HARR, LLC v. Town of Northfield ( 2020 )

STATE OF VERMONT
SUPERIOR COURT CIVIL DIVISION
Washington Unit Docket No. 268-8-20 Wncv
ds
HARR, LLC,
Plaintiff
Vv. DECISION ON MOTION
Town of Northfield, VT,
Defendant
The Town’s Motion to Dismiss
Plaintiff HARR LLC owns and operates a mobile home park in the Town of Northfield.
The Town owns and operates the Northfield Electric Department, which provides electricity to
residents of the park, who rent lot-space from HARR, which does not own their mobile homes.
According to the complaint, when a tenant of the park becomes delinquent on their electricity
bill, the Town eventually secures the deficiency by placing a lien on the real property of the:
park, owned by HARR, even though HARR otherwise has no contract or agreement with the
Town to secure tenants’ accounts with the electric department and the tenants do not own the
property subject to the liens. In this case, HARR seeks a declaration that any such liens are
“unenforceable” as is the charter provision upon which the Town evidently relies as authority
for this practice. It does not in the complaint assert any substantive reasons why it believes the
liens or the charter provision might be unenforceable, and it seeks no other relief in this case.
The Town has filed a motion to dismiss. It argues that this matter already has been
resolved by a final judgment of the Vermont District Court (claim preclusion). Alternatively, it
argues that issue preclusion forecloses the single count of declaratory relief asserted in this
case. The Town argues, moreover, that HARR is improperly attempting to assert a wholly
abstract claim for declaratory relief detached from any substantive dispute between the
parties, which it characterizes as an impermissible “independent” claim.
In response, HARR concedes that the substantive claims litigated in the federal case
have been finally determined. |t argues, however, that once the federal court ruled on all
federal claims presented, it lost jurisdiction to consider HARR’s declaratory count, enabling it to
refile that claim in state court. It cites 12 V.S.A. § 558(a)(2) in support of this argument. It also
argues that such an “independent” declaratory claim is permissible in Vermont, relying on case
law to the effect that one may seek declaratory relief alone (without also seeking damages or
other equitable relief). In the same breath, and even though there is no claim for damages in
this case, it says, “HARR has the right and the ability to use the Act to seek any refunds it may
be due.” Harr’s Opposition to Motion to Dismiss 6 (filed Oct. 26, 2020).
“Res judicata [claim preclusion] bars the litigation of a claim or defense if there exists a
final judgment in former litigation in which the parties, subject matter and causes of action are
identical or substantially identical. The doctrine does not require that claims must have been
actually litigated in an earlier proceeding; rather, res judicata bars parties from litigating claims
or causes of action that were or should have been raised in previous litigation.” Lamb v.
Geovjian, 165 Vt. 375, 379-80 (1996) (citations and quotation marks removed). “The purpose
of the res judicata doctrine is to promote the finality of judgments and conserve the resources
of courts and litigants.” Pomfret Farms Ltd. Partn. v. Pomfret Associates, 174 Vt. 280, 284
(2002). The same principle generally applies as between state and federal courts so long as the
subject claims were within the jurisdiction of the court issuing the judgment.
When the plaintiff brings an action on the claim in a court, either state or
federal, in which there is no jurisdictional obstacle to his advancing both theories
‘or grounds, but he presents only one of them, and judgment is entered with
respect to it, he may not maintain a second action in which he tenders the other
theory or ground. If, however, the court in the first action would clearly not
have had jurisdiction to entertain the omitted theory or ground (or, having
jurisdiction, would clearly have declined to exercise it as a matter of discretion),
then a second action in a competent court presenting the omitted theory or
ground should be held not precluded.
Restatement (Second) of Judgments § 25 cmt. e; see also 18 Wright & Miller, Federal Practice &
Procedure: Jurisdiction § 4411 (“Provided that the court that heard the first action had
independent jurisdiction to apply both state and federal law, all theories growing out of the
same transaction often are precluded by the first action.”).
When HARR filed its complaint in federal court, its cause of action against the Town was
fully matured. A cause of action is a “group of operative facts giving rise to one or more bases
for suing.” Black’s Law Dictionary 214 (7th ed. 1999). According to that complaint, the Town
already had recorded several liens against the real property of HARR’s park. There was nothing
anticipatory about the controversy; it had fully occurred. Based on the allegations, HARR
sought declaratory relief (count 1) and claimed a federal equal protection violation (count 2), a
federal substantive due process violation (count 3), and inverse condemnation under the
Vermont Constitution (count 4)." It described its declaratory relief “claim” only as follows:
“HARR seeks a declaratory judgment that the liens created by the Town Charter and asserted
against the Park by the Town are unenforceable and unconstitutional.” Federal Complaint 4 31.
As relief, HARR sought damages for the constitutional violations and declarations that the
charter provision and liens are unconstitutional and unenforceable. As far as the complaint
goes, then, it is clear that HARR was seeking nothing with its claim for declaratory relief that it
was not also seeking with its substantive claims.
The federal court granted the Town’s motion for judgment on the pleadings ina
decision squarely addressing all claims in the complaint. See HARR LLC v. Town of Northfield,
423 F.Supp.3d 54 (D. Vt. 2019). It first rejected all three of HARR’s constitutional claims. After
doing so, it addressed the claim for declaratory relief. It explained that the Declaratory
1 HARR did not ask the federal court to interpret the charter provision to determine whether in fact the Town’s
alleged conduct fell within its reasonable scope, and the federal court never did so.
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Judgment Act is procedural only. “As a result, [it] does not create an independent cause of
action.” /d. at 66 (citation omitted). In other words, the availability of declaratory relief is not a
substantive legal claim on its own. At that point in the federal case, there was no aspect of the
controversy, as presented by HARR, left to address. “Because the court has granted judgment
on the pleadings in favor of Defendant on Plaintiff’s substantive claims, Plaintiff’s request for
declaratory relief in Count | must be DISMISSED.” /d. at 67. There was nothing left to do.
The federal court gave HARR 30 days to petition for leave to amend. HARR did not do
so, and the federal court entered final judgment on February 11, 2020. HARR did not appeal.
The federal court’s final judgment thus fixed the parties’ rights with regard to the controversy
over the Town’s practice.
Six months later, HARR filed the complaint in this case. It describes the same cause of
action that was resolved in the federal suit. It includes one claim only, which is for declaratory
relief: “HARR seeks a declaratory judgment that the liens created by the Town Charter and
asserted against the Park by the Town are unenforceable.” Complaint {| 30 (filed Aug. 6, 2020).
The complaint does not otherwise hint at any substantive legal reasons for HARR’s claim that
the liens and charter provision are unenforceable.
This case is foreclosed by the final judgment in the federal case (claim preclusion).
HARR is not presenting here any claim that it did not present in its federal case, and even if it
had, the doctrine of claim preclusion would preclude it. “The doctrine does not require that the
claims were actually litigated in the prior proceeding; rather, it applies to claims that were or
should have been litigated in the prior proceeding.” In re Tariff Filing of C. Vermont Pub. Serv.
Corp., 172 Vt. 14, 20 (2001). In other words, it applies to the whole cause of action regardless
how a party frames the claims. There is no serious contention here that the parties, subject
matter, or cause of action in this case are any different from the federal case.
HARR’s attempt at skirting the finality of the federal judgment by framing its claim here
as one for declaratory relief is unavailing. “That there has been a prior adjudication between
the parties bears on the allowance of a declaratory action. As is the case with other types of
action, an action for a declaration may not be employed to relitigate a claim already
adjudicated, or to evade the effects of preclusion with respect to issues already determined.
Neither will a declaratory judgment be available to assert technical defects or mere errorina
prior judgment.” Restatement (Second) of Judgments § 33 cmt. a. The federal court addressed
HARR’s declaratory relief claim. It had no substance except by reference to the other claims in
that case. HARR’s claim for declaratory relief in this case does not point up any different
controversy than that presented to the federal court. It is simply an attempt at an
impermissible second bite at the apple.
HARR does not meaningfully explain its argument that the federal court, once it ruled on
the federal claims, lost jurisdiction over any other claims, and that somehow enabled HARR to
refile its declaratory claim in state court. The federal court ruled on the two federal claims that
invoked its federal question jurisdiction, and then it exercised supplemental jurisdiction to
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address the only other well-pleaded claim presented: the state law takings claim. If any other
state law claim had been.presented, it could have exercised supplemental jurisdiction over that
claim as well. See 28 U.S.C. § 1367(a); 13D Wright & Miller et al., Federal Practice & Procedure:
Jurisdiction 3d § 3567. HARR’s jurisdictional argument inexplicably fails to account for
supplemental jurisdiction. There was no loss of jurisdiction in the federal court that would
allow HARR to avoid the doctrine of claim preclusion here.
HARR’s reliance on 12 V.S.A. § 558(a)(2) also is puzzling. Dismissals for lack of
jurisdiction typically are without prejudice, meaning that such claims may be refiled with the
impediment to jurisdiction resolved. 9 Wright & Miller et al., Federal Practice & Procedure:
Civil 4th § 2373; V.R.C.P. 41(b)(3). Section 558(2) provides that if a claim is timely filed
Originally, but then “the action is dismissed for lack of jurisdiction of the subject matter or -
person, improper venue, or failure to join an indispensable party,” then it may be refiled within
1 year. The statute provides a 1-year safe harbor from expiring limitations statutes. This
statute is irrelevant to this case. There was no such dismissal preceding this case, and there is
no statute-of-limitations issue presented. |
HARR’s claim that this case is just like Leno v. Meunier, 125 Vt. 30 (1965), is wrong. In
Leno, the only asserted basis for federal court jurisdiction was that the litigants lived in different
states (diversity jurisdiction). The federal court determined that in fact both litigants were
domiciled in Vermont, there was no basis for diversity jurisdiction, and it thus dismissed. The
plaintiff refiled in state court, and the Vermont Supreme Court ruled that the action in state
court thus fell within the scope of 12 V.S.A. § 558(a)(2). Leno is irrelevant to this case. There
was no such jurisdictional ruling in this case by the federal court, which plainly had federal
question jurisdiction that, in turn, permitted supplemental jurisdiction over HARR’s other
claims.
Lastly, HARR argues that Vermont law permits “independent” declaratory relief claims
even if federal law does not. HARR appears to misunderstand the references to “independent”
claims in the Town’s briefing. The Declaratory Judgments Act relaxes the traditional rule that
courts may act only when a dispute ripens into an entitlement to a coercive remedy. “[T]he
declaratory-judgment remedy provides a useful solution. It gives a means by which rights and
obligations may be adjudicated in cases involving an actual controversy that has not reached
the stage at which either party may seek a coercive remedy and in cases in which a party who
could sue for coercive relief has not yet done so.” 10B Wright & Miller et al., Federal Practice &
Procedure: Civil 4th § 2751. Thus, invocation of the Act is not itself a substantive legal claim. It
is “a procedural vehicle and remedy that was not previously available” but it does not enlarge
“the jurisdiction of the courts over subject matter or parties.” Town of Andover v. State, 170 Vt.
552, 553 (1999). There still must be “an actual or justiciable controversy” between the parties.
Chase v. State, 2008 VT 107, 4] 13, 184 Vt. 430 (citation omitted). “For there to be an actual
controversy the defendant must be so situated that the parties have adverse legal interests.”
10B Wright & Miller et al., Federal Practice & Procedure: Civil 4th § 2757. Absent sucha
controversy, there is no “independent” claim for declaratory relief, eventhough one may seek
declaratory relief in a proper case without seeking any other kind of relief. Vermont and
federal law do not differ on this issue.
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HARR’s declaratory relief claim in federal court was not dismissed because somehow
that court does not have jurisdiction over claims for declaratory relief, and the federal court did
not so rule. The federal judgment became final and resolved the controversy between HARR
and the Town. There thus remains no controversy that HARR may leverage into a declaratory
judgment action in state court.
Because this case is fully resolved on claim preclusion grounds, it is unnecessary to
address issue preclusion.
Order
The Town’s motion to dismiss is granted.
The Town shall submit a form of judgment. V.R.C.P. 58(d).
Robert R/ Bent,
Judge