Gettis v. Gmedc

• Decision Date: 28 October 2005
• Docket Number: No. 04-262.,04-262.
• Citation: 892 A.2d 162,2005 VT 117
• Parties: Patricia A. GETTIS and James N. Gettis v. GREEN MOUNTAIN ECONOMIC DEVELOPMENT CORPORATION, Connecticut River Valley Revolving Loan Fund and Town of Hartford.
• Court: Vermont Supreme Court

892 A.2d 162

2005 VT 117

Patricia A. GETTIS and James N. Gettis v. GREEN MOUNTAIN ECONOMIC DEVELOPMENT CORPORATION, Connecticut River Valley Revolving Loan Fund and Town of Hartford.

No. 04-262.

Supreme Court of Vermont.

October 28, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher D. Roy of Downs Rachlin Martin PLLC, Burlington, for Plaintiffs-Appellants.

Peter G. Beeson of Devine, Millimet & Branch, P.A., Manchester, New Hampshire, for Defendant-Appellee Green Mountain Economic Development Corporation.

Robert S. DiPalma of Paul, Frank + Collins, P.C., Burlington, for Defendant-Appellee Connecticut River Valley Revolving Loan Fund.

James F. Carroll and Susan P. Ritter of English, Carroll & Ritter, P.C., Middlebury, for Defendant-Appellee Town of Hartford d/b/a Hartford Business Revolving Loan Fund.

Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.

DOOLEY, J.

¶ 1. Plaintiffs, Patricia and James Gettis, appeal a superior court order granting summary judgment to defendants, Green Mountain Economic Development Corporation, Connecticut River Valley Revolving Loan Fund, and the Town of Hartford. Defendants were involved in loan transactions with plaintiffs. The trial court determined that: (1) all of plaintiffs' claims for non-economic damages were barred by the statute of limitations; (2) defendants were entitled to summary judgment on plaintiffs' claims for economic damages; (3) plaintiffs could not establish a prima facie case for tortious interference with contractual relations and prospective economic advantage; and (4) there were no grounds for punitive damages. We affirm the first two of the court's decisions and do not reach the remainder.

¶ 2. The parties submitted statements of undisputed facts in support of their summary judgment motions.¹ From these statements, the trial court determined which of the material facts were undisputed and used those facts to render its decision. The following statement of facts is primarily based on the recitation of facts in the summary judgment decision.

¶ 3. For several years, plaintiffs ran an inn and a catering business under the auspices of Gettis, Inc., a subchapter S corporation. In the early 1990s, they sold the inn in order to focus on their catering business. Eventually, they sought start-up funding to open a gourmet, take-out delicatessen to augment their catering business.

¶ 4. After being denied loans by other lenders, plaintiffs approached Green Mountain Economic Development Corporation [GMEDC] for assistance. GMEDC is a regional development corporation that acts as a loan administrator for the other defendants, Connecticut River Valley Revolving Loan Fund [CRV] and Town of Hartford Business Revolving Loan Fund [the Town]. Plaintiffs further developed their business plan with the assistance of Lenae Quillen-Blume, a small business development advisor for the Small Business Administration [SBA], whose office was located in the GMEDC building. Plaintiffs have alleged that Ms. Quillen-Blume was acting for GMEDC in her interactions with plaintiffs.

¶ 5. Through GMEDC, plaintiffs submitted a "Financing Proposal" to the Town and CRV, seeking a total of $75,000 in financing. Both lenders initially denied the application. Plaintiffs revised their application, reducing their loan request from the Town and CRV to a total of $35,000. On September 20, 1996, James Saudade, executive director of GMEDC, informed plaintiffs that their loan would not be recommended for approval due to insufficient collateral and a concern about non-competition provisions in the proposed lease for their business location. Plaintiffs worked to address those concerns and identified an alternative location for their business.

¶ 6. On October 30, 1996, CRV approved a $15,000 loan to Gettis, Inc., and on November 26, 1996, the Town of Hartford Selectboard approved a $20,000 loan to Gettis, Inc. Both loans were conditioned upon zoning and permit approval. Throughout November and early December 1996, plaintiffs applied for zoning approval, arranged for health and fire inspections, and worked to secure other necessary permits and licenses.

¶ 7. On December 10, 1996, the parties closed on the two loans, totaling $35,000, even though plaintiffs had not received zoning approval and other permits as required by the loan agreement. On December 18, the Town issued conditional use approval for the delicatessen. The site development plan was approved on December 23. The Town issued a zoning permit for construction and operation of the delicatessen on January 10, 1997.

¶ 8. At the time of the loans, it was expected that the loan proceeds would cover necessary equipment and facilities renovations. Patricia Gettis had already expended over $15,000 on renovations by the time the loans closed, so that the sum was immediately reimbursed. By late January 1997, plaintiffs recognized, however, that the renovations would cost much more than expected because of regulatory requirements imposed by the Vermont Department of Labor and Industry, and that the loan funds would not cover both the renovations and equipment. They determined that they would need an additional $20,000 to purchase equipment. They contacted their GMEDC loan administrator, Margo Watson, who advised them to complete the renovations and to purchase the necessary equipment with personal credit cards. She assured them that funds for an additional consolidated loan at a lower interest rate would soon be available to replace the credit card debt. Using their credit cards, plaintiffs bought over $20,000 worth of business equipment, which was ultimately subject to the lenders' security interests.

¶ 9. On February 27, 1997, plaintiffs opened "A La Carte," their new delicatessen. In March 1997, plaintiffs met with the loan administrator, Margo Watson, and the SBA advisor to discuss the consolidation loan they desired. They presented the loan administrator with documentation of business equipment purchases they had made on their credit cards. She informed them at that meeting that funds for the consolidation loan they sought would not be available for another six months.

¶ 10. In September 1997, and again in early October, Ms. Gettis was hospitalized with an unprecedented flare-up of her inflammatory arthritis. Her doctor associated the flare-ups with stress and overwork, which, according to Ms. Gettis, was caused by the business's financial difficulties. Ms. Gettis continued to work despite her doctor's pleas to stop. She continued to suffer from aggravated arthritis throughout the period A La Carte was in business. On October 3, 1997, while Ms. Gettis was hospitalized, Mr. Gettis met with the loan administrator and the SBA business development advisor, who informed him that no additional loan funds would be available to replace plaintiffs' credit card debt.

¶ 11. A year later, in early October 1998, the lenders agreed to allow plaintiffs to make interest-only payments from December through March, spreading the principal due during those months over the remainder of the year. On October 9, the loan administrator sent plaintiffs a letter asking them to make payments on their loans immediately, as no payment had been received since August 1998. She also requested that plaintiffs return signed letters acknowledging their agreement with the proposed modified payment plan. On November 3, the executive director of GMEDC sent another letter to plaintiffs, warning them that GMEDC still had not received payment. He informed them that the modified payment plan was conditioned upon plaintiffs bringing their loans current. No payments were made.

¶ 12. On December 1, 1998 the GMEDC executive director sent letters declaring plaintiffs in default on their loans from CRV and the Town and demanding payment in full within fifteen days. A La Carte closed its doors permanently at the end of December 1998. Defendants never repossessed their collateral. Plaintiffs eventually filed for bankruptcy.

¶ 13. Plaintiffs filed suit against defendants GMEDC, CRV, and the Town on December 12, 2001. The counts of the complaint were: (1) breach of contract; (2) negligent or intentional breach of fiduciary duty; (3) breach of the implied covenant of good faith and fair dealing; (4) equitable and promissory estoppel; (5) negligent or intentional misrepresentation; (6) tortious interference with contractual relations and prospective economic advantage (against GMEDC only); (7) tortious interference with prospective economic advantage (against the Town and CRV only); and (8) negligent or intentional infliction of emotional distress.

¶ 14. The exact bases for plaintiffs' claims are often not specified, but have emerged in the briefing and argument. The central factual allegation behind virtually all of plaintiffs' counts is contained in paragraph fifty-six of the complaint as follows:

But for the unexpected imposition of personal credit card debt that needed to be serviced with payments much higher than would have been the case if additional loan proceeds had been advanced, the Gettises' business would have met or exceeded the expectations and projections set forth in the original business plan. Thus, but for the burden of personal credit card debt, their business would have been on the track to success.

The first count is based on the failure of defendants to provide additional loans to pay off the credit card debt. The fourth and fifth counts raise various arguments on that subject. According to plaintiffs' fourth count, defendants should be estopped from enforcing the loan terms because they induced plaintiffs' financial failure through the credit card debt and the failure to provide business loans to eliminate that debt. The fifth count alleges misrepresentation because defendants knew they would not extend further credit when they induced plaintiffs to incur credit card debt, but stated that they would provide further...