Evidence Of Malice

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 theirfather’s suicide and their grandmother’s death, defendant unsuccessfully triedto persuade mother to invest the funds in his real estate business as theybecame available.  Even though mother declined this offer, defendanttransferred $300,000 of estate funds he received into his own account tosupport his business, without informing plaintiffs that he had received thefunds.  Mother called defendant regularly about the status of the funds,but defendant deceived her by saying that the funds were tied up in probate orwere otherwise not available.  Defendant’s theft of the funds and deceitabout their availability continued for over two years, until mother learnedthat the funds had been sent to defendant for the children years earlier. Defendant did not dispute any of these facts, contending only—and not byaffidavit—that he was not aware of the children’s needs for the funds, as motherclaimed.  In short, the undisputed facts demonstrated that defendant was alawyer who breached his fiduciary duty to vulnerable clients recovering fromthe loss of a family member by stealing their money and then lying about itover 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 tothem about the theft for years notwithstanding his fiduciary duty to them, hecontends that the jury could reasonably have found no malice because (1) he didnot intend to harm them, and (2) he always intended to return the money to themsooner rather than later.  We conclude that even if the jury accepted thisexplanation entirely, defendant’s fraudulent conduct demonstrated bad motiveand malice.  Defendant’s admitted motive was to enrich himself and promotethe interests of his company, which in and of itself demonstrates a bad motive.  To find malice, the jury was not required to determine thatdefendant’s motive in stealing plaintiffs’ estate funds was to harm them ratherthan enrich himself.  If that were the case, punitive damages would neverbe available against companies that, for example, knowingly placed dangerousproducts into the market, hoping that people would not get hurt, but willing toignore 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)