Old Lantern Non-Conforming Use - Decision on Post-Trial Sanctions Motion ( 2018 )

STATE OF VERMONT
SUPERIOR COURT ENVIRONMENTAL DIVISION
Environmental Division Unit Docket No. 154-12-15 Vtec
Old Lantern Non-Conforming Use
Decision on Post-Trial Sanctions Motion
This matter was the subject of a trial that was recounted in a Merits Decision issued on
April 2, 2018. After the trial, but before this Court issued its Merits Decision, Appellee Old Lantern
Barn, together with its owners, Lisa and Roland Gaujac (hereinafter collectively referred to as
“Old Lantern”) filed a motion for monetary sanctions against Appellants Alison and Adrian
Wolverton (“Appellants”) and their attorney, James A. Dumont, Esq., for what Old Lantern asserts
was an “abuse of the judicial process.” Appellants and their attorney strongly object to the
sanctions request. Both Old Lantern and Appellants, joined by their attorney, have filed
supplemental memoranda in support of and in opposition to the sanctions request. The Town of
Charlotte (“Town”) and Interested Persons Michael Frost, Karen Frost, Maura Wygmans, and
Justin Wygmans have chosen to not engage in this post-trial sanctions dispute.
Discussion
We begin our analysis with a review of the case law concerning what constitutes abuse of
judicial process and whether a trial court has the authority to sanction a party and their attorney
for such abuse.
A “trial court has inherent authority under the law of this state to award monetary
sanctions against a litigant or attorney who abuses the judicial process.” Provident Funding
Associates, L.P. v. Campney, 2017 VT 120 ¶ 18, citing Van Eps v. Johnston, 150 Vt. 324, 327 (1988).
In Van Eps, our Supreme Court defined abuse of the judicial process to include “acting in bad
faith, ignoring court orders, and scheduling delays causing prejudice to the opposing party.” Id.(citations omitted).
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Provident Funding provides further guidance in the case at bar, even though it presented
somewhat different procedural facts. In that case, a successor-in-interest to a first mortgagee
and promissory note holder initiated multiple foreclosure actions after the mortgagor/
homeowner defaulted on the note. The trial court had dismissed three prior foreclosure actions
on the same note and mortgage after the plaintiff failed to prosecute the actions, either by failing
to properly serve a defendant or respond to notices from the court. When the plaintiff presented
an identical foreclosure action for the fourth time, a junior mortgagee moved to have the action
dismissed. The Court granted the junior mortgagee’s dismissal motion and, as a sanction for
causing the junior mortgagee to incur the unnecessary expense of having to hire an attorney to
respond and participate in the three prior identical foreclosure actions, which plaintiff then
caused the court to dismiss, the trial court ordered that plaintiff would be precluded in the future
from foreclosing the junior mortgagee’s interest in the subject property. Id at ¶ 8.
On appeal, the Supreme Court affirmed the trial court’s determination that a sanction
was warranted, but reversed the dismissal sanction and remanded the action for the trial court
to consider monetary sanctions, specifically reimbursement of attorney’s fees, as an alternate
sanction against plaintiff for its improper actions. Id. at ¶ 20. Thus, the Supreme Court
established that ordering reimbursement of an innocent party’s attorney’s fees is an appropriate
sanction against a party who is found guilty of abusing the judicial process. In so ruling, the Court
cited to several of its prior decisions, including O'Rourke v. Lunde, 2014 VT 88, ¶ 33, 197 Vt. 360,
104 A.3d 92 (explaining that an award of attorney's fees is permissible in “exceptional cases,”
such as where party is forced to undergo multiple rounds of litigation (quotation omitted)); and
Lamell Lumber Corp. v. Newstress Int'l, Inc., 2007 VT 83, ¶ 23, 182 Vt. 282, 938 A.2d 1215(affirming award of attorney's fees to plaintiff as monetary sanction for defendant's failure to
appear at scheduled jury draw). While the case at bar presents a different set of procedural facts,
we find these decisions helpful in analyzing Appellees’ motion for sanctions and Appellants’
objections.
I. Did Appellants’ and their attorney’s actions constitute an abuse of the judicial process?
In the Merits Decision issued last week, we addressed the frustrations that were caused
by Appellants and their attorney when they chose, on the first day of the scheduled trial, to not
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participate in that trial. We have those frustrations in mind and incorporate them here by this
reference. However, to determine whether and how Appellants and their attorney may have
abused the judicial process, we must look back to the various filings and court decisions leading
up to the de novo trial in this appeal.
This appeal concerns an area of the law that is not wholly clear and can be complex. A
challenge to the lawful use of a property that does not comply with the present zoning
regulations can present multiple layers of factual and legal issues. This appeal was no exception,
and the vigor with which the parties here litigated those legal and factual issues presented
perfect examples of how complex the legal analysis of non-conforming uses can become. In
particular, the Court wrestled for some time with the legal concept that an expansion of a non-
conforming business use, absent a physical expansion of the property improvements, may not
result in the targeted property losing its grandfathered status. See In re Old Lantern Non-
Conforming Use Appeal, No. 154-12-15 Vtec, slip op. at 14–15 (Vt. Super. Ct. Envtl. Div. July 3,
2017) (Durkin, J.). When the parties filed several reconsideration motions, we revisited the
intensity and related issues in our Entry Orders issued on September 13, 2017, and November
13, 2017.
We continue to believe that the neighboring Appellants and Interested Persons held
sincere concerns about the use of the Old Lantern Barn, its alleged increase in intensity, and
whether their concerns could legitimately be raised in this appeal. We found no abuse of the
judicial process in the way in which they pursued those concerns in this litigation.
Our pre-trial rulings set the parameters of what legal and factual issues were within our
jurisdiction in this appeal. We reviewed those determinations again as we prepared our Merits
Decision and continue to believe those rulings reflect an accurate reading of the current case law.
But we find no abuse committed in the manner in which Appellants and their attorney challenged
the applicable case law precedent, or our interpretation of it.
However, we do find fault and abuse in how Appellants’ addressed (or rather, failed to
address) the issues that remained for trial. Our pre-trial rulings left four Questions from
Appellants’ Statement of Questions as ripe for resolution at trial. These Questions memorialized
Appellants’ long-running assertions that (1) the Old Lantern Barn had changed from offering
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meals only prepared off-site, to offering meals prepared on-site; (2) the Old Lantern Barn had
been changed or expanded to a restaurant, open to the general public; and (3) the Old Lantern
Barn had ceased operations for six months, or more. If Appellants, assisted by their attorney,
presented sufficient facts to support these long-standing accusations, they could have provided
a factual foundation for a legal determination that the Old Lantern Barn should no longer be
regarded as a lawful, pre-existing but non-conforming use.
We never received Appellants’ presentation of facts that supported these claims. And we
are left to assume by Appellants’ decision at the start of trial that they never had the facts to
support these accusations. We are left to conclude that Appellants made these bold assertions
throughout two to three years of administrative proceedings and litigation without ever having
any facts to support these allegations. We are left to wonder whether Appellants, and perhaps
their attorney, simply created these allegations from thin air, in their zeal to bring an end to Old
Lantern’s business operations.
Our fears were compounded by the manner in which Appellants revealed their lack of
evidence. We recognize that the discovery process in any litigation can reveal many things,
including the reliability of one’s own facts. But when it became apparent that Appellants had no
factual foundation for the legal issues raised in the four Questions that remained for adjudication
at trial, they and their attorney had ample time to confess that reality to opposing counsel and
the Court. Instead, Appellants and their attorney caused Old Lantern, their attorney, and this
Court to commit the time and resources to trial preparation. When all parties and their counsel
appeared for the first day of trial, they and the Court understood that Appellants came prepared
to present their evidence, at the appropriate time, and participate in the trial. Instead,
Appellants, through their attorney, asked for confirmation of the Court’s pre-trial rulings, and
then advised that they had decided not to participate in the trial. We continue to believe that
Appellants’ and their attorney’s actions are the most egregious of any the undersigned has
witnessed in thirty-three years of civil trial litigation.
One more circumstance deserves mention. Appellants asserted a new legal theory at the
beginning of trial, not previously disclosed to the Court: the notion that an ordinance existed, or
once existed, that required Old Lantern to obtain a recreation or dance hall permit, that Old
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Lantern had failed to receive such a permit, and that this omission justified vacating Old Lantern’s
grandfathered status. Appellants’ little to no prior notice of this new legal theory for denying Old
Lantern’s lawful non-conforming use left no time to verify whether such an ordinance ever
existed, still exists, and whether Old Lantern had ever received such a permit. More to the point
in this limited jurisdiction de novo appeal, Appellants and their attorney offered no legal rationale
as to how the Court’s jurisdiction would allow such a claim to be entertained in this appeal. When
the Court posed that query and made that ruling, Appellants and their attorney saw fit to give
notice that they would therefore begin the process of submitting yet another complaint to the
Town Zoning Administrator about the Old Lantern Barn’s lawful status. Appellants and their
attorney suggested that their inability to raise this new issue in this appeal was an additional
rationale for their decision to not participate in the trial.
We appreciate, but find unconvincing the affidavit of Kevin Brown, Esq. offered by
Appellants and their attorney as an explanation for their actions on the first day of trial. Mr.
Brown never appeared in this proceeding. Respectfully, his affidavit appears to be drafted more
as an advocacy document than as an objective assessment of the legal challenges presented in
this litigation.
Lastly, we note that Appellants’ attorney spent considerable time in his opposition
memoranda relying upon the notion that in this proceeding, it is Old Lantern that carried the
various burdens of proof. Some of what Appellants’ attorney represents is accurate, as to the
burden of proof, but we are unconvinced that his legal theory justified his and his clients’ antics
on the first day of trial. Burdens of proof often shift, even when the ultimate burden of
persuasion returns to the originally-burdened party. But as an officer of this Court, Appellants
attorney had a duty to inform opposing counsel and this Court, well in advance of trial, when he
became aware that Appellants possessed no evidence, or were unprepared to present such
evidence, that would support the claims that Appellants presented in their Statement of
Questions.
For all these reasons, we conclude that Appellants and their attorney committed an abuse
of the judicial process when they failed to disclose their lack of any evidence to support their
remaining claims, and failed to make such a disclosure, including up to the first day of trial.
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II. What is the appropriate sanction?
In light of our conclusions concerning the abuse of the judicial process that Appellants
and their attorney committed, we turn to the question of whether to impose the sanction Old
Lantern requests of reimbursement of their attorneys’ fees and expenses. Old Lantern also
requests that the Court conduct a hearing to receive evidence and argument before making its
ruling. We believe a hearing will be necessary to make an informed determination of the
appropriate reimbursement level as a sanction and therefore GRANT that request. However, for
the benefit of the parties, we provide the following guidance on the parameters of the evidence
that the Court will entertain.
We first note that Old Lantern appears to request that the Court entertain ordering
Appellants and their attorney to reimburse a sum of $80,000.00 in attorneys’ fees, and it appears
that Old Lantern represents that this sum is approximately the full amount of attorneys’ fees that
Old Lantern incurred to the day of trial. Whether that is the total of legal fees incurred or not,
we DECLINE to order a sanction of that scope.
Our judiciary adheres to the “American Rule” concerning reimbursement of attorneys’
fees which provides that, absent a contractual or statutory provision to the contrary, all parties
must bear their own costs of legal representation, even when they prevail in litigation. See
Southwick v. City of Rutland, 2011 VT 105, ¶ 5, 190 Vt. 324 (“affirming that Vermont adheres to
what is called the American Rule: parties must ‘bear their own attorneys' fees absent a statutory
or contractual exception.’”), quoting DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239, 246
(2001). Thus, even when a party prevails in litigation in Vermont, such as Old Lantern did here,
they must bear the cost of their own attorneys’ fees when they prevail, absent a contractual or
statutory provision to the contrary. It is for this reason that we decline to entertain a request for
attorneys’ fees incurred in the pre-trial preparations in this litigation, before Appellants and their
attorney committed their abuse of the judicial process.
We make reference to this general rule to clarify the focus of our future hearing: we are
only considering the possible reimbursement of attorneys’ fees as a sanction against Appellants
and their attorney for the abuse of the judicial process that they committed. Thus, our
consideration here does not cause us to ignore the American Rule to which Vermont generally
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adheres. Rather, we rely upon the equitable powers that this Court enjoys when considering an
award of attorneys’ fees as a sanction “against a litigant or attorney who abuses the judicial
process.” Provident Funding Associates, L.P. v. Campney, 2017 VT 120 ¶ 18 (citation omitted).
CONCLUSION
For all these reasons, we conclude that Appellants Alison and Adrian Wolverton
(“Appellants”) and their attorney, James A. Dumont, Esq. abused the judicial process as detailed
above and shall hold a hearing to receive evidence on a monetary penalty to be imposed upon
Appellants and their attorney, and whether an award should be imposed individually or jointly
and severally, consistent with the guidelines for such an award outlined above.
A Notice of hearing accompanies this Decision.
Electronically signed on April 13, 2018 at Newfane, Vermont, pursuant to V.R.E.F. 7(d).
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Thomas S. Durkin, Superior Judge
Environmental Division
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