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

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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.)

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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