Divided Court reverses, as abuse of discretion, dismissal of foreclosure action under Rule 41 for failure to prosecute in the name of the real party in interest, holding Rule 25 governs transfers of interest pending litigation and that real-party- in-interest rule applies only at the time the action commences.

 Ditech Financial LLC v. Brisson, 2025 VT 54 [9/18/2025]

CARROLL, J.   In this foreclosure action, plaintiff Ditech Financial LLC appeals the trial court’s order dismissing the case with prejudice and vacating the foreclosure judgment for plaintiff’s failure to prosecute.  We agree with plaintiff that the court abused its discretion in dismissing the case for want of prosecution and thus reverse the court’s order, reinstate the judgment of foreclosure, and remand for further proceedings consistent with this opinion.

 

In July 2024, the court concluded the parties agreed that US Bank Trust National Association was not the real party in interest, but that “a glaring question” remained “as to who the real party in interest is.”  The court set a hearing for the parties to present evidence on the real party in interest stating that “the action w[ould] be dismissed for failure to prosecute” if plaintiff “fail[ed] to prove who the real party in interest is at the hearing.”

 

A hearing was held in August 2024, following which the court dismissed the case.  The court concluded “Ditech no longer exists” and had gone through bankruptcy, that plaintiff failed to prove that it, or Shellpoint, emerged from bankruptcy with continued control in the foreclosure judgment and that plaintiff  failed to prove who the real party in interest is.”  Accordingly, the court dismissed the case with prejudice and vacated the foreclosure judgment.

 

On appeal, plaintiff argues that the court lacked authority to dismiss the case with prejudice or vacate the foreclosure judgment under the applicable civil rules. 

 

Rule 17

 

We begin our discussion with the applicable rules governing the real party in interest.  Civil Rule 17(a) requires that an action “be prosecuted in the name of the real party in interest.”  Rule 17(a) applies at the time the action commences.  Hilbrands v. Far E. Trading Co., 509 F.2d 1321, 1323 (9th Cir. 1975); see also Smedberg v. Detlef’s Custodial Serv., Inc., 2007 VT 99, ¶ 30,(noting  V.R.C.P. 17(a) “must be construed to the same effect” as “identical” federal rule); Reporter’s Notes, V.R.C.P. 17 (“This rule is based on Federal Rule 17, as modified in Maine Rule 17.”). 

 

 In her 2023 motion to dismiss plaintiff’s motions, defendant did not challenge plaintiff’s standing at the time the action commenced, nor did the court consider whether plaintiff was the proper plaintiff to have commenced the suit.  Thus, Rule 17 was inapplicable.

 

Rule 25

 

 Rather, to the extent a transfer occurred during the pendency of the proceedings, Civil Rule 25(c) governs.  Rule 25(c) provides “[i]n case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.”

 

Rule 25 “expressly permits parties to continue in an action, even if they do not remain the real party in interest, as long as the cause of action itself survives the transfer to the new party.”  ELCA Enters., Inc. v. Sisco Equip. Rental & Sales, Inc., 53 F.3d 186, 191 (8th Cir. 1995) 7 C. Wright & A. Miller, Federal Practice & Procedure § 1958 (3d ed. 2025) (explaining Federal Rule 25(c) “does not require that anything be done after an interest has been transferred”).  Accordingly, to the extent there was a transfer of interest, the action could continue in plaintiff’s name, unless upon motion the court required otherwise.

Rule 41

 

The court did not rely on Rule 25 in dismissing the action, however.  Rather, it dismissed the case and vacated the foreclosure judgment for failure to prosecute because plaintiff failed to comply with the court’s August 2024 order to prove, after a hearing, who the real party in interest was.  Although it did not cite the rule, the court was plainly referring to Civil Rule 41(b)(2).

 

Rule 41(b)(2) provides: “For failure of the plaintiff to prosecute or to comply with [the Vermont Rules of Civil Procedure] or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant.”

This “general power” of the court to dismiss a case for want of prosecution “is limited by several important considerations” including that “the law favors disposition of cases on their merits,” that “sanctions against litigants should be proportionate to their offenses” and “appropriate to the circumstances,” and that “courts must be wary of imposing sanctions on a party without notice and an opportunity to be heard.”  Ying Ji, 2013 VT 81, ¶¶ 6-7 (quotation omitted); cf. John v. Med. Ctr. Hosp. of Vt., Inc., 136 Vt. 517, 519 (1978) (requiring “findings . . . that 10 there has been bad faith or deliberate and willful disregard for the court’s orders, and . . . the party seeking the sanction has been prejudiced thereby” for “the ultimate sanction of dismissal” under Civil Rule 37(b)(2)). 

Under the similar federal rule, courts recognize that dismissal for lack of prosecution “is a harsh remedy to be utilized only in extreme situations.”  Minnette v. Time Warner, 997 F.2d 1023, 1027 (2d Cir. 1993)

  

We agree with plaintiff that there was no failure on its part to prosecute the case, and thus, conclude the court exceeded its discretion by dismissing the case with prejudice

Here, the trial court made no findings that plaintiff failed to pursue the case, caused undue delay, or demonstrated continued noncompliance with the court’s orders.  Nor does the record demonstrate inaction by plaintiff such as failure to attend a hearing or respond to repeated requests from the court, or that plaintiff unreasonably delayed its response to the court’s order to prove the identity of the real party in interest. Plaintiff attended the hearing and complied with the court’s order to provide proof of the real party in interest, although the court was unpersuaded.  The court therefore exceeded its discretion by dismissing the case with prejudice for plaintiff’s failure to comply with the court’s order.

 

Reversed.  The judgment of foreclosure is reinstated, and the matter is remanded for further proceedings consistent with this opinion.

 

COHEN, J., dissenting.   I cannot agree with the majority that the trial court abused its discretion in dismissing this foreclosure proceeding.  Plaintiff’s incompetent recordkeeping, its shifting representations to the trial court, its sale of a mortgage and note that it now claims no longer legally exist, and its failure to provide adequate proof that it was the party entitled to enforce the foreclosure judgment, together support the sanction of dismissal here.  Accordingly, I dissent.  

 

What the trial court described as dismissal for failure to prosecute can be viewed as dismissal for failure to comply with the court’s July 2024 order directing plaintiff to provide proof that plaintiff was the entity that owned the right to enforce the judgment.  See V.R.C.P. 41(b)(2).

 

The facts of this case justify the court’s decision. Plaintiff was on notice that it faced dismissal if it did not demonstrate that it owned the right to enforce the foreclosure judgment, yet it did not seriously address the trial court’s concerns.  Plaintiff’s failure to adequately respond to the court’s order, coupled with its slipshod recordkeeping and its sale of a mortgage and note that it now claims no longer exists—which undoubtedly caused real confusion and anxiety for the pro 15 se defendant here—lead me to conclude that the court acted within its discretion in dismissing the action.

 

The sanction of dismissal with prejudice was not disproportionate to the actions and inaction that caused it.  Dismissal under these circumstances would serve both as a penalty and an important deterrent to future similar conduct by foreclosure plaintiffs.  See  John v. Med. Ctr. Hosp. of Vt., Inc., 136 Vt. 517, 520 (1978) (noting that sanction of dismissal is sometimes warranted, and can serve “not only as a penalty, but as a deterrent as well”)

 

For that reason, I would affirm the trial court’s decision.

How cited

 

SCOVT reverses denial of post- judgment motion to reopen case for leave to file a second amended complaint, holding as a matter of first impression that curing a pleading deficiency is a possible basis for relief under Rule 59(e) (following Foman v. Davis, 371 U.S. 178 (1962).)

  

Stowe Aviation, LLC v. Agency of Commerce, 2024 VT 11 [February 23, 2024]

CARROLL, J. Plaintiffs appeal from an order denying their motion to reopen this breach-of-contract case and for leave to file a second amended complaint. Plaintiffs assert that Rule 59(e) is a viable means to reopen the pleadings, and the trial court abused its discretion in denying relief under that rule. We agree that plaintiffs can potentially obtain Rule 59(e) relief, and therefore reverse the order denying plaintiffs' Rule 59(e) motion and remand for further proceedings to evaluate plaintiffs' request to replead consistent with this opinion.

Plaintiffs complained in count one that they executed an MOU with defendant based on its representations that it provided "gold standard" oversight of EB-5 projects, when in fact a significant fraud had been perpetrated on its watch. In count two, plaintiffs alleged that defendant’s misrepresentations about its oversight of other EB-5 projects breached the implied covenant of good faith and fair dealing.

The trial court granted defendant's motion to dismiss for failure to state a claim on both counts. It concluded that the MOU did not contain any provision promising oversight of the Jay Peak projects for the benefit of plaintiffs. The court found the claim of breach of the implied covenant of good faith and fair dealing arising from the same allegations suffered from the same deficiency. The court did find that plaintiffs had alleged a separate basis for a breach-of-contract claim but did not, however, adequately plead damages related to this alleged breach, and therefore failed to state a claim. The court dismissed the complaint pursuant to Vermont Rule of Procedure 41(b) and closed the case the same day.

Plaintiffs moved under Vermont Rule of Civil Procedure 15 to amend the complaint in response to the court's identification of a potential basis for plaintiffs' two claims. The defendant opposed the motion, arguing ,because the court had closed the case, plaintiffs had to first move the court to reopen or vacate judgment under Vermont Rules of Civil Procedure 59 or 60. Plaintiffs then timely filed a restyled motion seeking relief under either Rule 59 or 60, and submitted a proposed second amended complaint attempting to cure the deficiencies the court identified in its final order.

The court concluded that for plaintiffs to prevail under Rule 59(e), the court had to have made a mistake, not plaintiffs. It found that plaintiffs' failure to request leave to amend was not a fault or mistake of the court, but of plaintiffs. It found that the proposed second amended complaint contained new arguments that plaintiffs could have pleaded before it closed the case. It concluded that it had not made a clerical mistake in failing to sua sponte grant leave to amend. The court accordingly denied the motion. Plaintiffs appealed this order.

The first question presented is whether plaintiffs can prevail on a Rule 59(e) motion to replead where plaintiffs did not seek leave to amend their complaint prior to the court's merits decision and where the court dismissed with prejudice and closed the case. We have never addressed whether the court's power includes granting Rule 59(e) relief to cure a pleading deficiency.

In Mitec, we held that the right to amend provided by Rule 15 no longer attached after entry of judgment.  N. Sec. Ins. Co. v. Mitec Electronics, Ltd.,   2008 VT 96, ¶ 39. And while we ultimately reversed the post-judgment grant of leave to amend in Mitec, our decision was based on the specific facts of that case, and we did not express or imply that the rules never allow repleading after the court closes the case or enters judgment.

We are persuaded that curing a pleading deficiency is a possible basis for relief under Rule 59(e). Relief to amend pleadings under Rule 59(e)  is available in most if not all the federal circuits. As we noted in Equinox, "[f]reedom of amendment is a fundamental principle of our rules." State v. Equinox House, Inc.,  134 Vt. 59 , 62 (1975); see also Foman v. Davis, 371 U.S. 178, 181-82 (1962)  (stating that Rule 59 motion to amend should have been granted because purpose of civil rules, including Rule 15, is that "[i]f the underlying factors or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claims on the merits").

In Williams v. Citigroup Inc. , 659 F.3d 208 (2d Cir. 2011) (per curiam), the Second Circuit encountered facts similar to the present dispute. There, the district court dismissed the plaintiff's complaint and entered final judgment the following day. The plaintiff timely moved to reopen the judgment and sought leave to cure defects in the original complaint that the court identified in its dismissal order. The Second Circuit reversed, concluding that the court abused its discretion in denying the motion for reconsideration. The court held that the U.S. Supreme Court in Foman makes unmistakably clear there is no such rule requiring litigants to request leave to amend with their opposition papers or to do so before the court enters judgment.

We similarly hold that the trial court's denial of plaintiffs' motion in this case was an abuse of discretion. The court's conclusion that relief was unavailable because plaintiffs should have requested leave to amend in their opposition papers cannot be squared with Equinox, Mitec, or the federal cases addressing the topic including Foman. The rules do not require it.

 On remand, plaintiffs must first convince the court to reopen the case under Rule 59(e) before they can file their second amended complaint. The standard to prevail on a Rule 59(e) motion in this context is more exacting, because the presumption to grant leave to amend under Rule 15 "disappears after judgment has been entered."  Plaintiffs must demonstrate one of the "four basic grounds" for granting a Rule 59 motion. Mitec,  2008 VT 96, ¶ 42.*

 If plaintiffs sufficiently demonstrate a basis for relief under Rule 59(e), the inquiry proceeds to whether plaintiffs' second amended complaint meets the ordinary Rule 15 standard. Colby v. Umbrella, Inc., 2008 VT 20, ¶ 4 (identifying factors to evaluate whether to allow party to amend pleadings under Rule 15 including undue delay, bad faith, futility, and prejudice); Bevins v. King, 143 Vt. 252, 254-56(1983). Plaintiffs can only file their second amended complaint if they prevail on both Rule 59(e) and Rule 15 standards.

The order denying plaintiffs' post-judgment motion for reconsideration is reversed, and the matter is remanded for further proceedings consistent with this opinion.

How cited

_______

SCOVT Note: This was a second amended complaint. Rule 15(a) allows a party to  amend a pleading once as a matter of course “at any time before a responsive pleading is served.” The Court has held a  trial court's proper course of action when granting a Rule 12(b) motion to dismiss prior to the service of a responsive pleading is to dismiss with leave to amend.  Neal v. Brockway, 136 Vt. 119, 122, 385 A.2d 1069, 1070 (1978) (reversing dismissal of complaint for failure to state claim without affording party opportunity to amend of  right). 

In the cited case of Foman v. Davis, 371 U.S. 178 (1962) the U.S. Supreme Court held the Court of Appeals erred in affirming a District Court's denial, without any apparent reason, of petitioner's motion to vacate the judgment in order to allow amendment of the complaint to plead a new legal theory based on the same transaction. See also   Perkins  v. Windsor Hospital Corp., 145 Vt. 305, 313 (1982) (stating that a motion to amend should not be denied simply “because it stated a new cause of action.”)

Here is Justice Marshall in Foman:

 As appears from the record, the amendment would have done no more than state an alternative theory for recovery.

Rule 15 (a) declares that leave to amend "shall be freely given when justice so requires"; this mandate is to be heeded . . . If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be "freely given."

 Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.

371 U.S. at 182. More recently, the  U. S. Supreme Court has held is its unnecessary for a "short and plain statement of a claim" to provide a legal theory. Skinner v. Switzer, 562 US 521 (2011)  (under the Federal Rules of Civil Procedure, a complaint need not pin plaintiff's claim for relief to a precise legal theory. Rule 8(a)(2) requires only a plausible "short and plain" statement of the plaintiff's claim, not an exposition of his legal argument.); Johnson v. City of Shelby, 574 US 10 ( 2014) ( the Rules do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted). 

*The ""four basic grounds" for granting a Rule 59 motion" referred to in Mitec, are from Wright & Miller:

First, the movant may demonstrate that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based.  

Second, the motion may be granted so that the moving party may present newly discovered or previously unavailable evidence.

Third, the motion will be granted if necessary to prevent manifest injustice.

Fourth, a Rule 59(e) motion may be justified by an intervening change in controlling law.

 11 Fed. Prac. & Proc. Civ. § 2810.1 (3d ed.)

” 

SC0VT affirms summary judgment dismissing FEPA, contract and promissory estoppel claims by employee fired for lying, holding FEPA protections apply only to governmental investigations, that handbook by its terms did not create a contract, and that employee did not have evidence of a “specific” promise needed to support promissory estoppel claim.

 

Westcott v. Mack Molding, Co. , 2024 VT 85 [12/20/2024]

WAPLES, J.   Employee Paul Westcott surreptitiously recorded conversations at work and employer Mack Molding Co., Inc. fired him for lying about it.  Employee sued employer.  The trial court concluded at summary judgment that employee’s recording activities were not protected by Vermont’s Fair Employment Practices Act (FEPA) or Worker’s Compensation Act (WCA).  The trial court further concluded that employee could not sustain his breach-of-contract or promissory-estoppel claims.  We affirm.

 

FEPA and WCA Retaliation Claims

 

Employee does not dispute that employer terminated him for lying.  However, he contends that lying in support of a protected activity is itself protected activity. 

Assuming arguendo that being fired for lying about a protected activity would make the firing improper, we first consider whether his covert recording of workplace conversations is protected by the FEPA or the WCA, which incorporates by reference the provisions against retaliation under the FEPA.  21 V.S.A. § 710(f)

 

 The FEPA provides, in relevant part: “An employer . . . shall not discharge . . . any employee because the employee: . . .  (b) has lodged a complaint or has testified, assisted, or participated in any manner with the Attorney General, a State’s Attorney, the Department of Labor, or the Human Rights Commission in an investigation of prohibited acts or practices;   (c) is known by the employer to be about to . . . testify, assist, or participate in any manner in an investigation of prohibited acts or practices.}21 VSA § 495(a)(8).

 

Employee points us to a dictionary definition of the word “investigation” and argues that employee’s actions fall into it.  Employer instead argues that “investigation” means an investigation by the “Attorney General, a State’s Attorney, the Department of Labor, or the Human Rights Commission,” as specified in 21 VSA § 495(a)(8)(B). 

 

We think employer’s interpretation is correct. The Legislature intended the “investigation” referred to in subdivision (c) to mean the sort of investigation it defines immediately beforehand.  Because employee does not contend that his actions were in any way related to a government investigation as described in subdivision (b), his covert recording does not fall within the scope of the FEPA’s participation clause.

Similarly, employee’s actions do not fall within the scope of the WCA’s protections against retaliation. 21 V.S.A. § 710(d).

 

Breach of Contract

  Employee contends that employer breached a contract with him, created by the employee handbook 

 

Within the disciplinary process section, the handbook expressly provides that employees “should not assume that any or all of the steps outlined below will be followed in every situation” and that the stated “process does not create a binding obligation to follow these steps in every situation.” 

 

 The situation created by the handbook here is not like that of Dillon v. Champion Jogbra, Inc., 175 Vt. 1, ¶ 15, where despite an “at will” disclaimer, the disciplinary policy “require[d] management” to follow certain steps in the process -- a “promise for . . . specific treatment in a specific situation” because here the handbook stated that “the Company expressly reserves the right to terminate the employment relationship at will” and the handbook did not make any promises modifying that status.

 

Promissory Estoppel   

 

Employee argues that he “had a legitimate expectation that he would be permitted to return to work” after his period of short-term disability because of statements made by, the human resources directo in a letter explaining his disability benefits, providing: “[i]f you . . . recover after you have used 12 weeks of FMLA but before the maximum benefit (time away from work) of twenty-six (26) weeks is exhausted, you will still be considered” an employee and will “be reinstated to the first available position for which you are qualified.”

To sustain a promissory estoppel claim, employee must “[1] demonstrate that the termination was in breach of a specific promise made by the employer, [2] that the employer should have reasonably expected to induce detrimental reliance on the part of the employee, and [3] that the employee did in fact detrimentally rely on the promise.”  Dillon v. Champion Jogbra, Inc., 175 Vt. 1, ¶ 19 (2002). 

 

Even if we viewed this statement as a promise, employee’s termination was not “in breach of a specific promise made by the employer”.  Employee was merely promised that he would be able to return to “the first available position” not that the employer would refrain from terminating his employment for any other reasons.

Affirmed.

 How cited

SCOVT Affirms summary judgment dismissing FEPA and promissory estoppel claims for lack of evidence, refusing to consider any supporting facts not presented by plaintiff in a required Rule 56 “statement of additional facts”.

 Caldwell v.Champlain College Inc., 2025 VT 17 [4/11/2025]

WAPLES, J.   Employee Robert Caldwell contends that the trial court erred in granting summary judgment on his Fair Employment Practices Act (FEPA) disability discrimination and promissory-estoppel claims against his former employer Champlain College because genuine issues of material fact precluded summary judgment.  We affirm. 

In opposing Champlain’s motion for summary judgment, employee did not file his own statement of additional material facts.  A separate statement of material facts has been required by Rule 56 since at least 1995, and amendments to the rule in 2003 made clear that attorneys must include “in their Rule 56(c)(2) statements all of the facts that they have relied on ... [because] facts that are omitted from their statements will not be considered by the court in ruling on the motion.” Reporter's Notes—2003 Amendment, V.R.C.P. 56; see also Reporter's Notes—1995 Amendment, V.R.C.P. 56. The 2022 Amendments also explicitly clarify that “statements of additional facts ... are to be submitted in a separate statement, with numbered paragraphs.” Reporter's Notes—2022 Amendment, V.R.C.P. 56.

 

Employee’s failure to file a statement of additional material facts means the Court need not consider any facts outside of Champlain’s statement of undisputed material facts in ruling on the summary judgment motion.  V.R.C.P. 56(c)(5). Unless otherwise noted, all facts presented in the analysis below are facts that employee did not dispute in his response to Champlain’s statement of undisputed material facts.

 

Without direct evidence of unlawful discrimination, which employee has not offered, we apply the three-step framework adopted by the United States Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).  Hammond, 2023 VT 31, ¶ 25. Assuming that employee can establish a prima facie case of discrimination, the burden shifts to Champlain to articulate a “legitimate, nondiscriminatory reason for the challenged conduct.”  Hammond, 2023 VT 31, ¶ 25 (quotation omitted).  Champlain’s explanation that employee was being fired “based on [his] fundraising number.”  suffices to meet Champlain’s burden. Employee thus must show that the “proffered reason was a mere pretext for discrimination.”  Id

 

Employee offered no evidence to raise even the barest suggestion that Champlain’s decision to terminate him was not for exactly the reasons it stated: employee, who was chief fundraiser, failed to meet his fundraising expectations.  Summary judgment was warranted because employee bore the burden of proof to show that Champlain’s reason for termination was pretextual, and he failed to make a showing sufficient to establish the existence of this element essential to  his case.

 

To establish his promissory estoppel claim, employee must “demonstrate that the termination was in breach of a specific promise made by the employer that the employer should have reasonably expected to induce detrimental reliance on the part of the employee, and that the employee did in fact detrimentally rely on the promise.”  Dillon v. Champion Jogbra, Inc.175 Vt. 1, 9, (2002).  “ ‘Courts have generally required a promise of a specific and definite nature before holding an employer bound by it.’ ”  Pettersen v. Monaghan Safar Ducham PLLC, 2021 VT 16, ¶ 13, 214 Vt. 269, 256 A.3d 604 (quoting Dillon, 175 Vt. at 10, 819 A.2d at 710).  A mere “ ‘expression of intention, hope, desire, or opinion, which shows no real commitment’ ” does not suffice.  Id. (quoting Nelson v. Town of St. Johnsbury Selectboard, 2015 VT 5, ¶ 56, 198 Vt. 277, 115 A.3d 423).  ¶ 27. Employee cites no evidence at all in support of his promissory estoppel claim.  His brief in opposition to summary judgment before the trial court similarly cited no evidence.  Because employee did not introduce evidence of any promise, much less one “of a specific and definite nature,” his claim for promissory estoppel fails.

Affirmed.

How cited

SCOVT affirms ruling that Vermont has personal jurisdiction over Meta for consumer protection claims brought by State .

State v. Meta Platforms, Inc., 2025 VT 51 [8/29/2025]

 CARROLL, J.   This interlocutory appeal requires us to evaluate the constitutionality of a Vermont court’s exercise of personal jurisdiction over nonresident defendants who allegedly violated the Vermont Consumer Protection Act (VCPA) through their design and operation of an online application.  We affirm. 

 

Broadly, the complaint alleges Meta intentionally designed Instagram to be addictive to teens, that Meta did so to increase advertisement revenue despite knowing the resulting negative effects on teens, and that Meta failed to take meaningful action to mitigate these harms while both actively minimizing and withholding its relevant internal research findings to maintain teens’ engagement with the application.  

Meta moved to dismiss the complaint for lack of personal jurisdiction under Vermont Rule of Civil Procedure 12(b)(2).  The court denied Meta’s motion on the ground that Vermont has specific jurisdiction over Meta for these claims. The court granted permission to appeal its ruling on personal jurisdiction, and we accepted the appeal of this issue.  See V.R.A.P. 5(b)(1), (6).  

 

On appeal, Meta maintains that Vermont lacks specific personal jurisdiction over Meta and that the State’s complaint must be dismissed.  Specifically, Meta argues that specific personal jurisdiction is lacking because Meta’s contacts with Vermont were not purposefully directed at Vermont, none of the misrepresentations were made in or aimed at Vermont, and that the State’s claims do not arise out of or relate to any of the alleged connections Meta has with Vermont.  

 

We first address whether, taking the facts in the State’s complaint as true and considering them in the light most favorable to the State, there is a basis to demonstrate that Meta has sufficient minimum contacts with Vermont.

Here, the State is not relying solely on Instagram’s accessibility in Vermont.  Rather, Meta has purposefully availed itself of the Vermont market, including studying Vermont teen users to increase engagement with the application and engaging with Vermont businesses to sell targeted advertising space to target Vermonters.  See Burger King Corp., 471 U.S. at 473 (“[A] forum legitimately may exercise personal jurisdiction over a nonresident who ‘purposefully directs’ [its] activities toward forum residents.”).

 

Having concluded that the complaint provides enough facts to demonstrate that Meta has sufficient minimum contacts with Vermont, we address whether the claims arise out of or relate to Meta’s connections to Vermont.

Here, the State’s claims are related to Meta’s Vermont contacts.  The State asserts that Meta has cultivated and purposefully availed itself of the Vermont market for social media and that the use of Meta’s product and subsequent misrepresentations about such use has caused injury to Vermonters.   Meta argues that the State’s claims are not related to its contacts with Vermont because the State is not claiming that viewing advertisements is causing Vermonters to be addicted to Instagram. However, the relatedness requirement does not demand such a strict causal showing. While there may not be a direct causal relationship between the advertisements and the State’s claim, the State is claiming that Meta designed Instagram in a way to increase Vermont user engagement.  Thus, there is a sufficient relationship between the State’s claims and Meta’s connections to Vermont

 

Having established that Meta has minimum contacts with Vermont and those contacts relate to this cause of action, “these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice.”  Atl. Richfield Co., 2016 VT 22, ¶ 27 Meta’s only argument that asserting jurisdiction over it in this case would be unreasonable is that it “would blur the distinction between general and specific jurisdiction, subjecting Meta to personal jurisdiction in every forum in the country.”   Surely, a company cannot avoid jurisdiction in one state just because it avails itself of another, or many others, in the same way.  The State has undoubtedly met its burden of demonstrating sufficient facts to support jurisdiction in this case.

 

In sum, the civil division did not err in concluding that the allegations in the State’s complaint support a prima facie case for specific jurisdiction over Meta in Vermont.  Accordingly, we affirm the court’s decision to deny Meta’s motion to dismiss for lack of personal jurisdiction.

 

Affirmed.  

SCOVT affirms Rule 12(b)(6)dismissal of fraud and negligent misrepresentation claims; as to fraud holding opinions and broken promises are not actionable and any misrepresentations of fact were not plead with the particularity required by Rule 9; as to negligent misrepresentation holding justifiable reliance was not adequately plead because no specific factual allegation supported the conclusory allegation that plaintiff took “reasonable steps to determine” the facts.

 Lynn v. Slang Worldwide, Inc. , 2025 VT 30 [June 13, 2025.]

EATON, J. Plaintiff Shayne Lynn appeals the trial court's dismissal of plaintiff's complaint for failure to state a claim. Plaintiff argues that his complaint, which alleges fraud and negligent misrepresentation by defendants, is sufficient to meet Vermont's pleading standards and that the trial court erred when it held otherwise. We affirm.

 

We will uphold a motion to dismiss for failure to state a claim only if it is beyond doubt that there exist no facts or circumstances that would entitle the plaintiff to relief.  However, the Court is not required to accept conclusory allegations or legal conclusions masquerading as factual conclusions.

 

Fraudulent-Inducement Claim

 

To maintain a claim for fraudulent inducement, the plaintiff must show "an intentional misrepresentation of existing fact, affecting the essence of the transaction," where "the misrepresentation was false when made and known to be false by the maker, was not open to the defrauded party's knowledge, and was relied on by the defrauded party to his damage." Statements of opinion cannot be fraud unless the misrepresentation of opinion is part of a scheme to defraud. Promises to act in the future cannot constitute the requisite misrepresentation of existing fact unless there is a present intention to act contrary to the promise.

 

Plaintiff alleges that Miller and Driessen misrepresented that Slang was "financially sound," had a "bright economic future," and that its finances were "in excellent shape"; promised Slang would invest $18 million in High Fidelity; and provided  documents to plaintiff that were "intentionally and materially misleading" and "did not reflect that the company was about to fail."

 

Miller and Driessen's opinions about Slang's financial outlook were not actionable misrepresentations of material fact sufficient to create a claim of fraudulent inducement.

 

Miller and Driessen's alleged promise to invest in High Fidelity cannot support a fraud claim, absent an express allegation of present intent to renegotiate on the promise. See V.R.C.P. 9(b) (requiring allegations of fraud to be stated with particularity)

 

The general assertion that that Plaintiff was provided with misleading data is not pled with particularity. Sutton v. Vt. Reg'l Ctr., 2019 VT 71A, ¶ 73, ("Rule 9(b) requires that plaintiffs identify the particular statements . . . that they claim were fraudulent.")

 

Plaintiff argues that  opinion and broken promises can be the basis of a fraud claim if part of a scheme to defraud, citing  Winey v. William E. Dailey, Inc.,  161 Vt. 129,  133,  and  Fayette v. Ford Motor Credit Co.,  129 Vt. 505, 510 (1971).

 

 In cases where an opinion or a promise was sufficient to support a fraud claim, there was also a material misrepresentation of existing facts or a present intent not to follow through on the promise. See, e.g., Harponola Co. v. Wilson,  96 Vt. 427, 433-34 (1923 (considering promise in combination with "the original fraud" of factually misrepresenting product's value); Proctor Trust Co. v. Upper Valley Press, Inc., 137 Vt. 346, 351,   (1979)(considering opinions "which [plaintiffs] knew were extremely likely to turn out to be false" combined with income projections based on highly unreliable data which "closely resemble misrepresentations of existing fact"); Fayette,129 Vt. at 510, (considering promise combined with steps taken by defendant indicating no intention of following through on promise). Without such allegations here, plaintiff fails to state a claim for a fraudulent scheme.

 

Plaintiff's complaint is insufficient as a matter of law to support a claim of a scheme to defraud. None of the statements alleged by plaintiff are fraudulent misrepresentations of material fact. They are puffery, trade talk, and an unspecified allegation of misleading data. Plaintiff cannot create a fraudulent scheme by combining an unsubstantiated promise with puffery and a general allegation of misleading financial data. Plaintiff has failed to allege fraudulent inducement.

 

Negligent-Misrepresentation Claim

 

Justifiable reliance is a key aspect of a claim of negligent misrepresentation, and any complaint must plead facts that support such reliance. In McGee v. Vermont Federal Bank, FSB, we held that the plaintiffs did not state a claim for negligent misrepresentation because they failed to adequately allege justifiable reliance. 169 Vt. 529, 531(1999) (mem.). Specifically, "[no]owhere in the [plaintiff's] pleadings do they indicate that they could not verify the information" provided to them. Id. Similarly, in Burgess v. Lamoille Hous. P'ship,  we held that the plaintiff failed to demonstrate justifiable reliance where the evidence showed that there was relevant information readily available that demonstrated the falsity of the information provided by the defendant. 2016 VT 31, ¶ 23.

 

Plaintiff argues that he has sufficiently pled justifiable reliance for the purposes of the notice pleading standards by alleging that "the financial data made available to him was intentionally materially misleading," that "he took reasonable steps to determine the financial status of [Slang]," and that had he "known the true financial status of [Slang], he would never have agreed to merge with it."  Plaintiff's allegations that the documents and information were "false," not "true," and "misleading," and that plaintiff acted "reasonably" to ascertain their veracity are mere restatements of the legal elements required for a claim of negligent misrepresentation. Without specific factual allegations to support these conclusory statements, they are insufficient to prevent dismissal of his claim.

 

Furthermore, justifiable reliance requires both that the plaintiff is unaware of the truth and that the truth is "not within the knowledge of" the plaintiff.  Burgess, 2016 VT 31, ¶ 22  We decline to infer the missing element—that he was unable to learn Slang's real financial situation—into plaintiff's complaint. Plaintiff therefore failed to state a claim for negligent misrepresentation.

Affirmed.

How cited

SCOVT NOTE: In the view of the drafters of the current Restatement, "justifiable" reliance is no longer an element of a claim of negligent misrepresentation. The Third Restatement replaces the requirement that the plaintiff's reliance be “justifiable” with statement that the conventional rules of comparative responsibility apply. See Reporter's Note, Restatement (Third) of Torts: Liability for Economic Harm § 5 (2020). 

As a matter of first impression SCOVT recognizes tort of intentional interference with expectation of inheritance, but a Divided Court holds the claims in this case of IIEI, constructive fraud and unjust enrichment involve trust administration within the exclusive jurisdiction of probate.

 Dewdney v. Duncan, 2025 VT 26 [5/23/2025]

COHEN, J.   Plaintiffs Berol and Cordelia Dewdney appeal the civil division’s decision granting summary judgment to defendant Ralph Duncan, IV on plaintiffs’ claims for intentional interference with expectation of inheritance (IIEI), breach of contract, promissory estoppel, unjust enrichment, and constructive fraud.  We affirm.

In October 2011, Anna created a revocable inter vivos trust to receive the royalty income from her books.  Anna designated plaintiffs and defendant as beneficiaries of the trust with 40% of the income assigned to each plaintiff and 20% assigned to defendant.  At the same time, defendant executed his last will and testament in which he designated plaintiffs as his sole heirs if Anna predeceased defendant. Thereafter, Anna amended the trust and changed the distribution of the trust income to 25% for each plaintiff and 50% to defendant.  Plaintiff’s complaint in the civil division sought the creation of a constructive trust entitling them to all distributions exceeding defendant’s original 20% share and restitution of any amounts previously distributed to defendant that exceeded 20%.

 

The trial court ruled that IIEI was a cognizable cause of action in Vermont but that plaintiffs were required to first seek a remedy in the probate division.  The court determined that plaintiffs failed to establish their remaining claims

 

 Intentional Interference with Expectation of Inheritance

 

The Third Restatement, states that a defendant is liable for IIEI when: (a) the plaintiff had a reasonable expectation of receiving an inheritance or gift;  (b) the defendant committed an intentional and independent legal wrong;  (c) the defendant’s purpose was to interfere with the plaintiff’s expectancy;  (d) the defendant’s conduct caused the expectancy to fail; and (e) the plaintiff suffered economic loss as a result. Restatement (Third) of Torts: Liab. for Econ. Harm § 19(1) (2020).  The Third Restatement, however, also provides that an IIEI claim “is not available to a plaintiff who had the right to seek a remedy for the same claim in a probate court,”  Id. § 19(2) (the probate exhaustion rule.)

 

While we have not previously recognized the tort of IIEI, we conclude that the Third Restatement definition of IIEI, with its probate exhaustion requirement, is the appropriate definition to adopt.

 

Plaintiffs argue that the Third Restatement and cases from other jurisdictions distinguish between wills and inter vivos trusts for purposes of the probate-exhaustion rule.

 

Under Vermont law, the probate division is vested with exclusive jurisdiction over claims brought by a trustee or beneficiary concerning trust administration.  14A V.S.A. § 203(a)(“ The Probate Division of the Superior Court has exclusive jurisdiction of proceedings in this State brought by a trustee or beneficiary concerning the administration of a trust”); 4 V.S.A. § 35 (“The Probate Division shall have jurisdiction of . . .(3) the administration of trusts pursuant to Title 14A”)

 

Other jurisdictions do not have statutory mandates vesting the probate division with exclusive jurisdiction over the administration of trusts as we do in Vermont. Accordingly, we hold that an IIEI claim is not available to a plaintiff who had the right to seek a remedy for the same claim in probate court.

 

Plaintiffs argue that they did not have the right to make their claim in the probate division because their claim does not concern the administration of the trust, but instead seeks a remedy for defendant’s undue influence, duress, and fraud in inducing Anna to amend the trust. In Collins v. Collins. 2017 VT 70, we held that the was the probate division was the proper forum for challenging the settlor’s capacity to make a trust Challenging the settlor’s ability to change the beneficiary necessarily implicates the administration of the trust because the trustee must know to whom to administer the trust property.  Collins, 2017 VT 70, ¶ 15. Similarly, plaintiffs challenge whether Anna was unduly or fraudulently influenced to change the trust distributions between beneficiaries involves the administration of the trust and therefore falls within the exclusive jurisdiction of the probate division.

 

Plaintiffs were barred from bringing their IIEI claim in the civil division because they did not first pursue it in the probate division.  We therefore affirm the court’s decision to grant summary judgment for defendant on this claim.

 

 Unjust Enrichment

 

We conclude that plaintiffs were required to bring their unjust enrichment claim in the probate division. 

 

To succeed on a claim for unjust enrichment, a plaintiff must prove three things: "(1) a benefit was conferred on defendant; (2) defendant accepted the benefit; and (3) defendant retained the benefit under such circumstances that it would be inequitable for defendant not to compensate plaintiff for its value." Beldock v. VWSD, LLC, 2023 VT 35, ¶ 68. A recipient of a donative transfer may be liable to a claimant for unjust enrichment if the recipient diverted the donative transfer by fraud, duress, or undue influence; this includes a transfer through an inter vivos trust. See Restatement (Third) of Restitution and Unjust Enrichment § 46 (2011)

Plaintiffs asserted their claim for unjust enrichment under the theory that defendant induced Anna to amend the trust and increase his share of trust distributions through fraud and undue influence, thus reducing their expected shares and making it inequitable for defendant not to compensate them.

 

Like plaintiffs’ IIEI claim, this claim challenges the administration of the trust because plaintiffs, the trust’s beneficiaries, seek to challenge the amended distribution of the trust property, and the distribution of the trust is a main function of trust administration.  Therefore, plaintiffs were required to bring their claim in the probate division.  14A V.S.A. § 203(a); Collins, 2017 VT 70, ¶ 15.  Our holding should not be interpreted to mean that claims of unjust enrichment relating to trusts will always be under probate jurisdiction.  Here, however, plaintiffs’ underlying allegations of fraud and undue influence over the amendment to the trust distributions fall within the probate’s exclusive jurisdiction over administration of trusts

 

 Constructive Fraud

 

Similarly. Plaintiffs’ constructive fraud claim implicates the administration of the trust, which the Legislature has placed in the exclusive jurisdiction of the probate division.  Our holding should not be interpreted to mean that claims of unjust enrichment relating to trusts will always be under probate jurisdiction.  Here, the underlying allegations of fraud and undue influence over the amendment to the trust distributions fall within the probate’s exclusive jurisdiction over administration of trusts.   

 

 Plaintiffs’ argument that they should be allowed to amend their complaint to plead actual fraud based on these same facts is moot because plaintiffs were required to seek a remedy in the probate division in the first instance for this type of challenge.   

 

Promissory Estoppel

 

  A plaintiff must show the following for a promissory estoppel claim: “(1) defendant made a promise to [the promisee] that defendant should have reasonably expected to induce action or forbearance; (2) [the promisee] relied on the promise to [the promisee’s] detriment; and (3) injustice can be avoided only by enforcement of the promise.”  Pettersen v. MonaghanSafar Ducham PLLC, 2021 VT 16, ¶ 11. Implicit to a promissory estoppel claim is a showing that the defendant breached a promise.  See Dillon v. Champion Jogbra, Inc., 175 Vt. 1, 9 (2002).

 

Here, a reasonable jury could conclude from the evidence that defendant made a promise to Anna to make plaintiffs his sole heirs. However, defendant did not break this promise because defendant has not positively and unequivocally revoked his promise, nor has he removed plaintiffs from his will.  Accordingly, plaintiffs cannot show detrimental reliance, because Anna was not harmed by any breach of the promise.  We therefore affirm the court’s decision to grant defendant summary judgment on this claim.

 

 

WAPLES, J., dissenting.   I agree with the majority that Vermont should recognize claims for intentional interference with an expectation of inheritance (IIEI) and adopt the definition of such claims from the Restatement (Third) of Torts: Liability for Economic Harm § 19 (2020).  I disagree, however, that defendant was entitled to summary judgment on this claim.  The undisputed facts do not establish that plaintiffs “had the right to seek a remedy for the same claim in a probate court.”  Id. § 19(2).  I would reverse the trial court’s decision on the IIEI claim and remand for additional proceedings.  I therefore respectfully dissent. 

 

 I do not find Collins persuasive on the question of whether plaintiffs’ claim here “implicates the administration of the trust.” The Restatement’s explicitly recognizes that a probate court “is unable to provide a remedy for wrongful conduct in relation to a nonprobate transfer, such as a transfer by inter vivos trust.”  Id. § 19 cmt. c.    In a similar vein, the UTC’s reference to the probate division’s “exclusive jurisdiction of proceedings . . . brought by a trustee or beneficiary concerning the administration of a trust” in 14A V.S.A. § 203(a) should not be read to conflict with the UTC’s express direction that “[a]n action against a beneficiary or other person for intentional interference with an inheritance or gift” is not a trust contest.  Id. § 604, official cmt. 

 

It is not clear from the undisputed facts that plaintiffs’ “challenge to the trust amendment implicates the administration of the trust,”  as opposed to falling into the category of “other proceedings involving a trust” for which the probate court “has concurrent jurisdiction with other courts of this State,” 14A V.S.A. § 203(b).  As plaintiffs explain, they are not seeking to hold a trustee liable for misconduct or mishandling of trust assets in their capacity as a trustee.

 

I believe we should draw a distinction between trusts and wills for purposes of determining the viability of an IIEI claim.  I would reverse the trial court’s summary judgment decision in defendant’s favor and I therefore respectfully dissent.  

How cited