mahoney v. beacon hill builders ( 2024 )

Vermont Superior Court
Filed 11/16/21
Lamoille Unit
VERMONT SUPERIOR COURT CIVIL DIVISION
Lamoille Unit Case No. 196-11-17 Lecv
154 Main Street
Hyde Park VT 05655
802-888-3887
www.vermontjudiciary.org
Mahoney vs. Beacon Hill Builders &
ENTRY REGARDING MOTION
Title: Motion for Summary Judgment (Motion: 25)
Filer: Jennifer Lajoie
Filed Date: May 21, 2021
The motion is GRANTED IN PART and DENIED IN PART.
Leslie Mahoney (“Plaintiff”) filed a second amended complaint on June 1, 2018, against
Beacon Hill Builders & Associates, Inc., (““BHB”), Tucker Fossiano (“Tucker”), and David Fossiano
(“David”) (together, “Defendants”). She alleges that in March 2016, she purchased a lot in the Rich-
Reed Subdivision located in Wolcott, Vermont and that she retained Defendants to build her a
house on that lot. According to the second amended complaint, Plaintiff met with Tucker at the job
site in August 2016 to discuss the details of the project, including her available budget. Plaintiff told
Tucker she had $250,000 to spend on the project and, according to Plaintiff, Tucker agreed that
BHB “could do the project for $250,000.” Plaintiff contends that the parties” agreement is
memorialized in the zoning application that Tucker prepared and filed on August 30, 2016,
Construction began in mid-September 2016, and Plaintiff believed BHB would be able to
complete “the entire upstairs of the house, the downstairs bathroom, and the downstairs frame and
site work for $250,000 which would leave a portion of the basement unfinished, but otherwise, the
house would be complete and move-in ready.” Plaintiff asserts that she visited the job site in
October 2016 and “discovered for the first time that Defendants had constructed the house in the
wrong location by almost 150 feet.” Plaintiff did not ask Defendants to move the house because
she “wanted to get the project done.”
Plaintiff alleges she spoke with David in Januaty 2017 about the progress of the project and
realized that “Defendants were approaching $250,000 in costs and had not even come close to
completing the agreed upon parts of the home.” David told Plaintiff “it would be, at a minimum,
over $100,000 more to complete the home.” Plaintiff told Defendants to stop working on the
house because she “could not spend more than $250,000.”
Plaintiff asserts that she hired other contractors in March 2017 to continue working on her
house. She claims these other contractors discovered “numerous structural defects and deficiencies
resulting from Defendants’ poor workmanship.” In addition, Plaintiff alleges that Defendants’ work
does not comply with Vermont’s Residential Building Energy Standards (“RBES”), which
compliance is required by statute.
Entry Regarding Motion Page 1 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
Plaintiff asserts ten causes of action against Defendants:
Breach of contract (Count I);
Breach of implied warranty against structural defects (Count II);
Breach of implied warranty of good workmanship (Count II);
Negligence in construction (Count IV);
Consumer fraud (Count V);
Fraudulent misrepresentation (Count VJ);
Negligent misrepresentation (Count VID);
Fraud-in-inducement (Count VIID;
Unjust entichment (Count IX); and
Noncompliance with Vermont’s RBES (Count X).
Defendants have denied any wrongdoing and filed a motion for partial summary judgment in
which they ask the court to dismiss Counts IV-VIII against BHB and to dismiss all ten Counts
asserted against the individual defendants, Tucker Fossiano and David Fossiano.
Summary Judgment Standards
A patty is entitled to summary judgment if “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” V.R.C.P. 56(a). A fact is material
“4f it might affect the outcome.” In re Estate of Fitzsimmons, 2013 VT 95, 7 13, 195 Vt. 94 (quoting
N. Sec. Ins. Co. v. Rossitto, 171 Vt. 580, 581, 762 A.2d 861, 863 (2000) (mem.)). “Where the moving
party does not bear the burden of persuasion at trial, it may satisfy its burden of production by
showing the coutt 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
ttiable issue of fact.” Boulton v. CLD Consulting Eng’rs, 175 Vt. 413, 417 (2003) (quoting Ross v. Times
Mirror, Inc. 164 Vt. 13, 18 (1995)). ““The nonmoving party may survive the motion if it responds
with specific facts raising a triable issue, and it is able to demonstrate sufficient evidence to support a
ptima facie case.”” State v. G.S. Blodgett Co., 163 Vt. 175, 180 (1995) (quoting Celotex Corp. v.
Catrett, ATT U.S. 317, 323, 324 (1986)). “If the nonmoving patty fails to establish an essential
element of its case on which it has the burden of proof at trial, the moving party is entitled
to summary judgment as a matter of law.” Washington v. Pierce, 2005 VT 125, 917, 179 Vt. 318(quoting G.S. Blodgett, 163 Vt. at 180). When considering motions for summary judgment, the
nonmoving patty is entitled to “all reasonable doubts and inferences.” West v. N. Branch Fire District
#7, 2021 VT 44, § 13 (citing In re Miller Subdivision Final Plan. 2008 VT 74, 4 8, 184 Vt. 188):
G.S. Blodgett, 163 Vt. at 180.
Legal Analysis
A. Negligence in Construction (Count IV)
Defendants contend that the economic loss rule precludes Plaintiff from pursuing an action
in negligence for the recovety of money damages. “The economic-loss rule ‘maintain[s] a distinction
between contract and tort law’ by prohibit[ing] recovery in tort for purely economic losses.”” Walsh
», Cluba, 2015 VT 2, J 27, 198 Vt. 453 (quoting Long Trail House Condo. Ass'n v. Eingelberth Constr., Inc.,
2012 VT 80, J 10, 192 Vt. 322); see also Wentworth v. Crawford & Co., 174 Vt. 118, 127 (2002) (“{O]ur
caselaw prohibits a claimant from seeking damages for contractual losses through tort law.”). As the
Walsh Court wrote, “Tort law imposes duties to protect the public from harm, and thus negligence
Entry Regarding Motion Page 2 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
actions ate generally limited to unanticipated physical injury, while contract law allows patties to
protect themselves through bargaining.” Walsh, 2018 VT at J 27 (citing Long Traif, 2012 VT at { 10).
For purposes of the economic loss doctrine, “economic loss” has been described to include:
damages for inadequate value, costs of repait and replacement of the defective
product, or consequent loss of profits, as well as the diminution in the value of the
product because it is inferior in quality and does not work for the general purposes
for which it was sold or manufactured. Redarowicz v. Oblendorf, 441 N.E..2d 324, 327
ill. 1982); Heath v. Palmer, 2006 VT 125, 9 15[, 181 Vt. 545}.
Treetop at Stratton Condo. Ass'n, Inc. v. Treetop Dev. Co., 2011 WL 8472969 (Vt. Super. Feb. 4, 2011).
The Treetop at Stratton Condominium court explained that, “to recover in negligence, there must be a
showing of harm above and beyond disappointed expectations, since a buyer’s desire to enjoy the
benefit of his bargain is not an interest that tort law traditionally protects.” Id. (citing Redarowiex, 441
N.E.2d at 327).
Plaintiff contends that she suffered physical harm to her property as a result of Defendants’
conduct. However, as the Wa/sh Coutt explained, even though physical harm may have occurred to
property rather than to humans, “injury to the product or property that is the subject matter of a
contract is generally considered a disappointed economic expectation for which relief lies in contract
rather than tort law,” and the economic loss rule “bar[s] tort claims when the alleged damage is to
property that is the subject of a contract between the parties.” Id. at {] 28; see also Heath v. Palmer,
2006 VT 125, J 15, 181 Vt. 545 (stating trial court properly rejected negligence claim against
contractor because plaintiff's remedy for economic damages was based in contract rather than tort).
Purely economic losses may be recoverable under a tort theory of liability in professional
setvices cases because of the parties’ special relationship, “which creates a duty of care independent
of contract obligations.” EBWS, LLC v. Britly Corp., 2007 VT 37, § 31, 181 Vt. 513, (2007) (citing
Springfield Hydroelec. Co. v. Copp, 172 Vt. 311, 316 (2001)). Plaintiff argues that she had a “special
telationship” with Defendants because she was out-of-state for much of the time when Defendants
wete building her house and she was relying on Defendants for decision-making. According to
Plaintiff, this special relationship precludes application of the economic loss rule to bar her
negligence claim. The court declines to find a special relationship as advocated by Plaintiff. The
defendant in EBWS was a construction contractor, “not a provider of a specialized professional
service,” and the Court concluded that the economic loss rule barred the plaintiffs negligent design
cause of action. Id. at J 32; see also Hamill v. Pawtucket Mut. Ins. Co., 179 Vt. 250, 253-54 (2005) (no
special relationship existed between homeowner and independent adjusters his insurance company
hired to investigate claim); cf. Switon v. Vermont Regional Center, 2019 VT 71A, 33 (special
relationship existed where defendants recruited plaintiffs to invest life savings “by promising
exceptional oversight and management of the investment”); Sachs v. Downs Rachlin Martin PLLC,
2017 VT 100, § 29 n.4, 206 Vt. 157 (special relationship between lawyer and client creates duty of
cate separate from contractual obligations).
Because Plaintiff did not have a special relationship with Defendants, the property at issue is
the subject matter of the parties’ contract, and she is seeking to recover economic damages, her
1 Plaintiff claims she suffered non-economic damages that she describes as being “unable to use her land during the
pendency of this lawsuit and the loss of use of her land and time with family [that] goes beyond purely economic
losses.” The only viable relief Defendants could possibly provide for this alleged loss is money damages. Plaintiff
Entry Regarding Motion Page 3 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
negligence claim is barred by the economic loss doctrine. The court, therefore, grants the
Defendants summary judgment with respect to Plaintiff's negligence in construction cause of action
(Count IV).
B. Fraudulent Misrepresentation (Count VI) and Fraud-In-Inducement (Count VID)
To prevail on a claim for fraudulent misrepresentation, Plaintiff must prove the following:
(1) [an] intentional misrepresentation of a material fact; (2) that was known to be
false when made; (3) that was not open to the defrauded party’s knowledge; (4) that
the defrauded party act[ed] in reliance on that fact; and (5) [was] thereby harmed.”
Felis v. Downs Rachlin Martin PLLC, 2015 VY 129, § 13, 200 Vt. 465 (quoting Estate of Alden v. Dee,
2011 VT 64, J 32, 190 Vt. 401). Allegations of fraud must be proved by clear and convincing
evidence. Bennington Hous. Auth. v. Bush, 2007 VT 60, 8, 182 Vt. 133 (citing Gavala v. Claassen, 2003
VT 16, 4 5, 175 Vt. 487). A fraudulent misrepresentation can be the basis for a fraud-in-inducement
claim if an intentional misrepresentation of an existing fact was made that affected ““the essence of
the transaction” if ““the misrepresentation was false when made and known to be false to the
maker, was not open to the defrauded party’s knowledge, and was relied on by the defrauded party
to [their] damage.” Kneebinding, Inc. v. Howell, 2018 VT 101, 4 141, 208 Vt. 578 (quoting Union Bank
v, Jones, 138 Vt. 115, 121 (1980)).
The basis for Plaintiff's fraud claims is Defendants’ alleged statement that they could build
her a house for $250,000, that they would complete the exterior and the upstairs of the house, and,
at a minimum, that they would complete the bathroom and framing in the basement. Plaintiff
asserts that these representations induced her to engage Defendants to build her house.
Based on Defendants’ statement of undisputed material facts and Plaintiff's responses
thereto, it is apparent that the parties agree about the following:
1. Tucker told Plaintiff during their initial meeting at the property, in August 2016, that
Defendants could build her a house for $250,000, “but that it would be tight.”
2. At that first meeting, Tucker and Plaintiff agreed “that if the project started to go over
budget, Beacon Hill would not finish the entire basement.”
3. As of the time of this meeting, Plaintiff did not know whether she would be getting vinyl or
wood siding or whether she would have radiant or baseboard heat installed. She also did not
have any specific landscaping or lighting designs in mind for the house. “These were all
items that [Plaintiff] expected to negotiate moving forward.”
4, Tucker never told Plaintiff that she would get a specific house for $250,000.
also includes a request for “injunctive relief’ in addition to a request for compensatory, consequential, and punitive
damages in the “Wherefore” clause of her second amended complaint. However, Plaintiff told Defendants to cease
working on her house prior to filing this lawsuit (paragraph 30 of Plaintiff’s second amended complaint), and she
makes no demand for any specific type of injunctive relief. Thus, it appears that the type of relief Plaintiff will
recover, if she recovers anything, will be limited to economic damages. .
Entry Regarding Motion Page 4 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
5. Plaintiff told Tucker at this first meeting that she would pay for some of the project with
money “outside” of her $250,000 budget, such as plumbing fixtures and lighting, and she
had already purchased wood flooring from a Vermont flooring company.
6. In September 2016, after receiving CAD drawings from a third party, Plaintiff did not have a
defined list of the items she was buying on her own versus what she expected to be included
in her $250,000 budget.
7. BHB normally enters in a contract or agreement with a client prior to starting construction,
but Plaintiff only had a rough sketch of a house and did not have any construction
specifications and therefore there was nevet enough information to build a full proposal.
8. In October 2016, Plaintiff visited the job site and knew that the house was being built in the
“wrong location.” However, she did not mention her belief or concern to Defendants,
much less insist that the hole be moved, as she was concerned about the cost of moving the
hole and wanted to get the project done.
9. Ata meeting Plaintiff had with Defendants at BHB’s offices on October 3, 2016, the parties
did not have an exact list of what was going to be included in PlaintifPs $250,000 budget and
what she was going to be spending “outside” of this budget. Plaintiff continued to purchase
items so that she would not go over budget, and she told BHB that she would be buying all
the plumbing, bathtub, sink, all the appliances, refrigerator, washer, dryer, stove, kitchen
cabinets, wood floor, lights and bathroom tile.
10. When Plaintiff left the meeting with Defendants on October 3, 2016, it was her
understanding that BHB would finish the basement “to the extent the budget allowed, and
that this aspect of the agreement in particular was a moving target.”
Plaintiff gave her deposition on February 14, 2020. She relies, in part, on the following
pottions of her deposition to support her claims against Defendants:
Q: So at that (first) meeting you didn’t come to an agreement as to what the
$250,000 was going to buy you?
A: A house that I could live in, within budget, that was - - met standards.
Q: I want to know what you were going to get for $250,000, other than the house
that you were going to live in.
A: The house that I could live in, that met federal and state regulations.
A: They hired everybody. That is their business. They are the general contractor,
and I trusted them.
Entry Regarding Motion Page 5 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
Q: So you may not like the cost of it, but what you got for a product to-date —
A: Well, after the fact I realized the work wasn’t completed the way it should have
been. But at the time I didn’t question them; they were building the house. They
knew what was needed; and I trusted that they were staying within the $250,000,
until I got the final call.
A: I didn’t question these invoices. They sent them to me; I thought it was going to
be within my budget; I paid them. I didn’t question them; I trusted them.
A: They told me they would finish my house for $250,000, minus some of the work
in the cellar, if it’s going over. I believed this; I agreed to it, and I trusted it.
A: They said they would build me a house for $250,000, within my budget. And I
trusted them to build me a house that was well-built, within standards, and met
regulations.
Q: Can you go through those changes, so that I can understand them?
A: In the first meeting that I had with David Fossiano and Tim Urie, they had asked
for changes so we could stay within the agreed-upon $250,000 budget.
In response to Defendants’ interrogatories asking Plaintiff to identify “each and every
written or verbal representation, communication and/or conversation” Plaintiff received that she
contends misled her, Plaintiff stated:
Defendants, through Tucker Fossiano, David Fossiano, and Tim Urie, misled
me with regard to the cost of the project. They agreed to complete certain work for
$250,000 and they did not do that. Not only did they not complete the work, the
work they did do was done poorly. These misleading statements and
mistepresentations happened on multiple dates including my initial meeting with
Tucker at the house site as well as my October 3, 2016 meeting with David and Tim.
Tucker misled me into believing that Defendants could complete the project for
250,000. David and Tim misled me into believing that they could complete the
ptoject, as modified at our meeting, for $250,000. They acted confidently about how
much it would cost to construct a single-family dwelling and specifically made
suggestions for cutbacks to the project to stay within that budget. I relied on their
experience and knowledge when I decided to continue working with them even after
modifying the terms of my agreement with Defendants to include less work on my
Entry Regarding Motion Page 6 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
home. I discussed the budget on the phone with David Fossiano and in emails; I
frequently brought up the budget and sought confirmation from Defendants that we
would be staying under budget. I relied on Defendants’ statements that they would
stay within the budget.
Defendants misled me with regards to the location of the home. Tucker
Fossiano and I visited the house site and discussed the house going in a certain
location. The zoning application stated that the home would be built 150+ feet away
from the nearest property line. This did not happen and therefore I was misled
regarding the house location.
I was misled about the quality of certain products and materials that
Defendants suggested I use, such as Pella Windows and Doots which so far have led
to various insulation and other issues. Additionally, Defendants suggested I use
hemlock wood as it would not need to be painted, just stained; they then proceeded
to hire several painters to paint the hemlock.
“To find that a misstatement was made with knowledge of its falsity, the person accused,
and not a hypothetical reasonable petson must be found to have known that the statement was false,
ot to have made that statement with reckless indifference as to its truth.” Bennington Hous. Auth,
182 Vt. at 137 (quoting Powell v. D.C. Hous, Auth, 818 A.2d 188, 197-98 (D.C. 2003)). Plaintiff
acknowledges that she “does not know whether Tucker Fossiano knowingly misrepresented that
BHB could build the house for $250,000, just that he agreed to do it.” Defendants point out that
Plaintiff has presented no evidence (1) of any intent by Defendants to falsely misrepresent the cost
of the project to trick or otherwise induce Plaintiff into hiring them or (2) that any statement
Defendants made to Plaintiff was false.
According to the Restatement (Second) of Torts, “‘an actual fraudulent representation
occuts when a person misrepresents a fact in a way that ‘assert[s] that the maker knows it’ to be so,
but in fact ‘has merely a belief in its existence and recognizes that there is a chance . . . that the fact
may not be as it is represented.” Fodlo v. Florindo, 2009 VT 11, ¥ 30, 185 Vt. 390 (quoting
Restatement (Second) of Torts § 526 cmt. e (1977)). According to the Fo/le Court, “[fJraud
perpetrated in this manner is characterized as a ‘false representation... made... recklessly because
the person making the misrepresentation asserts something as fact regardless of ‘whether it is true or
false.’ Id. (quoting Restatement (Second) of Torts § 526 cmt. e (emphasis added)). Plaintiff relies on
this section of the Restatement (Second) of Torts to argue that she need not prove Tucker knew his
statements were false when they were made; she argues she need only show that Tucker was reckless
when he told her that Defendants could build her a house for $250,000.
The parties’ summary judgment filings make clear that neither Plaintiff nor Defendants knew
exactly which costs and expenses would be covered by Plaintiff's $250,000 budget and what Plaintiff
would pay for “outside” of this budget amount. The court finds that Plaintiff has failed to make out
a ptima facie case for fraudulent misrepresentation because she fails to present any evidence
suggesting that Tucker knowingly, or even recklessly, made a false statement when he told her
Defendants could build her a house for this amount. As a result, the court grants Defendants’
motion for summary judgment on Counts VI and VIII of Plaintiffs second amended complaint.
Entry Regarding Motion Page 7 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
C. Consumer Fraud (Count V)
In support of her claim for consumer fraud, Plaintiff asserts in her second amended
complaint that, “[t]hrough conversations, written representations, and advertising, Defendants
misled [het] with deceptive acts and practices regarding the cost of the project and Defendants’
workmanship, knowledge, and experience.” She also asserts that:
Beacon Hill’s website advertises that: “Beacon Hill Builders has the ability and
immense talent to execute any project. Whether a custom home or larger
commercial project, we have the resources to provide exceptional craftmanship and
deliver your project on time and on budget.” Ms. Mahoney relied on this mission
statement.
In her opposition to Defendants’ motion, Plaintiff identifies as the basis for her consumer
fraud claim Defendants’ representation that they could build her a house that she could move into
for $250,000. She also focuses on Defendants’ workmanship, knowledge, and experience, alleged
violations of the residential energy building code, issues surrounding the location of the house,’ cost
management, and other alleged building defects.
The Vermont Consumer Protection Act (“VCPA”) declares unlawful “[u]nfair methods of
competition in commerce and unfair or deceptive acts or practices in commerce.” 9 V.S.A. §
2453(a). Our Supreme Court has interpreted the “in commerce” language of the VCPA to require
the alleged unfair or deceptive acts or practices to occur ““in the context of [an] ongoing business in
which the defendant holds himself out to the public.”” Fow# Fuels, Inc. v. Kurrle Corp., 2013 VT 111,
21, 195 Vt. 524 (quoting Zeeman v. Black, 273 S.E.2d 910, 915 (Ga. Ct. App. 1980)). In addition, the
deceptive acts or practices “must have a potential harmful effect on the consuming public, and thus
constitute a breach of a duty owed to consumers in general.” Id. (citing Zeeman, 273 S.E.2d at 915).
The VCPA is “concerned with the contents of advertisements and offers—that is, elements
of contract formation—and not conduct that is in breach of an existing contract.” Winey ». William E.
Dailey, Inc, 161 Vt. 129, 136 (1993). Statements of fact are distinguished from statements of opinion
in VCPA actions; statements of fact are actionable, whereas statements of opinion are not. Heath,
2006 VT at J 14; Winey, 161 Vt. at 133. Misrepresentations of opinion are actionable, however, if
they are “part of a scheme to defraud.” Winey, 161 Vt. at 133. The Winey Court stated that it was
“reluctant to conclude that the Legislature intended a mere breach of contract to raise a
presumption of fraud.” Id. at 136.
To survive summary judgment, Plaintiff must prove that (1) Defendants made one or more
misteptesentations or omissions that were likely to mislead her, (2) that Plaintiff interpreted
Defendants’ misrepresentation(s) or omission(s) reasonably, and (3) the misleading
misrepresentation(s) or omission(s) were material. EBWS, 2007 VT | 26; Jordan v. Nissan N. Am.,
Inc., 2004 VT 27,95, 176 Vt. 465. The court views the elements under an objective standard
because the purpose of the VCPA is to protect the public, not punish wrongdoing. Inke/ v, Pride
Chevrolet-Pontiac, Inc., 2008 VT 6, J 10, 183 Vt. 144.
2 This court is without jurisdiction to resolve any issues Plaintiff may have regarding alleged zoning violations, as it
has informed the parties. See generally 4 V.S.A. § 34; In re Confluence Behavioral Health, LLC, 2017 VT 112, 206
Vt. 302; Gould v. Town of Monkton, 2016 VT 84, 202 Vt. 535. Thus, this court will not address any issues Plaintiff
raises relating to zoning.
Entry Regarding Motion Page 8 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
Review of Plaintiffs’ evidence submitted in support of her VCPA claim shows that Plaintiff
has failed to make out a prima facie case of consumer fraud under the VCPA. She has failed to
identify any alleged misrepresentation of fact that she claims reasonably misled her to believe
Defendants could build her a house for $250,000, as she must to maintain this cause of action.
Simply making assertions about Defendants’ workmanship, knowledge, and experience, alleged
violations of the residential energy building code, issues surrounding the location of the house, and
cost management, without coming forward with specific misrepresentations thereof, is insufficient
to withstand a motion for summary judgment. As a result, the court grants Defendants’ motion for
summary judgment as to Count V.
D. Negligent Misrepresentation (Count VI)
In support of her negligent misrepresentation claim, Plaintiff asserts in her second amended
complaint that:
Defendants knowingly and/or recklessly supplied [Plaintiff] with facts about the cost
of the project, the location of the house, and Defendants’ level of experience and
workmanship and [Plaintiff] relied on those facts in hiring Defendants and paying
their invoices throughout the project.
In Vermont, negligent misrepresentation requires a plaintiff to establish the following:
“One who, in the course of his business, profession or employment, or in any other
transaction in which he has a pecuniary interest, supplies false information for the
guidance of others in their business transactions, is subject to liability for pecuniary
loss caused to them by their justifiable reliance upon the information, if he fails to
exercise reasonable care or competence in obtaining or communicating the
information.”
Howard v. Usiak, 172 Vt. 227, 230-31 (2001) (quoting Liwoge v. People’s Trust Co., 168 Vt. 265, 268-69
(1998) (itself quoting Restatement (Second) of Torts § 552). Contrary to Plaintiffs assertion in her
second amended complaint, negligent misreptesentation does not include a “knowing” or “reckless”
component.
In her opposition to Defendants’ motion for summary judgment, Plaintiff fails to point to
specific evidence adduced through discovery to make out a prima facie case for negligent
misrepresentation. She writes:
First, Plaintiff alleges that Beacon Hill supplied her with false information. Some
examples of this false information are: (1) the cost of the project; (2) Beacon Hill’s
experience level and quality of workmanship; (3) Beacon Hill’s intention to build the
house in a certain location; and (4) Beacon Hill’s ability to comply with local and
State laws and regulations, including the RBES.
However, as discussed above, Plaintiff has failed to produce evidence of any information
Defendants provided to Plaintiff that was false, and thus, Plaintiff fails to persuade the court that
Entry Regarding Motion Page 9 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
there is a triable issue of fact with respect to her claim for negligent misrepresentation. The court,
therefore, grants Defendants’ motion for summary judgment with respect to Count VII.
BE. Defendants Tucker Fossiano and David Fossiano
Defendants seek to have Tucker and David dismissed (as to all counts) from Plaintiff's
lawsuit, in their individual capacities, because Plaintiff does not assert any independent substantive
claim against either of them. Plaintiff acknowledges that she has added David and Tucker as
individual defendants in an effort to pierce the corporate veil. Tucker is the president and David is
the vice president of BHB.
Piercing the corporate veil is a common-law equitable remedy under which a court may
impose personal liability on a corporation’s officers, directors, or shareholders for a corporation’s
wrongful acts. Fragier v. Preferred Operators, Inc., 2004 VT 95,96, 177 Vt. 571 (mem.). Reasons courts
give fot piercing the corporate veil include: “using the corporation to perpetrate a fraud; the
personal use of corporate funds; the failure to observe corporate formalities; and
undercapitalization.” In re Vermont Toy Works, Inc., 135 B.R. 762, 770 (D. Vt. 2006). When the
evidence shows that a person who owns or controls a corporation uses the corporate form to
“evade contract or tort responsibilities,” a court may pierce the corporate veil “to correct [the]
abuse.” Winey v. Cutler, 165 Vt. 566, 568 (1996) (mem.) (citing United States v. Fidelity Capital
Corp., 920 F.2d 827, 836-37 (11th Cir.1991)). Further, a court may disregard the corporate form if
the corporation is dominated by its owner(s) such that the corporation is essentially the alter ego of
its owner(s). Id. (citing Wolfe v. United States, 798 F.2d 1241, 1243 (9th Cir.1986)); see also Agway, Inc.
v. Brooks, 173 Vt. 259, 262 (2001) (stating Vermont courts “will look beyond the corporation to its
shateholders for liability ... and pierce the corporate veil, where the corporate form has been used
to perpetrate a fraud... and also where the needs of justice dictate.”). Even in an absence of fraud,
a debtor corporation and an individual owner of all the stock may be treated “‘as identical” when
justice will be served thereby. Agway, 173 Vt. at 262-63 (citing Roberts v. W.H. Hughes Co., 86 Vt. 76,
88 (1912)).
Defendants admit the following statements by Plaintiff, as set forth in her statement of
additional undisputed material facts that she submitted along with her opposition to Defendants’
motion for partial summary judgment:
8. Pursuant to the testimony of Tucker Fossiano, Beacon Hill does not own the
building where it is headquartered. Beacon Hill owns some job trailers and other
equipment however they are all used as collateral to secure a business line of credit.
Beacon Hill does not own any vehicles; it has one vehicle that is financed with no
equity and one that is leased. Beacon Hill has one business checking account that
had a negative $738 balance at the time of Tucker Fossiano’s deposition. Beacon
Hill had an SBA small business loan which matured but Beacon Hill was not able to
pay off. In order to pay off that loan Tucker Fossiano took out a second mortgage
on his personal residence to pay the loan.
9, Tucker Fossiano does not own any vehicles individually and drives Beacon Hill
leased or financed vehicles.
Entry Regarding Motion Page 10 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &
10. Tucker Fossiano and David Fossiano are the only salaried employees of Beacon
Hill.
11. If there was ever a judgment against Beacon Hill Builders there would be no
funds available to pay it.
Defendants asserts that Plaintiff presents no evidence of fraud or the individual defendants’
petsonal use of corporate funds to justify piercing the corporate veil and holding David and Tucker
Fossiano personally liable in the event Plaintiff is awarded damages in this case. However,
Defendants admit that (1) Tucker drives BHB vehicles for his personal use, (2) Tucker took out a
mortgage on his residence to pay off a BHB loan; (3) the BHB bank account was overdrawn when
Tucker gave his deposition; and (4) David is the vice president of BHB.? Although Plaintiff has
presented no evidence of fraud, these admitted facts could be evidence of undercapitalization, the
personal use of corporate assets, treating the corporation as an alter ego, and the failure to obsetve
corporate formalities. Thus the court cannot, as a matter of law, rule out piercing the corporate
veil. The record contains insufficient facts to decide this issue one way or the other on summary
judgment.
Although the court is granting Defendants’ motion for summary judgment as to Plaintiffs
claims for negligence, fraud, and misrepresentation, Plaintiff has other claims that are not affected
by this ruling, including breach of contract, breach of implied warranty against structural defects,
breach of implied warranty of good workmanship, unjust enrichment, and noncompliance with the
Vermont RBES, As a result, the court denies Defendants’ request to dismiss Tucker and David as
individual Defendants from this lawsuit.
Conclusion
For the reasons set forth above, the court:
(1) grants Defendants’ motion for summary judgment as to Counts IV-VII of Plaintiff's second
amended complaint and
(2) denies Defendants’ request that Tucker Fossiano and David Fossiano be dismissed from this
lawsuit.
Electronically signed pursuant to V.R.E.F. 9(d) on November 16, 2021 at 1:32 PM.
Many “Wi liw
Mary ifs Teachout
Superif Court Judge
3 Defendants state in their reply memorandum that Tucker is the sole shareholder of BHB, but they do not cite any
evidence to support this.
Entry Regarding Motion Page 11 of 12
196-11-17 Lecv Mahoney vs. Beacon Hill Builders &