Sunday, May 21, 2017

Solar Flare

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Russell v. Hernon, 2017 VT 45

By Andrew Delaney

The most-important lesson in this case is that the basis for a prejudgment-interest start date has to have a discernible basis.

Mr. Russell was involved in efforts to develop solar facilities and possibly sell solar tax credits. I keep getting calls from folks with interesting accents trying to get me to put solar panels on my house. I don’t believe these are related, but I do enjoy messing with people who call me up and try to sell me stuff. There is nothing more entertaining than exasperated telemarketers (email me for NSFW link to a conversation with “Microsoft”). Digression is a way of life here at SCOV Law.

Back to the story . . . so Mr. Russell, Mr. Hernon, and a couple business entities are involved in this solar-facilities-and-tax-credits project. According to Mr. Russell he was the concepts guy and the head admin person.

Things didn’t work out with some credits due to tax elections and so Mr. Russell’s payments were supposed to then be in cash (or so he said). When that also didn’t work out, Mr. Russell sued Mr. Hernon and the business entities.

Mr. Russell said he was owed $28.5K based on a written agreement. He also claimed he was owed $21K in lost profits based on an oral agreement. Defendants said, “Nope,” there was no actual contract, and that any payment agreements were for gifts. The usual “no consideration” defense made an appearance. Defendants further argued that even if there were a contract, Mr. Russell breached it because he proposed a plan that wouldn’t work for the tax-credit goal.

The jury found three contractual breaches but that plaintiff suffered no damages for the first two of those breaches. On the third breach, however, the jury found $28.5K in damages for plaintiff.

All the defendants appeal.

First, they challenge the jury instructions. The gist is that plaintiff conceded that as part of the last contract he was giving up on past damages. Defendants argue that by submitting the were-there-past-breaches? question to the jury, and by the jury deciding that there were past breaches, the jury had “no choice” but to conclude that there was consideration for the final contract.

The SCOV—assuming the claim was preserved—rejects the premise. The trial court determined that Mr. Russell hadn’t “given up” on the past-due amounts, and cited a letter referencing the past-due amount written after the last agreement.

The SCOV reasons, “The trial court’s instructions to the jury were consistent with the evidence and the law.” Mr. Russell claimed damages from the prior contracts. There was evidence to support the questions put to the jury, and the jury actually did not find that the prior claims were settled with the last contract (which undermines the defendants’ consideration-as-a-foregone-conclusion argument). So that’s that. No error with the jury questions.

Next, the defendants argue that certain evidence shouldn’t have come in. I read a statistic somewhere that it’s a small fraction of one percent of cases that are reversed on evidentiary issues. This case is not in that small fraction of one percent. The SCOV concludes that defendants waived most of the arguments when they didn’t object (or object properly) below. The evidentiary arguments don’t get far at all.

Finally, defendants argue that the prejudgment interest award was wrong. The court awarded interest from two months after the last contract’s date but didn’t explain why and there’s no clear due date in the agreement. The SCOV notes that plaintiff is entitled to prejudgment interest from the time of breach.

Here the evidence isn’t conclusive and the SCOV can’t figure out the basis for the trial court’s prejudgment-interest start date, so it gets kicked back to the trial court to answer the here’s-where-prejudgment-interest-starts-and-why questions.

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