Limitation of liability; liquidated damages; exculpatory clause; arbitration. Divided court rejects as unconscionable a limitation of liability clause and an arbitration clause in home inspection contract.

  Glassford v. BrickKicker and GDM Home Services, Inc. (2009-362) (04-Nov-2011) 2011 VT 118 (Skoglund, J ) (Dooley, J., concurring and dissenting.) (Burgess, J., joined by Chief Justice Reiber, concurring and dissenting).

Plaintiffs, who brought suit to obtain compensation for an allegedly negligent home inspection, appeal the superior court’s order granting summary judgment in favor of the home inspector based on the terms of a binding arbitration agreement in the parties’ contract.  At issue is whether the superior court erred in rejecting plaintiffs’ contention that the terms of the home inspection contract are unconscionable under the common law.  The  contract limited defendant’s liability to no more than the $285 charged for its inspection.  Yet homebuyer would have to pay, at minimum, a $1350 arbitration fee to recover no more than the $285 inspection fee. We find unconscionable the contractual provisions limiting liability to the cost of the inspection and yet requiring arbitration that would necessarily cost more than the amount of the liability limit.  Because the limited liability and arbitration provisions are interconnected in creating the substantively unconscionable illusory remedy, we strike both of them, notwithstanding the contract’s boilerplate severability clause.   Accordingly, we reverse the superior court’s decision and remand the matter for further proceedings consistent with this opinion.

The limitation of liability clause in this case fails to meet any of the elements of the test for a valid liquidated damages provision.  It also fails the Dalury  public policy test under which an exculpatory agreement is invalid if it exhibits some or all of the following characteristics:

[1.] It concerns a business of a type generally thought suitable for public regulation. [2.] The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public. [3.] The party holds [it]self out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. [4.] As a result of the essential nature of the service, in the economic setting of the  transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks [the party's] services. [5.] In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence. [6.] Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or [the seller's] agents

Dalury, (quoting Justice Tobriner of the California Supreme Court in Tunkl. )

Dooley, J., concurring and dissenting, agrees with the majority’s decision to strike the limited-liability provision. Because it fails the Dalury standard for an exculpatory clause and is not a valid liquidated damages proviso, it is unconscionable as a matter of law.   However Justice Dooley would remand for the superior court to reconsider whether the arbitration requirement is unconscionable in light of the decision regarding the limitation of liability. In general, if a contract or a term within a contract is unconscionable, a court can choose either to refuse to enforce the contract, or it may choose to enforce the remainder of the contract with the unconscionable term excised so as to avoid any unconscionable result.  Restatement (Second) of Contracts § 208 (1981).

Burgess, J., joined by Chief Justice Reiber, concurring and dissenting, agree with the majority’s decision to strike the arbitration provision as one-sided and “so ridiculously unfair that it defies reformation.”  However they disagree that Dalury applies and conclude there is no unconscionability per se in the limitation of liability.

Denial of Rule 59(e) motion to amend judgment reversed. Rule 59 is available to reconsider and correct manifest, intrinsic error of law, whether or not expressed for the first time in the Rule 59(e) motion.

In re SPLand Co., LLC,  2011 VT 104 (Johnson, J.) (Reiber, C.J., dissenting.)


This appeal arises out of a dispute over an administrative amendment to the master development plan for Killington Resort Village. An adjoining property owner appeals the Environmental Court’s denial of its motion to alter and amend a grant of summary judgment in favor of applicants. Adjoiner argues that the Environmental Court erred because as a matter of law administrative amendments under Rule 34(D) require an underlying Act 250 land use permit. We agree and therefore reverse the denial of the motion to reconsider.


Applicant argues that Rule 59 does not permit reconsideration of the summary judgment ruling, especially on issues raised for the first time. The goal of Rule 59(e) is to “make clear that the [trial] court possesses the power to rectify its own mistakes in the period immediately following the entry of judgment.” Whether or not the Rule 34 issue was expressed for the first time in the Rule 59(e) motion, it was a question of law intrinsic to the Environmental Court’s summary judgment ruling and therefore well within the court’s discretion to reconsider on Rule 59(e) motion.


Rule 59(e) “gives the court broad power to alter or amend a judgment.” Reporter’s Notes, V.R.C.P. 59. We have stated that Rule 59(e), is “invoked ‘to support reconsideration of matters properly encompassed in a decision on the merits.’ ” Under this rule, “the court may reconsider issues previously before it, and generally may examine the correctness of the judgment itself.” Rule 59(e) “codified the trial court’s inherent power to open and correct, modify, or vacate its judgments.” See 11 C. Wright et al., Federal Practice and Procedure § 2810.1, at 124-25 (2d ed. 1995) (describing correction of manifest error of law upon which judgment is based as one of four basic grounds upon which Federal Rule of Civil Procedure 59(e) motion may be granted).


The trial court enjoys considerable discretion in deciding whether to grant such a motion to amend or alter. 11 Wright, supra, §2810.1, at 124. Indeed, we have held that the court’s power on a Rule 59(e) motion even extends to issues not raised in the motion. Once a Rule 59(e) motion is filed, the trial court has the power to make an appropriate modification or amendment, including issues not raised in the Rule 59(e) motion. This approach srikes “an appropriate balance between reconsideration and finality.”


Here, the Environmental Court was asked to reconsider an issue of legal interpretation “properly encompassed in a decision on the merits,” which in no way offended the interests of finality. The issue of whether a Rule 34(D) administrative amendment may be used to authorize a fifteen-lot subdivision absent positive findings on all Act 250 criteria is at the core of this case. It was thus well within the Environmental Court’s discretion to fully reconsider this question of law on the merits upon Rule 59(e) motion.


Because the Environmental Court fully considered on the merits the applicability of Rule 34(D), neither our preservation rule nor Rule 59(e) prevents us from considering it here.


Reiber, C.J., dissents because the issue the majority decides was not raised below in a timely and proper manner and therefore should not be reviewable on appeal. The question it addresses—whether an administrative amendment under Rule 34 requires an underlying Act 250 permit—was not raised with the trial court before the entry of judgment but only later in a Rule 59(e) motion to alter or amend.


As the majority acknowledges, it is well settled that a "Rule 59(e) motion may not be used . . . to raise arguments . . . that could have been raised prior to the entry of judgment."  Rule 59(e) "does not provide a vehicle for a party to undo its own procedural failures, and it certainly does not allow a party to introduce new evidence or advance arguments that could and should have been presented to the [trial] court prior to the judgment." Adjoiner plainly waived the issue the majority decides by failing to raise it either explicitly or implicitly throughout the lengthy litigation process that preceded the trial court's entry of judgment. Accordingly, on this basis I would affirm the judgment.

Stare decisis. Burden of proof: “clear and convincing” standard applies to termination of parental rights, therefore finding of sexual abuse by a preponderance of the evidence was insufficient to support family division order prohibiting parental contact.

DeSantis v. Pegues, 2011 VT 114 (Skoglund, J.) (Johnson, J., joined by Justice Dooley concurring) (Crawford, Supr. J., Specially Assigned, dissenting.)


Father appeals the family court’s denial of his motion to reinstate parent-child contact following a voluntary suspension of such contact due to an allegation of child sexual abuse. We hold that the court’s finding of sexual abuse by a preponderance of the evidence was insufficient to support an order effectively terminating father’s parental rights. We reverse and remand.


The case at the heart of this argument is Mullin v. Phelps, 162 Vt. 250, 647 A.2d 714 (1994). There, the mother moved to gain custody of the parties’ two sons after the father was accused of abusing the boys. The family court transferred custody, which had been with the father for the previous six years, upon a finding of sexual abuse by a preponderance of the evidence, and the court conditioned father’s visitation upon his acknowledgement of the sexual abuse. We affirmed the court’s finding of abuse and the resulting transfer of custody, but we reversed the court’s visitation order because it “effectively terminated the father’s parental rights.” In so doing, we adopted the standard that, as a matter of due process, a court must find evidence of sexual abuse by clear and convincing evidence in order to terminate all contact between a parent and child. 


Here the family court  expressly concluded that the evidence presented did not reach the clear and convincing standard required to terminate father’s parental rights.  The dissent’s belief that Mullin v. Phelps should be overruled was not raised, briefed, or argued by any party.  We do not address this issue.


Johnson, J., joined by Justice Dooley, writes separately to stress that the case is governed by the doctrine of stare decisis. Recognizing with Justice Cardozo , that “when a rule, after it has been duly tested by experience, has been found to be inconsistent with the sense of justice or the social welfare, there should be less hesitation in frank avowal and full abandonment,” Justice Johnson concludes this case presents precisely the opposite scenario. Mere disagreement with how a case was decided—particular one of relatively recent vintage—is not a sufficient basis to deviate from a policy essential to certainty, stability, and predictability in the law. The dissenting judge may consider Mullin v. Phelps, to have been decided “in error,” but to advocate its reversal solely because he remains unpersuaded by its reasoning is to invite an endless cycle of decision and reversal should the next Court consider the abandonment of Mullin to have been “in error,” and the Court after that to conclude otherwise. The folly of such an approach is self-evident. Nothing has appeared over the last seventeen years indicating even remotely that Mullin has undermined the public welfare, wrought individual injustice, or impeded the administration of justice. Indeed, not one cogent reason has been produced to abandon a precedent grounded in fundamental due process and the compelling state interest in preserving the relational interests between parents and children.


Crawford, Supr. J., Specially Assigned, dissents from the application of a clear-and-convincing-evidence standard to decisions about parent-child contact in divorce and parentage cases. A higher standard of proof is constitutionally mandated in cases in which the state seeks to deprive an individual of a liberty interest so that the possibility of error is borne more heavily by the state. In disputes over custody and visitation between individuals, however, the higher burden simply shifts the possibility of error from one parent to another. Because the private interests are equally balanced, there is no compelling reason that one individual should more heavily bear the burden of error. It is time to reconsider the wisdom of the Mullin v. Phelps decision. It arose out of a factual context in which the claims of abuse were highly suspect. The constitutional principle has not found support in the decisions of other states. And, most compellingly, in cases in which a child’s word is offered against an adult’s, it can result in rulings which favor contact with a probable abuser over safety for children.

Ex parte Internet search by Judge prohibited.

Rutanhira v. Rutanhira, 2011 VT 113 (Skoglund, J.)


Father appeals an order awarding mother primary legal rights and responsibilities for the parties’ daughter based on the court’s conclusion that father exercised poor judgment in desiring to take his daughter to his birth country, Zimbabwe. The trip, planned for the summer of 2010, coincided with the World Cup in South Africa. Mother objected. She viewed the trip to Zimbabwe as far too dangerous for daughter. Though father wanted daughter to know her heritage, he ultimately acquiesced to mother’s wishes. Nevertheless, this was the issue upon which the family court based its award of legal custody to mother. The court reasoned that “[t]aking the child to an unstable place . . . would not be a wise idea” On appeal, father contends that the trial court abused its discretion by considering evidence outside of the proceeding, specifically a post-hearing internet search about Zimbabwe. We agree that the trial court erred in relying on evidence gathered outside the proceeding, which father did not have an opportunity to contest, and we reverse and remand for the family court to rehear this matter.


There are two concerns about judicial Internet searches. Reliability and permanence of information are constant concerns with Internet-based resources. See D. Tennant & L. Seal, Judicial Ethics & the Internet: May Judges Search the Internet in Evaluating & Deciding a Case?, 16 Prof. Law. 2, 14-16 (2005). In its decision, the court referred to a “sampling” of information the court had viewed on the Internet. This was not necessarily a source Father relied upon in 2009 when making his decision. We cannot determine whether the “sampling” of information the court obtained from these sites was exhaustive or selective. It is impossible for us to review the record given the dynamic nature of information on the Internet and the necessarily time-bound query that produced such articles. The articles examined by the court, as far as we know, spanned several years and are from sources whose record for accuracy is unknown.


Second, is the lack of notice and opportunity to be heard. A court cannot undertake an Internet search after the submission of a case on an issue material to that case and rely on information or evidence not properly introduced. In doing so, a court denies parties the opportunity to address the information and confront potentially harmful evidence. Even in the context of judicial notice, our Rules of Evidence demand that the parties receive “an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed.” V.R.E. 201(e). Other appellate courts have reached a similar conclusion when reviewing a trial court’s reliance on Internet searches undertaken after the close of the hearing. Here, the trial court conducted its own investigation, using this further investigation to determine the outcome of the case. Neither party could reasonably expect such additional fact-finding. Neither had an opportunity to test any of the evidence acquired through this investigation. It was error for the court to rely on this evidence.

Insurance. Denial of UIM claim affirmed because policy delivered out-of-state. Phrase “with respect to” is a conjunction.

 McGoff v. Acadia Insurance Co., 2011 VT 102 (mem.)

Plaintiffs appeal an order  granting defendant Acadia  summary judgment with respect to plaintiffs’ underinsured motorists (UIM) claim arising from an automobile accident in which Thomas McGoff was injured. Plaintiffs argue that the court erred in ruling that Vermont’s UIM requirements do not apply to the instant policy on grounds that the policy was not delivered or issued for delivery in Vermont. We affirm.

In relevant part, § 941(a) provides that no motor vehicle policy “may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless” UM/UIM coverage is provided for the protection of the insureds. The policy was issued and delivered to Sandri, a Massachusetts company with its principal place of business in Massachusetts, by a Massachusetts agent, for vehicles—including the Plymouth supplied to McGoff—registered in Massachusetts. In short, given § 941(a)’s plain language, the statute does not apply to the subject policy.

Plaintiffs appear to argue that because the Plymouth was garaged in Vermont rather than in Massachusetts, as indicated in the Acadia policy, and thus should have been registered in Vermont rather than Massachusetts, § 941’s UIM requirements should apply, including § 941(c), which requires that UM/UIM coverage in a policy be provided in the same amount as the liability coverage “unless the policyholder otherwise directs.” This position is contrary to the plain language of § 941(a) as well as the nearly unanimous relevant case law, and therefore we decline to adopt it under the present circumstances.

The salient language in § 941(a) limits application of the statute to policies “delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state.” (Emphasis added.) The two key phrases connected by the term “with respect to” are conjunctive rather than disjunctive, thereby requiring both elements to be satisfied for the statute to apply. Whether the issue is framed as one of statutory construction or choice-of-law, the courts construing statutes similar to § 941(a) are nearly unanimous in concluding that insurance policies such as the instant Acadia policy are not subject to that state’s statutory UM/UIM coverage requirements unless the policy was delivered or issued for delivery in that state, even if the subject vehicle was regularly garaged in that state.

Attorney’s fees. Indemnity agreement did not require award of fees incurred to enforce the indemnity clause. Case analogous to denial of fees for suits that establish insurance coverage.

Southwick v. City of Rutland, (II), 2011 VT 105 (Skoglund, J. )


After we held an indemnity clause applies to claims based on the City’s own negligence, Southwick v. City of Rutland, 2011 VT 53, the City filed a motion for attorney’s fees covering all legal expenses associated not only with its defense in the underlying Southwick action, but also for all expenses incurred through the litigation of the indemnity and third-party actions. The trial court entered judgment in favor of the City, awarding the entirety of its requested attorney’s fees. Because the plain language of the contract does not require VSA to pay attorney’s fees incurred by the City in pursuing either indemnity from VSA or other third-party actions, we reverse and remand.


The Agreement’s indemnity clause reads:


"Indemnification and Hold Harmless: [VSA] hereby agrees to defend, indemnify and hold harmless Rutland, . . . its officers, trustees, agents and employees from all claims for bodily injury or property damage arising from or out of the presence of [VSA], including its employees, agents, representatives, guests and others present because of the event or [VSA’s] activities in or about Whites Park, including the entrances, lobbies and exits thereof, the sidewalks, streets and approaches adjoining the campus or any portion of the campus used by [VSA] or any of the above stated. [VSA] shall be responsible for all costs of defense, including reasonable attorney’s fees, and shall pay all fines or recoveries against Rutland."


The costs contemplated in the Agreement do not include the City’s claim to enforce the indemnity clause against VSA, or its claims against P&C and Nautilus. Contrary to the trial court’s conclusion, the indemnification clause is not all encompassing: it limits VSA’s obligation to those costs associated with the City’s defense against claims for bodily injury or property damage. Therefore, there is no contractual basis for departing from the American Rule and awarding attorney’s fees for time expended on work other than for defense in the Southwick action. See Windsor Sch. Dist. v. State, 2008 VT 27, ¶ 28, 183 Vt. 452, 956 A.2d 528 (“An insured is not entitled to recover attorney’s fees incurred in a declaratory-relief action to establish the insurer’s duty to defend or indemnify.”); see also Concord Gen. Mut. Ins. Co. v. Woods, 2003 VT 33, ¶ 18, 175 Vt. 212, 824 A.2d 572 (denying insured attorney’s fees incurred in defense of insurer’s declaratory action).


The Southwicks’ action and the City’s third-party claims might have been set in motion by the same event, they are not based on a “common core of facts” within the rule of L’Esperance v.Benware, where plaintiffs’ lawsuit was not one “which can be viewed as a series of discrete claims so that the hours expended can be divided on a claim by claim basis.” 2003 VT 43, ¶ 24, 175 Vt. 292, 830 A.2d 675. Nor is there an equitable basis for awarding the City attorney’s fees related to its third-party actions under the urle of In re Gadhue, where we upheld an award of attorney’s fees on the basis of bad faith. 149 Vt. 322, 328-29, 544 A.2d 1151, 1154-55 (1987).

Older friend did not have duty to prevent / did not cause 15-year-old’s suicide.

Lenoci v. Leonard, 2011 VT 47 (mem.)

This case asks the Court to decide if an eighteen-year-old has a duty to control the behavior of a fifteen-year-old friend and, if the fifteen-year-old later commits suicide, whether the eighteen-year-old is at fault.  Plaintiff contends the trial court erred in finding Kayla did not owe Alex a duty. She suggests such a duty arose when Kayla, an eighteen year old, brought Alex, a minor, to a party with alcohol and adults present and recognized, or should have recognized, the "unreasonable risk of sexual assault" Alex faced. Plaintiff further argues that there was ample evidence supporting her theory that Kayla's negligence caused Alex's death and emotional distress and summary judgment was therefore premature. We affirm the trial court's grant of summary judgment to defendant and conclude she had no duty to intervene to prevent the tragedy that occurred. We additionally address the trial court's holding that Alex's suicide broke any causal connection to Kayla's actions.

Foreseeability of the risk is often a primary consideration on the issue of duty. We have recognized that "[a]ctionable negligence is made out only when it appears that a prudent person, in like circumstances, would have thought that injury would be likely to result" from the acts or omissions in question.To argue that Kayla could or should have anticipated Alex would suffer emotional distress as a result of the intercourse requires too much speculation and does not satisfy the need that the claimed injury be reasonably foreseeable.

Plaintiff essentially advocates that we find a duty simply because one girl was eighteen and the other was fifteen. The law does not impose such a duty in this situation—a duty for an eighteen-year-old to protect a high school friend who has not reached the age of majority from the consequences of the younger person's independent behavior.  There is no evidence that Kayla ever agreed to supervise and care for Alex or that the parents of Alex ever relinquished or sought to relinquish supervision of Alex to Kayla. As the trial court noted, "This was a case of two high school friends sneaking out together, unbeknown to either of their parents; not a situation where an adult agrees to care for another's child. Kayla did not become Alex's keeper simply because Kayla was 18 years old and Alex was not." We affirm the trial court's decision on this issue.

The trial court, however, noted that the wrongful death claim required further analysis because "a separate duty exists as to suicide." We address this issue to provide guidance to the trial bench in the future and to affirm the trial court's reasoning in this case.   

Generally speaking, voluntary suicide is viewed as an independent intervening act that breaks the causal chain and severs potential liability. However, the causal chain is not broken when an injured person becomes insane, even temporarily, and that insanity prevents one from realizing the nature of one's act or controlling one's conduct. Here, there was no evidence of an uncontrollable impulse on Alex's part to commit suicide.

A number of jurisdictions have recognized an additional exception to the general rule limiting liability in the event of a suicide, holding that liability exists because the defendant had a duty to prevent the suicide arising from the defendant's special relationship with the suicidal individual. This exception does not apply here. As we have found, the relationship between Alex and Kayla did not give rise to any "special relationship" that would impose a duty of care on Kayla.
There was substantial evidence that Alex had been expressing suicidal ideation for some time, long before she had sex at the apartment, and there was no evidence Kayla knew Alex was suicidal. Alex, for her own reasons, chose to end her life. Nothing Kayla did or did not do played a part in that decision.
Affirmed.

Torts. Epidemiological evidence insufficient to show specific causation.

Blanchard v. Goodyear Tire & Rubber Co., 2011 VT 85 (mem. )

Plaintiff Paul Blanchard appeals the superior court’s order granting summary judgment to defendants with respect to his toxic tort personal injury action.  We affirm.

Plaintiff cannot survive Goodyear’s motion for summary judgment on his toxic tort claim unless he is able to point to evidence suggesting a probability, rather than a mere possibility, that (1) he was exposed to the specified chemical at a level that could have caused his physical condition (general causation); and (2) the exposure to that chemical did in fact result in the condition (specific causation).

Plaintiff proffered evidence indicating that, as a teenager some thirty-five years earlier, he frequently played on a field adjoining the Goodyear plant.  A gully that ran across the field may have contained water contaminated by petroleum products containing benzene.  Benzene has been associated with non-Hodgkins lymphoma, a general category of cancer under which plaintiff’s subtype falls.  Plaintiff’s lymphoma was not caused by an immunodeficiency disorder, a known cause of that type of lymphoma.       

Assuming that we accept all of this evidence as true, it falls well short of what plaintiff would be required to show in order to prevail in a jury trial. As we recently explained in Estate of George v. Vermont League of Cities and Towns, epidemiological studies assess the existence and strength of associations between a suspected agent and a disease or condition and thus focus on general causation—whether the agent is capable of causing the disease—rather than specific causation—whether the agent actually caused the disease or condition in a particular individual. 2010 VT 1, ¶ 18.  Proof of an association between occupational exposure to benzene and non-Hodgen’s lymphomas is insufficient to support a jury finding of specific causation. The vast majority of cases concerning his type of lymphoma are of unknown origin. Therefore evidence excluding one known cause of plaintiff’s lymphoma does not permit a  jury to find more-probable-than-not specific causation. 


In the end, plaintiff’s suspicion that his cancer was caused by exposure to benzene on the Goodyear ballfield when he was a teenager is purely speculative.

Foreclosure complaint dismissed for lack of standing.

U.S. Bank National Association v. Kimball, 2011 VT 81 (Burgess, J.)

Plaintiff US Bank  appeals from a trial court order granting summary judgment for defendant homeowner and dismissing with prejudice US Bank’s foreclosure complaint for lack of standing.  The court concluded that to enforce a mortgage note, “a plaintiff must show that it was the holder of the note at the time the Complaint was filed,” and here there was “simply no evidence of an assignment to a party in interest.”  Because neither note submitted by US Bank was dated, the court concluded that there was no evidence that the note was endorsed to US Bank before the complaint was filed.  Therefore, the court held that US Bank lacked standing to bring the foreclosure action. On appeal, US Bank argues that it had standing to prosecute the foreclosure claim and the court’s dismissal with prejudice was in error.  Homeowner cross-appeals, arguing that the court erred in not addressing her claim for attorney’s fees.  We affirm the dismissal and remand for consideration of homeowner’s motion for attorney’s fees. The foreclosure complaint is dismissed and the case is remanded for consideration of defendant’s motion for attorney’s fees.

 It is neither irrational nor wasteful to expect a foreclosing party to actually be in possession of its claimed interest in the note, and have the proper supporting documentation in hand when filing suit.  Nevertheless, and despite the court’s invocation of “with prejudice” in its dismissal order, US Bank cannot be precluded from pursuing foreclosure on the merits should it be prepared to prove the necessary elements.   The court’s dismissal on just jurisdictional grounds was not adjudication on the merits.  See V.R.C.P. 41(b)(3).

To foreclose a mortgage, a plaintiff must demonstrate that it has a right to enforce the note, and without such ownership, the plaintiff lacks standing.   While a plaintiff in a foreclosure should also have assignment of the mortgage, it is the note that is important because “[w]here a promissory note is secured by a mortgage, the mortgage is an incident to the note.”  Under the  UCC the Bank had the burden of demonstrating that it was a “ ‘[p]erson entitled to enforce’ ” the note, by showing it was “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument.”  9A V.S.A. § 3-301.  On appeal, US Bank asserts that it is entitled to enforce the note under the first category—as a holder of the instrument.

To be a holder, US Bank was required to show that at the time the complaint was filed it possessed the original note either made payable to bearer with a blank endorsement or made payable to order with an endorsement specifically to US Bank.  US Bank lacked standing because it has failed to demonstrate either requirement.  Initially, US Bank’s suit was based solely on an assignment of the mortgage by MERS.  The complaint did not allege that US Bank held the original note. While US Bank eventually produced the original note with an endorsement to it, none of the evidence submitted at summary judgment by US Bank established the timing of the endorsement. Fraught with contradictions and evidently lacking information based on personal knowledge, the affidavit was insufficient to establish that US Bank had an interest in the note prior to the time the complaint was filed. Based on this contradictory and uncertain documentation, the trial court did not err in concluding that there was no evidence to show that US Bank was a holder of the note at the time it filed the complaint.  

Adverse possession must be continuous.

   In re Estates of Allen, 2011 VT 95 (Dooley, J.)

Plaintiff  appeals a superior court judgment, arguing  the court misstated the elements of proof for adverse possession and misapplied the law. We affirm.

Plaintiff’s main merits  argument appears to be that the court erred in requiring the fifteen years to be consecutive.  Thus, he argues that he showed adverse possession for the years 1964 to 1972 and again for the period from 1985 to 1992, and these periods should be added to reach the fifteen years.  We have often stated that the claimant must possess the property continuously over the fifteen-year period.  This is the same as saying the years must be consecutive.  Plaintiff cannot add two different periods, separated by many years, to establish the fifteen years of adverse possession.We hold that the superior court acted correctly in determining that plaintiff had no interest in the mineral rights.

 Affirmed.

Probate appeal. Statement of questions does not limit superior court. Summary judgment is always provisional until final judgment is entered.

In re Estates of Allen, 2011 VT 95 (Dooley, J.)

This case originates from a quiet-title action in probate court by defendant Richard Rupe and his father laying claim to certain mineral rights by way of adverse possession.  Defendant and his father appealed the probate decision to the superior court, which, after first granting summary judgment in favor of plaintiff on certain issues, ultimately dismissed plaintiff’s claim to the mineral rights and awarded all rights, title, and interest to defendant. Plaintiff now appeals this superior court judgment, arguing  the court exceeded its authority by considering more than the issues raised in the statement of questions submitted on appeal from the probate court and resolved by summary judgment.  We affirm. 

 Plaintiff’s main argument on appeal is that, under Rule 72, the superior court had no authority to require plaintiff’s to prove an interest in the mineral rights by adverse possession because the court granted summary judgment for plaintiff on defendant’s four questions. The summary judgment decision was an interlocutory order.  If plaintiff believed that the summary judgment meant that he had prevailed fully on the merits, he should have sought entry of judgment under Vermont Rule of Civil Procedure 58.  See Powers v. Hayes, 170 Vt. 639, 640, 751 A.2d 781, 782 (2000) (mem.) (stating that summary judgment is not entry of judgment as required for a final judgment).  As it was the summary judgment did not preven the trial court from requiring him to prove his adverse possession claim.

A case such as this is a hybrid of an appeal from the probate court and a de novo proceeding that is conducted as if the probate court proceeding never occurred.  The statement of questions required by Rule 72(c) has a limited function.  Recently, we have held that while a list of certified questions is mandatory, it only “serves to focus, but cannot limit, the issues for the court.”  In re Estate of Doran, 2010 VT 13, ¶ 14, 187 Vt. 349, 993 A.2d 436.

We hold that the superior court acted correctly in determining that plaintiff had no interest in the mineral rights.

Affirmed.

Restrictive covenants: Who can enforce?

Tibbetts v. Michaelides, 2011 VT 52 (mem.)

In this dispute between neighboring landowners, defendants appeal from a superior court order rejecting their claim that plaintiffs violated a deed restriction limiting the number of houses to be constructed on the property. We affirm. The restricted lots were not benefited by the covenant.

The essential question presented, as the trial court recognized, is which estate the parties to the Lowell-to-Trono deed intended to benefit from the five-house restriction. It is axiomatic that “[t]he intent of the parties determines which estates or servitude interests are burdened or benefited by a servitude” and that such intent may be either express or “inferred from the circumstances.” Restatement (Third) Prop.: Servitudes § 2.5 cmt. a (2000); see Madkour v. Zoltak, 2007 VT 14, ¶14, 181 Vt. 347, 924 A.2d 11 (“To determine which property is burdened by the restrictive covenant. . . we must look to the language of the deed itself and consider [the grantor’s] intent in the context within which she conveyed the property.”).

Construing the deed as a whole and the circumstances of its making, the trial court here concluded that the restriction was intended solely to benefit the land retained by Lowell, so that defendants had no standing to enforce it. We agree. Although the deed does not expressly identify the restriction’s intended beneficiary, there was no dispute that, as the trial court found, Lowell retained substantial property “surrounding the five-acre parcel.” As the court further observed, a basic interpretive rule is that—absent evidence of an intent to the contrary—a restriction relating to the use of a portion of land sold by a grantor is generally presumed to be intended for the benefit of the land that the grantor has retained.

We find no basis to disturb the judgment that neighbors were not benefitted by the restriction, and therefore lacked standing to enforce it.

Workers’ compensation. Appeal on “question of law” whether the evidence supports the finding. “Five part” test discussed.

Houle v. Ethan Allen, Inc. , 2011 VT 62 (mem.)

Employer appeals from the Commissioner of the Department of Labor’s decision that claimant Robin Houle’s right shoulder condition was compensable under the Workers’ Compensation Act. Employer raises numerous arguments. We affirm.

According to Dr. Chen, the combination of claimant’s repetitive work for employer and her need to compensate for the pain and weakness in her left shoulder most likely resulted in a “cumulative dose injury” to her right shoulder. Dr. Wieneke, an orthopedic surgeon, and Dr. Johansson, an osteopath, disagreed with Dr. Chen’s analysis.

In view of the competing expert medical opinions, the Commission relied on a traditional five-part test to evaluate their persuasiveness. This test considers: (1) the nature of treatment and the length of time there has been a patient-provider relationship; (2) whether the expert examined all pertinent records; (3) the clarity, thoroughness, and objective support underlying the opinion; (4) the comprehensiveness of the evaluation; and (5) the qualifications of the experts, including training and experience. The Commissioner found this to be a close case, but she was ultimately persuaded by claimant’s credible testimony and by Dr. Chen’s status as claimant’s treating orthopedic surgeon.

Employer first challenges the Commissioner’s use of the five-part test to evaluate competing medical opinions, both as applied in this case and in general. According to employer, the use of this test improperly shifts the burden of proof from claimant to employer, unfairly places employers at a disadvantage, and erroneously employs a “winner take all” approach to evaluating a claimant’s expert testimony. Claimant did not raise any of these arguments below, however, and thereby waived them. See Cehic, 2006 VT 12, ¶ 14 (similarly refusing to consider issue not raised before Commissioner). We reject employer’s unsupported assertion that it had no obligation to challenge the use of the test below. One primary purpose of our rules on preservation is to give the factfinder “the opportunity to consider the matter in the first instance.” Id.

No such opportunity was provided to the Commissioner here. To the contrary, employer urged the Commissioner to conclude that its experts were more persuasive under the five-part test. Given this, we decline to address employer’s challenge to the test for the first time on appeal.

We also reject employer’s assertion that the Commissioner erred by not explicitly making findings on all of the factors in the five-part test cited above. There appears to be no legal requirement that the Commissioner make findings on all five factors.

Because employer appealed directly to this Court, our jurisdiction is limited to a review of questions of law certified to this Court by the Commissioner. 21 V.S.A. § 672. The question certified here was “[d]id the Commissioner err in concluding that claimant’s right shoulder condition was compensable.” Our review of the facts is highly limited and “confined to the issue of law relating to the sufficiency of the evidence to support the factual findings.” Peabody v. Jones & Lamson Mach. Co., 122 Vt. 431, 433, 176 A.2d 759, 761 (1961). We evaluate any “factual” challenges advanced by employer under this deferential standard. Essentially, employer challenges the Commissioner’s assessment of the weight of the evidence. As we stated in Cehic, “it is not our role to weigh the evidence in the record.” 2006 VT 12, ¶ 12; see also Coburn v. Frank Dodge & Sons, 165 Vt. 529, 533, 687 A.2d 465, 468 (1996) (“[T]he weight of the evidence is not reviewable by this Court on appeal.”). If employer believed that the weight of the evidence preponderated in its favor, it could have sought a new trial on the facts in the superior court. It declined to do so. Because the Commissioner was well within her discretion in finding Dr. Chen’s testimony credible while discounting Dr. Latham’s testimony, we affirm.

Appellate practice: timely objection/motion required in trial court to preserve error.

In re Estate of Tucker, 2011 VT 54
Appellant, testator’s daughter, seeks reversal of the trial court’s judgment declining to admit testator’s purported last will and testament to probate. This judgment followed a trial by jury, which rendered a special verdict finding that testator lacked testamentary capacity. Appellant raises various issues relating to the burden of proof, the jury instructions, and the denial of post-judgment motions. We conclude that all of appellant’s claims are moot or unpreserved, and accordingly, we affirm.

Daughter’s first claim of error relates solely to the court’s decision in allocating the burden of proof on undue influence. The jury rendered its verdict solely on testamentary capacity. Daughter must show that the asserted error produced prejudice and the jury relied upon the asserted error. See Lorrain v. Ryan, 160 Vt. 202, 209, 628 A.2d 543, 548 (1993) (“[Appellants] must show that an error in instructing the jury produced prejudice.

. . . Where there are multiple theories that could support the jury’s action, it is appellant’s responsibility to demonstrate . . . that the jury relied on the erroneous theory.”). Here, the asserted error played no part in the jury’s verdict, so there could be no prejudice. See Parizo v. Wilson, 101 Vt. 514, 518, 144 A. 856, 858 (1929) (“The rule is well settled that a judgment will not be reversed for an error that, by the verdict, is rendered immaterial.”).

Daughter next claims that the trial court erred in failing to inform the jury from the outset that the burden of proof for testamentary capacity was on daughter.We conclude that the late objection does not properly preserve the reservation of burden of proof issue for appeal. In addition to requiring that a party raise objections with “specificity and clarity,” In re White, 172 Vt. 335, 343, 779 A.2d 1264, 1270 (2001) (quotation omitted), we also require that an objection be raised in a “timely manner,” Burton v. Jeremiah Beach Parker Restoration & Constr. Mgmt. Corp., 2010 VT 55, ¶ 6, ___ Vt. ___, 6 A.3d 38, and “in a manner which gives the trial court a fair opportunity to rule on it.” White, 172 Vt. at 343, 779 A.2d at 1270 (quotation omitted). Daughter’s objection to the reservation of the burden of proof was not timely and failed to give the trial court an opportunity to properly consider the issue and to weigh her reasons for claiming that a determination of the burden of proof should not be reserved.

We also decline to reach argument about the instructions because daughter did not properly preserve it before the trial court. Vermont Rule of Civil Procedure 51(b) specifically addresses the requirement of objections to jury instructions in order to preserve claims of error. It states that “[n]o party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.” To preserve an objection to jury instructions, a party must additionally renew any objection made during the charge conference after the court instructs the jury. Venturella v. Addison-Rutland Supervisory Union, 2010 VT 115, ¶ 5, ___ Vt. ___, 12 A.3d 558 (mem.). In this case, daughter raised no objection at the trial court about the court’s failure to instruct the jury on insane delusions.

Lastly, we address daughter’s argument that the trial court erred in failing to rule in her favor on a number of post-trial motions. The motions that daughter raises on appeal include: (1) a motion for judgment as a matter of law; (2) a motion for relief from judgment; (3) a motion for a new trial. We hold the trial court properly denied daughter’s post-trial motion for judgment as a matter of law. Daughter did not make a motion for judgment as a matter of law before the submission of the case to the jury. See V.R.C.P. 50(a)(2) (“Motions for judgment as a matter of law may be made at any time before submission of the case to the jury.”). In the absence of such a motion, daughter’s challenge to the sufficiency of the evidence is waived, Ferrisburgh Realty Investors v. Schumacher, 2010 VT 6, ¶ 27, 187 Vt. 309, 992 A.2d 1042, and the trial court properly denied the post-verdict motion on this ground. The other post-verdict motions all relate to daughter’s claim, discussed above, that the trial court failed to allocate the burden of proof on testamentary capacity prior to trial. As we have held above, this claim—made in different forms in daughter’s various arguments—was waived. Daughter could not save this claim by including it in post-verdict motions.

Act 250: Newly amended law does not apply on reconsideration of permit denial.

In re Times and Seasons, LLC, 2011 VT 76 (Johnson, J.)

     Applicant Times and Seasons, LLC, appeals from the Environmental Court’s grant of summary judgment to the Natural Resources Board and corresponding denial of applicant’s Act 250 permit application to construct and operate a gift shop and deli with related improvements on Dairy Hill Road in the Town of Royalton.  Applicant argues that it may avail itself of the definition of “primary agricultural soils” in 10 V.S.A. § 6001(15) amended during the course of its litigation to secure compliance with criterion 9(B), 10 V.S.A. § 6086(a)(9)(B), the only Act 250 criterion for which it has not received approval.  We disagree and therefore affirm.

     An application for reconsideration cannot rely on a favorable change in law.  See 10 V.S.A. § 6087(c).  On reconsideration, applicants must demonstrate through changes to the project itself that the deficiencies identified in the permit application’s denial have been corrected.  To take advantage of the change in law, applicant must begin the Act 250 permit process anew.

Summary judgment against movant: Conclusory affidavits insufficient.

In re Shenandoah LLC, 2011 VT 68 (Burgess, J.) (Skoglund, J., joined by Justice Dooley dissenting.)

          It is well-established that ultimate or conclusory facts and conclusions of law cannot be utilized on a summary-judgment motion. 10 V.S.A. § 6001(14)(A)(iv) presumes parents are “persons,” for jurisdictional purposes “unless the individual establishes that he or she will derive no profit or . . . acquire any other beneficial interest from the partition or division of land by the . . . child”. Appellants' motion for summary judgment provided no information to the court and no actual documentation to support their conclusory statements that they had no “control” over the Trust’s activities and derived no “benefit” from the Trust’s land development activities.  We therefore affirm the Environmental Court’s decision that there was no genuine issue of fact as to whether the parents benefited from their children’s trust’s subdivision.
          The dissenters agree that the majority that the affidavits contained only “ultimate or conclusory facts and conclusions of law,” but would not affirm summary judgment against the movant, merely because it had not properly supported the motion.  The Environmental Court, having found the evidence offered by appellants insufficient for a determination on the material fact in issue, should have simply denied summary judgment. To complicate the matter before the Environmental Court, there was no adversarial party to oppose summary judgment.  Instead of requesting further evidence, the court summarily decided the case against the movant, essentially holding that the proffered facts were so lacking as to prove their own negative. Appellants should have been allowed to go forward with their proof. 

Act 250 jurisdiction: parents are as a matter of law affiliated with minor children because of their obligation of support.

  In re Shenandoah LLC, 2011 VT 68 (Burgess, J.) (Skoglund, J., joined by Justice Dooley dissenting.)
          Shenandoah, LLC, David Shlansky, Ting Chang, and other entities and individuals, appeal from the Environmental Court’s summary judgment decision upholding an Act 250 jurisdictional opinion.  The Environmental Court found that all prior subdivisions attributable to a Trust were also attributable to Shenandoah because they were “individuals and entities affiliated with each other for profit.”  10 V.S.A. § 6001(14)(A)(iii).The Environmental Court also found these units attributable to Shlansky and Chang as parents of the minor beneficiaries of the Trust, because profits of the trust would “diminish the parents’ burden to provide for their minor children.” We affirm the court’s jurisdictional opinion.
          The parents are financially responsible for their minor children so that, absent any evidence or argument to the contrary, any financial benefit to the children inures to the benefit of the parents.
          That benefit to the parents renders them “persons” as defined by Act 250.  10 V.S.A. § 6001(14)(A)(iii) (pertaining to subdivisions); Act 250 Rule 2(C)(1)(a) (pertaining to development).   Under the first definition of “person,” it is explicitly up to the parents to prove otherwise.  See 10 V.S.A. § 6001(14)(A)(iv) (presuming to include the parents as “persons,” “unless the individual establishes that he or she will derive no profit or . . . acquire any other beneficial interest from the partition or division of land by the . . . child”). Because any financial benefit to the minor children constitutes a financial advantage to the parents ordinarily responsible for their support the parents are affiliated “persons.”
          Justice Skoglund,  joined by Justice Dooley dissenting. would remand for further factual development, otherwise they argue, the result in this case is so far beyond the broad definition of the term “person” that any parent is swept into the Act 250 process if their child, dependent or not, benefits from a proposed land development.  This is far beyond the broad definition of that term recognized under the Act.



Note that Chief Justice Reiber was present for oral argument, but did not participate in this decision. Judge Eaton was not present for oral argument, but reviewed the briefs, listened to oral argument, and participated in the decision, with Justice Johnson making a majority.

Real Property. Law of Cadavers. Ancient deed “excepted” a cemetery plot in fee simple, and did not merely “reserve” an easement. New owner had no right to bury parents in old cemetary.

 In re Guite, 2011 VT 58 (Dooley, J.)  

This case concerns the use of a hilltop cemetery on a farm in Hartland, Vermont.  The petitioner claims that the cemetery plot is owned by heirs of the Aldrich family, who settled the property as a farm in approximately 1775 and remained there until selling the farm in 1853.  Respondent purchased the farm property in 1950 and buried the cremated remains of his parents in the hilltop cemetery.  Respondent claims that the Aldrich family reserved only an easement in the cemetery plot, so that he could use it to bury his parents and the remains cannot be moved.  The trial court adopted respondent’s theory and denied the petition.  We conclude that petitioner’s theory is correct and reverse.

In Harding, we ruled that where we could not ascertain the true intent of the parties to the original deed, and in the absence of a “clearer expression of intent,” we would rely upon the common law of family gravesites, which creates an easement.  2005 VT 24, ¶ 18.  The deed in this case contains the necessary clearer expression of intent.  

The 1853 deed in this case has excepted from the conveyance a fee interest in a particular plot of land, rather than a burial easement as recognized at common law.  The plot is excepted “out of the above described premises.”  The terms “excepting” and “exception” are generally used to withhold from a grant or conveyance something that would otherwise pass in the grant.   This technical meaning of the words “excepting” and “exception” dates back to the era of the 1853 deed. see P. Jackson, The Law of Cadavers 219 (1936) (distinguishing “exception” from “reservation” and noting that “the scrivener’s choice of terms is given appropriate but not conclusive weight”). Importantly, the grantor retained an ascertainable tract of land, with the burial plot description being used to locate where the tract is to be found.

Accordingly, we find that the 1853 deed excepted from its grant the 41’ by 27’ burial plot, and the plot is owned in fee simple by the heirs of the Aldrich family.  Thus, it was never owned by the King family, and they had no right to bury the cremated remains in it.  

Trusts and estates. The amended POA statute, enacted in 2002, invalidates gift transactions made after its effective date, even though they would otherwise have been valid under the statute at the time the POA was signed

In re Estate of Lovell, 2011 VT 61 (Reiber, C.J. )

Defendants Charles and Hubert Lovell appeal a grant of summary judgment to plaintiff, Duane Amsden, in which the trial court found that Charles Lovell could not, pursuant to his powers as his father’s attorney-in-fact, transfer title of his father’s farm to himself and his brother, Hubert Lovell, where the power of attorney failed to explicitly grant the power to make such a gift.  We affirm.

Here, unlike Kurrelmeyer, 2006 VT 19, ¶ 2 , the property transfer occurred after the effective date of the amended POA statute.  Under 14 V.S.A. § 3515(b): “[a]ny term of a power of attorney, executed after the effective date of [the POA statute] . . . which is otherwise inconsistent with, the provisions of this subchapter, shall be void and unenforceable.” The POA granting Charles Lovell authority to make transfers in his father’s stead was created prior to the effective date of the amended POA statute; however, he exercised the term providing him power of transfer after the effective date.  The term providing the power to transfer did not give him the explicit power to make gifts, as required by the amended POA statute, and thus an attempt to exercise authority pursuant to that term after the statute’s effective date was void and unenforceable.