Bourdeau Bros., Inc. v. Boissonneault Family Farm, Inc. , 2020 VT 35 ( 2020 )

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made
before this opinion goes to press.
2020 VT 35No. 2019-166
Bourdeau Bros., Inc. Supreme Court
On Appeal from
v. Superior Court, Franklin Unit,
Civil Division
Boissonneault Family Farm, Inc. et al. March Term, 2020
Robert A. Mello, J.
Arend R. Tensen of Cullenberg & Tensen, PLLC, Lebanon, New Hampshire, for
Plaintiff-Appellant.
Jay Boissonneault, Pro Se, St. Albans, Defendant-Appellee/Cross-Appellant.
PRESENT: Reiber, C.J., Robinson, Eaton, Carroll and Cohen, JJ.
¶ 1. COHEN, J. This is a collection action brought by a grain supplier against dairy
farmers for unpaid grain bills. Plaintiff, the prevailing party below, appeals the trial court’s denial
of its request for attorney’s fees. Plaintiff argues that it was entitled to recover attorney’s fees
based on a term contained in invoices that it provided to defendants each time it delivered grain.
Plaintiff argues that under 9A V.S.A. § 2-207, the term became part of the parties’ contract when
defendants failed to object to it within a reasonable time. Defendants cross-appeal, arguing that
the trial court improperly calculated damages and erred by dismissing their counterclaim and
finding defendant Jay Boissonneault personally liable. We remand for the trial court to reconsider
whether plaintiff is entitled to attorney’s fees, but otherwise affirm the judgment.
¶ 2. Plaintiff Bourdeau Bros., Inc. is a Vermont company that sells agricultural supplies,
feed, and chemicals. Defendants operate a dairy farm in Georgia, Vermont. In July 2016, plaintiff
sued defendant Boissonneault Family Farm, Inc. (BFF) for amounts owed for grain delivered by
plaintiff to the farm. Plaintiff subsequently amended its complaint to add Jay and Cathy
Boissonneault as co-defendants. In their answer, defendants denied that Cathy Boissonneault or
BFF had done business with Bourdeau Bros., Inc. Defendants moved to dismiss Cathy
Boissonneault and BFF as defendants. The court denied the motion. In February 2018, defendants
filed a counterclaim alleging that plaintiff owed defendants $16,000 for water plaintiff took from
defendants’ pond.
¶ 3. A two-day bench trial took place in March 2019. At the conclusion of the trial, the
court dismissed plaintiff’s claims against Cathy Boissonneault. The court found that beginning in
2012, defendants Jay Boissonneault and BFF had an oral agreement with plaintiff to purchase
grain. Each time plaintiff delivered grain, it presented an invoice to defendants. Defendants
consistently paid the amounts indicated in the invoices until 2015, when defendants stopped
paying. The court found that defendants owed plaintiff $27,564.97 for grain delivered in 2015,
including interest of eighteen percent per year. The court denied plaintiff’s request for attorney’s
fees despite language in the invoices stating that plaintiff would be entitled to such fees in the
event of a collection action. The court explained that the attorney’s fees provision was a material
alteration to the parties’ oral agreement to which defendants had not agreed. The court also
dismissed defendants’ counterclaim for damages for water taken by plaintiff.
¶ 4. Both parties appealed. Plaintiff argues that the court erred in denying its request
for attorney’s fees, which it asserts were contractually required. Defendants deny that they owe
attorneys’ fees. They also challenge the court’s calculation of damages and claim that it erred in
dismissing their counterclaim and in finding defendant Jay Boissonneault personally liable.
2
¶ 5. On appeal, we review the trial court’s factual findings in the light most favorable
to the prevailing party. Rubin v. Sterling Enterprises, Inc., 164 Vt. 582, 588, 674 A.2d 782, 786
(1996). We will affirm the court’s findings of fact if there is credible evidence in the record to
support them, even if substantial contradictory evidence exists. Lofts Essex, LLC v. Strategis
Floor & Decor Inc., 2019 VT 82, ¶ 17, __ Vt. __, 224 A.3d 116. “Where the trial court has applied
the proper legal standard, we will uphold its conclusions of law if reasonably supported by its
findings.” Highgate Assocs., Ltd. v. Merryfield, 157 Vt. 313, 315-16, 597 A.2d 1280, 1281-82
(1991).
¶ 6. We begin by addressing plaintiff’s claim that the court erred in denying its request
for attorney’s fees. The general rule is that attorney’s fees are not recoverable “absent a statutory
or contractual exception.” DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239, 246, 776 A.2d
413, 419 (2001). Plaintiff argues that it was entitled to attorney’s fees based on the following
provision that appeared at the bottom of each invoice it presented to defendants:
Terms: Net 30 days, a finance charge, based on the following
periodic rates: 1½ % per month (18 annual percentage rate) will be
applied to any past due balance which was billed 30 days or more
prior to the closing date of this statement . . . . A customer will be
responsible for reasonable attorney fees and costs if collection of the
amount becomes necessary.
Plaintiff argues that under § 2-207 of the Uniform Commercial Code, these additional terms
formed part of its agreement to sell grain to defendants. Plaintiff claims that defendants indicated
their assent to the terms by paying interest on past-due amounts without objection. The trial court
agreed that plaintiff was entitled to collect interest based on the above provision because
defendants had never objected and because plaintiff would be entitled to collect statutory interest
in the absence of the provision. However, it denied plaintiff’s request for attorney’s fees, stating:
“We follow in this country the American Rule under which all parties are responsible for their own
3
attorney’s fees. In order for there to be an exception, the parties have to agree otherwise. So that’s
a material alteration . . . .”
¶ 7. Section 2-207 of the Uniform Commercial Code (UCC), as enacted in Vermont,
provides in part:
(1) A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for
addition to the contract. Between merchants such terms become part
of the contract unless: . . .
(b) they materially alter it . . . .
9A V.S.A. § 2-207(1)-(2)(b). This Court has never had occasion to interpret § 2-207. The proper
interpretation of the statute is a legal question that we review without deference to the trial court.
See In re Treetop Dev. Co. Act 250 Dev., 2016 VT 20, ¶ 9, 201 Vt. 532, 143 A.3d 1086.
¶ 8. As a preliminary issue, we must determine whether the parties qualify as
“merchants” to whom § 2-207 applies. For purposes of the UCC, a merchant is defined in relevant
part as “a person who deals in goods of the kind or otherwise by his or her occupation holds himself
or herself out as having knowledge or skill peculiar to the practices or goods involved in the
transaction.” 9A V.S.A. § 2-104(1). Plaintiff is plainly a merchant for purposes of this case
because it deals in grain, which is the subject of the contract at issue. Similarly, we conclude that
defendants Jay Boissonneault and BFF are merchants in this context because they have specialized
knowledge of grain purchasing acquired in the course of their business as dairy farmers. See Aube
v. O’Brien, 140 Vt. 1, 4, 433 A.2d 298, 300 (1981) (holding that bonded cattle dealer and dairy
farmer were both merchants under § 2-104(1)); see also In re Montagne, 431 B.R. 94, 113 (Bankr.
D. Vt. 2010) (“A dairy farmer is a merchant in all aspects of his mercantile capacity, i.e., with
respect to goods for dairy farming operations, but not for every purchase of goods.”). The trial
4
court therefore correctly concluded that § 2-207(2)(b) is applicable to defendants’ agreement to
purchase grain from plaintiff.
¶ 9. However, we cannot affirm the trial court’s ruling that the invoice term allowing
plaintiff to recover reasonable attorney’s fees in the event of a collection action was, as a matter
of law, a material alteration to the parties’ contract. As discussed further below, we conclude that
the determination of whether an additional term materially alters a contract under § 2-207 requires
a factual inquiry into the particular circumstances of each case. Because the trial court made no
findings to support its conclusion, we must remand for further proceedings.
¶ 10. The UCC does not define what constitutes a material alteration. However, Official
Comment 4 to § 2-207 lists several examples of clauses “which would normally ‘materially alter’
the contract and so result in surprise or hardship if incorporated without express awareness by the
other party,” such as a disclaimer of standard warranties. 9A V.S.A. § 2-207 cmt. 4. Comment 5
lists examples of terms “which involve no element of unreasonable surprise and which therefore
are to be incorporated in the contract unless notice of objection is seasonably given,” such as
interest on past-due amounts. Id. cmt. 5. Attorney’s fees are not on either list.
¶ 11. Based on the language of Comments 4 and 5, most courts agree that an additional
term is a material alteration if it would result in unreasonable surprise or hardship if incorporated
without the buyer’s express awareness.1 See, e.g., Am. Ins. Co. v. El Paso Pipe & Supply Co., 978
F.2d 1185, 1190 (10th Cir. 1992); Luedtke Eng’g Co. v. Ind. Limestone Co., 740 F.2d 598, 600
(7th Cir. 1984); St. Charles Cable TV, Inc. v. Eagle Comtronics, Inc., 687 F. Supp. 820, 827
(S.D.N.Y. 1988); Palmer G. Lewis Co. v. ARCO Chem. Co., 904 P.2d 1221, 1229 (Alaska 1995);
C9 Ventures v. SVC-W., L.P., 136 Cal. Rptr. 3d 550, 568 (Cal. Ct. App. 2012); Oakley Fertilizer,
1
One of the express purposes of the Vermont UCC is “to make uniform the law among
the various jurisdictions.” 9A V.S.A. § 1-103(a)(3). Accordingly, it is appropriate for this Court
to examine how other courts have interpreted § 2-207 to aid our review of that provision.
5
Inc. v. Cont’l Ins. Co., 276 S.W.3d 342, 348 (Mo. Ct. App. 2009); Stanley-Bostitch, Inc. v.
Regenerative Envtl. Equip. Co., 786 A.2d 1063, 1066 (R.I. 2001). We find the majority view to
be persuasive. Accordingly, we hold that the test for a material alteration under 9A V.S.A. § 2-
207 is whether the additional term would result in surprise or hardship to the non-assenting party.
¶ 12. Because the law presumes consent to an additional term if no objection is made
within a reasonable time, see 9A V.S.A. § 2-207 cmt. 6, the non-assenting party bears the burden
of demonstrating that the additional term would result in surprise or hardship and so constitutes a
material alteration to the contract. Comark Merch., Inc. v. Highland Grp., Inc., 932 F.2d 1196,
1201 (7th Cir. 1991) (explaining that “[a]s between merchants, paragraph 2-207(2)(b) presumes
the inclusion of the additional clause unless one of the three exceptions is met,” so party opposing
inclusion bears burden of proving exception); Bayway Ref. Co. v. Oxygenated Mktg. & Trading
A.G., 215 F.3d 219, 223 (2d Cir. 2000) (noting that nearly every court to consider issue has held
that party opposing inclusion of additional terms shoulders burden of proof, and listing cases).
¶ 13. Furthermore, we conclude, in accordance with the prevailing view, that “whether
an additional term in a written confirmation constitutes a ‘material alteration’ is a question of fact
to be resolved by the circumstances of each particular case.” 2 N & D Fashions, Inc. v. DHJ Indus.,
Inc., 548 F.2d 722, 726 (8th Cir. 1976); see also Am. Ins. Co., 978 F.2d at 1190 (noting general
agreement among jurisdictions that whether addition is material alteration is question of fact). This
2
The clauses listed in Comment 4 to § 2-207 and certain other common boilerplate clauses
have been held by some courts to be material alterations as a matter of law. See, e.g., Rottinghaus
v. Howell, 666 P.2d 899, 904-05 (Wash. Ct. App. 1983) (affirming trial court’s conclusion that
disclaimer of standard warranties was material alteration as matter of law, citing Comment 4);
Resch v. Greenlee Bros. & Co., 381 N.W.2d 590, 593 (Wis. Ct. App. 1985) (holding
indemnification clause shifting liability to buyer for claims arising from product purchased was
material alteration as matter of law). Because this case does not involve one of these types of
clauses, we do not address whether this approach is appropriate. We note that the modern trend
appears to be to consider the facts of each case. See T. Davis, U.C.C. Section 2-207: When Does
an Additional Term Materially Alter a Contract?, 65 Cath. U. L. Rev. 489, 509 (2016) (noting
departure from earlier approach).
6
approach makes sense because the materiality of an alteration depends largely on the subjective,
and objectively reasonable, expectations of the parties in the context of a particular transaction or
business relationship. Ebasco Servs. Inc. v. Pa. Power & Light Co., 402 F. Supp. 421, 442-43
(E.D. Pa. 1975) (explaining Official Comment 4 “indicates to us that the materiality of a change
is to be judged in large part by the expectations of the parties involved in the transaction,” which
“is a determination uniquely within the province of a fact finder”). Thus, relevant factors to the
materiality determination may include the prior course of dealing between the parties, the number
of written confirmations provided by plaintiff, and whether the term reflects industry custom. Am.
Ins. Co., 978 F.2d at 1191.
¶ 14. The majority of courts faced with challenges under § 2-207(2)(b) to attorney’s fees
provisions contained in written confirmations between merchants have applied this case-by-case
analysis.3 Comark, 932 F.2d at 1203 n.8 (explaining that courts tend to analyze materiality of
attorney’s fees provisions as factual question, and listing cases). In cases where non-assenting
parties failed to demonstrate surprise or hardship, courts have upheld attorney’s fees provisions.
See Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701, 708 (2d Cir. 2007) (affirming
enforcement of attorney’s fees provision where defendants failed to offer evidence to show
objective or subjective surprise). But where non-assenting parties have shown that attorney’s fees
3
A few courts have held that an attorney’s fees provision is a material alteration as a matter
of law. See A.E. Robinson Oil Co. v. Cty. Forest Prods., Inc., 2012 ME 29, ¶ 10 n.3, 40 A.3d 20;
Johnson Tire Serv., Inc. v. Thorn, Inc., 613 P.2d 521, 523 (Utah 1980). These cases contain little
analysis and we find them to be unpersuasive. In Herzog Oil Field Serv., Inc. v. Otto Torpedo
Co., 570 A.2d 549, 551-52 (Pa. Super. Ct. 1990), a Pennsylvania appellate court held that a clause
awarding the seller attorney’s fees of 25% of the balance owed in the event of a collection action
was a material alteration because attorney’s fees provisions were uncommon and were usually less
than 25% of the balance owed and the provision changed the buyer’s financial obligation “to a
material degree.” However, the court cited no authority or facts to support these assertions. We
believe the majority view—that the materiality determination must be supported by a factual
analysis of the particular case—is the better-reasoned approach. See Rocheux Int’l of N.J., Inc. v.
U.S. Merchs. Fin. Grp., Inc., 741 F. Supp. 2d 651, 686 (D.N.J. 2010) (criticizing Herzog and
Johnson Tire).
7
provisions resulted in surprise or hardship, courts have declined to enforce them. See Comark,
932 F.2d at 1202 (affirming district court’s conclusion that attorney’s fees term unfairly surprised
defendant, and therefore materially altered contract, in absence of evidence that such fees were
expected under industry custom or prior dealing between parties).
¶ 15. We adopt the majority approach and hold that the question of whether additional
terms, including attorney’s fees provisions, materially alter a sales contract between merchants
under § 2-207(2)(b) is a question of fact to be determined under the circumstances of the particular
case. The trial court in this case concluded that the attorney’s fees provision was a material
alteration as a matter of law and therefore made no findings to support its conclusion. Accordingly,
we must reverse the court’s decision on this issue and remand for it to make findings. Parker v.
Parker, 2012 VT 20, ¶ 13, 191 Vt. 222, 45 A.3d 48 (explaining that this Court will remand for
additional findings if findings are inadequate to permit review of trial court decision).
¶ 16. With respect to their cross-appeal, defendants’ first argument appears to be that the
court erroneously included sums due for grain purchased in 2014 in its damages award, when
plaintiff only sought payment for grain purchased in 2015. This argument is without merit. The
billing statements admitted into evidence below indicate that at the beginning of 2015, defendants
owed $5669 for grain delivered in 2014 and that defendants paid for this grain in January 2015.
The damages awarded by the court did not include this amount. We therefore affirm the court’s
calculation of damages.
¶ 17. Defendants next argue that the trial court erred in dismissing their counterclaim for
amounts allegedly owed by plaintiff for water it removed from a pond on the farm rented by
defendants. We see no error. An agricultural tenant generally does not have the right to sell natural
resources that are on the land. See Univ. of Vt. & State Agric. Coll. v. Ward, 104 Vt. 239, 158 A.
773, 784 (1932) (holding that durable lease permitting tenant to take wood for personal use did not
give tenant or his administrator right to sell timber from land; severance of wood from land
8
converted it into personal property, which was owned by landlord). The trial court found that the
terms of the lease between BFF and the owner of the farmland did not give BFF the exclusive right
to control the water in the pond. The court further found that landowner expressly permitted
plaintiff and others to take water from a fire hydrant connected to the pond throughout the course
of the lease. The record supports these findings. The lease contains no provision granting
defendants exclusive control over the water in the pond. Plaintiff’s representative and landowner
both testified that landowner permitted plaintiff to take water from the fire hydrant to use in
spraying landowner’s and others’ fields. Landowner testified that the hydrant was paid for by the
State of Vermont and installed by the town for use by its fire department. He had never charged
anyone for its use. This evidence supports the court’s findings, which in turn support its conclusion
that defendants were not legally entitled to recover damages for water plaintiff removed from the
pond. The court did not err in dismissing defendants’ counterclaim.
¶ 18. Finally, defendant Jay Boissonneault argues that he is only an agent for BFF and is
not liable for the company’s debts, and therefore the court erred in holding him personally liable
for damages awarded to plaintiff. Defendant invited the alleged error by taking the position below
that he, and not the corporation, was responsible for the grain orders. See State v. Longe, 170 Vt.
35, 44 n.1, 743 A.2d 569, 575 n.1 (1999) (“The invited error doctrine holds that an action induced
by an appellant cannot ordinarily be a ground of error.”). We therefore decline to disturb the
court’s decision that defendant Jay Boissonneault is personally liable.
The matter is remanded for further proceedings on the issue of whether plaintiff is entitled
to attorney’s fees. The judgment is otherwise affirmed.
FOR THE COURT:
Associate Justice
9