SCOVT affirms Rule 12(b)(6) dismissal and denial of later motion to amend complaint for losses due to negligent notarization of fraudulent document, holding pleading and argument below failed to show a “special relationship” justifying exception to economic loss rule.

Veljovic v. TD Bank, N.A., 2025 VT 38 [filed 7/11/2025]

 REIBER, C.J.   Plaintiff Aleksandra Veljovic appeals from the dismissal with prejudice of her negligence, negligent supervision, and respondeat superior claims against TD Bank, N.A. and its former employee, Zlata Cavka.  Plaintiff alleged that the employee negligently notarized a fraudulent document that was ultimately used by plaintiff’s ex-husband to secure a divorce order in Serbia leading to her loss of marital property.  She argued that TD Bank should be held liable under the legal theories cited above.  The court dismissed plaintiff’s complaint, concluding that plaintiff could not recover for purely economic losses and she failed to show the existence of a special relationship between the parties.  It also denied plaintiff’s post-judgment request to amend her complaint.  We agree with the court’s conclusions and therefore affirm.

Plaintiff’s complaint lacked any allegations indicating that she had any relationship, much less a close or “special” relationship, with Cavka or that she relied on Cavka’s notarial services.  The only connection plaintiff alleges between herself and Cavka was that Cavka notarized a document purportedly containing plaintiff’s signature, allegedly presented to Cavka by plaintiff’s ex-husband.  Without facts that establish a relationship of trust, confidence, or reliance between plaintiff and Cavka, plaintiff’s claims are barred by the economic-loss rule.   

Plaintiff argues that the notary’s services qualify under the professional services exception to the economic loss rule because a notary is a public officer who owes a duty to the public to perform her service with diligence.  Plaintiff raised this argument in the trial court for the first time in her V.R.C.P. 59(e) motion to reconsider.  However, a “Rule 59(e) motion may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.”  11 C. Wright & A. Miller, Federal Practice and Procedure § 2810.1 (3d ed. 2024)  Because plaintiff did not raise this argument in the trial court prior to judgment, it is not preserved for appeal.

Following the trial court’s ruling, plaintiff sought to amend her complaint to include an allegation that she held an account at TD Bank to support her contention that she shared a special relationship with the bank.   Vermont Rule of Civil Procedure 15(a) provides that a party may amend a pleading after entry of judgment “only by leave of court or by written consent of the adverse party.”  Additionally, for the court to grant leave to amend post-judgment, the plaintiff must first succeed in having the final judgment set aside under Rule 59(e), which did not occur here. See Stowe Aviation, LLC v. Agency of Com. & Cmty. Dev., 2024 VT 11, ¶¶ 18, 21( Even if a plaintiff never moved to amend before judgment, Rule 59(e) relief is available to amend pleadings but plaintiff must demonstrates one of the basic grounds for granting a Rule 59 motion.) In certain instances, denial of a Rule 15(a) motion “may be justified based upon a consideration” of several factors, including the futility of the amendment. Colby v. Umbrella, Inc., 2008 VT 20, ¶ 4, 184 Vt. 1, 955 A.2d 1082. We review a trial court’s denial of a plaintiff’s motion to file an amended complaint for abuse of discretion. N. Sec. Ins. Co. v. Mitec Elecs., Ltd., 2008 VT 96, ¶ 34, 184 Vt. 303, 965 A.2d 447. Plaintiff fails to show an abuse of discretion here.

Plaintiff’s amendment failed to establish that she shared a special relationship with the bank to oversee notarial services offered by any of its employees.  See Shulman v. Concord Gen. Mut. Ins. Co., 618 F. Supp. 3d 165, 175 (D. Vt. 2022) (holding that plaintiffs failed to sufficiently allege “a special relationship of trust” with insurer where insurer had “made no contact with plaintiffs”).  Therefore, because plaintiff’s proposed amended complaint, like her original complaint, cannot show that an exception to the economic-loss rule applies, it cannot withstand a motion to dismiss, and amendment would therefore be futile.  The trial court did not abuse its discretion in denying plaintiff’s post-judgment motion to amend her complaint.  

Affirmed.

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SCOVT NOTE: Economic Loss "Rule," Public Duties and Notaries Public. This case has a special irony in that the trial court denied the Rule 59(e) motion on grounds that "plaintiff raised no issues of fact or law that the court had not already considered" and the Supreme Court affirmed on the grounds that "plaintiff did not raise [the correct argument] in the trial court prior to judgment." On the merits, the economic loss rule does not preclude recovery against notaries for breach of their pubic duties.

The Vermont Supreme Court has adopted the definition of Restatement (Second) of Torts § 552 for claims of negligent misrepresentation. Glassford v. Dufresne & Assocs. P.C., 2015 VT 77. It should now be beyond question that the economic loss "rule" does not preclude recovery under § 552. Id,; Sutton v. Vermont Regional Center, 2019 VT 71 ¶ 36 (amended and superceded by 2019 VT 71A) ("The economic-loss rule is not an impediment to this claim, and the Restatement (Second) provision describing the tort applies, by its own terms, to "pecuniary loss""); But see PeakCM, LLC v. Mountainview Metal Systems, LLC , 2025 VT 50 (to use the duty outlined in negligent-misrepresentation claims to establish a "special- relationship" exception would drastically expand the exception to the point of swallowing the economic-loss rule.)

In Glassford the Court observed that § 552(3) identifies the specific circumstances when liability for economic loss  may be imposed on defendants who have a duty to provide information for the benefit of the public.  Restatement § 552 cmt. k. This includes:

 For example, if a notary public negligently acknowledges a signature on a deed that turns out to be a forgery and a purchaser relies on the recorded deed in purchasing land, the notary is liable to the purchaser for any pecuniary losses as a result of the invalid deed. Id. illus. 16

2019 VT 71 at ¶ 16. See also Sutton v. Vermont Regional Center, 2019 VT 71 ¶ 31 n. 6 (amended and superceded by 2019 VT 71A) (noting the plethora of exceptions to the broad formulation of the economic-loss rule has induced the drafters of the current restatement to propose "a more limited principle: not that liability for economic loss is generally precluded, but that duties of care with respect to economic loss are recognized in specific circumstances.") (citing  Restatement (Third) of Torts: Liab. for Econ. Harm § 1 cmt. b (Tentative Draft No. 1, 2012)) 

As now set forth in Restatement (Third) of Torts: Liability for Economic Harm  § 5(3) (2020) the liability for pecuniary loss due to negligent misrepresentation by one who is under a "public duty" to supply the information "extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them."

Divided Court affirms judgment on a verdict for conversion of proceeds of sale, breach of fiduciary duty, and unjust enrichment, but reverses punitive damages

Eugene W. Beaudoin, Derivatively on Behalf of The New England Expedition Ltd. Partnership II & IV v. Barry E. Feldman, The New England Expedition-Colchester LLC and Colchester Managing Member Inc., 2018 VT 87  [filed 8/17/2018]

SKOGLUND, J. In this commercial dispute involving the sale of a grocery store, defendants Barry Feldman, the New England Expedition-Colchester, LCC (NEE-Colchester), and Colchester Managing Member, LLC (CMM), ask this Court to strike jury-awarded punitive damages and to find that the trial court erred in numerous evidentiary rulings, in denying defendants’ motion for judgment as a matter of law, and in denying defendants’ motion for a new trial. For the below-stated reasons, we strike the punitive damages, but affirm the remainder of the trial court’s rulings and orders.

Feldman appeals, arguing that the trial court: (1) erred by allowing the jury to consider punitive damages in this commercial dispute; (2) abused its discretion by allowing Beaudoin to introduce evidence of the Rhode Island contempt order; (3) abused its discretion by excluding evidence of Beaudoin’s pre-2005 tax returns; (4) abused its discretion by admitting evidence of Feldman’s additional real estate projects; (5) erred by denying Feldman’s motion for judgment as a matter of law for Beaudoin’s failure to join allegedly indispensable parties; and (6) erred in denying Feldman’s motion for a new trial after Beaudoin’s counsel’s closing statement remarks.

Where a party failed to object to jury instructions pursuant Rule 51(b), it properly preserved its claim “that the trial court erred in submitting plaintiffs’ demand for punitive damages to the jury” by seeking judgment as a matter of law in compliance with Rule 50(a) and  renewing its motion after entry of the judgment as required by Rule 50(b). Murphy v. Stowe Club Highlands, 171 Vt. 144, 154, 761 A.2d 688, 695-96 (2000). Because Feldman challenges the presentation of punitive damages to the jury in the first, Feldman properly preserved his claim for appellate review by complying with V.R.C.P. 50(a) and (b), regardless of “whether or not [he] also objected to the jury instruction.”

An award of punitive damages requires a showing of two essential elements—“wrongful conduct that is outrageously reprehensible” and “malice, defined variously as bad motive, ill will, personal spite 9 or hatred, reckless disregard, and the like.” The “conduct need not only be wrongful, but truly reprehensible,” and malice must be proven by “some showing of bad motive.”

Not every claim of bad faith, conversion, or breach of fiduciary duty warrants a punitive-damages award. The dispute must result in behavior that is truly reprehensible or egregiously awful. The evidence in this case did not rise to that level This was a dispute between two businessmen. While Feldman’s conduct may have been wrongful, intentional, and even actionable—as evidenced by the conversion, unjust enrichment, and breach of fiduciary duty judgments against him—as a matter of law, it falls short of the type of egregious behavior this Court has found to support punitive damages in the past.  The record before this Court “cannot support a punitive award given the absence of outrageously reprehensible conduct and the lack of actual or legal malice towards” Beaudoin. Fly Fish Vermont, 2010 VT 33, ¶ 17. The trial court erred when it submitted the question of punitive damages to the jury because there was insufficient evidence to support it, and thus this Court must strike the punitive damages awarded by the jury.

ROBINSON, J., dissenting. The trial court’s refusal to admit highly relevant evidence bearing on the critical issue in this case was not supported by its reasoning and exceeded its discretion. I dissent from the majority’s affirmance of the trial court’s exclusion of evidence of Beaudoin’s pre-2005 tax returns, and I would reverse

I cannot agree that the trial court’s conclusion that the proffered evidence was irrelevant was within its broad discretion. I respectfully dissent. I am authorized to state that Chief Justice Reiber joins this dissent