Couple o' Credits

By Andy Delaney

Two opinions Friday, both about credit, but in very different contexts. 

In our first case, the credit is for time served. Mr. Davila blew off his furlough and a warrant was issued for his arrest. He was arrested in Massachusetts and spent 490 days in the pokey there for both Vermont's warrant and local charges. He wanted that time to count toward his Vermont sentence so he filed a petition requesting as much. The trial court denied credit, siding with the Department of Corrections. The trial court reasoned that under the law, petitioner couldn’t get credit for days spent out of state while an arrest warrant was outstanding, and he wasn’t "awaiting transportation" to Vermont while Massachusetts still had pending charges. So, the trial court granted summary judgment to the State, rejecting petitioner's claim for credit for the Massachusetts jail time. 

He appeals.  

On appeal, a slim SCOV majority agrees with the trial court. Only after Massachusetts releases petitioner and Vermont gets custody does sentence credit resume. Justice Waples, joined by Chief Justice Reiber, dissents. The dissent reasons that the time in Massachusetts starts counting after the Vermont warrant is no longer "outstanding." Davila v. Deml, 2025 VT 39.  

Our second case involves credit for attorney's fees between law firms and the limits of the common-fund doctrine. The common-fund doctrine basically says that if one directly benefits from an action brought by another party, then a fair share is due. In a practical sense, in your typical car wreck case, if an attorney for the plaintiff recovers medical bills paid by an insurer, the insurer "pays" its portion of the attorney's fee (in practical terms it ends up being a reduction of the "lien," but I digress).      

So, after employee was injured on the job, there were a couple of lawsuits: (1) employer sued insurance broker for allegedly failing to get it workers' comp insurance; and (2) employee (represented by defendant law firm), sued employer. 

Plaintiff law firm represented employer in both actions. Mediation failed, but employee later separately settled with employer's broker's professional liability insurer. That settlement required dismissal of employee's claims against employer. Professional liability insurer paid the settlement, from which  defendant law firm got its contingency fee.  Plaintiff law firm also got a fee from employer's later settlement with insurer. Confused yet? Good. 

Plaintiff law firm filed suit against defendant law firm claiming unjust enrichment, arguing that its legal work (motion practice, prevailing against insurer's motions) enabled the employee's settlement with the professional liability insurer, thereby increasing the eventual fee received by defendant law firm. The trial court sided with plaintiff law firm, ruling that, under the common-fund doctrine, equity required the defendant law firm to share some of its fee. Something seems off about that but what do I know? 

Defendant law firm appeals. 

On appeal, SCOV reverses. SCOV explains that the common-fund doctrine—which is an exception to the American Rule about who pays attorney's fees (you're on your own)—allows recovery of attorney's fees only when the claimant's efforts create a fund from which multiple parties are legitimately entitled to a benefit. In the past, this has applied when an insured's recovery also satisfied their insurer's subrogated interest, and the insurer hadn’t helped achieve the settlement.

Here, employer (plaintiff law firm's client to help you—and me—keep track) was not entitled to share in the employee's settlement with the broker's professional liability insurer. The parties' interests were not sufficiently "common." They were adversaries in one case, and a common fund never existed between them. The fact that the employee's recovery was larger or more likely because of employer's litigation against Cornerstone was, at best, an incidental benefit. SCOV concludes that there are no grounds to abandon the rule limiting the doctrine to situations like insurance subrogation or class actions. The benefit the defendant law firm received was simply too indirect and not the sort of legally recognized "common fund" that triggers fee sharing.

So, SCOV reverses summary judgment for plaintiff law firm and directs judgment for defendant law firm, declines to address the trial court's damages ruling, and closes the door (for now) on expanding Vermont's common-fund doctrine beyond cases where the parties have parallel or shared legal interests in the recovery. WWSAF Special Partners Group, LLC v. Costello, Valente & Gentry, P.C., 2025 VT 40.