Fly Fish Vt. Inc v. Chapin Hill Estates Inc

• Decision Date: 23 April 2010
• Docket Number: No. 07-476.,07-476.
• Citation: 996 A.2d 1167,2010 VT 33
• Parties: FLY FISH VERMONT, INC., d/b/a The Fly Rod Shop, and Robert Shannon, Jr.v.CHAPIN HILL ESTATES, INC. and Peter J. Fitzpatrick.
• Court: Vermont Supreme Court

996 A.2d 1167

2010 VT 33

FLY FISH VERMONT, INC., d/b/a The Fly Rod Shop, and Robert Shannon, Jr.v.CHAPIN HILL ESTATES, INC. and Peter J. Fitzpatrick.

No. 07-476.

Supreme Court of Vermont.

April 23, 2010.

COPYRIGHT MATERIAL OMITTED

Peter G. Anderson, Stowe, for Plaintiffs-Appellees.

Charles F. Storrow of Kimbell Storrow Buckley Hughes, LLP, Montpelier, for Defendants-Appellants.

Present: REIBER, C.J., DOOLEY, JOHNSON and BURGESS, JJ., and DAVENPORT, Supr. J., Specially Assigned.

¶ 1. BURGESS, J.

In this action involving a boundary dispute and claims of nuisance and trespass related to the siltation of a pond, the appealing landowner contends that the trial court erred in establishing the boundary between the parties' properties and awarding compensatory damages for encroachment based upon that incorrectly established boundary. The landowner also argues that even if the court correctly established the boundary, it erred by awarding punitive damages without finding the requisite wrongful intent, or, alternatively, by awarding an excessive amount of damages. We affirm the trial court's boundary determination, but reverse its award of punitive damages.

¶ 2. This case involves adjoining parcels of land, one situated downhill from the other, along Route 100 in Stowe. The downhill property is owned by plaintiff/appellee Fly Fish Vermont, Inc., which in turn is owned by plaintiff/appellee Robert Shannon, Jr. The uphill property is owned by defendant/appellant Chapin Hill Estates, Inc., which in turn is owned by defendant/appellant Peter J. Fitzpatrick. Plaintiffs sued defendants for damages, claiming that construction work associated with a development project on defendants' property caused siltation to enter and damage the pond on their property. Defendants counterclaimed, alleging, among other things, that the pond was located, at least in part, on their property. The trial court found in favor of plaintiffs and awarded them both compensatory and punitive damages.

¶ 3. The critical facts are not in dispute. In a 1963 deed, India Chapin conveyed to Harrington's of Vermont, Inc. (one of plaintiffs' predecessors-in-title), a 2.5-acre parcel of land and an easement to water from a spring on her retained property, which was later conveyed to Fitzpatrick. The deed described part of the boundary line between the conveyed and retained property as following along a brook that eventually flowed into a drainage pipe under Route 100. The deed also referenced a more accurate description of the conveyed parcel: a survey by James Rich recorded in the town land records. In part, the Rich survey described the boundary as running nine feet from an iron pin to a brook and then westerly along the center of the brook to the edge of Route 100, where the brook entered a large culvert.

¶ 4. The following year, in a 1964 deed, Chapin conveyed her remaining ninety-five acres of property to Fitzpatrick. Fitzpatrick surveyed part of the property in 1965 in contemplation of building a motel. In 1966, Fitzpatrick built a road, dubbed “Megan's Way,” to the proposed motel construction site. Construction of the road effectively eliminated the surface brook that the applicable deeds had designated as a boundary line between the adjoining properties. All that remained of the brook was some intermittent ditching along the north side of a berm left over from construction of the road. Fitzpatrick eventually abandoned construction of the motel, but in 1969 sold part of his land to Chapin Hill Estates, Inc., one of his real estate development corporations.

¶ 5. In 1989, Harrington's conveyed its parcel to William Alley and his wife, another of plaintiffs' predecessors-in-title. That same year, Alley constructed a pond-the one involved in the instant dispute-to support his business of selling fly-fishing equipment and supplies. Aware of the construction, Fitzpatrick warned Alley to make sure that the pond did not extend past the boundary line. With the brook long gone, Alley understood the property boundary to be the intermittent ditching located alongside Megan's Way, so he made sure that he did not cross that line. Fitzpatrick knew where Alley built the pond but did not assert that it encroached upon the Chapin Hill property until years later during the events leading to this lawsuit.

¶ 6. In 1993, Alley and his wife conveyed their land to a couple, who divorced five years later. The wife was awarded the property and sold it to plaintiff, Robert Shannon and his fly-fishing supply business in March 2002. In the spring of 2004, plaintiffs received notice that Fitzpatrick and one of his development corporations had filed an application for approval of a subdivision proposal. About the same time, Fitzpatrick sent plaintiffs a letter asserting for the first time that the pond encroached upon his corporation's property. Fitzpatrick offered to adjust the boundary to allow for the pond encroachment in exchange for Shannon conceding any water rights he had to the spring on Fitzpatrick's property. Shannon rejected the offer.

¶ 7. In February 2005, Fitzpatrick obtained from the Town of Stowe a subdivision permit for his development project. The permit contained numerous conditions designed to minimize runoff resulting from the development. Construction on the development began in the summer of 2005 and continued into the fall of that year. Significant rainstorms, which occurred on four days between mid-October and mid-November, overwhelmed the incomplete measures that defendants had taken to prevent erosion and water runoff onto plaintiffs' property. As a result, a substantial amount of siltation entered plaintiffs' pond from defendants' property, causing damage to the pond.

¶ 8. During the fall of 2005, defendants failed to assure the adequacy of the erosion-control measures following the first two significant rainfalls in October. By late October, the Town considered defendants' apparent noncompliance with the permit conditions to be serious enough to hire its own independent engineer to inspect the site. The Town issued defendants a notice of violation and a “stop work” order in December 2005, but did not commence any formal enforcement proceedings. Issues surrounding the deficiencies in defendants' erosion-control measures were not resolved to the Town's satisfaction until May 2006, after which the Town issued certificates of occupancy to defendants.

¶ 9. As the result of defendants' deficient and inadequately monitored erosion-control measures, significant silt-laden runoff entered plaintiffs' pond from denuded and destabilized construction areas on defendants' property, altering the pond's soil composition and filling the pond bottom with new material. This runoff resulted in significantly higher levels of turbidity in the pond water, which, in turn, reduced levels of natural biota in the water.

¶ 10. Plaintiffs filed suit against defendants in May 2006, asserting counts sounding in trespass and nuisance and claiming a prescriptive easement to the extent that defendants were asserting that the subject pond was located on defendants' property. Defendants filed a counterclaim, alleging that plaintiffs had abandoned any water rights on defendants' property and that plaintiffs' pond encroached upon defendants' property. In an October 2007 decision, the trial court determined that plaintiffs had abandoned any water rights on defendants' property; however, the court established a boundary line that located plaintiffs' pond entirely on plaintiffs' property and awarded plaintiffs $32,533 in compensatory damages and $100,000 in punitive damages, plus costs, as the result of defendants' activities damaging the pond.

¶ 11. In arriving at its boundary decision, the court determined that it was impossible to establish the location of the brook described in the early deeds and thus concluded that the most equitable and rational method for establishing the boundary between the parties' properties was to draw a straight line, or “tie line,” between the two known and still-existing monuments. As for damages, the court compensated plaintiffs for the damage to their pond, but rejected as too speculative any award of damages for lost-business income. The court also awarded plaintiffs punitive damages because of defendants' reckless, if not intentional, disregard for plaintiffs' property rights. On appeal, defendants argue that the trial court erred in establishing the boundary between the parties and awarding plaintiffs punitive damages.

¶ 12. We begin with the court's boundary determination. Defendants contend that plaintiffs are not entitled to any award of damages resulting from sedimentation of the pond because the court should have determined the boundary line along the brook as it existed at the time of the original conveyance of the subject properties, which would have placed at least part of the pond on defendants' property. According to defendants, the court erroneously assumed that because the brook had been destroyed by defendants' actions in 1966 and thus no longer existed, the boundary line could not be established as it existed in 1963 or shortly thereafter. Defendants assert that the location of the brook in 1963, as set forth in the Rich survey, is identifiable and undisputed and therefore should be established as the boundary line now. In support of this argument, defendants rely on the general rule that boundaries move with the gradual movements of streams over time, but not when streams move suddenly as the result of natural or man-made events.

¶ 13. We do not find defendants' arguments persuasive. Defendants correctly state the general rule that sudden as opposed to gradual changes in the course of a boundary stream do not alter the boundary. See 9 R. Powell, Powell on Real Property § 66.01[2], at 66-5 to 66-7 (M. Wolf ed. 2008) (noting general rule that boundary line between abutting landowners moves with waterway when change in location of body of...