SCOVT reverses summary judgment for defendant based on finding in earlier case, holding issue preclusion does not apply to a finding that was untested on appellate review.)

Daiello v. Town of Vernon, 2018 VT 17  [2/16/2018]

EATON, J. Plaintiff landowner, who built a residence on leased property owned by defendant, Town of Vernon, appeals the superior court’s order granting the Town summary judgment with respect to his claim that the Town breached a covenant of quiet enjoyment implied in the 1838 lease by not providing him access to the property. We reverse and remand for further proceedings.

The trial court granted the Town’s summary judgment motion, ruling that as a matter of law, the Town did not breach the covenant because the finding in Merritt v. Daiello that plaintiff had access to his property from the west precluded plaintiff from relitigating that fact.

In Merritt v. Daiello, plaintiff challenged on appeal the trial court’s finding of access to his property from the west, but this Court declined to review that finding because it upheld on different grounds the trial court’s conclusion that there was no easement by necessity. Commentators and courts alike have held that issue preclusion should be denied with respect to any finding that was untested on appellate review. See Restatement (Second) of Judgments § 27 cmt. o ("If the appellate court upholds one of the[] determinations [by the lower court] as sufficient and refuses to consider whether or not the other is sufficient and accordingly affirms the judgment, the judgment is conclusive [only] as to the first determination.")

Accordingly, plaintiff is not precluded in this proceeding from relitigating whether he has access to this property from the west.

The second preclusion question raised herein is whether the parties are precluded from relitigating in this case whether Stebbins Road was properly laid out by the Town The issue of whether the Town properly laid out Stebbins Road was raised in Merritt v. Daiello, determined by the superior court in the Merritts’ favor, and upheld on appeal. The Town is correct that because it was not a party in Merritt v. Daiello, it is not precluded from arguing that Stebbins Road was properly laid out as a public road.

On remand, if the court rules the Town properly laid out Stebbins Road and thus did not interfere with plaintiff’s access over that road this would result in two inconsistent judgments. By not joining the Town in their earlier action seeking to prevent plaintiff from accessing his property through their property based on a claim that the Town had failed to properly lay out the public road crossing their property, the Merritts ran the risk that issues resolved in that action would be subject to religitation in any later action involving the Town and themselves as indispensable parties.