A corporation sued its former president and CEO for breach of fiduciary duty for failing to provide one of its creditors financial reports and for unjust enrichment and breach of fiduciary duty for going to work for another corporation, even though the president “stepped back” from the plaintiff and took a seventy-five percent cut in salary.  The corporation won on both of these counts in a jury trial, but the Law Court vacated both parts of the judgment.

On the breach of fiduciary duty issue with regard to the financial statements, the Court held that a jury instruction that the defendant-president would be liable if he “did not act with care, competence and diligence” was erroneous because the standard for breach of fiduciary duty under Delaware law, which applied in this case, was gross negligence.  The Court held that the instruction that the defendant could be found liable for failing to act with care, competence, and diligence “allowed the jury to assess [his] conduct against a lesser standard than what was actually required for a violation of the law….”

The Law Court also vacated the judgment in the plaintiff’s favor for unjust enrichment.  The jury had found that the defendant had not breached his fiduciary duty by working for a different company.  The Law Court concluded that the equitable claim for unjust enrichment was essentially the same as the tort claim for breach of fiduciary duty where the enrichment was allegedly unjust because of the breach of fiduciary duty.  Since the plaintiff prevailed on the breach of fiduciary duty claim, he must also prevail on the equitable unjust enrichment claim decided by the Court.

The Law Court vacated a judgment of the Superior Court which in turn had vacated a decision of the City of Portland Zoning Board of Appeals upholding the issuance of a building permit to the applicants to build a second floor on their house on Peaks Island.  The permit was approved under one of two subsections of the code provision for building extensions.  One of these applied to non-conforming lots as to “land area per dwelling unit” and the other applied to lots “conforming as to land area per dwelling unit but lawfully non-conforming as to any yard setback or nonresidential principal structures that are lawfully nonconforming as to any yard setback.”  The Zoning Board found that the latter subsection applied because there was no applicable land-area-per-dwelling-units standard in that zone and that it had been omitted intentionally.  The Law Court agreed based on its interpretation of various code provisions showing that the omission was intentional, and even if not intentional, that the two standards were independent and had separate meanings.

An employee took early retirement and immediately went to work full-time at another job.  A few years later, when his work-related carpal tunnel injury worsened, he applied for restoration and ongoing partial incapacity benefits.  While he was working, he was receiving retirement benefits from his original employer, as well as payments for life and health insurance.

The workers’ compensation hearing officer awarded the employee ongoing partial incapacity benefits and ruled that the so-called retiree presumption did not apply.  The hearing officer also, however, gave the employer an offset for the life and health insurance payments it made.

The employer appealed the issue of the application of the retiree presumption, and the employee appealed the offset of the health and life insurance payments.  The first issue is governed by the language of the retiree presumption statute, 39-A M.R.S.A. § 223, which states that an employee is presumed not to be eligible for workers’ compensation benefits when two conditions are met.  First, the employee must have “terminated active employment” and second, he must have received non-disability pension or retirement benefits of a certain type.  The question in this case was whether the employee had terminated active employment when he went to work full-time immediately after he retired from the employer.  The Court held that the statute’s plain meaning is that the employee must have terminated all active employment and not just active employment by the employer.  If the Legislature had intended the latter meaning, it could have specifically incorporated language to that effect, similar to language in the second part of the statute.  Since it did not, the statute unambiguously required that the employee terminate all active employment in order to qualify for the presumption.  (Although the Court did not emphasize this, if the phrase in question required the employee only to terminate employment with the employer then it would be fulfilled in every instance in which the employee retired, rendering that prong of the test for the retiree presumption meaningless).

The Court also held in the employee’s favor on the second issue.  It found that the term “retirement plan” as used in 39-A M.R.S.A. § 62-B was ambiguous and that the Legislative history showed that the Legislature intended that there be a setoff of life insurance and health insurance payments only when those fringe benefits were considered in determining the employee’s average weekly wage for purpose of determining his benefits.  In this case, the value of the benefits was not used in determining the employee’s AWW and the payments therefore should not be a setoff.

(The Court noted in a footnote that this holding might change depending on whether the hearing officer included the value of the fringe benefits in calculating the pre-injury average weekly wage).

The Law Court affirmed the judgment of the Probate Court in this estate matter in which a parcel of property was divided among all but one of the decedent’s sons but the testamentary division would violate the Town’s zoning ordinance.  The sons had previously formulated a plan for dividing the property that would not violate the zoning ordinance.  The omitted brother argued that the devise failed because it violated the zoning ordinance.

The inheriting sons designated a surveyor as an expert witness, and he formulated a revised plan for dividing the property that would satisfy the zoning ordinance.  The Court adopted that plan, and the omitted son appealed.  The Law Court held that the fact that a devise results in a real estate parcel that violates a zoning ordinance does not negate the devise because the zoning ordinance controls only the use of the land, whereas the devise under a will goes to its ownership.  In other words, wills can validly transfer title to non-conforming lots to beneficiaries.  It is then up to the beneficiaries to deal with the non-conformity.  Here, if the Court had not partitioned the land to conform it to zoning requirements, but instead ordered it to pass to the beneficiaries, each of them could have sought a variance.

The Law Court also affirmed the partitioning of the land by the Probate Court on the ground that it had equitable jurisdiction to do so, just as the District Court and the Superior Court do.  The Court pointed out that an equitable partition is a more flexible procedure than a civil action for partition.

The father in this parental rights action appealed a Maine court’s order exercising jurisdiction over the parental rights action in Maine under the UCCJEA.  Although the child lived in Hawaii, the District Court found, and the Law Court affirmed, that jurisdiction was proper under the Act because the Hawaii court conceded authority to Maine, the mother and the child had come to Maine to escape domestic violence, and the child and the parent had sufficient connections with Maine for the court to exercise jurisdiction.  Those connections included that the maternal grandmother and other relatives lived here and had an interest in the child’s well-being.  In addition, substantial evidence was available in Maine regarding the child’s future care, protection, training, and personal relationships.

In this case, defendant pled an easement by necessity as a defense to trespass.  The parties previously litigated the issue of whether the defendant had a right of access across the plaintiff’s property, and the defendant lost.  Nonetheless, the defendant continued to try to access his property through plaintiff’s, even removing boulders that had been put across it by the plaintiff.

The Superior Court concluded that the doctrine of claim preclusion barred the affirmative defense of easement by necessity.  The Law Court affirmed that finding.  It found that the defendant’s argument that claim preclusion did not apply in declaratory judgment actions did not apply in this case because in the previous case, the plaintiff had requested injunctive relief, as well as a declaratory judgment.  Claim preclusion therefore applied and barred the necessity defense because it could have been raised in the previous action which was between the same parties and involved the same subject matter.

The Law Court also affirmed the Superior Court’s finding that the defendant acted maliciously and therefore that punitive damages were appropriate.  Finally, the Court vacated the Superior Court’s attorney fee award on the ground that there was no statute, agreement, or inherent basis for it.  It remanded, however, because it was unable to determine whether the Superior Court would have entered a different punitive damage award had it been aware that it lacked authority to award attorney fees.

This is a case that should be of major interest to all tort lawyers because it addresses important issues involving uninsured motorist coverage.

The plaintiff was injured in an automobile accident as a passenger in her parents’ vehicle.  The tortfeasor had $100,000 in liability coverage.  The parents had $100,000 in UM coverage, and the plaintiff had $50,000 UM coverage in her own policy, which coincidentally was issued by the same company as the liability carrier, an important factor in the Court’s decision.

The plaintiff and defendant entered into a high-low agreement with a high of $100,000 and a low of $60,000 and agreed to arbitrate on damages.  The arbitrator found the damages to be $135,000, at which point the liability insurer ponied up its $100,000 coverage limit.  The arbitrator’s decision was not reduced to judgment, but the parties filed a stipulation of dismissal, and the Court dismissed the plaintiff’s action with prejudice.  The plaintiff then sought to reach her own UM coverage for the additional $35,000.  The Court granted summary judgment in favor of the insurer, however, on the basis that, after settling with the tortfeasor, the plaintiff was no longer “legally entitled to recover damages” as required by the UM statute.

Three issues were presented on appeal:

 1. Whether the arbitrator’s decision collaterally estopped the UM insurer (which was also the liability carrier);

 2. Whether the use of the phrase “his insurer” in the high-low arbitration agreement included the insurer as the plaintiff’s UM carrier; and

 3. Whether, after releasing the defendant and his insurer, the plaintiff was still “legally entitled to recover damages” for purposes of the UM statute.

The Law Court resolved all of these issues in favor of the plaintiff.  First, it concluded that the unconfirmed arbitration award could have collateral estoppel effect because the arbitration procedure possessed the essential elements of an adjudicatory procedure as required by Section 83 of the Restatement (Second) of Judgments.  This was true even though the award was never confirmed or entered as a judgment.

The Court also found that Allstate as the UM insurer was in privity with Allstate as the liability insurer such that the award would collaterally estop it as the UM insurer.  Privity existed because the two entities had commonality of ownership, and Allstate as liability insurer and Allstate as UM insurer had substantially the same goal of limiting the plaintiff’s damages.  Finally, the insurer had a full and fair opportunity and incentive to litigate the issue of damages in the arbitration procedure.

Allstate, of course, then argued that, if it was in privity with itself, the release of Allstate as liability insurer should also be held to have released Allstate as the UM insurer.  This was not a question of collateral estoppel, however, as the Court pointed out, but of interpretation of the arbitration agreement which referred to the defendant and “his insurer.”  The Court held that the meaning of the agreement was clear that the use of the phrase “his insurer” referred only to Allstate as the liability insurer and not as the UM insurer.

Finally, the Court concluded that the Superior Court erred in finding that the plaintiff was no longer legally entitled to recover damages once she had released the tortfeasor.  The Court noted a split of authority on this issue, but adopted the right view that releasing the tortfeasor did not bar a UM action.  The Court once again pointed out that the purpose of the Uninsured Motorist Statute was to provide the plaintiff with the same recovery which she would have received had the tortfeasor had liability coverage equaling the UM coverage of the injured party.  It also stressed the strong public policy of just compensation and held that this policy compelled it to read the statute liberally in favor of the insured.  Thus, the Superior Court erred in concluding that the plaintiff was no longer legally entitled to recover damages once she had released the tortfeasor.

Nonetheless, the Court remanded because the Superior Court had not addressed the issue of Allstate’s consent to the plaintiff’s settlement and the effect of the settlement on Allstate’s subrogation rights.  These issues had to be decided as genuine issues of material fact.

In this very interesting case, the Law Court was called upon to determine whether the two ancient writs of audita querlan and coram nobis still existed and could be applied in the case of the defendant, a citizen of the United Kingdom, who is going to be deported unless he can have certain convictions in Maine either set aside or their sentences altered.

The Court concluded that the common law writs were no longer available in Maine because of the adoption of the Post-Conviction Relief Statute, which was intended to occupy the field of post-conviction relief from errors in convictions or sentences.  The Court also pointed to a number of other statutes and rules that provided for relief from wrongful conviction including, but not limited to, filing a motion for a new trial under M.R. Crim. P. 33 if new evidence is discovered within two years of the conviction and challenging an illegal sentence under M.R. Crim. P. 35(a).

The Court observed that deportation may be one of many significant collateral consequences of criminal convictions which the Court was not in a position to alter, even though as in this case, the defendant would probably be deported.

This is an appeal from the Department of Environmental Protection’s (DEP) granting of permits to construct a wind energy generation facility.  The application was made under a statute specifically providing for expedited handling of wind projects.

The opponents of the project appealed but conceded on appeal that the Board’s findings were supported by evidence and by doing this essentially undercut their appeal.  Their argument on appeal was that, even though the Board’s findings were supported by evidence, opposite findings were also supported in the record.  The Court held, as it has in many cases, that the standard of review of administrative decisions on appeal is deferential to findings of the administrative body and that it will only overturn findings if there is no evidence in the record to support it.  Therefore, even if opposite findings might have been supported in the record, the reviewing court, in this case the Law Court, has to uphold the decision of the administrative body if it is supported by evidence.  The Law Court therefore rejected the appellants’ argument that the Board’s specific findings with regard to wildlife impact, public health, and sound assessment should be vacated because there was evidence in the record to support opposite findings.

The Court also rejected an equal protection challenge to the statute creating the expedited procedure for wind project applications which provided, among other things, for a direct appeal to the Law Court.  The Law Court pointed out several other statutes that provided for direct appeal to the Law Court and held that these provisions were well within the authority of the Legislature and did not violate equal protection.

The father of a ward appealed an order appointing the child’s maternal grandmother her permanent guardian.  The Court modified two details of the order and affirmed it as modified.  The father and mother were divorced, and the mother had primary physical custody.  The father visited the child but then stopped doing so when he was charged with OUI, and a surprise visit to his residence revealed possession of alcohol, marijuana, and drug paraphernalia.  The mother began to have substance abuse problems and eventually moved in with a boyfriend who physically abused her.  The father was visiting Jewel at the time but was not aware of these events.

The grandmother, who had originally provided the apartment for the mother and the ward, applied for temporary guardianship and for permanent guardianship.  She was awarded temporary guardianship, and the father moved to dissolve the temporary guardianship.  On the day of the hearing on the motion and on the petition for permanent guardianship, the mother and father signed an agreement to modify the parental rights judgment in the District Court by awarding the father primary residential care.  In light of the agreement, the GAL recommended that the Probate Court grant temporary guardianship to allow the child a slow and steady transition to the father’s home.  The GAL also recommended that the father make arrangements for a therapist for the child.

The Probate Court found that the grandmother would provide a living situation that was in the best interest of the child and that a temporarily intolerable living situation existed as to both parents.  It based its conclusion on the latter issue on four findings:  (1) the lack of a parental rights order giving the father primary residential care; (2) the father’s limited and inconsistent contact; (3) the fact that he had not arranged for a therapist; and (4) the fact that he had not established that he was drug-free through a hair follicle test.  The Court ordered that the guardianship would terminate when the father provided proof that the District Court had approved the parents’ agreement and modified the parental rights order, the father had found a qualified therapist, and the father had passed a hair follicle drug test.  The Court granted the motion to dissolve the temporary guardianship.

The Law Court first noted that the standard for proving a “temporarily intolerable living situation” is less stringent than establishing jeopardy sufficient to terminate parental rights.  The Court concluded that the Probate Court had correctly found that the living situation was temporarily intolerable because the parent was currently unable to meet the child’s needs and that inability would have an effect on the child’s well-being that may be dramatic, and even traumatic, if the child lives with the parent, and the proposed guardian will provide a living situation that is in the best interest of the child.

The Law Court found that there was evidence in the record supporting the Probate Court’s four factual findings except for the finding that the father had failed to establish sobriety through a hair follicle test.  The father declined to take a hair follicle drug test when the GAL requested it because he did not have a PCP and could not afford the test.  The GAL said that a random urine test would suffice, but that was never completed.  The GAL ultimately reported that there was no evidence that the father was currently using drugs or had a drug problem.  The Probate Court also found that there was no evidence that the OUI conviction represented a pattern of behavior or evidence that the father has a drug abuse problem.  He was attending school to be an EMT and will be required to submit to drug testing in order to maintain that position.  These findings, the Law Court said, could not be reconciled with the finding that the father had failed to establish that he was drug-free through a hair follicle test, and the Law Court struck that finding.

The Court finally agreed with the father that the Probate Court should not have characterized the guardianship as permanent, but as temporary because it was not contemplated that it would last longer than six months, which fits the statutory definition of temporary guardianship.