Friday, January 30, 2009
In a civil case brought by the victims of an attorney who had misappropriated entrusted funds, the Vermont Supreme Court reversed and remanded a jury award to consider additional damages based on the lawyer's malice. The key facts:
Here, plaintiffs’ complaint contained the following allegations. When mother hired defendant to obtain estate funds earmarked for her children following their father’s suicide and their grandmother’s death, defendant unsuccessfully tried to persuade mother to invest the funds in his real estate business as they became available. Even though mother declined this offer, defendant transferred $300,000 of estate funds he received into his own account to support his business, without informing plaintiffs that he had received the funds. Mother called defendant regularly about the status of the funds, but defendant deceived her by saying that the funds were tied up in probate or were otherwise not available. Defendant’s theft of the funds and deceit about their availability continued for over two years, until mother learned that the funds had been sent to defendant for the children years earlier. Defendant did not dispute any of these facts, contending only—and not by affidavit—that he was not aware of the children’s needs for the funds, as mother claimed. In short, the undisputed facts demonstrated that defendant was a lawyer who breached his fiduciary duty to vulnerable clients recovering from the loss of a family member by stealing their money and then lying about it over a period of years until the clients discovered the theft.
The court notes:
In this case, although defendant acknowledges stealing plaintiffs’ money and then lying to them about the theft for years notwithstanding his fiduciary duty to them, he contends that the jury could reasonably have found no malice because (1) he did not intend to harm them, and (2) he always intended to return the money to them sooner rather than later. We conclude that even if the jury accepted this explanation entirely, defendant’s fraudulent conduct demonstrated bad motive and malice. Defendant’s admitted motive was to enrich himself and promote the interests of his company, which in and of itself demonstrates a bad motive. To find malice, the jury was not required to determine that defendant’s motive in stealing plaintiffs’ estate funds was to harm them rather than enrich himself. If that were the case, punitive damages would never be available against companies that, for example, knowingly placed dangerous products into the market, hoping that people would not get hurt, but willing to ignore a great risk of harm to increase profits.
The court concludes that malice was established as a matter of law. The jury had awarded compensatory but not punitive damages. On remand,the jury must consider whether to award punitive damages against the attorney. (Mike Frisch)