¶ 1. This is аn action by clients (hereinafter plaintiffs) against a lawyer who misappropriated funds belonging to the clients. The complaint sought the funds, additional compensatory damages, and punitive damages on multiple theories. The lawyer failed to answer the complaint, and the superior court entered a default judgment in favor of plaintiffs. Thereafter, the court held a trial on damages, and a jury awarded plaintiffs a limited amount of compensatory damages but no punitive damages. On appeal, plaintiffs contend that the court erred by: (1) granting them a default judgment rather than summary judgment, particularly on the question
¶ 2. Plaintiffs are a widow (mother) and her four children. In July 2001, shortly after mother’s husband committed suicide in Massachusetts, where the family was living, mother and the children moved to Vermont to be near mother’s parents. Mother hired defendant, a successful real estate attorney, to close on her purchase of a home in Vermont. In early 2002, mother’s mother-in-law died and left a substantial inheritance for mother’s children. Because husband’s suicide had resulted in a complete breakdown in communication between mother and husband’s family, mother hired defendant to ensure that her children would receive their inheritance from their grandmother’s estate.
¶ 3. Defendant advised mother to invest the estate funds in his real estate business once they were acquired, but she rejected this advice. Nonetheless, in July 2002, shortly after receiving a partial distribution of $300,000 from the estate and setting up a trust account for the funds, defendant transferred the funds into his own account and used the money over the next two and one-half years for his real estate business, without infоrming plaintiffs that the funds had been received. Some nine months later, in April 2003, defendant received a final distribution of approximately $109,000 and paid these amounts to plaintiffs without disclosing the earlier distribution.
¶ 4. From the time mother hired defendant, she made repeated inquiries as to when the funds would be available, and defendant lied to her to cover up his theft of the funds, telling her that there were problems getting the funds out of the probate estate. Partly because they were unable to access the entire estate funds, some of the children had to change their college plans and attend less expensive institutions that were closer to home.
¶ 5. At the end of 2004, mother renewed communications with her Massachusetts in-laws and learned the estatе had made the $300,000 payment to the children in 2002. Plaintiffs filed suit against defendant
¶ 6. Meanwhile, plaintiffs moved for summаry judgment, attaching a statement of undisputed facts, mother’s affidavit, and defendant’s affidavit to the Board. In response, defendant asserted that plaintiffs were seeking summary judgment rather than a default judgment to obtain more attorney’s fees from him. Defendant asked the court to enter a discretionary default judgment against him pursuant to Rule 55 of the Vermont Rules of Civil Procedure.
¶ 7. The court granted defendant’s motion and denied that of plaintiffs. The court reasoned that entry of default judgment “offer[ed] an expedient resolution on the question of liability.” The court noted that plaintiffs had not agreed to entry of default judgment only because they feared that a default judgment would not allow them to have a jury trial on damages. Finding that entry of default judgment would not bar a jury hearing on damages, and that plaintiffs were entitled to such a hearing, the court granted defendant’s motion for a default judgment and held a damages hearing.
¶ 8. Following the close of evidence at the damages hearing, the court held a charge conference in chambers to discuss the issue of malice as it related to common-law and consumer-fraud punitive damages. Plaintiffs’ position was that the default judgment entered against defendant determined the presence of malice as a matter of law and precluded the submission of the issue of malice to the jury. In the alternative, plaintiffs argued that they had submitted sufficient evidence of malice, as a matter of law, to require an award of punitive damages. The court rejected these arguments and instructed the jury that plaintiffs “must establish that [defendant] acted with malice” before the jury could award punitive damages. Towards that end, the jury was given special interrogatories in response to which they first were to indicate whether defendant had acted with malice, and second, if so, indicate what amount of punitive damages, if any, they would award.
¶ 9. At the charge conference, plaintiffs also asked the court to instruct the jury that if they were able to establish that defendant had injured them, they were entitled to damages for emotional harms, and specifically for insult, indignity, humiliation, or injury to feelings. The court refused to give plaintiffs’ proposed instruction and instead charged the jury that plaintiffs could be awarded damages for emotional harms suffered, but did not refer to the specific harms enumerated by plaintiffs.
¶ 10. At the charge conference, plaintiffs’ counsel withdrew plaintiffs’ count alleging that defendant violated the CFA, but only after agreeing with defense counsel that plaintiffs could obtain an award of attorney’s fees as if liability were based on the CFA. The withdrawal occurred after plaintiffs’ counsel concluded that the court would rule against plaintiffs on an issue
¶ 11. During closing argument, defense counsel emphasized the need for the jury to find malice predicated on a showing of bad motive. In responding to examples of obvious malice proffered by plaintiffs’ attorney, defense counsel reminded the jury that the court had not instructed them that defendant’s actions demonstrated malice as a matter of law. When plaintiffs objected to this comment, the court told the jury that “the issue of malice is going to be submitted to the jury” although “it may have been found by a Court in other circumstances.” Defense counsel then reiterated to the jury that “if there hasn’t been a showing of malice, then you don’t analyze the punitive damages.”
¶ 12. During its deliberations, the jury submitted questions to the court concerning perceived inconsistencies in the definition of malice set forth in the court’s charge, which was taken from ornease law. After discussing with counsel how to respond, the court read parts of
Brueckner v. Norwich University,
¶ 13. Ultimately, the jury awarded $5000 to mother and $1000 to each child in unreimbursed compensatory damages, but indicated by special interrogatory that it did not find malice and thus did not award plaintiffs any punitive damages. Plaintiffs moved for the judgment to be set aside under Rules 52, 55, 59, and 60 of the Vermont Rules of Civil Procedure. The court rejected plaintiffs’ motion, ruling, in part, that the default judgment entered against defendant did not decide the issue of malice in plaintiffs’ favor. The court reasoned that: (1) this was not an ordinary default judgment in that defendant himself moved for default; (2) the court had broad discretion to allow evidence on elements of a claim following entry of default judgment; and (3) the policy interests underlying default judgments and the role of the jury in determining punitive damages favored submitting the question of malice to the jury.
¶ 14. The court also addressed the parties’ claims concerning costs and attorney’s fees. Defendant argued that because plaintiffs had rejected his settlement offers and because the offers exceeded the aggregate amount eventually awarded to them, V.R.C.P. 68 precluded them from recovering attorney’s fees under the CFA. Rule 68 states in pertinent part that “[i]f the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.” Ruling that Rule 68 applied only to monies defined by statute as costs, the court granted plaintiffs’ motion for attorney’s fees in the amount they requested. The court applied Rule 68 to plaintiffs’ request for costs, however, limiting their recovery to costs accrued before defendant’s offer of judgment. This appeal and cross-appeal followed.
¶ 15. On appeal, plaintiffs first argue that the superior court erred by entering a default judgment rather than granting their motion for summary judgment. According to plaintiffs, summary judgment was mandatory under Rule 56(c)(3) because defendant did not oppose by affidavit, as required by the rule, any of their claims on the merits, including their claim that defendant’s willful and wanton conduct was suffiсient to support an award of punitive damages. On this point, we conclude
¶ 16. Plaintiffs sought summary judgment because they wanted a judgment on the merits and a jury trial on damages with respect to defendant’s allegedly outrageous conduct. They received both. “A default judgment is a judgment on the merits that conclusively establishes the defendant’s liability.”
United States v. Shipco Gen., Inc.,
¶ 17. Plaintiffs’ reason for raising this argument now is their apparent belief that the summary judgment motion, if granted, would have entitled them to at least some amount of punitive damages, even if the default judgment did not. Yet, in asking the trial court for summary judgment rather than default judgment, plaintiffs never explicitly claimed that it would make a difference as to the availability of punitive damages. We conclude that the slight differences in wording between the requested summary judgment and the default judgment would not have caused a different result.
¶ 18. We also reject plaintiffs’ argument that the default judgment entered by Judge Cohen decided the malice issue in their favor, thereby precluding the jury from reaching the issue. In his order, Judge Cohen stated that the only facts that were disputed by defendant related to the extent of punitive damages and did not prevent the court from entering a default judgment as to liability. In so ruling, the judge emphasized that “[t]he issue of damages is not before the court at this time.” Accordingly, the judge set the matter for a “jury determination of the appropriate amount of damages.”
¶ 19. Seizing upon the phrase “appropriate level of damages,” plaintiffs argue that the court’s order determined liability as to punitive damages by accepting as true their allegation of defendant’s willful and wanton conduct. According to plaintiffs, the court intended for a jury to determine only the amount of punitive damages, and not whether punitive damages were appropriate in this case. We conclude that plaintiffs read too much into Judge Cohen’s order. Nothing in the order suggests that the court intended to rule that plaintiffs were entitled to an award of punitive damages. To the contrary, the order merely states that liability in general was proven, and that damages would be considered by a jury at a later hearing.
¶ 20. Plaintiffs argue, however, that even if Judge Cohen’s order did not establish malice as a matter of law, the superior court erred in denying their motion for a new trial under Rule 59, in which they claimed that the jury’s finding of no malice was not supported by any evidence. Conceding thаt the jury could have declined to award punitive damages even if it had found malice, plaintiffs did not file a motion for judgment notwithstanding the verdict, but rather argued that they were entitled to a new trial on damages because
¶ 21. Before addressing the merits of that ruling, however, we note that the malice issue was at the heart of the parties’ dispute at the damages hearing. Defendant’s principal defense to punitive damages was that he had not acted with malice, and that plaintiffs had failed to demonstrate that he had acted with malice. Defendant’s testimony and defense counsel’s closing argument emphasized these points. Because of plaintiffs’ position that malice existed as a matter of law, their proposed jury charge listed the relevant factors for the jury to consider in determining punitive damages, but did not include a threshold question on whether malice existed. The court declined to exclude the threshold malice question, however, and the parties’ attorneys engaged the court in a vigorous debate about how to charge malice. During deliberation following the charge, the jury asked several questions concerning the meaning of malice and the perceived discrepancies in the definition of malice set forth in the court’s instruction. Ultimately, the jury indicated in response to a special interrogatory that there was no malice and thus did not weigh the relevant factors to determine how much, if anything, to award plaintiffs in punitive damages.
¶ 22. Upon review of the record in this case, we conclude that the evidence manifestly demonstrated malice on defendant’s part, and thus the trial court should have granted plaintiffs’ motion for a new damages hearing, one in which the jury would not be charged with finding malice. Although the default judgment on liability did not entitle plaintiffs to an award of punitivе damages, it served as a basis for such an award. Because plaintiffs obtained a default judgment, “the factual allegations of the[ir] complaint, except those relating to the
amount
of damages, will
be taken as true.” 10A C. Wright, A. Miller & M. Kane, Federal Practice
&
Procedure § 2688, at 58-59 (3d ed. 1998) (emphasis added); accord
Comdyne I, Inc. v. Corbin,
¶ 23. 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.
¶24. Although plaintiffs did not explicitly allege malice in their complaint, they contend that their allegations, which were not disputed in any significant sense at the damages hearing, demonstrate malice as a matter of law.
2
In considering this
contention, we first examine our law on the elements of malice. To demonstrate the malice necessary to establish liability for punitive damages, one must show “conduct manifesting personal ill will or carried out under circumstances evidencing insult or oppression, or even by conduct showing a reckless or wantоn disregard of one’s rights.”
Brueckner,
¶25. On the one hand, as indicated above, our longstanding definition of malice has included not only “conduct manifеsting personal ill will” but also “conduct showing a reckless disregard to the rights of others.”
Bolsta,
¶26. Our case law is consistent in this area only if we acknowledge that “bad motive” does not arise exclusively from “personal ill will” toward a particular person. Although malice is perhaps most often found when “the defendant’s tortious conduct is motivatеd by ill will toward the plaintiff,” it may also be found when the defendant engages in deliberate and outrageous conduct that is not necessarily motivated by ill will toward any particular person.
Tuttle v. Raymond,
¶ 27. Thus, malice may arise from deliberate and outrageous conduct aimed at securing financial gain or some other advantage at another’s expense, even if the motivation underlying the outrageous conduct is to benefit oneself rather than harm another. Cf.
Proctor Trust,
¶ 28. In eases involving wrongdoing by a fiduciary such as a lawyer, courts have stressed that malice arises when the attorney intentionally makes false statements to a client to obtain some personal gain. In
Thomas,
for example, the attorneys were alleged to have intentionally and fraudulently misinformed their client about their failure to file for a jury trial in order to insulate themselves from suit and protect their financial well-being. The court found, on the basis of this behavior, clear and convincing evidence of malice.
Thomas,
¶29. 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 acceрted 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. Cf.
Sweet v. Roy,
¶ 30. Based on the state of the evidence in this case, the trial court could have found malice as a matter of law. See V.R.C.P. 50(a)(1) (“If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law . . . .”); cf.
Dependable Ins. Co. v. Kirkpatrick,
¶ 31. We do not reach this determination lightly. We recognize that a trial court considering a Rule 59 motion claiming insufficient evidence to support a jury verdict must view the evidence most favorably to the verdict, and, further, that the trial court’s denial of such a motion will be reversed only upon a showing of a clear abuse of discretion.
EBWS, LLC v. Britly Corp.,
¶ 32. We also emphasize that the jury still retains full discretion to award any amount of punitive damages to plaintiffs, including none at all. See
Bruntaeger v. Zeller,
¶ 33. Having determined the main issue in the case favоrably to plaintiffs, we now turn to the others. One issue on appeal — whether the offer of judgment precluded the award of costs — and the cross-appeal issue — whether the offer of judgment and plaintiffs’ limited success precluded the award of attorney’s fees, at least in the amount ordered by the court — are now moot because the amount of plaintiffs’ recovery is unknown. Therefore, we do not reach those issues. We do reach, however, plaintiffs’ argument that the trial court erred in failing to present to the jury all the categories of damages to which plaintiffs were entitled. As detailed below, we also address plaintiffs’ argument that the court improperly determined the amount of punitive damages that the jury could awаrd under the CFA, but we conclude
¶ 34. We start with plaintiffs’ arguments concerning the court’s instructions to the jury on damages for emotional harm. Plaintiffs argue that the court erred in not instructing the jury that plaintiffs could recover compensatory damages for insult, humiliation, and indignity. Plaintiffs submitted a request to charge on this point and argued for its inclusion at the charge conference. After much discussion, the court rejected plaintiffs’ language and instead instructed the jury, in pertinent part, that: “[tjhese damages could include an amount to compensate [plaintiffs] for any emotional harm or anguish that they have suffered as a result of the activity complained of and to compensate for any lost educational opportunity.”
¶ 35. Plaintiffs’ argument is based almost entirely on this Court’s decision in
Rogers v. Bigelow,
¶36. We assume that the
Rogers
description is applicable to this action for intentional misappropriation of funds, but nonetheless stress that
Rogers
says nothing about what a court must include in a charge to the jury. Our rule is that the court can select its own language in сrafting the charge,
Weaver v. Brush,
¶ 37. Plaintiffs do not argue that the instructions the court gave were inaccurate or misleading. The argument is entirely that the court should have elaborated by using the Rogers language. After hearing extensive discussion at the charge conference, the presiding judge decided to leave the elaboration to argument of counsel in the closing arguments. We conclude that the court acted within its discretion, and its instructions must be affirmed under our standard of review.
¶ 38. Plaintiffs also ask us to review a ruling of the court, which also came in the charge conference, with respect to damages under the CFA. The complaint charged that defendant had violated the CFA, and plaintiffs sought punitive damages and attorney’s fees under 9 V.S.A. § 2461(b) for this violation. The statutory section provides:
Any consumer who contracts for goods or services in reliance upon false or fraudulent representations or practices ... , or who sustains damages or injury as a result of any false or fraudulent representations or practices . . . may sue for appropriate equitable relief and may . . . recover . . . the amount of his damages, or the consideration or the value of the consideration given by the consumer, reasonable attorney’s fees, and exemplary damages not exceeding three times the value of the consideration given by the consumer.
¶ 39. We have commented in other decisions that it is difficult to find reviewable rulings in charge conferencеs. See
Winey v. William E. Dailey, Inc.,
¶ 40. Plaintiffs argue that we should reach the issue because they preserved it through an objection under V.R.C.P. 51(b) after the charge was delivered. The objection was irrelevant, however, because by the time it was given the CFA was out of the case and the charge never mentioned the CFA. Plaintiffs’ problem is not with the absence of an objection, but with the absence of a definitive ruling that we can review. Ordinarily, we would review a ruling such as this that could reemerge on remand, but, for the reasons stated above, we cannot do so with respect to this issue.
Reversed and remanded for further proceedings in accordance with this opinion.
Notes
For ease of reading, the two defendants, John Ruggiero, Esq. and the Law Office of John M. Ruggiero, Esq., will be referred to, in the singular, as defendant.
We note that this Court has suggested, but never explicitly held, that the jury determines whether malice exists as a question of fact. See
Gaylord v. Hoar,
We have said “apparently” because plaintiffs’ theory is not clear. Plaintiffs seemed to argue at one point that defendant would have kept a third of the recovery, but in their brief they argue that embezzled funds are treated for income tax purposes as income “and the remedial purpose of the Consumer Fraud Act requires the same treatment here.”
The judge said in the charge conference that he was still “debating in my mind whether I have the jury decide,” but shortly thereafter said “I think I’ll charge the jury that in this case the consideration would be . . . guided by the fee charged.”