Consumer Protection. Operator of a web site containing forms with contractual provisions that, if used by third parties at their election, may cause violations of the CFA is not “other violator” liable under CFA because web site operator is not one who directly participates in the unfair or deceptive acts, who directly aids the actor, or who is in a principal/agent relationship with the actor.

 Knutsen v. Dion, 2013 VT 106 (08-Nov-2013).

 DOOLEY, J.   Plaintiff appeals the decision of the superior court denying her motion for summary judgment and granting defendant Vermont Association of Realtors, Inc.’s (VAR) motion for summary judgment on her consumer fraud claim arising out of her purchase of a home .  Plaintiff argues that the limited liability clause and the mandatory mediation clause of VAR’s form purchase and sale agreement that  was used in her real estate purchase were unfair and deceptive, and that by providing the form contract and representing on its website that the template is fair to all parties, VAR violated the CFA The trial court ruled that the clauses, either alone or in conjunction, were not “unfair or deceptive under the CFA.”  and that “VAR’s sole connection to this case—drafting the template clauses that [plaintiff] and her buyer’s broker eventually used—cannot support a consumer fraud claim” We affirm.

VAR was not involved in the transaction between plaintiff and sellers, nor in the actions of the real estate brokers who represented sellers and plaintiff and brought them to agreement. VAR’s sole involvement was to post on its website a model purchase and sales contract that could be used by member real estate brokers and was used by plaintiff’s real estate broker  Narrowly stated, the first issue in this case is whether, under plaintiff’s allegations, VAR is an “other violator” pursuant to § 2461(b)(permitting a consumer “who sustains damages or injury as a result of any false or fraudulent representations or practices prohibited by section 2453 of this title” to “sue and recover from the seller, solicitor or other violator….”).   

In Sawyer v. Robson, 2006 VT 136, 181 Vt. 216, 915 A.2d 1298, a private CFA suit, we stated “The plain meaning of ‘other violator’ is anyone engaged in an unfair or deceptive commercial practice in violation of the CFA’s prohibition on such activity.”  Id. ¶ 12.  We explained that “our focus in determining applicability of the CFA is the nature of the alleged violator’s activities, not whether the violator falls into a defined statutory category.”  Id.     In State v. Stedman, 149 Vt. 594, 547 A.2d 1333 (1988), a public CFA suit, we  held that derivative liability for consumer fraud could not be imposed “absent direct participation in the unfair or deceptive acts, direct aid to the actor, or a principal/agent relationship.”  Id. at 598, 547 A.2d at 1335-36. In various contexts under comparable statutory schemes, other courts have required some direct involvement for derivative liability to attach under a consumer protection act.

We conclude that the Stedman holding applies both to public CFA suits and to private CFA suits like the one before us.  Thus, VAR cannot be found liable “absent direct participation in the unfair or deceptive acts, direct aid to the actor, or a principal/agent relationship.”  Stedman, 149 Vt. at 598, 547 A.2d at 1335-36. The application of this test in private CFA cases is appropriate because it looks to “the nature of the alleged violator’s activities, not whether the violator falls into a defined statutory category.” Sawyer, 2006 VT 136, ¶ 12.  VAR had no direct involvement in the drafting of the contract used here and did not act as a principal with respect to plaintiff’s broker.  Thus, it may only be held liable if it provided “direct aid” to the broker.  The trial court correctly held that “VAR’s sole connection to this case—drafting the template clauses that [plaintiff] and her buyer’s broker eventually used—cannot support a consumer fraud claim.”  

Real estate agreement was contract for deed, not lease option. Though a contract for deed is treated as a mortgage, foreclosure remedy is not available under Rule 54(c) without notice, and appeal is not barred by Rule 80.1(m) requiring permission.

Prue v. Royer, 2013 VT 12 (Dooley, J.) 

The parties in this case entered into a real estate agreement which the trial court held to be contract for deed giving the purchasers an equitable interest in the property in question. The court initiated a foreclosure on that interest, even though it had not been pled. Plaintiffs, the purchasers as found by the trial court, appeal from the foreclosure. Defendant, the seller as found by the court, appeals from the court’s conclusions that the contract was an enforceable contract for deed. We affirm the trial court’s rulings that the agreement was a contract for deed, that its modifications were enforceable under the Statute of Frauds, that plaintiffs had an equitable interest in the property, and that they did not abandon that interest. We also hold that this matter is properly before us, despite noncompliance with 12 V.S.A. § 4601, and affirm the conditional award for damages for waste. Because the court’s foreclosure ruling awarded a remedy that was not pled or fully litigated, however, we reverse the foreclosure decree as premature and remand for a new foreclosure proceeding.

This case arises out of the lack of clarity in the parties’ agreements. The primary agreement is completed on a realtor pre-printed contract entitled “Purchase and Sale Contract,” but “Lease-Option to Purchase” is handwritten below that title. A separate page is entitled “Financing Property Agreement.” Plaintiffs characterized the agreement as a contract for deed, such that they acquired equitable title subject to a mortgage. Defendant, in contrast, characterized the agreement as a lease-option contract, such that plaintiffs were only leaseholders until they paid the purchase price.

Unlike a contract for deed, a lease-option to purchase is a unilateral contract; its acceptance rests wholly in the discretion of the leasee -optionee. The other main way in which a lease option is distinguished from a contract for deed is that the lease payments are not applied on the purchase price. Because we find that the contract represented a bilateral agreement to purchase the property, and that the payments went towards the purchase price of the property, we affirm the finding of the trial court that the agreement was a contract for deed, rather than a lease-option agreement. The consequence of this conclusion is that defendant’s interest is as an equitable mortgagee, not as a landlord or optionor.

Vermont has consistently treated a contract for deed as an equitable mortgage. It has been one of only a small minority of states to do so, however, a trend has developed consistent with the Vermont view. Thus, the Restatement (Third) of Property: Mortgages § 3.4(b) (1997) provides that “[a] contract for deed creates a mortgage.”

Defendant argues that plaintiffs failed to seek permission to appeal within ten days as required by Rule 80.1(m). Rule 80.1(m) applies only where “the permission to appeal [is] required by law.” 12 V.S.A. § 4601 provides, “When a judgment is for the foreclosure of a mortgage, permission of the court shall be required for review.” The issue is controlled by Herrick v. Teachout, 74 Vt. 196, 202, 52 A. 432, 434 (1902) (statute applies only to mortgages which are such upon their face, or recognized as such by the parties, and not to cases where the character of the instrument is in issue.) This is not a run-of-the-mill foreclosure action, and permission was not required by law.

Vermont Rule of Civil Procedure 54(c) states “every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party’s pleadings.” Despite the breadth of the language of the rule, it is overriden by considerations of “substantial justice” here, where Plaintiffs were prejudiced by the court’s sua sponte introduction of foreclosure into the case.