state v. howe cleaners ( 2023 )

STATE OF VERMONT Cob ie Ke
WASHINGTON COUNTY
Wd HOV’'2 1 P 3STATE OF VERMONT ) eYPERINR CAuR
Plaintiff, ) Washington Superior Court j;);; 0
) Docket No. 27-1-04 Wnecv
V. )
)
HOWE CLEANERS, INC., et al., )
Defendants. )
DECISION
No. 57, TD Bank and Fiore’s Motion for Leave to File Motions for Summary
Judgment
No. 58, Howe Cleaners and Benvenuti’s Motion for Leave to File Summary
Judgment Motion
No. 59, Howe Cleaners and Benvenuti’s Motion to Strike or Dismiss Cross-Claims
No. 60, Fiore’s Motion for Leave to File Sur-Reply
At issue are cross-claims by TD Bank and John Fiore against Howe Cleaners and
David Benvenuti seeking litigation expenses, primarily attorney’s fees, incurred in their
defenses against the State’s claims.’ The cross-claims are based on the exception to the
American Rule for litigation with third persons. Howe Cleaners and Mr. Benvenuti seek
to strike these cross-claims as waived, seek their dismissal due to perceived conflicts with
certain provisions of 10 V.S.A. § 6615, seek their dismissal for failure to state a claim,
and seek leave to address these issues in a summary judgment motion if their motion to
strike or dismiss is denied. TD Bank and Mr. Fiore seek leave to file a summary
TD Bank purported to add its cross-claim to this case by amendment on September 15, 2008. In that
filing, TD Bank asserted that it was entitled to amend as of course—leave from the court was not sought—
because Howe Cleaners and Mr. Benvenuti had never filed a responsive pleading to its original cross-claim,
which was filed many years earlier. The court rejects TD Bank’s convenient interpretation of Rule 15(a).
Generally, Rule 15(a) permits amendment of a cross-claim without leave anytime before an answer is filed
because that answer typically will be due within 20 days, Rule 12(a)(2), or at least in the earliest stages of
the litigation of the cross-claim in the event of a continuance or dismissal proceedings. The wholesale
failure of a defendant to file an answer, while otherwise actively defending, which the rules do not
contemplate, does not give the cross-claiming party a “free pass” to amend whenever it likes. Such an
interpretation of the rules would completely undermine the purpose of permitting amendments without
leave of the court. Ordinarily, a proper amendment as of course occurs at a time when there is no need for
judicial involvement, a motion for leave would be automatically granted anyway, and there could be no
prejudice to the opposing party. See 6 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d §
1480. Those are not the circumstances of this case. Even if TD Bank had formally requested it, leave
would have been denied. The delay is unreasonable and no justification for it has been offered. Amending
by adding a claim after Howe Cleaners and Mr. Benvenuti settled with the State would deprive them of the
opportunity to include the claim in their strategic calculations about settling. Moreover, the amended claim
would be dismissed anyway. Even though the court does not recognize TD Bank’s “amendment,” because
the court would be resolving Mr. Fiore’s identical claim for litigation expenses in this decision anyway, the
court will address the substance of TD Bank’s attempted amendment as well.
judgment motion on these issues.” The court concludes that the cross-claims for litigation
expenses fail to state a claim upon which relief can be granted and declines to address the
other issues raised in these motions.
At this point in the litigation, both TD Bank and Mr. Fiore have been determined
to have no liability to the State. With regard to TD Bank, the State was unable to come
forward with evidence of liability following a discovery sanction precluding the use of
certain potential evidence. Mr. Fiore was determined to be a diligent owner under 10
V.S.A. § 6615(e). In sum, the State alleged that TD Bank and Mr. Fiore were responsible
parties with liability under 10 V.S.A. § 6615 for contamination at the site, both TD Bank
and Mr. Fiore at all times disclaimed any such liability, and now both have been
determined to be free of that alleged liability. Neither TD Bank nor Mr. Fiore have
incurred any cleanup costs.
Howe Cleaners and Mr. Benvenuti have settled with the State and entered into a
consent decree memorializing their liability under 10 V.S.A. § 6615.
TD Bank argues that it is entitled to its defense expenses from Howe Cleaners and
Mr. Benvenuti under Windsor Sch. Dist. v. State, 2008 VT 27, as follows:
[T]he Dry Cleaning Defendants misunderstand the teachings of Windsor.
Most notably, the Dry Cleaning Defendants read the Albright v. Fish rule
discussed in Windsor to only allow recovery of attorney’s fees and costs
incurred in connection with the investigation and cleanup of a
contaminated property. This reading is far too narrow. In Windsor, the
Vermont Supreme Court specifically stated that the Albright v. Fish rule
applies “when the wrongful act of one person has made it necessary for
another person to become involved in litigation with a third party to
protect his or her interests.” This is precisely what happened in the
present case: but for the wrongful acts of the Dry Cleaning Defendants in
polluting the site with contaminants, the Bank (and Fiore) would never
have been involved in this litigation.
The attorney’s fees that were not covered by the Albright v. Fish
rule as applied in Windsor were those incurred by the Windsor School
District to (1) bring and prosecute its own indemnity action against the
Department of Corrections and (2) bring and prosecute a declaratory relief
action against its insurance carriers. The Bank seeks no such fees and
costs in its cross-claims against the Dry Cleaning Defendants. Rather, the
Bank merely seeks its attorney’s fees and costs incurred in defending
against the State’s lawsuit.
? TD Bank and Mr. Fiore also purport to seek leave to file summary judgment motions essentially to
withdraw certain cross-claims against each other, and to memorialize the mootness of certain other cross-
claims against Howe Cleaners and Mr. Benvenuti. The court recognizes TD Bank’s and Mr. Fiore’s
interest in preserving those claims in the event that a reversal on appeal leads to a basis for them, but fails
to see the purpose of filing summary judgment motions on the matter.
TD Bank’s Opposition to Dismissal at 7 (Oct. 16, 2008) (citations omitted) (original
emphasis removed; new emphasis added). This quotation appears to describe Mr. Fiore’s
position on the matter as well. See Mr. Fiore’s Opposition to Dismissal at 2-3 (Oct. 17,
2008).
This case is not analogous to Windsor and the circumstances do not otherwise
support the claims for litigation expenses. In Windsor, the DOC contaminated a parcel
and then conveyed it to the school district, which had no notice of the contamination.
The school district thus innocently incurred—and accepted—cleanup liability vis-a-vis
the State; the DOC refused to accept liability. The fees in Windsor found to fit the
Albright v. Fish rule “represented only a quarter of the total legal services provided, the
result of a stringent paring down of charges to those strictly related to the cleanup.”
Windsor, 2008 VT 27, § 14. Litigation expenses related to the apportionment of liability
remained the school district’s responsibility. See id., {| 4-5, 11-12, 14, 26.
In this case, neither Howe Cleaners nor Mr. Benvenuti directly conveyed the
contaminated parcel to either TD Bank or Mr. Fiore. To the extent that they caused the
contamination, neither Howe Cleaners nor Mr. Benvenuti breached any duty owed
directly to TD Bank or Mr. Fiore. Moreover, both TD Bank and Mr. Fiore have no
cleanup losses and never had any cleanup liability. The litigation expenses for which
both seek compensation were devoted to the apportionment of liability, precisely the sort
of expenses not permitted in Windsor. Windsor simply does not support TD Bank’s and
Mr. Fiore’s claims for litigation expenses.
Both TD Bank and Mr. Fiore emphasize a quotation from Albright v. Fish, that
the exception applies “when the wrongful act of one person has made it necessary for
another person to become involved in litigation with a third party to protect his or her
interests.” Albright v. Fish, 138 Vt. 585, 591 (1980). While this quotation ostensibly fits
the circumstances of this case, it is merely a maxim, “[a] traditional legal principle that
has been frozen into a concise expression.” Black’s Law Dictionary 993 (8" ed. 2004).
It is not a complete statement of the legal elements of the claim.
A New Jersey court has described the legal claim like this: “if someone’s
wrongdoing is the cause of litigation between the victim [of the wrongdoing] and third
parties and that litigation was foreseeable at the time of the wrongdoing, the reasonable
litigation expenses resulting therefrom are recoverable.” Lovett v. Estate of Lovett, 593
A.2d 382, 389 (N.J. Super. Ct. Ch. Div. 1991). A Washington court has described the
following necessary elements: “(1) a wrongful act or omission by A toward B; (2) such
act or omission exposes or involves B in litigation with C; and (3) C was not connected
with the initial transaction or event, Viz., the wrongful act or omission of A toward B.”
Manning v. Loidhammer, 538 P.2d 136, 138 (Wash. Ct. App. 1975). To essentially the
same effect as Lovett and Manning, Am. Jur. has isolated five discrete elements. See 22
Am. Jur. 2d Damages § 621.
These formulations of the rule reveal what TD Bank’s and Mr. Fiore’s claims lack.
Neither TD Bank nor Mr. Fiore were the “victim” of the wrongful act or omission; they
only appeared further along the chain of title. At the time of their wrongful act or
omission, Howe Cleaners and Mr. Benvenuti could not have reasonably foreseen that
their conduct would have caused TD Bank and Mr. Fiore, who had not been owners at
that time and who in fact would have no cleanup liability, to litigate the issue of cleanup
liability with a third party. TD Bank’s and Mr. Fiore’s claims are simply too remote from
the wrongful act or omission to fit within the exception.
Boiled down, TD Bank’s and Mr. Fiore’s claims for litigation expenses would
dramatically expand what is supposed to be a narrow exception to the American Rule to
nearly always apply to co-defendants when one is absolved of liability—after all, “but
for” the liable defendant’s conduct, the non-liable defendant would not have been sued by
a third party. As the Manning court said:
The [claimant] emphasizes that the jury absolved it of negligence. This
fact is not the determining consideration in allowing attorney’s fees as
damage by one defendant against another. If it were, every defendant
found not negligent could recover attorney’s fees against another
defendant who was found negligent. We have been cited to no case which
goes that far.
Manning, 538 P.2d at 141. No Vermont case applying this exception to the American
Rule goes that far.
TD Bank’s and Mr. Fiore’s claims for litigation expenses are not viable. Howe
Cleaners and Mr. Benvenuti are entitled to the dismissal of those claims.
Order
For the foregoing reasons, Howe Cleaner’s and Mr. Benvenuti’s motion to
dismiss is GRANTED. All other related motions or requests are DENIED AS MOOT.
5 pt
Dated this 2!" day of November 2008.
Mary Miles Teachout
Superior Court Judge