Sunday, December 7, 2014

Wild Water

Langlois v. Town of Proctor, 2014 VT 130

By Andrew Delaney

In the spirit of Félix Fénéon’s Novels in Three Lines: Potentially negligent landlord wins suit against town for town’s negligence without mention of her potential negligence and the SCOV reverses.

Of course, there’s a little more to it than that. Basically, plaintiff-landlord didn’t pay her water bill. She made some kind of an agreement with a town representative to shut the water off so that she wouldn’t incur any more charges. The town didn’t shut off the water, but landlord thought the town had. Landlord stopped heating the building. The pipes froze and burst, bada-bing, bada-boom, and in the words of Samuel Taylor Coleridge, “Water, water every where, Nor any drop to drink.”

So, landlord sued and made it to trial on negligence and breach-of-contract claims (consumer fraud and negligent misrepresentation got the boot on summary judgment). The jury found town negligent and awarded plaintiff almost $65K. The trial court didn’t give a comparative negligence instruction. Oopsie.

Town appeals and landlord cross appeals. Town argues: (1) it had no tort (negligence, not a tasty cake-like concoction—that’s a torte) duty to plaintiff; (2) the trial court shoulda instructed on comparative negligence; and (3) the proper measure of damages was the diminution in value of the building and there wasn’t any evidence of that. Landlord’s beef is that the jury instructions didn’t allow the jury to find that the town breached its duty of good faith and fair dealing.

Throw a little constitutional and criminal law in this one, and you’d have a case that touches on all your first-year-of-law-school subjects.

The SCOV begins with duty. If there’s no duty, there’s no claim for negligence. We covered that concept in Moose Lodge Mayhem earlier this year. Whether a duty exists is a question of law. The SCOV notes that there was a bit of confusion on the theories that gave rise to duty during the litigation, but due to the town’s failure to object to the jury instructions, the SCOV’s sole inquiry is whether plaintiff made out a duty to support her negligence claim, not what the scope of the duty was or whether the instruction was proper.

Plaintiff relies on a restatement section that covers the undertaking to render services (it’s Restatement (Second) of Torts § 323 (1979) for you slightly nerdy types out there). The basic thrust is that when there’s an undertaking and a failure to exercise due care, and that failure increases the risk of harm or “the harm is suffered because of the other’s reliance upon the undertaking,” the service renderer is subject to liability. It’s a fancy way of saying, “If you’re going to take something on, don’t screw it up.”

The town’s argument is, more or less, that it was a contractual duty to turn the water off and a tort-based duty of care must be “independent of any contractual obligations.” The jury did find that there was a contractual obligation to turn off the water, but it also found that the town didn’t breach that contract. So, the short answer, according to the SCOV, is that the jury’s finding of negligence wasn’t based on a contractual duty.

But the SCOV takes it a step further, and opines that the town “reads too much” into the tort-duty-must-be-independent-of-contractual-duty concept, noting at least one case where tort liability arose out of a contractual duty—a duty to maintain a mall’s roads and parking lots. Accordingly, the SCOV reasons that the jury had sufficient grounds to find a duty in this case. The SCOV also notes that landlord testified to relying on the town’s undertaking to shut off the water in turning off the water, which would satisfy the alternative grounds for liability under the restatement. The bottom line is that SCOV rejects the town’s argument that it “had no tort duty to properly turn off plaintiff’s water.”

This brings us to the comparative negligence question. If you don’t know how Vermont’s comparative negligence structure works, here’s the quick-and-dirty breakdown. It used to be that any negligence on a plaintiff’s part barred any recovery—game over. This was the harsh doctrine known as contributory negligence. That didn’t seem fair, so the legislature modified that concept by statute. As long as a plaintiff isn’t more than half at-fault, then the plaintiff can still recover damages (diminished proportionally by the percentage the plaintiff was at-fault). If the plaintiff was more than half at-fault, the plaintiff gets nada.

The trial court couldn’t see any duty for the plaintiff to check on the house before she shut off the heat, but the SCOV does. Though the instructions included a mitigation-of-damages instruction (if the defendant shows that plaintiff could’ve done something reasonable to avoid damages, the award should be reduced accordingly), the failure to include a comparative-negligence instruction was error—“[t]he trial court has a duty to instruct the jury on all issues essential to the case.”

The SCOV notes that there is at least one major difference between mitigation-of-damages and comparative-negligence theories. Whereas comparative negligence goes to liability, mitigation of damages goes to damages themselves after liability has been established. So what applies here? There’s what I like to call a “mini law review article” on the distinctions before the SCOV says, “We have never decided this question.”

The SCOV concludes that “comparative negligence applies, at least in part, regardless of the theory we follow.” Here, the town turned off the water at the curb, and the burst occurred in the cellar between the curb valve and the first-floor valve, and plaintiff didn’t discover it for some time. To grossly oversimplify things, the SCOV looks at legal history a little bit, reasoning that failure to mitigate damages was traditionally used to avoid the unjust result brought about by contributory negligence. As the focus has shifted to comparative fault, however, it is no longer necessary to make such a distinction.

The SCOV also notes that the line where comparative negligence ends and failure to mitigate begins is a question of fact not seemingly considered by the jury. That line is traditionally when the plaintiff becomes aware of being harmed by the defendant’s negligence. In the end, the SCOV concludes—noting that the jury did not award the full amount of damages testified to by plaintiff’s expert—that “the instructions as a whole did not contain the spirit of the law,” that the town was prejudiced by this, and that reversal and remand is warranted. On remand, town gets a SCOV-mandated comparative-negligence instruction.

The SCOV next considers damages, noting that it’s not required in the context, but that it’s likely to come up in the second trial, so the SCOV is going to take a gander. The town’s problem with the instructions, as noted above, is that the trial court failed to get into what the town considers the proper measure of damages—that when the cost of repair is disproportionate to the value of the property, damages are the diminution of the value in the property. Though it was alluded to, the town wanted the trial court to basically proclaim that the repair costs in this case were disproportionate and so the proper measure of damages was the diminution in value of the property.

The SCOV doesn’t think the trial court needs to give that specific instruction in this case, although the town advocates for making lack of disproportionality part of the plaintiff’s case in chief. While the SCOV clarifies “that the proportionality of cost-of-repair damages relative to the value of the property prior to a tort injury to property is part of the general inquiry on the reasonableness of damages,” the SCOV also reasons that the burden is on the party arguing disproportionality. So, in this case, the damages instruction was fine.

The final issue is plaintiff’s argument that the trial court should’ve instructed the jury as to plaintiff’s claim that the town violated the implied covenant of good faith and fair dealing.

The thrust of plaintiff’s claim was originally that the town sent “a false notice that the water had been shut off” and failed “to remediate the action immediately after it was discovered.” The town’s position was that the contract between plaintiff and the town was terminated by the plaintiff’s breach in failing to pay the water bill. The trial court allowed the jury to consider plaintiff’s breach-of-contract claim and specifically whether the town breached the covenant of good faith and fair dealing, though the trial court rejected plaintiff’s proposed jury instructions on the issue.

Again, grossly oversimplifying, over the course of the trial, plaintiff’s theory morphed into the position that the town put on a trumped-up defense on the breach-of-contract claim that was in bad faith; that the town was required to promptly disconnect the water and it did not; and that the town’s actions were unfair and unreasonable under the alleged contract.

The SCOV notes that the jury found there was a contract to disconnect the water, but that it was not breached. Thus, the contract claim dies unless the SCOV reverses on the breach-of-the-covenant-of-good-faith-and-fair-dealing claim. The SCOV does not reverse. It reasons that the town’s position, while potentially mistaken, was not wholly unreasonable and that plaintiff did not present sufficient evidence to get a more-specific instruction on the breach-of-the-covenant-of-good-faith-and-fair-dealing claim to the jury.

As we often do here, a number of the factual vagaries and nuances have been omitted. The opinion is worth a detailed review if dealing with any of the issues discussed above. It’s replete with citations that would do any law review alumnus proud.

This one gets sent back for a new trial on the negligence claim only.

Fin.

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