Bourdeau Bros., Inc. v. Boissonneault Family Farm, Inc.

• Decision Date: 08 May 2020
• Docket Number: No. 2019-166,2019-166
• Citation: 236 A.3d 1263
• Court: Vermont Supreme Court
• Parties: BOURDEAU BROS., INC. v. BOISSONNEAULT FAMILY FARM, INC. et al.

236 A.3d 1263

BOURDEAU BROS., INC.

v.BOISSONNEAULT FAMILY FARM, INC. et al.

No. 2019-166

Supreme Court of Vermont.

March Term, 2020

May 8, 2020

Arend R. Tensen of Cullenberg & Tensen, PLLC, Lebanon, New Hampshire, for Plaintiff-Appellant.

Jay Boissonneault, Pro Se, St. Albans, Defendant-Appellee/Cross-Appellant.

PRESENT: Reiber, C.J., Robinson, Eaton, Carroll and Cohen, JJ.

COHEN, J.

¶ 1. This is a collection action brought by a grain supplier against dairy farmers for unpaid grain bills. Plaintiff, the prevailing party below, appeals the trial court's denial of its request for attorney's fees. Plaintiff argues that it was entitled to recover attorney's fees based on a term contained in invoices that it provided to defendants each time it delivered grain. Plaintiff argues that under 9A V.S.A. § 2-207, the term became part of the parties' contract when defendants failed to object to it within a reasonable time. Defendants cross-appeal, arguing that the trial court improperly calculated damages and erred by dismissing their counterclaim and finding defendant Jay Boissonneault personally liable. We remand for the trial court to reconsider whether plaintiff is entitled to attorney's fees, but otherwise affirm the judgment.

¶ 2. Plaintiff Bourdeau Bros., Inc. is a Vermont company that sells agricultural supplies, feed, and chemicals. Defendants operate a dairy farm in Georgia, Vermont. In July 2016, plaintiff sued defendant Boissonneault Family Farm, Inc. (BFF) for amounts owed for grain delivered by plaintiff to the farm. Plaintiff subsequently amended its complaint to add Jay and Cathy Boissonneault as co-defendants. In their answer, defendants denied that Cathy Boissonneault or BFF had done business with Bourdeau Bros., Inc. Defendants moved to dismiss Cathy Boissonneault and BFF as defendants. The court denied the motion. In February 2018, defendants filed a counterclaim alleging that plaintiff owed defendants $16,000 for water plaintiff took from defendants' pond.

¶ 3. A two-day bench trial took place in March 2019. At the conclusion of the trial, the court dismissed plaintiff's claims against Cathy Boissonneault. The court found that beginning in 2012, defendants Jay Boissonneault and BFF had an oral agreement with plaintiff to purchase grain. Each time plaintiff delivered grain, it presented an invoice to defendants. Defendants consistently paid the amounts indicated in the invoices until 2015, when defendants stopped paying. The court found that defendants owed plaintiff $27,564.97 for grain delivered in 2015, including interest of eighteen percent per year. The court denied plaintiff's request for attorney's fees despite language in the invoices stating that plaintiff would be entitled to such fees in the event of a collection action. The court explained that the attorney's fees provision was a material alteration to the parties' oral agreement to which defendants had not agreed. The court also dismissed defendants' counterclaim for damages for water taken by plaintiff.

¶ 4. Both parties appealed. Plaintiff argues that the court erred in denying its request for attorney's fees, which it asserts were contractually required. Defendants deny that they owe attorney's fees. They also challenge the court's calculation of damages and claim that it erred in dismissing their counterclaim and in finding defendant Jay Boissonneault personally liable.

¶ 5. On appeal, we review the trial court's factual findings in the light most favorable to the prevailing party. Rubin v. Sterling Enterprises, Inc., 164 Vt. 582, 588, 674 A.2d 782, 786 (1996). We will affirm the court's findings of fact if there is credible evidence in the record to support them, even if substantial contradictory evidence exists. Lofts Essex, LLC v. Strategis Floor & Decor Inc., 2019 VT 82, ¶ 17, ––– Vt. ––––, 224 A.3d 116. "Where the trial court has applied the proper legal standard, we will uphold its conclusions of law if reasonably supported by its findings." Highgate Assocs., Ltd. v. Merryfield, 157 Vt. 313, 315-16, 597 A.2d 1280, 1281-82 (1991).

¶ 6. We begin by addressing plaintiff's claim that the court erred in denying its request for attorney's fees. The general rule is that attorney's fees are not recoverable "absent a statutory or contractual exception." DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239, 246, 776 A.2d 413, 419 (2001). Plaintiff argues that it was entitled to attorney's fees based on the following provision that appeared at the bottom of each invoice it presented to defendants:

Terms: Net 30 days, a finance charge, based on the following periodic rates: 1½ % per month (18 annual percentage rate) will be applied to any past due balance which was billed 30 days or more prior to the closing date of this statement .... A customer will be responsible for reasonable attorney fees and costs if collection of the amount becomes necessary.

Plaintiff argues that under § 2-207 of the Uniform Commercial Code, these additional terms formed part of its agreement to sell grain to defendants. Plaintiff claims that defendants indicated their assent to the terms by paying interest on past-due amounts without objection. The trial court agreed that plaintiff was entitled to collect interest based on the above provision because defendants had never objected and because plaintiff would be entitled to collect statutory interest in the absence of the provision. However, it denied plaintiff's request for attorney's fees, stating: "We follow in this country the American Rule under which all parties are responsible for their own attorney's fees. In order for there to be an exception, the parties have to agree otherwise. So that's a material alteration ...."

¶ 7. Section 2-207 of the Uniform Commercial Code (UCC), as enacted in Vermont, provides in part:

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

....

(b) they materially alter it ....

9A V.S.A. § 2-207(1) - (2)(b). This Court has never had occasion to interpret § 2-207. The proper interpretation of the statute is a legal question that we review without deference to the trial court. See In re Treetop Dev. Co. Act 250 Dev., 2016 VT 20, ¶ 9, 201 Vt. 532, 143 A.3d 1086.

¶ 8. As a preliminary issue, we must determine whether the parties qualify as "merchants" to whom § 2-207 applies. For purposes of the UCC, a merchant is defined in relevant part as "a person who deals in goods of the kind or otherwise by his or her occupation holds himself or herself out as having knowledge or skill peculiar to the practices or goods involved in the transaction." 9A V.S.A. § 2-104(1). Plaintiff is plainly a merchant for purposes of this case because it deals in grain, which is the subject of the contract at issue. Similarly, we conclude that defendants Jay Boissonneault and BFF are merchants in this context because they have specialized knowledge of grain purchasing acquired in the course of their business as dairy farmers. See Aube v. O'Brien, 140 Vt. 1, 4, 433 A.2d 298, 300 (1981) (holding that bonded cattle dealer and dairy farmer were both merchants under § 2-104(1) ); see also In re Montagne, 431 B.R. 94, 113 (Bankr. D. Vt. 2010) ("A dairy farmer is a merchant in all aspects of his mercantile capacity, i.e., with respect to goods for dairy farming operations, but not for every purchase of goods."). The trial court therefore correctly concluded that § 2-207(2)(b) is applicable to defendants' agreement to purchase grain from plaintiff.

¶ 9. However, we cannot affirm the trial court's ruling that the invoice term allowing plaintiff to recover reasonable attorney's fees in the event of a collection action was, as a matter of law, a material alteration to the parties' contract. As discussed further below, we conclude that the determination of whether an additional term materially alters a contract under § 2-207 requires a factual inquiry into the particular circumstances of each case. Because the trial court made no findings to support its conclusion, we must remand for further proceedings.

¶ 10. The UCC does not define what constitutes a material alteration. However, Official Comment 4 to § 2-207 lists several examples of clauses "which would normally ‘materially alter’ the contract and so result in surprise or hardship if incorporated without express awareness by the other party," such as a disclaimer of standard warranties. 9A V.S.A. § 2-207 cmt. 4. Comment 5 lists examples of terms "which involve no element of unreasonable surprise and which therefore are to be incorporated in the contract unless notice of objection is seasonably given," such as interest on past-due amounts. Id. cmt. 5. Attorney's fees are not on either list.

¶ 11. Based on the language of Comments 4 and 5, most courts agree that an additional term is a material alteration if it would result in unreasonable surprise or hardship if incorporated without the buyer's express awareness.¹ See, e.g., Am. Ins. Co. v. El Paso Pipe & Supply Co., 978 F.2d 1185, 1190 (10th Cir. 1992) ; Luedtke Eng'g Co. v. Ind. Limestone Co., 740 F.2d 598, 600 (7th Cir. 1984) ; St. Charles Cable TV, Inc. v. Eagle Comtronics, Inc., 687 F. Supp. 820, 827 (S.D.N.Y. 1988) ; Palmer G. Lewis Co. v. ARCO Chem. Co., 904 P.2d 1221, 1229 (Alaska 1995) ; C9 Ventures v. SVC-W., L.P., 202 Cal.App.4th 1483, 136 Cal. Rptr. 3d 550, 568 (2012) ; Oakley Fertilizer, Inc. v. Cont'l Ins. Co., 276 S.W.3d 342, 348 (Mo. Ct. App. 2009) ; Stanley-Bostitch, Inc. v. Regenerative Envtl. Equip. Co., 786 A.2d 1063, 1066 (R.I. 2001). We find the majority view to be persuasive. According...