Cressy v. Proctor

Filing 10

OPINION AND ORDER denying 4 Motion to Dismiss. Signed by Judge William K. Sessions III on 4/9/2013. (law)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF VERMONT
Ronald Cressy,
Plaintiff.

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v.
Kevin Proctor,
Defendant.

No. 2:12-cv-00262-wks

OPINION & ORDER
Ronald Cressy has filed a seven-count Complaint against
Kevin Proctor. Counts I through VI assert Cressy’s right to real
and personal property held by Proctor based on theories of
partnership, express and implied contract, unjust enrichment,
promissory estoppel, and quantum meruit. Count VII asserts
Cressy’s right to a one-half interest in real property based on
theories of express, resulting, and constructive trust. Proctor
has moved to dismiss all counts for failure to state a claim
upon which relief can be granted. Def.’s Mot. to Dismiss, ECF
No. 4. For the reasons set forth below, the Court denies
Proctor’s Motion to Dismiss in its entirety.
I.

Factual Background

When considering a motion to dismiss, the Court accepts as
true all allegations set forth in the Complaint. Gregory v.
Daly, 243 F.3d 687, 691 (2d Cir. 2001). The following facts are
contained in plaintiff’s Complaint.

Plaintiff Ronald Cressy and Defendant Kevin Proctor began a
romantic relationship in California in 1993. They chose to live
together in the summer of 1993. When they first met, Proctor
owned a recruitment advertising business named Synergy
Advertising (“Synergy”). Cressy worked for Carol Anderson, Inc.
and earned over $100,000 a year. Cressy left his job in 1994 and
began working at Synergy full-time. He did not receive an hourly
wage or salary from Synergy.
Synergy became a two-person business operated by Cressy and
Proctor at some point between 1994 and 1998. Cressy and Proctor
considered themselves to be business partners and described
their relationship to customers and others in that way. Proctor
ran Synergy’s art department and acted as the principal client
contact. Cressy handled billing, client contact, and processed
advertising.
The parties decided to move to Vermont in 1996. They spent
approximately two years looking for a home and chose a property
in Ryegate, Vermont (“Ryegate property” or “the property”),
which they purchased with proceeds from Synergy. Cressy and
Proctor agreed that the property would be titled in both of
their names. Cressy could not attend the closing in Vermont
because of obligations at Synergy in California. As a result,
his name was not on the title to the property. Proctor told
Cressy that he would hold title in his name for Cressy and later
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transfer title to both of them as joint tenants, but the
property remains in Proctor’s name only.
Cressy and Proctor moved to the Ryegate property in 1998.
The couple purchased personal property worth millions of dollars
during their time together. They stopped operating Synergy in
2008 with the intent to generate future income by selling
personal property. Cressy and Proctor agreed that they were
joint owners of all real and personal property acquired during
their relationship.
Cressy and Proctor ended their relationship in the summer
of 2012. Cressy moved out of the Ryegate property and now lives
in Glendale, California. Cressy is suing Proctor for a share of
the real and personal property acquired during their
relationship.
II.

Discussion

Cressy requests relief on a number of grounds: violation of
a partnership agreement, breach of contract (express and
implied), claims based upon equitable interests (unjust
enrichment, quantum meruit, and promissory estoppel), and
theories of trust (express, resulting, and constructive).
Plaintiff is entitled to plead inconsistent claims in the
alternative, Fed. R. Civ. P. 8(d), but recovery on one ground
may preclude recovery on any other.
a. Standard of Review
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In order to survive a motion to dismiss pursuant to Rule
12(b)(6), the plaintiff need only present a “short and plain
statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a).1 The factual allegations in the
complaint must establish a plausible right to relief.

Arista

Records, LLC v. Doe 3, 604 F.3d 110, 119–20 (2d Cir. 2010). “A
claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
b. Partnership
Under Vermont law, a partnership is formed by “the
association of two or more persons to carry on as co-owners a
business for profit, whether or not the persons intend to form a
partnership.” 11 V.S.A. § 3212 (a). “In deciding whether a
partnership has been created by a tacit agreement, courts must
examine the facts to determine whether the parties carried on as
co-owners of a business for profit.” Harman v. Rogers, 147 Vt.
11, 14, 510 A.2d 161, 164 (1986). When considering the rights of
the partners relative to each other—as opposed to third parties—
“there must be a manifestation of an intent to be so bound.” Id.

1

Federal Rule of Civil Procedure 8(a) governs the pleading requirements in
this case. The heightened pleading under Rule 9 is not required, only a
notice pleading under Ashcroft v. Iqbal, 556 U.S. 662 (2009). Rule 9 pleading
is not relevant in this case.

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Cressy has alleged facts supporting an inference that the
parties operated Synergy as co-owners and shared in the proceeds
of the business. Proctor argues that Cressy’s failure to state
the date, time, and specific content of the partnership
agreement is fatal to his partnership claim; however, Cressy is
not required to plead specific details of an agreement because a
partnership can arise from the parties’ dealings with one
another. Harman, 147 Vt. at 14, 510 A.2d at 164.

The facts

alleged in Count I support a plausible claim that the parties
were engaged in a partnership.
c. Express and Implied Contract
Cressy argues in the alternative that he is entitled to a
share of the property pursuant to an express or implied
contract. Cressy’s contract claims are based on an agreement
that Cressy would work for Synergy in exchange for an equal
share of the profits earned and property acquired by the couple.
The only difference between express and implied contract claims
is the evidence used to establish the agreement between the
parties. Peters v. Poro’s Estate, 96 Vt. 95, 117 A. 244, 246–47
(1922). An express contract is shown through spoken or written
words; an implied contract “is to be inferred from the
circumstances, the conduct, acts or relation of the parties….”
Id. Cressy must also show a mutual expectation to be bound by
the agreement. In re Boisvert’s Estate, 135 Vt. 69, 72, 370 A.2d
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209, 211 (1977). Cressy can satisfy his burden by showing
circumstances under which his work at Synergy was performed,
“the relative situations of the parties and their financial
circumstances.” Id.
There are disputed issues of fact regarding Cressy’s
contract claims; however, the facts alleged in Counts II and III
are sufficient to support plausible claims for breach of an
express or implied contract. Therefore, the motion to dismiss is
denied with respect to Counts II and III.
d. Equitable Claims
Counts IV through VI assert equitable grounds for relief as
alternatives to the partnership and contract claims. At this
point, the plaintiff has pleaded sufficient facts for his
equitable claims to survive the defendant’s motion to dismiss.
i.

Unjust Enrichment

“Under a quasi-contract theory of unjust enrichment, the
law implies a promise to pay when a party receives a benefit and
retention of the benefit would be inequitable.” Brookside
Memorials, Inc. v. Barre City, 167 Vt. 558, 559, 702 A.2d 47
(1997). “[T]he inquiry is whether, in light of the totality of
the circumstances, it is against equity and good conscience to
allow defendant to retain what is sought to be recovered.”
Legault v. Legault, 142 Vt. 525, 531, 459 A.2d 980, 984 (1983)
(citations omitted).
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Plaintiff’s allegations of unpaid work and substantial
effort in maintaining the home are sufficient to support his
claim of unjust enrichment at this stage. Proctor argues that
the value of plaintiff’s services did not sufficiently exceed
the financial support given to plaintiff and therefore the
defendant was not unjustly enriched. The value of plaintiff’s
services, however, is a question of fact that cannot be resolved
on a motion to dismiss. See Global Network Comm’cns, Inc., 458
F.3d at 154 (“[W]e are constrained to accept as true the factual
allegations contained in the complaint and draw all inferences
in plaintiff’s favor.”).
ii.

Promissory Estoppel

To succeed on a claim of promissory estoppel, the plaintiff
must show that (1) defendant made a promise to the plaintiff;
(2) that the defendant should have reasonably expected that the
promise would induce action or inaction by the plaintiff; (3)
that the promise actually did induce action or inaction; and (4)
that justice requires enforcement of the promise. Tour Costa
Rica v. Country Walkers, Inc., 171 Vt. 116, 120, 758 A.2d 795,
800 (2000). “In determining whether a plaintiff reasonably
relied on a defendant’s promise, courts examine the totality of
the circumstances.” Id.
Defendant argues that the promise to share in the proceeds
of the business is too vague or broad for the purposes of
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promissory estoppel. While the promise may or may not have broad
application, its vagueness is a matter of disagreement, and the
facts alleged in Count IV are sufficient to support a claim of
promissory estoppel at this stage of the proceedings.
iii. Quantum Meruit
“Under quantum meruit, one should receive the reasonable
value of his services where he justifiably relied on the
defendant’s request for those services regardless of whether the
defendant received a benefit.” In re Estate of Elliot, 149 Vt.
248, 253, 542 A.2d 282, 286 (1988). Under Vermont law “the
distinction between [unjust enrichment and quantum meruit] lies
not in the alleged wrong committed by the defendant but rather
in the measure of recovery for the wrong.” DJ Painting, Inc. v.
Baraw Enters. Inc., 172 Vt. 239, 242 n.2, 776 A.2d 416, 416 n.2
(2001).
Plaintiff’s quantum meruit claim is couched in the same
facts that support the preceding five counts. Defendant objects
to the claim, arguing that the plaintiff failed to allege that
defendant requested the services. It is reasonable, however, to
infer that the defendant requested plaintiff’s services at
Synergy because plaintiff’s labor clearly benefitted the
defendant.

Accordingly, plaintiff’s quantum meruit claim is

plausible on the facts alleged in the Complaint.
e. Additional Claims Related to Real Property
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In Count VII, plaintiff asserts his right to a one-half
interest the Ryegate property based on theories of express,
resulting, and constructive trusts. An express trust is created
by a specific intent to do so, and a constructive trust is an
equitable remedy imposed by a court to prevent one party from
being unjustly enriched at the expense of another. Savage v.
Walker, 2209 VT 185 ¶ 8, 969 A.2d 121, 124. A resulting trust
arises by operation of law when one person purchases real
property with his or her own funds and the property is deeded in
another person’s name. Gregoire v. Gregoire, 2009 VT 186 ¶ 15,
987 A.2d 909, 912 (citing Pinney v. Fellows, 15 Vt. 525, 538
(1843)). The legal owner of the property holds title for the use
and benefit of the individual who furnished consideration for
the property. Id.
Plaintiff alleges that the parties made an express oral
trust agreement that defendant would hold plaintiff’s one-half
interest in the property in trust for plaintiff. Alternatively,
he argues that a resulting trust existed as to a one-half
interest because part of the consideration for the property was
furnished through plaintiff’s work at Synergy, and the property
was deeded in defendant’s name only. Finally, plaintiff argues
that the court should impose a constructive trust on the
property to prevent defendant from being unjustly enriched at
plaintiff’s expense.
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Defendant objects to Count VII on various grounds. First,
he argues that the Statute of Frauds precludes the claim because
there was no written agreement and the plaintiff has not alleged
sufficient facts to support an equitable claim for relief. He
also argues that the claim is barred by Vermont’s six-year
Statute of Limitations, which began to run when Cressy became
aware that the property was titled in Proctor’s name only.
i.

Statute of Frauds
Under the Statute of Frauds, “a contract involving the sale

of land or interests therein ‘must be in writing to be
enforceable.’” Rappaport v. Estate of Banfield, 2006 VT 181 ¶13,
924 A.2d 72, 76; Vt, Stat. Ann. tit. 12, § 181(5) (2012). The
Statute of Frauds does not apply “where a party demonstrates
that he or she is equitably entitled to the claimed interest in
land.” Id. For this exception to apply, the plaintiff must show
that: “(1) there was an oral agreement (2) upon which he
reasonably relied (3) by changing his position so that he cannot
be returned to his former position, (4) the other party knew of
such reliance.” Id. at ¶ 14, 76. The plaintiff must have
“suffered a substantial and irretrievable change in position.”
Bassler v. Bassler, 156 Vt. 353, 358, 593 A.2d 82, 86 (1991).
The plaintiff does not allege that the parties had a
written agreement regarding ownership of the property. He relies
on the equitable exception to the Statute of Frauds in his claim
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to a one-half interest in the property. The facts supporting a
claim for equitable relief are laid out in subsection (d) and
are sufficient to preclude application of the Statute of Frauds
at this point. That the plaintiff worked for 14 years without
pay in reliance on a promise by the defendant is sufficient to
establish a “substantial and irretrievable change in position.”
Id.
ii.

Statute of Limitations
Vermont law requires civil actions to be filed “within six

years after the cause of action accrues.” Vt. Stat. Ann. tit.
12, § 511 (2012). “A cause of action does not accrue until each
element of the cause of action exists. A cause of action for
breach of contract accrues when the breach occurs . . . .”
Benson v. MVP Health Plan, Inc., 2009 VT 186 ¶ 5, 978 A.2d 33,
35 (citations omitted).
According to the defendant, breach occurred—and the cause
of action accrued—when the plaintiff became aware that the
property was titled in defendant’s name only. The plaintiff
argues that the express, resulting, and constructive trusts
arose at the time of the transfer, and that breach did not occur
until 2012 when the parties separated and the defendant refused
to convey the property.
Plaintiff’s argument for the establishment of a trust—
whether express, resulting, or constructive—is plausible based
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on the facts alleged and creates a dispute over when the
limitations period began to run. Therefore, the Statute of
Limitations issue cannot be decided at this time.
III. Conclusion
All of the issues raised in the complaint are adequately
pleaded and raise substantial factual questions. In addressing
all of the issues, each warrant full discovery. Accordingly, the
motion to dismiss is denied in its entirety.
Dated at Burlington, in the District of Vermont, this 9th day
of April, 2013.
/s/William K. Sessions III___
William K. Sessions III
U.S. District Court Judge

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