the purposes of the cross-
motions. Plaintiffs’ motion to enlarge the time for discovery is accordingly denied. See Al Baraka
Bancorp (Chicago), Inc. v. Hilweh, 163 Vt. 148, 155 (1994) (summary judgment rulings were not
premature where it was not shown that additional discovery would have changed the outcome). It has been
more than three years since the case was filed. It is time to move this case forward.
2
case as an “interested party” on some pleadings and court notices. She was deposed. But
she was not added as a party-defendant.
Plaintiffs filed two different motions seeking to join Donnelly as a party
defendant. Donnelly opposed both motions, and plaintiffs subsequently withdrew both
motions before the jury draw. The case was tried against Madden alone. The jury
returned a verdict against Madden and the verdict was affirmed on appeal.
More than two years after the jury verdict, plaintiffs sought an injunction in the
same docket that would have prevented Madden from coming within a certain distance of
them or their property. Donnelly intervened in these proceedings and participated in
evidentiary hearings in which she questioned the facts as they were found by the jury.
She eventually appealed from the final order granting injunctive relief to plaintiffs.
Taken together, plaintiffs argue that these facts show that Donnelly participated in
the underlying litigation either as an interested party or as an intervenor, and that she
controlled the defense in the underlying trial by financing the litigation. Plaintiffs are
presently seeking more information about the couple’s finances in order to prove the
extent of Donnelly’s financial contributions to the Shahi II litigation. In the end,
plaintiffs seek a ruling that Donnelly was either a de facto party or in privity with her
husband during the Shahi II litigation.
The general principles of issue preclusion are well settled. Application of the
doctrine requires proof that (1) preclusion is being “asserted against one who was a party
or in privity with a party in the earlier action; (2) the issue was resolved by a final
judgment on the merits; (3) the issue is the same as the one raised in the later action; (4)
there was a full and fair opportunity to litigate the issue in the earlier action; and (5)
applying preclusion in the later action is fair.” Scott v. City of Newport, 2004 VT 64, ¶ 8,
177 Vt. 491 (mem.) (quoting Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265
(1990)). Of these elements, the most important for purposes of the present case is
whether preclusion is being asserted against one who was a party or in privity with a
party during the earlier action.
Plaintiffs argue first that Donnelly had notice of the 2006 litigation and should
have intervened in the case as a party-defendant if she wanted to contest the facts that
were decided therein. This argument rests upon the murky assertion that nonparties may
sometimes have a duty to intervene in lawsuits in which they may potentially be liable,
and that preclusion is a consequence of a breach of that duty. It also bucks the “basic
premise of preclusion” that “parties to a prior action are bound and nonparties are not
bound.” 18A Federal Practice and Procedure, supra, at § 4449.
Intervention, of course, is a permissive procedure that “permits a nonparty to
become a party when it wishes.” 18 Federal Practice and Procedure, supra, at § 4452
(emphasis added). There are no civil procedural rules that require mandatory
intervention under any circumstances (the rules provide for mandatory joinder instead)
and there are similarly no common-law rules that impose upon any person “the burden of
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voluntary intervention in a suit to which he is a stranger.” Chase National Bank v.
Norwalk, 291 U.S. 431, 441 (1934). As such, attempts to blend preclusion doctrines with
a theory of mandatory intervention are both awkward and fraught with due-process
concerns. It is better to conclude that “a nonparty is not precluded from relitigating
matters decided in a prior action simply because it passed by an opportunity to
intervene.” 18A Federal Practice and Procedure, supra, at § 4452; Perez-Guzman v.
Gracia, 346 F.3d 229, 237–38 (1st Cir. 2003). “Joinder as a party, rather than knowledge
of a lawsuit and an opportunity to intervene, is the method by which potential parties are
subjected to the jurisdiction of the court and bound by a judgment or decree.” Martin v.
Wilks, 490 U.S. 755, 765 (1989).3 For these reasons, the court does not accept plaintiffs’
invitation to forge a new rule of mandatory intervention that would bind Donnelly to the
results of the 2006 jury trial.
Plaintiffs argue next that Donnelly should be bound by the judgment because she
participated as an “interested person” during the pretrial discovery phase. The general
rule, however, is that preclusion does not apply to persons who make appearances in
lawsuits for the purposes of discovery or who testify as witnesses, because such limited
participation does not equate to “a full and fair opportunity to litigate the claims and
issues settled in that suit.” Taylor v. Sturgess, 128 S. Ct. 2161, 2171 (2008). Formal
designation as a party is usually the prerequisite, 18A Federal Practice and Procedure,
supra, at § 4449, and here it is undisputed that Donnelly was not formally named as a
party-defendant at the trial. As such, Donnelly’s participation as an interested person
alone does not support a finding of preclusion.
Plaintiffs also argue that Donnelly should be bound by the judgment because she
did in fact intervene in the proceedings regarding the post-judgment injunction. Yet
those proceedings occurred more than two years after the jury verdict was returned and
after the appeal from the trial was completed. The post-judgment injunction also
involves a wholly different facet of the case than the questions that were resolved in the
jury trial. As such, the court is not persuaded that it would be fair to bind Donnelly to the
judgment based on her intervention at such a late date. Indeed, it is the lateness of the
intervention that distinguishes this case from Watergate West, Inc. v. Barclays Bank, S.A.,
759 A.2d 169 (D.C. 2000), upon which plaintiffs rely. That case stands for the
proposition that a party may become bound by a judgment when it intervenes in the case
shortly after judgment is issued, requests reconsideration of the judgment, files briefs
with the trial court, appeals from the judgment, and actively participates in post-judgment
enforcement proceedings. Id. at 179–80. It seems to the court that the hotel’s
involvement in Watergate West was materially more relevant to the underlying judgment
than Donnelly’s participation in the injunction proceedings here. As a result, the court
does not find Watergate West to be persuasive support for the contention that Donnelly’s
participation was enough to bind her to the jury verdict.
3
The holding of Martin was abrogated by Congress in 1991 as applied to employment
discrimination actions filed pursuant to federal law. See 18A Federal Practice and Procedure, supra, at
§ 4452 (explaining legislative changes to the employment discrimination statutes and other statutes where
the right to bring a qui tam action is terminated when a government action is brought). None of these
statutory modifications affect the common-law principle discussed in Martin and applied here.
4
Plaintiffs argue last that Donnelly should be bound by the judgment because she
was in privity with Madden during the trial. See Lamb v. Geovjian, 165 Vt. 375, 380
(1996) (“A privity relationship generally involves a party so identified in interest with the
other party that they represent one single legal right.”) (quotation omitted). Plaintiffs
contend that Madden and Donnelly had identical interests in the matter by virtue of their
marriage and the fact that they hold title to the Densmore Hill property as tenants by the
entirety. Plaintiffs also argue that Madden and Donnelly were represented by the same
attorney throughout the underlying case, that Donnelly financed the litigation, and that
Donnelly participated as essentially a de facto party during the underlying litigation.
The primary thrust of these arguments is that Donnelly should be bound by the
judgment because she “assumed control” over the litigation. This is an exception to the
general rule that permits preclusion to be asserted against a nonparty who has already
enjoyed a full and fair opportunity to litigate the claims asserted in the case. See 18A
Federal Practice and Procedure, supra, at § 4451 (explaining that “a nonparty may
participate in such a way as to become a de facto party, tacitly if not formally treated as
such by all parties”). The general requirements for application of the exception are that
the nonparty must have had adequate control of the litigation—i.e., “the opportunity to
present proofs and argument”—and a sufficient interest in the result. Taylor, 128 S. Ct. at
2173.
The degree of control expected from the nonparty is “effective choice as to the
legal theories and proofs to be advanced in behalf of the party to the action.”
Restatement (Second) of Judgments § 39, cmt. c. This exception normally applies in
those situations in which a nonparty actually assumes control of the defense, as in the
case of liability insurers, for example.
It is well-settled that “[l]esser measures of participation without control do not
suffice.” 18A Federal Practice and Procedure, supra, at § 4451. As such, “it is not
enough that the nonparty supplied an attorney or is represented by the same law firm;
helped to finance the litigation; appeared as an amicus curiae; testified as a witness;
participated in consolidated pretrial proceedings; undertook some limited presentations to
the court; or otherwise participated in a limited way. Even a nonparty who was ‘heavily
involved’ may remain free from preclusion.” Id. Thus, privity under the nonparty-
control exception is not established merely because a nonparty paid the expenses of
litigation, Martin v. American Bancorp. Retirement Plan, 407 F.3d 643, 652–53 (4th Cir.
2005), had the same attorney as the party and participated to a limited extent in the earlier
litigation, Benson & Ford, Inc. v. Wanda Petrol. Co., 833 F.2d 1172, 1174–75 (5th Cir.
1987), shared the same interests in the litigation as the named party, White v. Kelsey, 935
F.2d 968, 969–70 (8th Cir. 1991), or even had a close family relationship with the party.
18A Federal Practice and Procedure, supra, at § 4459. “It is essential that the nonparty
have actual control.” Benson & Ford, 833 F.2d at 1174.
The lead example of nonparty control is Montana v. United States, 440 U.S. 147
(1979). There, a federal contractor brought suit in state court contending that a state
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gross receipts tax unconstitutionally discriminated against the federal government and the
companies with which it dealt. The litigation was directed and financed by the federal
government to the extent that the federal government told the contractor to file the
complaint, reviewed and approved the complaint, paid the attorney’s fees and costs,
directed the appeal, and submitted briefs on appeal. After the state court affirmed the
constitutionality of the tax, the federal government then filed the same lawsuit in federal
court under its own name. It was accordingly held there that issue preclusion applied
because the federal government had a sufficient “laboring oar” in the conduct of the state-
court litigation. Id. at 155.
Here, plaintiffs have simply not adduced evidence showing that Donnelly was the
one rowing the oars of the Shahi II litigation. Restatement (Second) of Judgments § 39.
Plaintiffs have instead offered allegations—which, again, the court takes to be true for the
purposes of this decision—that Donnelly shared Madden’s interests in the litigation, paid
for his attorney’s fees, intervened in later proceedings on a restraining order, and had
sued his adversaries in her own name in the past. Even if these allegations are taken
together and viewed in their entirety, they simply do not sustain the contention that
Donnelly was the one presenting “proofs and arguments” in the Shahi II litigation.
Taylor, 128 S. Ct. at 2173. The allegations do not add up to the conclusion that she has
already had her day in court on the claims asserted in the complaint. As a result, the
court cannot conclude that Donnelly is bound to the judgment by virtue of privity.
In a variation on the same theme, plaintiffs contend that the cases of In re Curtis,
2006 VT 9, 179 Vt. 620 (mem.), and In re St. Mary’s Church Cell Tower, 2006 VT 103,
180 Vt. 638 (mem.), support their contention that Donnelly is bound by the judgment
because she had identical interests as Madden and was represented by the same attorney.
Those cases were materially and legally different, however. There, a group of neighbors
challenged a land-use permit issued to a wireless telephone company to install a cell-
phone tower inside a local church steeple. After the courts upheld the permit, the same
group of neighbors tried again by challenging the conditional-use permit issued to the
local church itself. The Vermont Supreme Court held that the second challenge was
barred by the doctrine of claim preclusion because the neighbors were challenging
essentially the same permit. See 2006 VT 103, ¶ 3 (differentiating between claim
preclusion and issue preclusion). In other words, the ruling there was that the neighbors
“lost their chance to raise the conditional use issue when they decided not to raise it in the
first appeal.” Id., ¶ 10.
Plaintiff’s motion for summary judgment is about issue preclusion, not claim
preclusion. If this court were to apply the holding of St. Mary’s Church Cell Tower here,
it would be saying that Donnelly lost her chance to have her own day in court when she
opposed plaintiffs’ attempts at joinder in the underlying case. This brings plaintiffs’
arguments back to their fundamental flaw: plaintiffs voluntarily withdrew their motion to
join Donnelly in the underlying litigation but are now acting as though their motion had
been granted.
6
Plaintiffs contend essentially that Donnelly should have jumped in once she got
her toes wet in the underlying litigation. But preclusion does not apply to nonparties with
wet feet. Rather, preclusion applies only when litigants dive all the way in or are
otherwise dragged into the water by someone who is already a party. Here, it is
undisputed that no one dragged Donnelly into the water, and the record does not show
anything more than that she stood on the side and put her toes in. As a result, plaintiffs
are not entitled to the application of issue preclusion in this case.
The end result is that plaintiffs will have to prove anew in this lawsuit that
Madden committed one or more torts and that Donnelly should be held liable for the
commission of those torts under one of the theories articulated in the complaint and that
plaintiffs are entitled to damages in some amount to be determined by the finder of fact.
In proving these propositions, plaintiffs will not be permitted to introduce the Shahi II
judgment as evidence of the facts found in that case. 18A Federal Practice and
Procedure, supra, at § 4449 & n.28. The judgment is hearsay, and the rule is simply that
“the facts found in one case are not evidence of those same facts in another case.” United
States v. Joyce, 511 F.2d 1127, 1132 (9th Cir. 1974); Mackay v. Easton, 86 U.S. (19
Wall.) 619, 632 (1873). If plaintiffs’ claims are to be proven, they will be proven here
based on the evidence presented here, and not based on the evidence presented at some
other time in another case. No other procedure would give effect to Donnelly’s right to
have her own day in court.
Obviously there are inefficiencies in this procedure. It is duplicative, and there is
a risk of inconsistent judgments. But it was plaintiffs who brought this upon themselves
by choosing not to join Donnelly the first time around. Since it was plaintiffs who made
that choice, it should be plaintiffs—and not Donnelly—who bear the consequences in this
proceeding.
II.
Donnelly contends that the doctrine of claim preclusion prevents plaintiffs from
bringing any claims against her arising out of the same harm as the 2006 judgment. Her
argument is that plaintiffs elected their remedy when they chose to proceed against
Madden alone, and that they are barred from litigating claims in the present case which
they already had a full and fair chance to litigate in Shahi II.
The primary support for Donnelly’s position derives from Raymond v.
Capobianco, 107 Vt. 295 (1935). In that case, the plaintiff successfully sued the driver of
an automobile for personal injuries sustained in a car accident. The plaintiff then sued
the owner of the car on the grounds that the driver had been acting as the owner’s agent at
the time of the accident, and that the owner was therefore liable under a theory of
respondeat superior. The question thus presented was whether the plaintiff elected to
proceed solely against the driver in this first suit and was therefore barred from
maintaining an action against the principal. Id. at 298.
7
The Raymond court reviewed several approaches from other jurisdictions before
concluding that, in cases where the principal is liable only under a theory of respondeat
superior, the principal and agent are only severally liable (rather than jointly and
severally liable). It followed from that conclusion that the plaintiff elected his remedy
when he chose to sue only the agent in the first lawsuit, and that the subsequent lawsuit
against the principal was barred. Id. at 303. Donnelly contends that the same conclusion
should apply here.
The problem is that the forcefulness of the Raymond holding has been eroded by
the passage of time. The Vermont Supreme Court itself has described Raymond as based
on “a doctrine which was out-moded at the time of its acceptance and which experience
has shown is increasingly ill-adapted to the needs of modern practice.” See Daniels v.
Parker, 119 Vt. 348, 354–55 (1956) (expressly overruling Raymond). The rule in
Vermont is now simply that “[w]here liability is joint and several, . . . a verdict in favor
of one will not discharge the others.” Plante v. Johnson, 152 Vt. 270, 274 (1989)
(quotation omitted).
In other words, “[a] judgment against one person liable for a loss does not
terminate a claim that the injured party may have against another person who may be
liable therefor.” Restatement (Second) of Judgments § 49. It is thus well-settled that a
plaintiff may file separate and consecutive lawsuits against different persons liable for the
same loss, and that the “entry of a judgment in the prior action does not bar the claims
against other potentially liable parties.” Central Hudson Gas & Elec. Corp. v. Empresa
Naviera Santa S.A., 56 F.3d 359, 367 (2d Cir. 1995); 18 Wright, Miller & Cooper,
Federal Practice and Procedure: Jurisdiction 2d § 4407. The theory of “election of
remedies” announced by Raymond is now considered to be “obsolete.” Restatement
(Second) of Judgment § 49, cmt. a.
There are still slightly different rules in cases involving vicarious liability, but
there is no longer a complete bar against the maintenance of separate and consecutive
lawsuits against agent and principal. The general rules applicable here are that (1) a
judgment against the injured person in the first action bars him from reasserting his claim
against the second defendant and (2) a judgment in favor of the injured person is
conclusive upon him as to the amount of his damages. Restatement (Second) of
Judgments § 51. The exceptions to these general statements are not applicable here.
Under the Restatement approach, therefore, the only preclusive effect in this case
is that the amount of damages recovered in the Shahi II trial limits the amount of
damages that plaintiffs can recover in this trial. Thus, plaintiffs are not precluded from
bringing their present claims against Donnelly, but they cannot recover more here than
they did in the first trial, and Donnelly is free to argue for less. Id., cmt. d.
Donnelly argues more generally that the elements of defensive claim preclusion
should apply here because Vermont abandoned the mutuality doctrine in Trepanier v.
Getting Organized, Inc., 155 Vt. 259, 264–65 (1990), and thus she may assert preclusion
against plaintiffs even though she was not a party to the earlier judgment. The flaw here
8
is that defensive claim preclusion is usually applied against parties who “litigated and
lost” in the earlier proceeding. Id. Plaintiffs won. To the extent that the claim was
decided in the earlier proceeding, any preclusion should run in plaintiffs’ favor, rather
than against them.
Donnelly is really arguing that plaintiffs should have joined her in the earlier
litigation. But there is no requirement under the prevailing procedural rules that a
plaintiff join every possible defendant in the same action. The rules regarding joinder of
claims are mandatory, but the applicable rules governing joinder of parties are
permissive. Accordingly, while injured plaintiffs often have strong incentives to bring
actions against two or more potentially-liable defendants at the same time (because doing
so reduces their litigation costs), it remains permissible to bring successive actions
against different defendants for the same harm. “[N]either the rule against ‘splitting’ a
claim nor the usual rules of joinder of parties require that [claims against separate
defendants] be maintained in a single action.” Restatement (Second) of Judgments § 51,
cmt. b.
The posture would be different if plaintiffs had lost the underlying trial. Donnelly
would then have taken easy recourse in the general rule that a judgment against the
injured person in the first action bars him from reasserting his claim against another
defendant liable for the same harm. See Restatement (Second) of Judgments § 51
(adding that there are exceptions to this general rule). But that is not what happened here.
Donnelly finally argues that there are different rules to be applied in cases of
conspiracy. But her cases all appear to involve the circumstance where the party
asserting a conspiracy litigated and lost in an earlier round of litigation. See, e.g., Lamb
v. Geovjian, 165 Vt. 375, 380 (1996). The accepted rule instead seems to be that when
two defendants are potentially liable for the same loss, the claims are regarded as
separate, and successive suits can be maintained against the different parties even when
the second suit is based upon an allegation of conspiracy. See, e.g., Taylor v. Compere,
230 S.W.3d 606, 610 (Mo. Ct. App. 2007). The court accordingly does not find the
application of claim preclusion to be warranted here.
III.
In the course of reviewing the foregoing motions for partial summary judgment
and the numerous pending discovery motions, it has become apparent to the court that
there are a number of legal issues in this case that may be dispositive and yet do not
require further factual development. Among these issues are (1) whether the claim for
fraudulent transfer can be sustained where Donnelly and Madden took title to the
Densmore Hill property as tenants by the entirety before the incidents underlying this
case even occurred; (2) whether the claim for agency can be sustained where the alleged
principal and the alleged agent are both tenants by the entirety in the same property; (3)
whether, on the claim for negligent supervision, there was a “duty to control” here within
the meaning of Peck v. Counseling Serv. of Addison County, Inc., 146 Vt. 61 (1985) and
Sorge v. State, 171 Vt. 171 (2000); and (4) whether public policy would support setting
9
aside the tenancy by the entirety even if Donnelly is “entirely innocent.” See Plaintiff’s
Cross-Motion for Summary Judgment, filed Oct. 5, 2009, at 27.
The issues resonate particularly in the arena of discovery. The fraudulent transfer
claim raises questions of law about the ability of a married couple to develop a parcel of
property as tenants by the entirety. It also raises questions about the ability of a creditor
to pierce the entirety through discovery requests aimed at uncovering the so-called
“source” of various payments.
The pending discovery issues cannot be resolved without at least beginning to
answer these questions. Yet at least some, and perhaps all, of these questions appear
capable of resolution without further factual development. They may also have
dispositive effects upon the litigation.
For these reasons, the court will entertain a second round of summary judgment
motions, on the remaining claims in the case (and specifically the issues raised above), to
be filed no later than May 17, 2010. Any oppositions must be filed by June 4, 2010. No
replies, surreplies, or other pleadings will be accepted. The stay of discovery will remain
in effect pending further order of the court.
ORDER
(1) Plaintiff’s Motion for Enlargement of Time and Motion for Partial
Summary Judgment on Issue Preclusion (MPR #34), filed September 1, 2009, is denied.
(2) Defendant’s Motion for Summary Judgment (MPR #36), filed September
3, 2009, is granted in part and denied in part to the extent consistent with this decision.
(3) Plaintiff’s Motion for Summary Judgment (MPR #41), filed October 5,
2009, is denied.
(4) Either party may file a motion for summary judgment on the issues
discussed in Part III of this opinion no later than May 17, 2010. Any oppositions must be
filed by June 4, 2010. No replies, surreplies, or other pleadings will be accepted.
(5) The stay of discovery remains in effect.
Dated at Woodstock, Vermont this ____ day of April, 2010.
_________________________________
Hon. Harold E. Eaton, Jr.
Presiding Judge
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