Lenair v. Shoreham Tel. Co. ( 2010 )

Lenair v. Shoreham Tel. Co., No. 294-4-09 Rdcv (Cohen, J., July 1, 2010)
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STATE OF VERMONT
RUTLAND COUNTY
)
RHONDA LENAIR, Trustee under the ) Vermont Superior Court
agreement of Trust of the Lisa Trust, ) Civil Division, Rutland Unit
of Benson, Rutland County, ) Docket No. 294-4-09 Rdcv
)
Plaintiff, )
)
v. )
)
SHOREHAM TELEPHONE CO, INC., )
JOHN DERRICK, and TOWN OF BENSON, )
)
Defendants )
DECISION ON DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT,
FILED DECEMBER 1, 2009, and MARCH 12, 2010
This case arises out of the alleged faulty burying of utility lines on the plaintiff
Rhonda Lenair’s property. The defendants move summary judgment, arguing that Ms.
Lenair is estopped or precluded from bringing her current claims against them because
the issue of damages has already been fully determined by a federal jury in a case against
the prior property owners.
Rhonda Lenair is represented by Herbert G. Ogden, Esq. The defendants
Shoreham Telephone Co., Inc. and John Derrick are represented by Gary F. Karnedy,
Esq., Kevin M. Henry, Esq., and Alexandra H. Bolanis, Esq. The defendant Town of
Benson is represented by Peter M. Bevere, Esq.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate where there is no genuine issue of material fact
and the party is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3). In response to
an appropriate motion, judgment must be rendered "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, . . . show
that there is no genuine issue as to any material fact and that any party is entitled to
judgment as a matter of law." V.R.C.P. 56(c)(3). In determining whether a genuine issue
of material fact exists, the court accepts as true allegations made in opposition to the
motion for summary judgment, provided they are supported by evidentiary material.
Robertson v. Mylan Labs, Inc., 2004 VT 15, ¶ 15, 176 Vt. 356. The nonmoving party
then receives the benefit of all reasonable doubts and inferences arising from those facts.
Woolaver v. State, 2003 VT 71, ¶ 2, 175 Vt. 397. Furthermore, where, as here, "the
moving party does not bear the burden of persuasion at trial, it may satisfy its burden of
production by showing the court that there is an absence of evidence in the record to
support the nonmoving party's case. The burden then shifts to the nonmoving party to
persuade the court that there is a triable issue of fact." Ross v. Times Mirror, Inc., 164 Vt.
13, 18 (1995) (internal citations omitted).
BACKGROUND
In October 2002, Rhonda Lenair and her late mother purchased a house on Park
Hill Road in Benson, Vermont, for $747,000 from Wayne and Lois Gauthier. In April
2003, Ms. Lenair discovered that she, and not a utility company, was the owner of the
underground utility lines that serviced her property. As a result, Ms. Lenair sued the
Gauthiers in United States District Court, District of Vermont, alleging claims for
consumer fraud, fraudulent nondisclosure, negligent nondisclosure, and breach of deed of
warranty (the matter Lenair v. Gauthier, 1:03-cv-00299-jgm is hereafter referenced as
“previous litigation”).
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In the previous litigation, Ms. Lenair alleged that the Gauthiers were liable for
failing to disclose the fact that would own the underground utility, and thus be
responsible for it. Furthermore, she alleged that the utility ran under a neighboring
property, outside of the easement area granted for it. She alleged that she would not have
purchased the property from the Gauthiers had she known these facts.
Under Ms. Lenair’s claim for consumer fraud, she sought damages in the amount
of the consideration she paid for the property ($747,000), attorney’s fees and expenses,
and exemplary damages. Under her claim for fraudulent nondisclosure, she sought to
rescind the purchase of the property and to recover all damages, including special
damages, to which she was entitled. Under the claim for negligent nondisclosure, she
sought “all damages, including special damages, to which she is entitled.” And, under the
claim for breach of warranty in the previous litigation, Ms. Lenair sought damages for the
lessened value of the property, the price she would have to pay the neighbors for a
corrective easement, or the expense of having a substitute electrical line built.
According to Ms. Lenair’s complaint in the previous litigation, Central Vermont
Public Service gave her an estimate of $41,052.04 to install an electrical system in
accordance with CVPS standards. Adams Electric estimated that items not covered by the
CVPS estimate, such as trenching and conduit, would total another $20,289. Neither of
these estimates included landscaping expenses.
A jury trial in the previous litigation was held from December 13-15, 2006. At the
close of evidence, the court dismissed the counts for consumer fraud, fraudulent
nondisclosure, and breach of deed of warranty. The only count that went to the jury was
for negligent nondisclosure.
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As to damages, the jury instructions set forth: “The plaintiff is entitled to be
compensated for damages proximately caused by the defendant’s conduct. The plaintiff
in this case seeks as damages the costs she will incur to replace the underground primary
power line serving the house she bought from the defendants.” Ms. Lenair did not
challenge the instruction regarding damages during the charging conference with the
court.
After deliberation, the jury awarded Ms. Lenair damages in the amount of
$36,500. She filed a motion for additur or new trial on damages, asking the court to
amend the judgment to $66,703.44. Ms. Lenair claimed that the jury award of $36,500
was the result of compromise. The court denied the motion for additur, finding that the
jury could have reasonably concluded that her estimate of damages was too high. Ms.
Lenair appealed both the December 15, 2006 judgment and the denial of her motion for
additur. The United States Court of Appeals for the Second Circuit affirmed the jury
award and the judgment of the district court. The $36,500 judgment in the previous
litigation was satisfied in full on April 16, 2009.
One week later, on April 23, 2009, Ms. Lenair filed a complaint in this Court
against defendants Shoreham Telephone Co., Inc., John Derrick, and the Town of
Benson, Vermont. In the instant litigation, Ms. Lenair alleges claims of negligence,
breach of contract, and consumer fraud against Shoreham Telephone and Mr. Derrick
arising out of the installation of the underground utilities for a previous owner of the
property. Ms. Lenair alleges that the defendants were negligent in failing to bury the
power line to the correct depth under Vermont law. She further alleges that the
defendants committed consumer fraud because they knew they had not buried the power
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line correctly and they could foresee that the representation that it was buried correctly
would cause someone to buy the property from the former owner.
Ms. Lenair seeks the following damages on the negligence and breach of contract
claims: (1) the estimate of $41,052.04 from CVPS to install an electrical system in
accordance with CVPS standards; (2) the estimate of $20,289 from Adams Electric to
bury the line from Park Hill Road to her house; (3) landscaping expenses and possible
business interruption, or, the reduction in value of the property if the underground utility
is not replaced, which she alleges is between $75,000 to $100,000.
In addition, for the consumer fraud claim, Ms. Lenair seeks the value of
consideration given to purchase the property ($747,000); other sums spent in reliance on
the misrepresentations; reasonable attorney’s fees and expenses, minus the $36,500
judgment in the previous litigation; and exemplary damages.
Against the Town of Benson, Ms. Lenair alleges that the town clerk negligently
mis-indexed the 1999 easement governing the underground power line. It was granted to
the Gauthiers’ predecessor in title, Robert Cunningham. Ms. Lenair alleges that the 1999
easement was mis-indexed under “Cunningham Robert” (missing a comma), rather than
“Cunningham, Robert” (with a comma). As a result, the 1999 easement entry was two
pages away from where it should have been, causing Ms. Lenair’s attorney to miss it in
his search. Ms. Lenair alleges that the mis-indexing proximately caused her and her
mother to purchase property they would not otherwise have bought.
Ms. Lenair seeks the same damages against the Town of Benson for mis-indexing
as she does against Shoreham Telephone and Mr. Derrick for negligence and breach of
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contract. Finally, in Ms. Lenair’s prayer for relief, she requests that her judgment be
reduced by the $36,500 judgment collected in the previous litigation.
DISCUSSION
I. Consumer Fraud
The plaintiff alleges that it was an unfair and deceptive act for the defendants to
bury the utility line improperly while allowing Robert Cunningham, a predecessor in
interest, to believe it had been buried correctly. The plaintiff argues that the defendants
could foresee that their failure to properly install the lines and their failure to state the risk
of what they had installed would cause future owners to buy without knowing the risks.
Defendants Shoreham Telephone and John Derrick argue that they are entitled to
judgment as a matter of law because the plaintiff has provided no evidence that she relied
on any representation or practice of the defendants, or that her injuries were the result of
any representation or practice of the defendants.
The Consumer Fraud Act is designed to protect against unfair and deceptive acts
or practices in commerce. 9 V.S.A. § 2453(a). The CFA is intended to “protect this
state’s citizens from unfair and deceptive business practices and to encourage a
commercial environment highlighted by integrity and fairness.” Gramatan Home
Investors Corp. v. Starling, 143 Vt. 527, 536 (1983).
A “deceptive act or practice” is a “material representation, practice or omission
likely to mislead a reasonable consumer.” Bisson v. Ward, 160 Vt. 343, 351 (1993). To
prove that a defendant employed deceptive acts and practices in commerce, a plaintiff
must establish with proof three elements: (1) the representation or omission at issue was
likely to mislead consumers; (2) the consumer's interpretation of the representation was
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reasonable under the circumstances; and (3) the misleading representation was material in
that it affected the consumer's purchasing decision. Jordan v. Nissan America, Inc., 2004
VT 27, ¶ 5, 176 Vt. 465.
The CFA operates under an objective standard. The first element requires the
consumer to prove that “the representation or omission had the tendency or capacity to
deceive a reasonable consumer” when viewed in light of all the circumstances, and the
second element measures the reasonableness of the plaintiff’s interpretation. Id. at ¶¶ 5-8.
The third element, of materiality, is also “generally measured by an objective standard,
premised on what a reasonable person would regard as important in making a decision.”
Carter v. Gugliuzzi, 168 Vt. 48, 56 (1998).
The gist of Plaintiff’s argument is that the defendants’ statement to Mr.
Cunningham, upon completion of the job, that they had properly installed the power line
was passed on by Mr. Cunningham to the Gauthiers, who then believed the line was
properly installed, and then finally from the Gauthiers to the plaintiff when she bought
the property.
The plaintiff, however, has not provided any evidence that the defendants’
representation to Mr. Cunningham (over 20 years ago) that they had properly installed the
power line was material, in that a reasonable person would regard it as important in
making a decision. The plaintiff bought the property under the assumption that she did
not even own the power line. In her complaint, she alleges that “[t]he plaintiff and her
late mother would not have purchased the property if they had known that they would
own the electrical utility supplying it.” Thus, according to the plaintiff it was not material
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to her decision to purchase the property whether the line was installed to the proper
depth, only whether she owned the line.
The Court fails to see how Plaintiff’s claim against the defendants is anything
other than a classic construction negligence or breach of contract claim. The plaintiff’s
reading of the CFA would turn every case of negligent construction into a claim for
consumer fraud. The defendants are entitled to judgment as a mater of law on the claim
of consumer fraud.
II. Issue Preclusion
Defendants Shoreham Telephone, Mr. Derrick, and the Town of Benson argue
that the plaintiff is estopped or precluded from seeking damages against them because the
issue of damages for replacement of the power line was decided by a federal jury in the
previous litigation. The jury awarded plaintiff $36,500 in compensatory damages and the
judgment was satisfied in full. The defendants also raise the issue of satisfaction of
judgment. The Court will first address issue preclusion.
“Collateral estoppel, or issue preclusion, bars the subsequent litigation of an issue
that was actually litigated and decided in a prior case where that issue was necessary to
the resolution of the dispute.” Scott v. City of Newport, 2004 VT 64, ¶ 8, 177 Vt. 491. It
serves the dual purpose of protecting litigants from the burden of relitigating identical
issues and of promoting judicial economy by preventing needless litigation. Parklane
Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979).
The Vermont Supreme Court has abandoned the doctrine of mutuality regarding
collateral estoppel. Trepanier v. Getting Organized, Inc., 155 Vt. 259, 264-66 (1990).
The Court quoted Justice Traynor in rationalizing its abandonment: “It would be unjust to
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permit one who has had his day in court to reopen identical issues by merely switching
adversaries.” Id. at 264-65 (quoting Bernhard v. Bank of America, 122 P.2d 892, 895
(Cal. 1942)). The Court found that issue preclusion without requiring mutuality of parties
“protects the court system and potential litigants from the burdens of relitigation,
encourages litigants to join all parties in one action, and decreases the chances of
inconsistent adjudication.” Trepanier, 155 Vt. at 265. Vermont permits the “defensive
use of collateral estoppel,” as in the instant case, where a defendant argues that a plaintiff
is estopped from asserting a claim that he or she had previously litigated on the same
issue against another defendant. Id. at 266 n.2.
Issue preclusion should be found only when the following criteria are met: (1)
preclusion is asserted against one who was a party or in privity with a party in the earlier
action; (2) the issue was resolved by a final judgment on the merits; (3) the issue is the
same as the one raised in the later action; (4) there was a full and fair opportunity to
litigate the issue in the earlier action; and (5) applying preclusion in the later action is
fair. Id. at 265.
The Court has further stated that when examining the final two criteria, “courts
must look to the circumstances of each case. Among the appropriate factors for courts to
consider are the type of issue preclusion, the choice of forum, the incentive to litigate, the
foreseeability of future litigation, the legal standards and burdens employed in each
action, the procedural opportunities available in each forum, and the existence of
inconsistent determinations of the same issue in separate prior cases.” Id. In order to
satisfy the final two criteria, the party opposing issue preclusion must show the existence
of circumstances that make it appropriate for an issue to be relitigated. Id. at 265-66.
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The critical inquiry when determining whether issue preclusion applies “is
whether the party to be bound has had a full and fair opportunity to contest an issue
resolved in an earlier action so that it is fair and just to refuse to allow that party to
relitigate the same issue.” Trepanier, 155 Vt. at 266. “The absence of mutuality will not
preclude the use of collateral estoppel unless the party denying the estoppel shows special
circumstances indicating unfairness.” Id.
Here, the first criterion is met because the plaintiff was the plaintiff in the
previous federal litigation against the former property owners, the Gauthiers.
In regards to the second criterion, the issue of damages is subject to the doctrine
of collateral estoppel. See Bridgestone/Firestone North America Tire, L.L.C. v. Naranjo,
79 P.3d 1206, 1211 (Ariz. Ct. App. 2003) (holding collateral estoppel prevented plaintiffs
from relitigating the issue of total damages where jury in previous litigation had assessed
“full damages”); see also Greenleaf v. Garlock, 174 F.3d 352, 358-59 (3d Cir. 1999)
(plaintiff’s prior state court jury verdict carried issue preclusive effect upon the issue of
damages in subsequent action); Kathios v. General Motors Corp., 862 F.2d 944, 946-47
(1st Cir. 1988) (resolution of the issue of bodily damages in first case collaterally
estopped plaintiff from seeking redetermination of his damages in subsequent action);
Ritchie v. Landau, 475 F.2d 151, 155-56 (2d Cir. 1973) (plaintiff estopped from
relitigating issue of damages after recovering in arbitration proceeding).
The second criterion is met because the issue of damages for replacement of the
underground power line was resolved by a final judgment on the merits in the previous
litigation. The federal jury was instructed that the plaintiff was “entitled to be
compensated for damages proximately caused by the defendant’s conduct. The plaintiff
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in this case seeks as damages the costs she will incur to replace the underground primary
power line serving the house she bought from the defendants.” The plaintiff did not
object to this instruction. The jury awarded plaintiff $36,500 in compensatory damages
and the judgment was subsequently satisfied in full.
The third criterion requires that the previous issue is the same as the one raised in
the later action. The plaintiff argues that the damages she seeks in the instant action are
different from those in the previous litigation. The Court does not agree. While the
plaintiff may have brought different claims against these defendants than she did against
the Gauthiers in the previous litigation, she is seeking to be made whole again through
replacement of the power line—her damages are the same.
On the claims of negligence, breach of contract, and mis-indexing, the plaintiff
seeks to recover the estimates from CVPS and Adams Electric to install a new electrical
system and bury the line. Both of these estimates were presented to the federal jury. The
plaintiff even recognizes that any damages she attempts to receive here must be offset by
the $36,500 jury award.
While the plaintiff alternatively seeks to recover for the reduction in value of her
property if the underground utility is not replaced, this claim makes little sense because
she has already recovered damages to have the utility line replaced. The plaintiff also
seeks landscaping expenses. She stated in her federal complaint that the CVPS and
Adams Electric estimates did not include landscaping costs. Thus, in the previous
litigation she recognized that landscaping costs would arise out of the replacement of the
underground line. The plaintiff cannot withhold a portion of her damages for future
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litigation against other defendants because this would be the definition of piecemeal
litigation.
Finally, the plaintiff seeks to recover for possible business interruption arising out
of the replacement of the line. This claim is speculative and not a valid claim for
damages. See Hedges v. Durrance, 2003 VT 63, ¶ 12, 175 Vt. 588 (“An injury based on
speculation about uncertain future events is no injury at all.”). Furthermore, even if the
plaintiff could recover for business interruption, these are damages which the she should
have reasonably foreseen would arise out of replacement of the utility line; thus, it should
have been argued in the previous litigation. Again, the allowance of such damages would
encourage piecemeal litigation.
In regards to the fourth criterion, the plaintiff had a full and fair opportunity in
United States District Court to litigate the issue of damages resulting from having to
replace the underground power line. The plaintiff also had the opportunity to join the
instant defendants in that action, but chose not to. “A plaintiff who could have joined
[her] present adversary as a co-defendant in the first action is usually held precluded in
the absence of strongly countervailing considerations. Since there are rarely tactical
reasons for refraining from joining all potential defendants, the inference is that the
second action is merely a renewal of a previously unsuccessful effort.” Restatement
(Second) Judgments § 29 cmt. e. The plaintiff even presented evidence at trial as to the
Town of Benson’s indexing, but did not join that defendant.
Furthermore, there was clearly an incentive to litigate in the previous litigation.
This is not a case where a small squabble against one defendant results in greater
unforeseen preclusionary consequences against other defendants in a later action. The
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plaintiff made numerous claims against the Gauthiers, including the same claim for
compensatory damages that she makes here.
Finally, applying preclusion in the later action is fair. The Court does not find
persuasive Plaintiff’s arguments that her federal case was a “last-minute attempt to
salvage a case neglected by the plaintiff’s first lawyer until trial was scheduled,” or that
she should have a chance to remedy what appeared to be a compromise verdict by the
federal jury. The Second Circuit explicitly rejected Plaintiff’s claim of a compromise
verdict. Thus, there are no special circumstances which would make relitigation
appropriate. The instant action appears to be nothing more than an attempt to recover
greater damages from other defendants where the plaintiff is not pleased with her
recovery in the previous litigation.
As Justice Traynor stated, “[i]t would be unjust to permit one who has had [her]
day in court to reopen identical issues by merely switching adversaries.” Bernhard, 122
P.2d at 895, quoted in Trepanier, 155 Vt. at 264-65. The plaintiff “had a full sized bite of
the apple” in the first case, and the jury “conclusively adjudicated” the extent of her
damages. See Kathios, 862 F.2d at 951. She has been made whole. Issue preclusion as to
damages is appropriate.
III. Satisfaction of Judgment
The doctrine of satisfaction of judgment is closely related to issue preclusion. In
fact, courts have analyzed both doctrines when a plaintiff seeks to recover additional
damages after a judgment in a previous case. See Bridgestone/Firestone North America
Tire, L.L.C., 79 P.3d 1209-1212 (analyzing both issue preclusion and satisfaction of
judgment); see also Greenleaf, 174 F.3d at 357-61 (same).
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The general rule is that the satisfaction of a judgment against one or more several
joint tortfeasors is a discharge of them all, “since a party injured by a wrong committed
by several can have but one satisfaction for his injury . . . .” Coldwell v. Lang, 105 Vt.
359, 363 (1933); see also Greenleaf, 174 F.3d at 357 (under Pennsylvania’s “one
satisfaction” rule, “although a plaintiff may obtain a judgment against several tort-feasors
for the same harm, he or she is entitled to only one satisfaction for that harm,” and is
barred from seeking additional damages “where the prior proceedings can reasonably be
construed to have resulted in a full satisfaction of the plaintiff's claim.”) (citations
omitted); Velazquez v. Water Taxi, Inc., 403 N.E.2d 172, 173 (N.Y. 1980) (“It is well
settled that the satisfaction of a judgment rendered against one tort-feasor discharges all
joint tort-feasors from liability to the plaintiff.”); Restatement (Second) of Judgments
§ 50 cmt. d (“[W]hen a judgment is based on actual litigation of the measure of a loss,
and the judgment is thereafter paid in full, the injured party has no enforcible [sic] claim
against any other obligor who is responsible for the same loss.”); W. Keeton, et al.,
Prosser and Keeton on the Law of Torts § 48, at 331 (5th ed. 1984) (“When payment of
the judgment in full is made by the judgment debtor, there is no doubt that the plaintiff is
barred from further action against another who is liable for the same damages.”); D.
Dobbs, The Law of Torts § 388, at 1082 (2001) (“When a defendant fully pays a
judgment for all of the plaintiff’s damages, the plaintiff’s claim is satisfied and [s]he has
no further claim for the same injury.”).
Here, the $36,500 judgment in the previous litigation was based on actual
litigation of the measure of the loss. It was paid in full on April 16, 2009. Thus, the next
question is whether the instant defendants were joint tortfeasors with the Gauthiers.
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In Vermont, “whenever independent acts of several persons concur to produce
single, indivisible injury that would not have occurred without such concurrence, each
person is responsible for entire result and may be sued jointly and severally.”
Montgomery v. Devoid, 2006 VT 127, ¶ 33, 181 Vt. 154 (citing Giguere v. Rosselot, 110
Vt. 173, 181 (1939)). Here, the action of the Gauthiers in not informing the plaintiff of
her ownership of the power line, the alleged negligence and breach of contract by
Shoreham Telephone and Mr. Derrick in installing the line, and the alleged mis-indexing
of the easement by the Town of Benson, all produced a single, indivisible injury—the
cost of replacing the power line.
As discussed above, there is no uncompensated portion of damages for the
plaintiff to pursue. The federal jury awarded her compensatory damages to replace the
power line and made her whole again. Therefore, the satisfaction in full of the $36,500
judgment in the previous litigation eliminates any claim against the instant defendants for
the same injuries. The defendants are entitled to judgment as a matter of law.
ORDER
(1) Defendant Town of Benson’s Motion for Summary Judgment, filed
December 1, 2009, is GRANTED.
(2) Defendants Shoreham Telephone Co., Inc. and John Derrick’s Motion for
Summary Judgment, filed March 12, 2010, is GRANTED.
Dated at Rutland, Vermont this _____ day of ________________, 2010.
____________________
Hon. William Cohen
Superior Court Judge
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