Preservation of error: summary judgment issues must be renewed at trial.

Stratton Corp. v. Englebert Construction, Inc., 2015 VT 69 [Filed May 1, 2015]

This case stems from a condominium construction project in Stratton, Vermont. Owner and developer, Stratton Corporation and Intrawest Stratton Development Corporation (collectively "developer"), sued the project's general contractor Engelberth Construction, Inc., who in turn filed a third-party claim against subcontractor Evergreen Roofing Company. A jury found  that Evergreen Roofing breached its subcontract with Engelberth Construction, and that Evergreen Roofing was obligated to indemnify Engelberth Construction. On appeal, Evergreen Roofing  argues that the court erred in denying a pretrial motion for summary judgment filed by Engelberth Construction on various issues, including  whether proof of non-insurance or lack of availability of insurance coverage was a prerequisite to developer's recovery against Engelberth. (the CIP issue).We conclude that Evergreen Roofing failed to preserve its argument, and we therefore affirm.

The  issues raised by Evergreen Roofing are not properly before us. First, a party generally cannot appeal from the pretrial denial of a motion for summary judgment. This is because "[o]nce trial begins, summary judgment motions effectively become moot,"  and the trial court's "judgment on the verdict after a full trial on the merits . . . supersedes the earlier summary judgment proceedings."  Evergreen Roofing provides no legal authority to support any exception to this general rule.

Second,  Evergreen Roofing  did not raise the CIP issue at trial. It did not object to the exclusion of CIP evidence; it did not object to the jury instructions; and it did not move for judgment as a matter of law. Evergreen Roofing's failure to properly raise the CIP issue at trial precludes our review of this issue on appeal. 

Consumer Fraud Claim fails where consumer has independent knowledge of the information.

West Dover Property, LLC. v. LaLancette Engineers, 2015 VT 48 [Filed March 20, 2015]

SKOGLUND, J. Plaintiff buyers in this consumer fraud action appeal from a summary judgment order in favor of defendant realtor who represented the seller in the sale of an inn. Plaintiffs argue that the trial court erred in concluding that defendant's alleged misrepresentation and omission were immaterial as a matter of law. We affirm.

Vermont's consumer protection statute provides a private cause of action for a consumer "who contracts for goods or services in reliance upon false or fraudulent representations or practices . . . or who sustains damages or injury as a result of [such representations or practices]." 9 V.S.A. § 2461(b). Defendant failed  to disclose the written estimate of roof repair costs to plaintiffs.  The omission of this information, as well as the affirmative representation that seller was aware of "no current problems with the roof" could give rise to a violation of the consumer protection statute.

However,  the plaintiffs' case fails for lack of proof on the element of causation and not because the information withheld was immaterial. Because the record is undisputed that the information about the need to replace the roof was known to plaintiffs, defendant's failure to provide the seller's estimate of repair costs to plaintiffs cannot satisfy the requirements for liability under the consumer protection act.  We hold that a buyer may not recover under Vermont's consumer protection statute for omission of information by the seller or his agent when, as in the circumstances of this case, the buyer has independent knowledge of the same information prior to the completion of the sale.

DOOLEY, J. dissenting. I would reverse the trial court's summary judgment decision and hold that plaintiffs' claim against defendant is sufficiently supported in the record to compel us to conclude that issues of material fact remain in dispute.

According to the majority, plaintiffs had independent knowledge of the same material information within the time allowed for cancellation of the purchase-and-sale agreement. The deficiency in this analysis is that its premise is incorrect—the information was not the same.  A jury could reasonably conclude that plaintiffs' response to the report provided by their inspector, in the face of a representation that there were no known problems with the roof, was very different from the response plaintiffs would have had if they had learned that the seller concluded that 6600 square feet of roof needed replacement.

Accordingly, I dissent from the majority's decision.  I am authorized to state that Justice Robinson joins in this dissent.

[Note:  The Court consisted of Dooley, Skoglund, Robinson and Crawford, JJ., and Eaton and Morris (Ret.), Supr. JJ., Specially Assigned Justice Crawford was present for oral argument, but did not participate in this decision. Judge Morris (Ret.) was not present for oral argument, but reviewed the briefs, listened to oral argument, and participated in this decision.]

Vt. Constitution, Chapter I, Article 4 is a self-executing clause that protects against deprivation of property rights without due process.

Nelson v. Town of St. Johnsbury, 2015 VT 5 [Filed January 16, 2015]

DOOLEY, J. Plaintiff, the former town manager of St. Johnsbury, appeals from a trial court decision granting partial summary judgment to defendants, the Town of St. Johnsbury and its individual selectboard members, on his claims of violation of Chapter I, Article 4 of the Vermont Constitution. We reverse and remand.

Plaintiff sought a preliminary injunction reinstating him as town manager; compensatory and punitive damages; and attorney's fees and costs. After a hearing, the trial court refused to grant a preliminary injunction. On summary judgment the court held that plaintiff has no legal interest in his employment because his employment was at will; the selectboard members are entitled to qualified immunity for their alleged violation of the Civil Rights Act, 42 U.S.C. § 1983; plaintiff has no private right of action for a violation of Chapter I, Article 4 of the Vermont Constitution; and plaintiff failed to satisfy all the required elements of promissory estoppel. This appeal followed.

Chapter I, Article 4 of the Vermont Constitution provides:

Every person within this state ought to find a certain remedy, by having recourse to the laws, for all injuries or wrongs which one may receive in person, property or character; every person ought to obtain right and justice, freely, and without being obliged to purchase it; completely and without any denial; promptly and without delay; conformably to the laws.

Vt. Const., ch. I, art. 4.

We have considered Article 4 the equivalent to the federal Due Process Clause. It does not create substantive rights; it merely provides access to the courts. Where a substantive right—e.g., a property interest—already exists, conferred by statute or common law, Article 4 can protect a plaintiff against deprivation of that right without due process.

Plaintiff claims that when the selectboard allegedly deprived him of his employment without due process, that deprivation offended the guarantees of Article 4. The Town contends that Article 4 does not provide a private right of action. The trial court agreed with the Town and granted its motion for summary judgment. We disagree with the trial court and reverse the grant of summary judgment to the Town.

The question of whether a private right of action can be based on a provision of the Vermont Constitution may be bifurcated into two questions. The first is whether the constitutional provision is self-executing—that is, whether a plaintiff can bring an action for a violation of the provision without implementing legislation. The second is whether the remedy that a plaintiff seeks, typically damages, exists for the violation.

A Vermont constitutional provision is self-executing "if it supplies a sufficient rule by means of which the right given may be enjoyed and protected, . . . and it is not self-executing when it merely indicates principles, without laying down rules by means of which those principles may be given force of law.” That is, "a self-executing provision should do more than express only general principles; it may describe the right in detail, including the means for its enjoyment and protection.” We have concluded that Article 7, and Article 13 are self executed because each "expresses a ... fundamental right" and that right is "so certain and definite in character as to form rules for judicial decisions."

Article 4 is about access to the judicial branch to enforce the law. We recognize that we are dealing with a very broad concept, stated in language from an earlier century. To say that the language is too vague and general to enforce ignores the immense body of law that has developed and applied the principles of due process. We find Article 4 no more broad or general than Article 7, which we held as self-executing.

We therefore hold that Chapter I, Article 4, of the Vermont Constitution is self-executing and that plaintiff properly invoked the Article in his complaint.

We stress that we have not addressed the remedy plaintiff might receive if he proves a violation of the provision. We have almost no precedents in which Article 4, rather than the Fourteenth Amendment to the United States Constitution, is the primary basis for decision and none in which the party invoking Article 4 is seeking relief within or because of an administrative process. The trial court will have to address how it meets the claims and facts before it. We reverse the trial court's grant of summary judgment to the Town and hold that plaintiff is entitled to due process under Chapter I, Article 4 of the Vermont Constitution.

We remand to the trial court to decide if the selectboard furnished plaintiff with adequate notice and hearing upon termination.

Economic-loss rule applies to bar tort claims for injury to property that is the subject of a contract between the parties.

Walsh v. Cluba, 2015 VT 2 [Filed February 13, 2015]


SKOGLUND, J. This case concerns a dispute over damage to a leased commercial space. The jury awarded plaintiff, landlord David Walsh, just under $11,000 in damages attributable to defendant, tenant Frank Cluba, but the court dismissed landlord's contract and tort claims against defendant Good Stuff, Inc., a business formed by Cluba and his partner that had possession of the subject property. We affirm.

The trial court granted Good Stuff summary judgment on contract claims, ruling that Good Stuff had not signed the lease and that Walsh had failed to point to any post-lease writing or action that could have bound Good Stuff to the lease. The court stated that the successor liability doctrine was inapplicable to this case, and that Walsh had abandoned his ratification theory by neither raising it nor offering facts to support it in his response to defendants' summary judgment motion. Accordingly, the court concluded that "[a]ll contractual claims against Good Stuff must be dismissed.”

At trial the court granted Good Stuff's Rule 50 motion, ruling that the economic-loss rule precluded the tort claim because the dispute was completely covered by Walsh's and Cluba's contractual relations and because the parties' duties were defined by the contract, which required the tenant to leave the premises in the condition in which he took them.

Walsh first argues that the trial court erred by dismissing his contractual claims against Good Stuff. We decline to consider the argument. The court declined to consider the ratification argument on the basis that it had neither been briefed nor supported by evidentiary material in Walsh's response to defendants' motion for summary judgment, in which defendants asserted that Walsh knew he was contracting solely with Cluba, made no attempt to bind Good Stuff to the lease agreement. Walsh made the tactical decision to abandon his contractual claims and instead rely on a negligence claim of liability and pointedly did not challenge the trial court's ruling below in his motion to clarify.

Walsh next argues that the court erred in barring his negligence claim against Good Stuff because he was claiming property damage as the result of Good Stuff's actions. Walsh alleged that "[i]n the process of vacating the premises, the Defendants negligently damaged them quite extensively which inhibited the Plaintiff from reletting the premises for some time, while repairs were made." Walsh sought a judgment that "the Defendants are liable for the cost of repairing the damages to the Lease Premises negligently inflicted by them, the loss of rentals during the period of repair, and other consequential damages resulting therefrom."

The economic-loss rule "maintain[s] a distinction between contract and tort law" by "prohibit[ing] recovery in tort for purely economic losses.” Negligence actions are generally limited to unanticipated physical injury, while contract law allows parties to protect themselves through bargaining.

Injury to the product or property that is the subject of a contract is generally considered a disappointed economic expectation for which relief lies in contract rather than tort law. Thus, the economic-loss rule generally applies to bar tort claims when the alleged damage is to property that is the subject of a contract between the parties. The determining factor in deciding whether to apply the economic-loss rule is not whether privity exists but rather whether there is "a duty separate and apart from a contractual duty.”

Walsh sought damages to his commercial property that was the subject of the lease agreement between him and his tenant, Cluba. Good Stuff occupied the property as the result of Cluba being its president and director and having signed the lease with Walsh. Thus, although Walsh and Good Stuff were legal strangers, any duty Good Stuff had concerning the subject property was established by virtue of the lease agreement. Here, the alleged tort duty was plainly interwoven with the subject contract—indeed, the contract was the source of the duty. Under these circumstances, the trial court did not err in dismissing Walsh's negligence claim based on the economic-loss rule.

Given the unique circumstances of this case, the trial court did not err in dismissing Walsh's negligence claim against Good Stuff under the economic-loss rule.


ROBINSON, J., concurring and dissenting. The majority expands the so-called economic-loss rule by applying it to claims resting on physical damage to property and by implying a presumptive prospective waiver of tort claims whenever parties assume corresponding contractual duties. In so doing, it misapprehends the rationale for and scope of the rule, further muddying an already confused area of law.

This Court has long recognized that the "economic losses" to which the economic-loss rule applies are intangible economic losses, and do not include losses accompanying physical harm to persons or property. Restatement (Third) of Torts: Liab. for Econ. Harm § 2 ("`[E]conomic loss' is pecuniary damage not arising from injury to the plaintiff's person or from physical harm to the plaintiff's property.”). This simply isn't an "economic-loss" case, in which a plaintiff is seeking a tort remedy for a purely economic loss. He does not seek damages for "economic loss without physical injury," or "absent some accompanying physical harm."

The majority shifts from a rule that recognizes that a contractual duty does not give birth to a tort duty to avoid purely economic losses to a rule that presumes that a contractual duty negates any pre-existing, independent tort duty concerning the same subject matter. This approach turns the analysis on its head and bypasses the proper threshold question—"Is there a duty here independent of the contract?" Wholly apart from any lease agreement, defendants here had a well-established duty not to unreasonably damage Walsh's premises.

Indemnity denied where manufacturer did not assume responsibility for workplace safety and did not create the dangerous condition.

Hemond v. Frontier Communications of America, Inc., 2015 VT 67 (Hemond III)

REIBER, C.J.   Plaintiff alleged, among other things, negligence in the design, manufacture, installation, and construction of the substation, negligent selection and installation of the switch, and defective manufacture, design, and distribution of the switch. Defendant Frontier Communications of America, Inc. appeals decisions denying its cross-claims for indemnity against three codefendants, a consulting firm that provided services to Frontier in connection with the reconstruction of the Richford substation; the manufacturer of the switch; and the distributor of the switch. Frontier asserts that it is entitled to implied indemnification from all three codefendants, and that the court erred in granting summary judgment because there are disputed questions of fact. We affirm.

Implied indemnity will apply “only when the party seeking indemnity is vicariously liable to the third person because of a legal relationship or because of the party’s failure to discover a dangerous condition caused by the indemnifying party, ‘who is primarily responsible for the condition.’ ”  Hemond II, 2015 VT 66, ¶ 9 (quoting White, 170 Vt. at 29, 742 A.2d at 737).  Frontier has failed to meet the standard for implied indemnity because this case presents no facts that could demonstrate that its liability to plaintiffs was vicarious through Stantec, Turner, or Graybar, or that Frontier was not primarily responsible for creating the dangerous condition that caused the accident.  

Frontier asserts that it did not engage in “active” negligence, but rather that its negligence, if any, was in failing to discover that the switch was dangerous when used in a particular circumstance.  But Frontier has failed to demonstrate that those entities assumed the primary responsibility for ensuring safety.  As explained in Hemond II, it was Frontier’s responsibility to design a safe substation.  Frontier failed to show that any of the codefendants assumed primary responsibility for safely designing the substation or choosing the switch.  At most, the evidence highlighted by Frontier suggests that Frontier relied on Turner and Graybar to indicate whether the switch was suitable for its intended purpose.  Frontier has failed to show that it delegated primary responsibility over safety to any of its codefendants.

Further,  the undisputed facts show that Frontier’s own acts, not those of any other defendant, created the dangerous condition which led to plaintiff’s injury.  Implied indemnity is limited to circumstances where the violation of the duty was “ ‘the primary fault’ ” of the indemnitor. See Restatement (First) of Restitution § 95 (explaining that a party’s negligent failure to make safe a dangerous condition is excused only when the danger was caused by the act of another who, as between the two, is primarily responsible for the condition). 

The critical fact—undisputed by Frontier—is that Frontier retained responsibility for the safety of its equipment and its workplace, and that the injury was primarily caused by Frontier’s own actions in choosing, and installing the switch.

Indemnity denied where contractor did not assume responsibility for workers’ safety and did not create the dangerous condition.

Hemond v. Frontier Communications of America, Inc. 2015 VT 66 (Hemond II)

REIBER, C.J. This case involves an indemnity dispute between two defendants in a suit arising after plaintiff suffered a tragic electrocution injury while working on an electrical switch. Defendant Frontier Communications of America, Inc., who owned the electrical equipment on which the accident took place, claimed implied indemnity from Navigant Consulting Group, Inc., a contractor. Navigant cross-claimed for indemnification from Frontier based on express statements in the parties' contract. The court granted summary judgment to Navigant on Frontier's claim for implied indemnification. Frontier appeals, arguing that the court erred in concluding that the undisputed facts demonstrated that Frontier failed to meet the requirements for implied indemnification.. We affirm.

Usually an obligation too indemnity arises only when the party seeking indemnity is vicariously or secondarily liable to the third person because of a legal relationship with the third person or because of the party's failure to discover a dangerous condition caused by the indemnifying party, "who is primarily responsible for the condition.” Frontier alleged that it was entitled to implied indemnification because it claimed that Navigant was responsible for advising on the suitability of the electrical system and its negligence in failing to advise against use of Switch 14E caused the dangerous condition. Even if Frontier's version of these facts is accepted, no obligation to indemnify arises here because Frontier has failed to show that its liability to plaintiffs was simply vicarious or secondary, or that it was not primarily responsible for the condition which caused the accident.

Frontier would have to show that as between Navigant and Frontier, it was Navigant's duty to keep the work environment safe or that Navigant's misconduct created the dangerous condition. The undisputed facts support neither scenario. Frontier had a nondelegable duty to design a safe environment for foreseeable workers in the substation. See Knisely, 171 Vt. at 647, 769 A.2d at 9 (concluding hospital not entitled to indemnification from contractor where it had a nondelegable duty to provide safe work environment and violation of duty was not primary fault of contractor). Frontier submitted no facts to demonstrate that Navigant assumed this responsibility. Navigant was a consultant to assist in obtaining a certificate of public good (CPG).The scope of the parties' contract was limited to the reliability of the system for purposes of obtaining a CPG; it did not mention safety.

Nor has Frontier shown that Navigant was primarily responsible for creating the dangerous condition. Even if as part of its contracted work to assist in obtaining a CPG Navigant was negligent in its reliability assessment, its negligence did not create the dangerous condition that caused the injury. Any failure on Navigant's part to identify that Switch 14E threatened system reliability did not primarily create the condition that caused plaintiffs' injury.

Frontier further argues that there exists a question of fact to determine if it had an "active part" in causing plaintiffs' injury. According to Frontier, indemnity is precluded when the indemnitee knows of a hazardous condition and fails to address it, but not when an indemnitee should have known of the hazard but fails to discover it. Frontier misses the point. Frontier failed to demonstrate that its liability was for a dangerous condition created by Navigant's acts. It was Frontier's own independent acts that created the dangerous condition. The parties agree in their statement of facts that Frontier chose the switch, and installed the switches. Navigant's negligence, if any, was in failing to advise that the reliability of the system was reduced by use of Switch 14E. The undisputed facts fail to show that it was primarily Navigant's acts which created the dangerous condition.

Implied indemnity barred by indemnitee’s independent vicarious culpability, even though not “primary” or “active” negligence.

Heco v. Foster Motors, 2015 VT 3 (Filed January 9, 2015)

SKOGLUND, J. Auto dealer appeals from a superior court judgment in favor a component manufacturer on dealer's scross-claim for indemnification of compensation paid to plaintiff in settlement of a personal-injury action.  We affrim.

Plaintiff was severely injured when a vehicle she was driving was struck from behind by another vehicle.  She filed a personal-injury action against Midstate, the automobile dealer that sold her the vehicle, Chrysler Group LLC, successor-in-interest to the company that manufactured the vehicle, and JCI, the manufacturer of the vehicle’s driver’s seat. The complaint alleged Midstate sold a vehicle that was not “crashworthy”  not only because of a defective and inadequate seat system, but also because of  defective design and inadequate warning. Plaintiff thus  alleged not only that Midstate was vicariously liable for the allegedly defective seating system supplied by JCI, but was also vicariously liable for Chrysler's role in selling a vehicle that was not crashworthy.

Plaintiff’s settled, releasing Midstate  from "any and all claims, demands, damages and causes of action under any state or federal law whatever the nature, which are known or unknown, foreseeable or unforeseeable, past, present or future, arising directly or indirectly out of the Vehicle, the Incident or the Lawsuit.” After trial and judgment for plaintiff and against JCI in the amount of $36,948,123, the trial court also entered a final judgment in favor of JCI and against Midstate on the cross-claim for indemnity. This appeal by Midstate is of that judgment. 

In support of its motion for summary judgment on the cross claim JCI asserted that the settlement agreement with plaintiff discharged Midstate from potential vicarious liability quite separate and independent from JCI's potential liability, and that Midstate could not therefore compel JCI to compensate it for the Midstate's "own vicarious liability for the conduct of Chrysler Group and Chrysler" in no way attributable to JCI.  We agree.

It is axiomatic that a party seeking implied equitable indemnity may recover only where its potential liability is vicariously derivative of the acts of the indemnitor and it is not independently culpable. Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 255 (Tex. 2006) ("Under the common law, a person is entitled to indemnity for products liability only if his liability is entirely vicarious and he is not himself independently culpable.")  This principle is carried forward in the current Restatement, which allows for noncontractual indemnity only where the indemnitee is "not liable except vicariously for the tort of the indemnitor," or where the indemnitee sells a product supplied by the indemnitor and the indemnitee is "not independently culpable." Restatement (Third) of Torts: Apportionment of Liability § 22(a)(2)(i) & (ii) (emphases added).

Such independent culpability need not arise exclusively from the primary or active negligence of the indemnitee. See, e.g., Hudiburg, 199 S.W.3d at 260. Midstate was sued based on its vicarious liability for the acts of both JCI and Chrysler Corporation, and  it chose to settle and compensate plaintiff in exchange for the discharge of any potential vicarious liability "arising directly or indirectly out of the Vehicle." Midstate's settlement discharged its potential vicarious liability not only for the acts of JCI, but also Chrysler, and as such Midstate may not assert equitable indemnity to compel JCI to reimburse it.

[SCOVT note: see also Restatement (Third) of Torts: Apportionment of Liability § 22, comment e (A vicariously liable person can obtain indemnity from the person whose negligence was imputed only if the vicariously liable person is not independently liable.)]