smiel v. cardinal builders

ORIGIN
RUTLAND Steseip APER
STATE OF VERMONT AUG fl 0° URT
RUTLAND COUNTY © 08 2008
JOHN A. SMIEL and )
CHERYL REYNOLDS ) Rutland Superior Court
) Docket No. 236-5-06 Rdcv
Vv. )
)
CARDINAL BUILDERS, LLC )
DECISION

Defendant’s Motion for Attorney’s Fees, filed May 2, 2008
Plaintiffs’? Motion for Judgment N.O.V. or New Trial, filed May 12, 2008

Plaintiffs John Smiel and Cheryl Reynolds filed a complaint alleging breach of
contract and consumer fraud. On April 18, 2008, after a three-day trial, a jury returned a
special verdict for defendant Cardinal Builders, LLC on both claims. The present post-
trial matters before the court are (1) Defendant’s Motion for Attorney’s Fees, filed May
2, 2008 by Attorney Matthew Hart, and (2) Plaintiff's “Motion for J udgment
Notwithstanding the Verdict and, In the Alternative, Motion for a New Trial Under Rule
59,” filed May 12, 2008 by Attorney Jeffry Taylor.

The court interprets Plaintiffs’ Motion as separate post-trial motions for judgment
as a matter of law under V.R.C.P. 50(b) and for a new trial under V.R.C.P. 59(b). 9B
Wright & Miller, Federal Practice and Procedure: Civil 2d §§ 2521, 2531 (explaining that
motions for judgment notwithstanding the verdict are now treated as renewed motions for
judgment as a matter of law under Rule 50(b), and explaining distinctions between post-
trial motions for judgment as a matter of law and motions for new trial).

Plaintiffs’ Motion for Judgment as a Matter of Law

Plaintiffs first seek a ruling that the evidence presented at trial required the jury to
determine that Cardinal Builders breached the contract by failing to insulate the
foundation.

The procedural requirements of V.R.C.P. 50 are interpreted strictly. Ulm v. F ord
Motor Corp., 

 (2001). Motions for judgment as a matter of law must be
made “at any time before submission of the case to the jury,” V.R.C.P. 50(a), because the
purpose of the motion is to test “whether any finding other than the one requested would
be erroneous as a matter of law.” 9B Federal Practice and Procedure, supra, § 2521.
Motions for judgment as a matter of law may be renewed after trial under Rule 50(b), but
such post-trial motions “can be granted only on grounds advanced in the pre-verdict
motion,” ifany. Monahan v. GMAC Mortgage Corp., 

, 

(quoting V.R.C.P. 50(b), Reporter’s Notes—1995 Amendment). Arguments that are
presented for the first time in a post-trial motion under Rule 50(b) are waived. 7d.

The court has reviewed the record and determined that Plaintiffs did not move for
judgment as a matter of law before submission of the case to the jury. Plaintiffs are
accordingly precluded from now “renewing” a motion for judgment as a matter of law
under Rule 50(b).' Merrill v. Reville, 

 (1977). Plaintiffs’ Motion for
Judgment as a Matter of Law is denied.

Plaintiffs’ Motion for a New Trial

Motions for a new trial are within the sound discretion of the trial court. Cooper
v. Myer, 

, 18 Vt. L. Wk. 404 (mem.). The trial court reviews all of the
evidence in the light most favorable to the jury verdict, because “it is the protected duty
of the jury to render a verdict, and a judge may not disturb that verdict unless it is clearly
wrong.” Hardy v. Berisha, 

 (1984) (citations omitted). “Only after
the evidence is so viewed, and the verdict is shown to be clearly wrong and unjust
because the jury disregarded the reasonable and substantial evidence, or found against it,
because of passion, prejudice, or some misconception of the matter, can the court
exercise its discretion to set aside the verdict.” Pirdair v. Medical Ctr. Hosp., 

 (2002) (quoting Gregory v. Vt. Traveler, Inc., 

 (1981)).

Plaintiffs argue that a new trial should be granted because the jury’s verdict was
erroneous. Plaintiffs contend that the parties contracted for the installation of a
foundation, that an implied term of the contract was that the foundation be installed in a
workmanlike manner under Jackson v. Rogers, 

 (1957), and that the
undisputed evidence showed that the foundation had been installed without insulation.
Plaintiffs therefore argue that the jury’s verdict, which found no breach of contract, was
clearly wrong.

No new trial is required in this case. The jury was instructed that the implied
warranty of workmanship applies only to defects that are latent or concealed at the time
the buyer purchases the home, and not to problems that are visible to the buyers.
Meadowbrook Condo Ass’n v. S. Burlington Realty Corp., 

 (1989). Based on
the evidence presented during trial, the jury could have determined that the implied
warranty did not apply because the absence of insulation was visible to Mr. Smiel and
Ms. Reynolds at the time of closing. The jury’s verdict was therefore consistent with the
evidence presented at trial and the law, and Plaintiffs’ Motion for a New Trial is
accordingly denied.

' Moreover, if the court were to reach the merits of the motion, it would be denied because the jury could
have reasonably found that the foundation was not insulated, but that the implied warranty of workmanship
did not apply because the defect was patent at the time of closing. For this reason, the evidence submitted
at trial does not require judgment as a matter of law on the claim for breach of contract.
Defendant's Motion for Attorney's Fees

Defendant seeks reasonable attorney’s fees and costs based on a contractual
agreement. See Fletcher Hill, Inc. v. Crosbie, 

, 

 (explaining
that the American Rule may be modified by statute or agreement). The contract is a
standard, pre-printed form prepared by the Vermont Association of Realtors. Paragraph
20 is a default clause which contains the following fee-shifting provision:

In the event legal action is instituted arising out of a breach
of this contract, the prevailing party shall be entitled to
reasonable attorney’s fees and costs.

The parties dispute whether the fee-shifting provision applies in this case.
Defendant contends that the provision was triggered by the filing of a complaint alleging
breach of contract. Plaintiffs argue that the condition precedent to an award is not
satisfied in this case because the jury found that no breach of contract had occurred, and
that this interpretation is supported by comparison with Janelli v. Standish, 

 (1991).

The language of the standardized VAR form shows that the parties intended for
the fee-shifting provision to be triggered by the filing of a complaint alleging breach of
contract. See Harsch Properties, Inc. v. Nicholas, 

, 18 Vt. L. Wk. 206
(explaining that courts interpret fee-shifting provisions to give effect to the intent of the
parties, which is expressed by the language of the contract). The contract provides for an
award to the prevailing party “in the event legal action is instituted arising out a breach of
this contract.” (Emphasis added). The court interprets the term “instituted” as referring
to the commencement of legal action, which is accomplished by the filing of a complaint.
V.R.CP. 3. The court furthermore interprets the term “arising out of a breach of this
contract” as referring to the causal connection between a controversy surrounding the
performance of the contract and the subsequent filing of a complaint. See Black’s Law
Dictionary 115 (8th ed. 2004) (explaining that the verb “arise” means “to originate” or
“to stem from” or “to result from”). These language choices show that the parties
emphasized the initiation of the litigation, rather than the ultimate verdict, as the trigger
for an award of reasonable attorney’s fees to the prevailing party. In this case, the
provision was triggered when Plaintiffs filed a complaint alleging breach of contract.

Interpreting the fee-shifting provision in this manner is consistent with other
terms of the contract. See In re Grievance of Cole, 

, 19 Vt. L. Wk. 219
(explaining that contract provisions are to viewed in their entirety, and read together).
The standardized, pre-printed form is neutral in tone, and the default clause even-
handedly describes the remedies available to each party in the event of a default by the
other party. This makes it unlikely that the parties intended to make attorney’s fees
available to one party, but not the other. Moreover, the contract contains a clause
requiring mediation prior to litigation, which reinforces the conclusion that the provisions
of the contract were intended to discourage, rather than encourage, a rush to litigation.
It is additionally noteworthy that the parties’ contract is a standardized form
which has been interpreted by other Vermont courts as providing for an award of
attorney’s fees to defendants who prevail in litigation arising out of an alleged breach of
contract. See Sherwood Development Corp. v. McCormick, No. $1519-04 CnC (Norton,
J., June 6, 2005) (awarding fees to defendant who prevailed on pre-trial motion to dismiss
in breach-of-contract action); Williams v. Campbell, No. $0920-01 CnC (Katz, J., Mar.
12, 2004) (interpreting identical fee-shifting provision as being triggered “when a party
asserts breach of contract”);° see also Janelli, 

 (interpreting prior
version of form as awarding attorney’s fees to prevailing defendant).

Plaintiff argues that the fee-shifting provision in Janelli was broader than the
language used here. This is true, in that the contract in Janelli allowed for the recovery of
attorney’s fees by the prevailing party in an action for fraud, whereas the provision in this
case is triggered by the assertion of a breach of contract. Comparison with Janelli,
however, does not require this court to interpret the parties’ contract as awarding fees
only to plaintiffs who prove that a breach of contract actually occurred, when such an
interpretation is not supported by the language or intent of the agreement.

For these reasons, the court concludes that Defendant is entitled to an award of
reasonable attorney’s fees and costs, based on the parties’ contract.

The next question is whether the attorney’s fees and costs requested are
reasonable. Defendant seeks $26,109.40 in attorney’s fees and $1,002.90 in costs. Mr.
Hart has filed an affidavit supporting this request, along with billing records indicating
that he spent 115.1 hours on the defense at rates between $140.00 and $160.00 per hour,
and that other lawyers spent 38.4 hours on the defense at rates between $150.00 and
$185.00 per hour.

Plaintiffs have objected to 27 hours billed by Mr. Hart: 3 hours for attending a
pretrial conference on April 9, 2008, and 24 hours for attending the trial on April 16-18,
4008. Plaintiffs contend that the bulk of the legal services at these proceedings were.
provided by attorney Harry Ryan, and that it is not reasonable to require Plaintiffs to pay
for two lawyers to attend the same proceeding. Plaintiffs also object to the absence of
expert testimony from independent counsel, which the court interprets as an objection to
the reasonableness of the rates requested, although Plaintiffs do not raise any specific
contention that the hourly rates billed by various attorneys are too high.

Based on these objections, the court will schedule an evidentiary hearing to
determine the reasonableness of the rates requested, and Defendant is required to present
expert testimony from independent counsel supporting the requested rates. Parker, Lamb
and Ankuda, P.C. v. Krupinsky, 

 (1985). The attorneys are encouraged,
however, in the interest of economy, to explore whether they can stipulate to any factual
matters without expert testimony, such as the reasonableness of hourly rates. The court
will address arguments related to the reasonableness of billing for two lawyers.

* Available at http://www. vermontjudiciary.org/tcdecisionscvl/2005-9-15-1 pdf.
> Available at http://www. vermontjudiciary.org/tcdecisionsevl/2005-1 1-2-6.pdf.
ORDER
For the foregoing reasons,

(1) Plaintiffs’ Motion for Judgment as a Matter of Law, filed May 12, 2008, is
denied;

(2) Plaintiffs’ Motion for a New Trial, filed May 12, 2008, is denied; and

(3) Defendants’ Motion for Attorney’s Fees, filed May 2, 2008, is granted, and
the court will schedule an evidentiary hearing on attorneys’ fees.

Dated at Rutland, Vermont this 7 day of August, 2008.

Ww Yee Jeachnst
Hon. Magy Miles Teachout
Presiding Judge