State v. Therrien, 02-108.

• Decision Date: 16 May 2003
• Docket Number: No. 02-108.,02-108.
• Citation: 830 A.2d 28
• Court: Vermont Supreme Court
• Parties: STATE of Vermont v. Carolyn THERRIEN and the Estate of Andrew Therrien v. Gregory Howe.

830 A.2d 28

STATE of Vermont v. Carolyn THERRIEN and the Estate of Andrew Therrien v. Gregory Howe.

No. 02-108.

Supreme Court of Vermont.

May 16, 2003.

Motion for Reargument Denied June 16, 2003.

Leslie C. Pratt, Montpelier, for Defendants/Third-Party Plaintiffs-Appellants.

James E. Preston of Pierson, Wadhams, Quinn & Yates, Burlington, for Third-Party Defendant-Appellee.

Present: DOOLEY, J., CASHMAN and ZIMMERMAN, District Judges, and ALLEN, C.J. (Ret.) and GIBSON, J. (Ret.), Specially Assigned.

DOOLEY, J.

¶ 1. After her husband, the late Andrew Therrien, was found to have violated Act 250, 10 V.S.A. §§ 6001-6108, and the Consumer Fraud Act, 9 V.S.A. §§ 2451-2480g, in connection with septic and water systems located on his Salem Heights development in the Town of Derby, defendant Carolyn Therrien, executrix of her late husband's estate, brought a third-party claim against attorney Gregory Howe for the alleged negligence of Howe and his late partner in preparing the deeds that defendant claims were the cause of the estate's liability. On Howe's motion, the trial court granted summary judgment in his favor. Defendant appeals, arguing that (1) the trial court erroneously ruled that a client's intentional misconduct constitutes a complete defense to an attorney charged with negligence by the client, and (2) the trial court exceeded the scope of the summary judgment motion before it by granting the motion in part based on arguments not raised or addressed by the parties. We reverse in part, affirm in part, and remand for further proceedings.

¶ 2. In October 1975, Andrew Therrien was issued a land use permit pursuant to Act 250 allowing him to subdivide his 100-acre parcel of land into seventy-seven residential lots. Therrien proceeded to sell most of these lots, but failed to disclose to prospective purchasers the conditions of the land use permit that encumbered the lots. More importantly, Therrien failed to comply with the septic and well water system conditions in the permit. As a result, some residents had little or no water pressure, sewage effluent surfaced and stagnated, and water wells were eventually contaminated with fecal waste.

¶ 3. In March 1983, the State notified Therrien that there were "several serious violations" of the land use permit on his subdivision that needed to be resolved. Thereafter, Therrien agreed in writing to a voluntary compliance schedule. Therrien, however, never complied. In fact, as the trial court found, Therrien continued to sell lots with permit violations without disclosing the land use permit even after he had signed the voluntary compliance schedule.

¶ 4. The State subsequently brought an action against Therrien in October 1985, alleging violations of Act 250 for his installation of water and septic systems that did not comply with the land use permit, and violations of the Consumer Fraud Act for failing to notify prospective purchasers that the use of the lots was encumbered by conditions contained in the permit.

¶ 5. In July 1991, the trial court issued an opinion citing Therrien for numerous violations of his Act 250 land use permit, specifically finding that Therrien's failure to abide by the terms of his permit and to fulfill the requirements of the voluntary compliance schedule was "willful and intentional." The Act 250 violations included: installation of community water systems not allowed under his permit; installation of improper individual septic systems, community septic systems, and collection sewers; failure to install appropriate septic systems as required by the permit; failure to comply with the isolation distances for water wells and lines from septic systems; failure to show land purchasers the permit and associated documentation; and failure to seek appropriate amendments to the permit. The court also found that Therrien had committed "unfair or deceptive acts and practices" prohibited by the Consumer Fraud Act, 9 V.S.A. § 2453, in selling subdivision lots not in compliance with the land use permit. The court decided not to assess punitive damages and civil penalties, but ordered Therrien "to correct the problems he ha[d] created and . . . to obtain the appropriate governmental approvals for the benefit of the people who live in his subdivision." In its order, the court delineated Therrien's specific liabilities, which consisted primarily of performing all work necessary to bring the water and septic systems in the subdivision into compliance with Act 250 and conforming all deeds of the present lot owners to the land use permit.

¶ 6. Since Andrew Therrien had died between the time the trial ended and the date that the decision was issued, the court entered the judgment order substituting Therrien's estate and defendant as executrix as parties. We affirmed this judgment in State v. Therrien, 161 Vt. 26, 633 A.2d 272 (1993). The remedial portion of this case remains unresolved and pending.

¶ 7. During the trial, a third-party claim was initiated against Howe, alleging, inter alia, that the negligence of Howe and Howe's late partner, David Lalime, during the course of representing Therrien rendered Howe liable to indemnify Therrien for any losses which might ensue as a result of the suit against Therrien by the State. Howe's and Lalime's alleged negligence consisted primarily in preparing, and allowing their clients to execute, numerous deeds and property transfer tax returns which they knew, or should have known, were inconsistent with the land use permit. These inconsistencies included the following: many lots were conveyed with fractional rights in community water systems, although the permit allowed only individual on-site wells on these lots; several lots were required by the permit to be served by community waste disposal systems yet were conveyed without any reference in the deeds to such systems; none of the deeds included restrictive covenants imposing permit-required 100-foot isolation distances between the on-site wells and septic systems or requiring that any on-site septic system to be installed by individual owners be installed in accordance with the approved plans; and several property tax returns stated that the transfer covered by the return was in compliance with Act 250 and the subdivision regulations, when in fact this was not the case. In December 2001, in response to a motion by Howe, the trial court granted summary judgment against defendant. Defendant subsequently brought this appeal.

¶ 8. On review of a grant of summary judgment, this Court will apply the same standard used by the trial court. White v. Quechee Lakes Landowners' Ass'n, 170 Vt. 25, 28, 742 A.2d 734, 736 (1999). Summary judgment will be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." V.R.C.P. 56(c)(3).

¶ 9. Defendant's primary argument on appeal is that the court erred in finding that intentional misconduct on the part of Therrien constitutes a complete defense to the indemnification for negligence claim against Howe. She contends that this case is unlike any case cited by the State or by the trial court in support of that proposition, in that here the deeds themselves rather than the actions of the client were the "sine qua non from which most, if not all, of the salient findings of wrongdoing in this case flowed." She argues that, were it not for Howe and his partner preparing the deeds inconsistent with the permit requirements, Therrien would not have incurred any liability. Thus, it should be Howe who is liable to the State, regardless of Therrien's possible willful and intentional conduct in failing to ensure compliance with the permit.

¶ 10. The trial court's July 1991 order contained nine paragraphs imposing specific restrictions and liabilities on Therrien.¹ Without individually examining the specific liabilities imposed, the trial court, in its December 2001 decision granting summary judgment in favor of Howe, held that, regardless of his actions, Howe is automatically shielded from any liability by Therrien's own intentional wrongful conduct. In so ruling, the court adopted the blanket rule that "intentional misconduct on the part of the client constitutes a complete defense to the attorney," citing for direct authority the cases of Heyman v. Gable, Gotwals, Mock, Schwabe, Kihle, Gaberino, 1999 OK CIV APP 132, ¶¶ 11-12, 994 P.2d 92 (Okla.Civ.App.), and Buttitta v. Newell, 176 Ill.App.3d 880, 126 Ill. Dec. 330, 531 N.E.2d 957, 959-60 (1988). The court also noted that its holding was supported by the fact that "in Vermont,... contribution among joint tortfeasors is barred," citing Howard v. Spafford, 132 Vt. 434, 435, 321 A.2d 74, 74-75 (1974), and Hiltz v. John Deere Indus. Equip. Co., 146 Vt. 12, 15, 497 A.2d 748, 751-52 (1985).

¶ 11. We conclude that the trial court's ruling is correct in part and overbroad in part. To explain our ruling, we must separate components of Therrien's violations of Act 250 and the superior court's 1991 remedial order. Before doing so, however, we emphasize that the Act 250 permit made no reference to the deeds of the lots in the Salem Heights development, and thus contained no explicit requirements of provisions in those deeds. While, as we explain, deed provisions were necessary in certain circumstances to comply with the permit, the permit did not specify those circumstances.

¶ 12. Therrien's violations related to both water systems and sewer systems. As to water systems, the Act 250 permit specified that each lot was to have its own well. In fact, Therrien drilled wells that were shared by multiple lots without, except in one instance, seeking a permit amendment. The deeds were apparently consistent with the actual lot development because they provided, in some instances, rights to water from...