Tuesday, August 2, 2011

Speaking Personally


In re Shenandoah, 2011 VT 68.

Let me suggest that there is a key difference in the way lawyers and civilians use language.  For most of us, outside the legal arena, language is a vehicle that we pack with meaning to send off to others.  If the words we choose create ambiguity or if, to extend the metaphor, we choose the wrong vehicle, there is no harm.  So long as our general sense is communicated, the language has served its purpose.  Sometimes, we even cultivate this tension between words and meaning to create humor, mystery, or drama. 

Lawyers have no use for such creative applications.  For lawyers, language is something to be pinned down, fixed, and then parsed.  If you have ever sat through a deposition or trial, you understand that a lot of what lawyers are doing is asking the same question six different ways to attack the answers for inconsistencies and to nail down every possible meaning. 


This difference comes from the central roles of lawyers as advocates and interpreters.  Nowhere is this truer than in the game of statutory interpretation, which brings us to today’s case. 

Petitioners are a husband and wife who established an irrevocable trust in favor of their minor children.  The trust, with mom as trustee and dad as attorney, invested in approximately four real estate development companies, which include the titular Shenandoah, LLC.  In 2008, the vice-president of Shenandoah sought a jurisdictional opinion from the local Act 250 District Coordinator on a 10-unit PUD that the company was planning in Vergennes.  The letter also asked for a general accounting to see how many units were credited to Shenandoah for Act 250 purposes. 

This is the normal process that any developer in Vermont follows.  You seek a jurisdictional opinion from Act 250 to see if it applies.  Chances are you know the outcome before you ask, but nevertheless, it is the first movement of the land use symphony, soon to be followed by the application and any scherzo section of hearings on the 10 criteria.  In this case, Shenandoah, to no one’s surprise, triggered Act 250 jurisdiction for its 10-unit subdivision (Act 250 covers developments of ten or more units). 

What surprised Shenandoah and petitioners is how the District Coordinator attributed several developments owned and controlled by petitioners to Shenandoah and by extension to the irrevocable trust.  Basically, the District Coordinator treated the various parties (trusts, mom, dad, and their other corporations) as one “person” for the purpose of calculating subdivisions and developments.  This meant that Shenandoah and petitioners would be spending a lot of time in Act 250 hearings on all of their future permits.  They challenged this decision and appealed to Environmental Court

To see where this is going, you have to take a step back and understand a little bit of Act 250 and its origins.  Act 250 was born under conditions that have become somewhat mythic.  In the late 1960s, ski areas like Mt. Snow experienced a second-home building boom.  In those less enlightened times builders were more casual about standards such as habitability, sanitation, and the environment.  According to legend, then Governor Deane Davis was invited by local officials to witness the effects this unregulated development was having on the environment.  Standing next to an open sewer pipe, Governor Davis vowed to craft legislation that would put an end to this.  Thus Act 250 was born to regulate development under ten different potential impacts. 

But putting brakes or controls on development is bit like trying to hold back a stream.  Clever developers have sought ways around the process.  One of the early issues became jurisdiction.  Because Act 250 does not apply to all development but has thresholds, it has also developed stringent rules to ensure that developers do not create shell corporations, put property in family members’ names, or any of a dozen other shifts.  Reading 10 V.S.A. § 6001(19)’s definition of “person,” one gets a mini-history of the more creative developers in this state and the changes that have had to follow their creative footsteps.  Without quoting the statute in whole, the key is that a person includes an individual and any corporation, trust, joint venture, unincorporated business entity, or any other entity in which the individual has an interest or realizes profit.  This even extends to any land or interest held by family members unless the individual can prove that she receives no beneficial interest from the family member’s holdings. 

In other words, the statute seeks to nail down every possible meaning of ownership, and benefit possible.  If that means the umbrella term “person” is stretched to absurd proportions, so be it.  The point is to fix every angle possible and to put every meaning into the word so that it can control and regulate the behavior that follows. 

In light of this statute, the SCOV’s analysis is straightforward.  The irrevocable trust may prevent the parents from receiving a direct interest, but the benefit to the children offsets any investment the parents might otherwise have to make.  Therefore, the parents reap an indirect benefit, and that is enough to include the trust in the definition of a person for the purposes of Act 250 jurisdiction, and the trust’s holding will be lumped in with the parents’ holdings for the purpose of defining development.  Judgment of the Environmental Court and the District Coordinator is affirmed, and the Petitioners can gird themselves for many years of evening appearing before the Commissioners of District 9. 

In dissent, Justices Skoglund and Dooley disagree with the majority’s analysis in part.  The problem here is that petitioners were unopposed at environmental court and did not fully brief the issue.  The question of whether the trust benefits the parents is more complex than the majority admits.  The parents’ filings were cursory on this subject because they were not challenged to provide more information.  It may be that the trust prevents either the parents or the minor children from benefiting from the trust, leaving its proceeds for the children after they reach the age of majority.  In that case, the majority’s conclusions may be misplaced.  Since there was no adversarial process, the dissent would have remanded the issue back to the Environmental Court for further findings and discovery to flush out the terms of the trust and determine whether it offered any benefit to the parents, indirect or other.  In lieu of this information, the dissent is uncomfortable with jumping to conclusions. 

The majority disagrees with this position noting that it falls upon the parties to raise issues and resting on bald assertions and conclusions without developing the facts was their choice and one for which they must bear the consequences.  To the majority the lack of an adversary to challenge Petitioners to develop facts is irrelevant.  If Petitioners meant the trust to prevent benefits accruing even indirectly to the parents, they needed to say it and not just mean it.  

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