Knutsen v. David M. Dion, Thomas Gardner, David M. Dion Real Estate, Inc.

• Decision Date: 23 January 2014
• Docket Number: No. 12–294.,12–294.
• Citation: 2013 VT 106,90 A.3d 866
• Court: Vermont Supreme Court
• Parties: Janet KNUTSEN v. David M. DION, Thomas Gardner, David M. Dion Real Estate, Inc., and Vermont Association of Realtors, Inc.

90 A.3d 866

2013 VT 106

Janet KNUTSEN

v.David M. DION, Thomas Gardner, David M. Dion Real Estate, Inc., and Vermont Association of Realtors, Inc.

No. 12–294.

Supreme Court of Vermont.

Nov. 8, 2013.

Motion for Reargument Denied Jan. 23, 2014.

Kimberly B. Cheney of Cheney Saudek & Grayck PC, Montpelier, for Plaintiff–Appellant.

Thomas F. Heilmann and David D. Aman of Heilmann, Ekman & Associates, Inc., Burlington, for Defendant–Appellee Vermont Association of Realtors, Inc.

Present: DOOLEY, SKOGLUND and BURGESS, JJ., and HOWARD and BENT, Supr., JJ., Specially Assigned.

DOOLEY, J.

¶ 1. Plaintiff Janet Knutsen appeals the decision of the superior court denying her motion for summary judgment and granting defendant Vermont Association of Realtors, Inc.'s (VAR) motion for summary judgment on her consumer fraud claim arising out of her purchase of a home in Moretown. Plaintiff argues that VAR's form purchase and sale agreement, which was used in her real estate purchase—to which VAR was not a party—violates the Vermont Consumer Fraud Act (CFA) in that two provisions of the form are unfair and deceptive, and that she is therefore entitled to damages under § 2461(b) of the CFA. We affirm.

¶ 2. On May 20, 2007, plaintiff entered into a purchase and sales contract with Lorraine and Leonard Sweetser (sellers) for the purchase of their home. Sheila Jacobs, plaintiff's broker, prepared the contract. The contract contained the following limitation of liability:

Limitation of Liability: Seller and Purchaser each agree that the real estate brokers identified in Section 31 hereof have provided both Seller and Purchaser with benefits, services, assistance and value in bringing about this Contract. In consideration thereof, and in recognition of the relative risks, rewards, compensation and benefits arising from this transaction to said real estate brokers, Seller and Purchaser each agree that such brokers, their agents, associates or affiliates, shall in no event be liable to either Purchaser, Seller or both, either jointly, severally or individually, in an aggregate amount exceeding the total compensation to be paid to such brokers on account of this transaction or $5,000, whichever is greater, by reason of any act or omission, including negligence, misrepresentation, errors and omissions, or breach of any undertaking whatsoever, except for intentional or willful acts. This limitation shall apply regardless of the cause of action or legal theory asserted against the real estate brokers unless the claim is for an intentional or willful act. This limitation of liability shall apply to all claims, losses, costs, damages or claimed expenses of any nature whatsoever from any cause or causes, except intentional or willful acts, so that the total aggregate liability of all real estate brokers identified in Section 31 hereof shall not exceed the amount set forth herein. Seller and Purchaser each agree that there is valid and sufficient consideration for this limitation of liability and that the real estate brokers are the intended third-party beneficiaries of this provision.

(bolding and emphasis in original). Plaintiff initialed and dated the page containing the limiting language and signed the contract. The above section provided a liability limitation to “real estate brokers identified in section 31” of the contract. The brokers identified in section 31 are the firms for which sellers' and buyer's agents worked.

¶ 3. The contract also contained a clause calling for presuit mediation of disputes related to the contract. The mediation provision stated:

Mediation of Disputes: In the event of any dispute or claim arising out of or relating to this Contract, to the Property, or to the services provided to either Seller or Purchaser by any real estate agent who brought about this Contract, it is agreed that such dispute or claim shall be submitted to mediation prior to the initiation of any suit. The party seeking to mediate such dispute or claim shall provide notice to the other party and/or to the real estate agent(s) with whom mediation is sought and thereafter the parties and/or real estate broker(s) to be involved in the mediation shall reasonably cooperate with each other in the selection of a mediator and shall reasonably agree upon the selection of a mediator. The real estate agent(s) who brought about this Contract can be of assistance in providing information as to sources for obtaining the services of a mediator. Unless otherwise agreed to in writing, the parties and any real estate agent(s) involved in the mediation shall share the mediator's fee equally. Seller, Purchaser and the real estate agent(s) who brought about this Contract acknowledge and understand that, although utilizing mediation in an effort to resolve any dispute or claim is mandatory under this Contract, the function of the mediator is to assist the parties involved in the mediation in resolving such dispute or claim and not to make a binding determination or decision concerning the dispute or claim. This provision shall be in addition to, and not in replacement of, any mediation or alternative dispute resolution system required by an order or rule of court in the event the dispute results in a lawsuit.

(bolding in original). Like the limitation of liability provision, plaintiff initialed and dated the page containing the mediation provision.

¶ 4. Although plaintiff's broker prepared the purchase and sales contract, she used a template that VAR provided on its website. VAR is a Vermont trade organization comprised of more than 1800 licensed real estate brokers and salespersons. VAR makes available to its members generic, preprinted real estate forms, including a purchase and sales contract form that a member can use as a template. VAR recommends the form to those involved in a real estate sale. The purchase and sales agreement form can be modified to meet the specifics of the agreement for any given purchase and sales transaction. The website page plaintiff attached to her motion for summary judgment indicates that VAR provides forms “through TrueForms.” ^* We take this to mean that the forms actually come from some external source, although the bottom of the form states, “This form developed by the Vermont Association of Realtors, Inc.”

¶ 5. Approximately one month prior to the closing on the contract, sellers presented plaintiff with a Sellers' Property Information Report (SPIR). The SPIR notified plaintiff that “[t]his year the water table was extremely high; water seeped in at various places where cracks are visible. Controlled with wet/dry vac. Sump pump takes care of water during early spring [and] does not reach concrete.” Plaintiff initialed the page of the SPIR containing this disclosure and signed the SPIR. She disregarded her broker's suggestion to have the contract reviewed by an attorney.

¶ 6. In the years after the closing, plaintiff experienced water infiltration in the basement of the house. Plaintiff brought suit against sellers, the home inspector, and sellers' real estate brokers and their real estate agency, alleging that she had purchased the home based on misrepresentations about the water infiltration problem. She settled with sellers and with the home inspector, and the trial court dismissed the case against sellers' real estate brokers, and their agency, for failure to comply with the presuit-mediation clause of the contract. Plaintiff refiled her action, again suing sellers' real estate agency and their realtors, and adding as defendants VAR, her broker, and her broker's agency. Plaintiff's claims against her broker and the agency were voluntarily dismissed with prejudice.

¶ 7. The claim against VAR was based on the two clauses in the form contract quoted above—the limited liability clause and the mandatory mediation clause. Plaintiff argued that those clauses were unfair and deceptive, and that by providing the form contract and representing on its website that the template is fair to all parties, VAR violated the CFA. She therefore sought damages under 9 V.S.A. § 2461(b), the private right of action under the CFA. Both plaintiff and VAR filed motions for summary judgment on the CFA claims. The trial court ruled that the clauses, either alone or in conjunction, were not “unfair or deceptive under the CFA.” It therefore found that “VAR's sole connection to this case—drafting the template clauses that [plaintiff] and her buyer's broker eventually used—cannot support a consumer fraud claim” and granted VAR's motion for summary judgment. This appeal followed, and plaintiff's claims against sellers' realtors, and their agency, have been stayed pending its resolution.

¶ 8. We review a grant of summary judgment using the same standard of review applied by the trial court. Al Baraka Bancorp (Chicago), Inc. v. Hilweh, 163 Vt. 148, 153, 656 A.2d 197, 200–01 (1994). “Summary judgment is appropriate only where the moving party establishes that there is no genuine issue of material fact and that the party is entitled to judgment as a matter of law.” Samplid Enters., Inc. v. First Vt. Bank, 165 Vt. 22, 25, 676 A.2d 774, 776 (1996); V.R.C.P. 56(a).

¶ 9. On appeal, the only issue is plaintiff's CFA claim against VAR. Plaintiff argues that the trial court erred by “rel[ying] on a factual conclusion that [plaintiff] freely entered into a contract and, hence, there was ... no need to examine the VCFA.” Plaintiff points us to the section of the CFA that provides that “[n]o actual damage to any person need be alleged or proven for an action to lie under this chapter.” 9 V.S.A. § 2457. Plaintiff objects to the trial court's observation that plaintiff was not harmed because she had not been deceived by the challenged provisions and because her damages could be satisfied even under the limitation of liability provision. Plaintiff calls the violation a “per se” violation of the CFA, which she interprets as meaning that no damages must be...