Glassford v. Dufresne & Assocs., P.C.

• Decision Date: 12 June 2015
• Docket Number: No. 14–194.,14–194.
• Court: Vermont Supreme Court
• Parties: James GLASSFORD and Heidi Glassford v. DUFRESNE & ASSOCIATES, P.C.

124 A.3d 822

2015 VT 77

James GLASSFORD and Heidi Glassford

v.DUFRESNE & ASSOCIATES, P.C.

No. 14–194.

Supreme Court of Vermont.

June 12, 2015.

Kimberly B. Cheneyof Cheney, Saudek & Grayck PC, Montpelier, for Plaintiffs–Appellants.

Philip C. Woodwardof Woodward & Kelley, PLLC, South Burlington, for Defendant–Appellee.

Opinion

DOOLEY, J.

¶ 1. Plaintiffs Heidi and James Glassford appeal the decision of the Washington Superior Court denying summary judgment to plaintiffs and granting summary judgment to defendant Dufresne & Associates, P.C. on plaintiffs' claims of negligent misrepresentation and violation of the Vermont Consumer Protection Act (CPA). We affirm.

¶ 2. The following facts are undisputed. Plaintiffs are homeowners who purchased their home direct from the builder, D & L Homes by Design, LLC (D & L). D & L hired defendant to certify that the on-site mound sewage disposal system constructed for the home satisfied state permitting requirements. This certification was made pursuant to 10 V.S.A. § 1973, which requires a permit for “constructing, replacing, or modifying a potable water supply or wastewater system,” id.§ 1973(a)(3), and imposes the certification requirement as follows:

(e) No permit issued by the Secretary shall be valid for a substantially completed potable water supply and wastewater system until the Secretary receives a statement from an installer or licensed designer certifying that, in the exercise of his or her reasonable professional judgment, the installation-related information submitted is true and correct and the potable water supply and wastewater system:

(1) were installed in accordance with:

(A) the permitted design and all permit conditions; or

(B) record drawings and such record drawings are in compliance with the applicable rules, were filed with the Secretary, and are in accordance with all other permit conditions;

(2) were inspected;

(3) were properly tested; and

(4) have successfully met those performance tests.

Id.§ 1973(e).

¶ 3. As the language of the statute makes clear, this is a post-permit requirement that must be completed before the permit becomes effective. The statute does not require that the certification be recorded in the land records, and it provides no private remedy against an installer or licensed designer who made inaccurate representations in the statement. The Secretary of Natural Resources is authorized to take certain enforcement actions with respect to § 1973.

¶ 4. On April 19, 2005, the Vermont Agency of Natural Resources issued a Wastewater System and Potable Water Supply Permit for construction of the sewage disposal system on the property, subject to receiving a certification pursuant to § 1973(e). On October 20, 2005, defendant's employee sent to the Agency the certification required by § 1973(e), stating as follows: “I hereby certify that, in the exercise of my reasonable professional judgment, the installation-related information submitted is true and correct and the wastewater system was installed in accordance with the permitted design and all permit conditions, was inspected, was properly tested, and has successfully met those performance tests.” Defendant's certification was for the Agency's use in determining whether the system was installed according to the permitted design.¹On November 4, 2005, the Agency wrote defendant stating that “all conditions pertaining to ... [the] permit have been satisfied.”

¶ 5. On December 20, 2005, plaintiffs signed a purchase-and-sale agreement to purchase the home from D & L. Although the seller represented that the home and property had received all the necessary permits, plaintiffs never saw the certificate or the letter from the Agency stating that the certification requirement was satisfied. Sometime thereafter, plaintiffs hired an attorney in connection with the closing, which occurred on January 17, 2006. On January 13, just prior to the closing, plaintiffs' attorney prepared a certificate of title that noted the wastewater and water supply permit and stated: “The permit requires a certificate from the designer or installer filed with [the] District Environmental Office certifying completion of the water and sewage conditions.” The title certificate was provided to plaintiffs and was not thereafter amended. Correspondence between plaintiffs' attorney and the attorney for the seller included a request for a copy of the water and sewage certificate, and a copy was included in a FAX from January 12. In an affidavit, plaintiff Heidi Glassford stated, “We would not have purchased the property if Attorney Palmisano had warned us that the certificate was missing and might be a cause of concern about our title to the property, or the proper construction of the waste water system.” Plaintiffs never saw the certificate until after the sewage disposal system failed.

¶ 6. In February 2006, the sewage disposal system failed. In November 2008, plaintiffs hired defendant to investigate the system's failure because they knew defendant had inspected the system prior to their purchase. Defendant prepared a report stating that he had “completed the original” inspection in 2005 and found the system had been installed according to the permitted design. Plaintiffs received other opinions about the disposal system's failure both before and after hiring defendant to inspect the system.²In general, plaintiffs' position is that the sewage disposal system failed because the soil placed over the system was improperly graded.³Defendant's position is that the system failed because the house was too large, plaintiffs operated a daycare center that added to the wastewater entering the system, and plaintiffs' horses were allowed to walk over the system.

¶ 7. Plaintiffs filed a complaint in superior court alleging pecuniary losses from defendant's failure to properly inspect the sewage disposal system and subsequent misrepresentation about the construction of the system in the certification to the Agency.⁴Specifically, they alleged damages in tort for negligence—which, as discussed below, the superior court defined as a negligent misrepresentation claim—and under the CPA. Both parties moved for summary judgment, and the court entered judgment for defendant on both claims.

¶ 8. As related to this appeal, the superior court held that plaintiffs' negligent misrepresentation claim failed because plaintiffs did not see defendant's certification until the proceedings in this case and therefore did not rely on the alleged misrepresentation. With respect to the CPA claim, the court held that the claim failed because the parties did not contract for a sale of goods or services as required under the CPA. Plaintiffs appealed.

¶ 9. On appeal, plaintiffs argue that, with respect to the negligent misrepresentation claim, the superior court erred in finding that they did not rely on the certificate. They contend that defendant was under a public duty to furnish this information and that therefore they fall within the class of plaintiffs sought to be protected by the public duty. They further contend that, although they never saw the certificate prior to their purchase, they relied on it through their agent attorney, whose knowledge of the certificate was imputed to plaintiffs. They also argue that the superior court erred in concluding that the CPA requires privity between the parties and instead should have held defendant liable as an indirect seller. We disagree with plaintiffs and affirm the superior court's grant of summary judgment for defendant.

¶ 10. We review summary judgment decisions de novo under the same standard as the trial court. Stone v. Town of Irasburg,2014 VT 43, ¶ 25, 196 Vt. 356, 98 A.3d 769. Summary judgment will be granted when, viewing the evidence in the light most favorable to the nonmoving party, “there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Id.;see V.R.C.P. 56(a).

¶ 11. Before turning to plaintiffs' claims, we emphasize what we are deciding under this standard of review. As noted in the footnotes above, defendant disputes several facts critical to plaintiffs' claims, and the absence of these material facts—facts that link defendant to the failure of the sewage disposal system—defeats plaintiffs' summary judgment motion. Assuming without deciding that plaintiffs' version of the disposal system's failure is undisputed, we still conclude that plaintiffs' claims of negligent misrepresentation and violation of the CPA fail before even reaching the causation issue. The superior court did not need to consider that issue in its decision, and neither do we.

¶ 12. We start with plaintiffs' claim of negligent misrepresentation. As noted above, plaintiffs claim only economic losses, which usually are precluded in a tort action. Long Trail House Condo. Ass'n v. Engelberth Constr., Inc.,2012 VT 80, ¶ 10, 192 Vt. 322, 59 A.3d 752. Plaintiffs argued below that their case fits into an exception to the economic loss rule where a special relationship exists between the parties, particularly in the context of professional malpractice. According to plaintiffs, that special relationship was created by defendant's statutory duty to file a certificate with the Agency. The superior court found the proper framework for plaintiffs' claim under the common law tort of negligent misrepresentation, as defined in Restatement (Second) of Torts § 552 (1977)[hereinafter the Restatement], which provides a cause of action for “information negligently supplied for the guidance of others.” We previously have adopted this section of the Restatement for claims of negligent misrepresentation, Limoge v. People's Trust Co.,168 Vt. 265, 268, 719 A.2d 888, 890 (1998), and do so here.

¶ 13. Section 552 of the Restatement provides:

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of

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