Saturday, September 13, 2014

Rolling Stone

Stone v. Town of Irasburg, 2014 VT 43

By: Jeffrey M. Messina

Plaintiff, the Treasurer of the town of Irasburg, sued the Town claiming the Select Board acted unlawfully in ordering her to raise her bond to $1 million then preventing her from doing so. She sought damages based on common law defamation, tortious interference with office, violation of the Vermont Constitution, and deprivation of due process.

Plaintiff was elected Treasurer of the Town of Irasburg, and almost immediately tension developed between her and the Select Board. About a month into the position, a member of the Board proposed the town's auditors should perform an audit every two weeks for the first two months of plaintiff’s term, and every month thereafter during the time she holds the position. After the first audit, the auditors told the Board they were unable to balance the books due to several mistakes in the reports submitted by plaintiff.

In response, the town attorney advised increasing the Treasurer's bond from $500,000 to $1,000,000 if plaintiff could not satisfy the auditors concerns. Accordingly, the Board gave the plaintiff a few weeks to "settle and reconcile accounts to the satisfaction of the auditors," and notified the bonding company of the potential need for increased bonding limits and the appointment of an assistant treasurer.

Tensions continued to simmer.

The simmer came to a boil between plaintiff and the Board when a dispute arose over $200 in an envelope received at the town offices as partial payment of property taxes. This is where it gets really ugly, as unbridled insults and accusations flew in both directions. Ultimately, the Board required plaintiff to increase her bond limit and gave her 10 days to obtain the bond. Failure to do so would effectively end her position.

Acquiescing, plaintiff attempted to obtain the higher bond from the national underwriter as well as other insurers. Interestingly, each insurance company requested an employer statement which "tells about the job [plaintiff] will be doing and all the controls in place for the funds she will be overseeing." Both the town attorney and Board were unwilling to fill out the employer portion of the application. Obviously, plaintiff was unable to obtain the higher bonding limit. Plaintiff filed suit.

Plaintiff’s original complaint sought to enjoin the Town from demanding the bond increase and the court issued an ex parte temporary restraining order (TRO) in plaintiff's favor. Following the hearing, however, the court vacated the TRO without prejudice, noting that with the extension of 10 days there was no imminent harm. Plaintiff then filed an amended complaint seeking, in addition to the injunction, an order that the Town cooperate with her in obtaining the bond. Predictably, plaintiff failed to obtain the increased bond and the Board declared the position of Treasurer vacant.

After the Town declared the position vacant, plaintiff sought reinstatement. The Town filed motions in opposition to reinstatement and sought dismissal for failure to state a claim. The court denied the motions to dismiss and concluded plaintiff had established a prima facie case for a “stigma-plus” civil rights claim for deprivation of a liberty interest in violation of the 14th Amendment. An evidentiary hearing began but was never completed because plaintiff failed to win reelection, which rendered her claim for relief moot.

Plaintiff filed a second amended complaint seeking money damages and attorneys’ fees on five legal theories: (1) violation of Ch. 1, Article 8 of the Vermont Constitution; (2) a civil rights violation arising from the Board's actions demanding the bond increase and ousting plaintiff without a vote; (3) common law defamation; (4) tortious interference with performance of office; and, (5) indemnification of legal fees pursuant to statute. The trial court granted summary judgment to the Town on all five claims, in two separate decisions.

The trial court analyzed the civil rights violation as a “stigma-plus” claim and determined that the Board meetings provided sufficient opportunity for plaintiff to address the claims against her. The court, therefore, concluded that she had received notice and an opportunity to be heard. The trial court's disposition of the statutory claim for attorneys’ fees was premised on the Board’s determination to increase the bond limit as a valid exercise of its authority despite no formal vote. Further, because plaintiff filed the suits to retain her position, she was not taking an action in performance of her official duties. As such, she was not entitled to payment of her legal fees. The remaining counts were found in the Town's favor based primarily on procedural grounds, except the court found for the Town on the defamation and tortious interference claims because plaintiff had not supported her claims with affidavits or other record evidence.

SCOV reviews summary judgment de novo.

SCOV begins its analysis with the civil rights violation, stating that "the fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner." The Court goes on to say that an individual may sue under a “stigma-plus” claim where they can show two elements: "damage to public standing through governmental action without hearing or opportunity to contest the action plus an accompanying tangible loss such as discharge from government employment." In this case, SCOV determines that plaintiff did not have a meaningful opportunity to be heard.

The Court finds that remedying a “stigma-plus” violation requires more than just a chance to speak; the opportunity to speak must be before a neutral body that provides a realistic chance of success. Based on the transcript of the hearing, SCOV determines plaintiff did not have sufficient opportunity to defend herself: the Select Board comments were “rude and dismissive,” and the plaintiff did not have a chance to question key individuals involved. As such, the Court concludes a factfinder could determine the Board failed to give the plaintiff a real opportunity to clear her name. Accordingly, SCOV rejects summary judgment. SCOV does agree, however, that the plaintiff did not have a property interest in the elected position, so it upholds judgment in favor of the Town on the claim of deprivation of a property interest.

Plaintiff’s second argument is that her suit was not a personal matter, but the only means she had to enforce her right to engage in her elected duties. Further, because her removal was not lawful, her suit was in furtherance of her duties and she's therefore entitled to legal fees under the statute. SCOV readily concludes that based on the language and subject matter of the statute, it's is not intended to provide attorneys’ fees to municipal employees disputing with towns over termination of their employment. SCOV adds, however, that if plaintiff were to prevail she may be entitled to attorneys’ fees under a federal statute that provides for that kind of thing.

SCOV determines the trial court's reasoning for granting summary judgment to the Town on the remaining three counts based solely on procedural grounds was insufficient. The Court finds that the record demonstrates contested facts which could support a judgment in plaintiff's favor.

According to SCOV, procedural requirements are important in cases where a party does not adequately dispute the statement of undisputed facts, and SCOV has affirmed lower court acceptance of those facts as admitted. In this case, however, SCOV states granting summary judgment to the Town only on plaintiff's failure to adequately respond was error for two reasons: first, because the Town had failed to provide a proper statement of undisputed facts with citation to the record demonstrating absence of any controverted material fact; and, second, plaintiff was not required to submit new evidence in support of her opposition where evidence already in the record supported her position. Because both parties had previously filed motions for summary judgment, the lower court already had a detailed statement of undisputed facts. SCOV concedes that while it is not the trial court's responsibility to go searching for factual disputes, the court should not have "turned a blind eye to the existence of this evidence either." In short, because both parties failed to follow the procedural requirements, summary judgment in favor of the Town on procedural grounds alone cannot be sustained. The High Court, then, goes on to address each of the three remaining claims on their merits.

For the constitutional claim, plaintiff asserted the Select Board unlawfully invalidated the town vote by improperly raising her bond and removing her from office. However, plaintiff did not present any argument related to the claim so SCOV determines appellant has waived any consideration of the issue on appeal.

SCOV then determines that the trial court erred in granting summary judgment to the Town on plaintiff’s defamation claim based solely on failure to follow the procedural requirements of the rule. SCOV finds important facts remain disputed which could support an outcome in plaintiff's favor.

Finally, SCOV discusses plaintiff's final claim of tortious interference with performance of an office. SCOV concludes there is no such tort in Vermont case law (or the law of other jurisdictions for that matter) and looks to the closest analogy of tortious interference in the employment context. The Court points out that under any analysis of related torts, the main element is interference by a third-party. Because the Select Board members are agents of the Town and not third parties, plaintiff cannot show a prima facie case for tortious interference.

Back to the trial court it goes for further developments.  

No comments:

Post a Comment