Loux v. Cooley
| Decision Date | 07 September 1995 |
| Docket Number | No. 2:93-CV-92.,2:93-CV-92. |
| Parties | H. Arthur LOUX and Nancy S. Loux v. Carroll R. COOLEY v. FEDERAL DEPOSIT INSURANCE CORP. as Receiver for the First National Bank of Vermont. |
| Court | U.S. District Court — District of Vermont |
Robert P. Gerety, Jr., Plante, Hanley & Gerety, P.C., White River Jct., VT, for plaintiffs.
Harry A. Black, Black, Black & Davis, White River Jct., VT, for Carroll R. Cooley.
Edward R. Zuccaro, Zuccaro, Willis & Bent, P.C., St. Johnsbury, VT, for FDIC.
RULING ON MOTION FOR SUMMARY JUDGMENT (paper 84)
As the party moving for summary judgment, defendant Carroll Cooley has the initial burden of informing the Court of the basis for his motion and of identifying those parts of the record which he believes demonstrate the absence of a genuine issue of material fact. See Latimer v. Smithkline and French Laboratories, 919 F.2d 301, 303 (5th Cir.1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Where, as here, a motion for summary judgment is supported by affidavits or other documentary evidence, the party opposing that motion must set forth specific facts which show there is a genuine, material issue for trial. See King Service, Inc. v. Gulf Oil Corp., 834 F.2d 290, 295 (2d Cir.1987). Accordingly, the plaintiffs must come forward with enough evidence to support a verdict in their favor. They cannot defeat the defendant's motion merely by presenting a metaphysical doubt, conjecture or surmise concerning the facts. See Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Borthwick v. First Georgetown Securities, Inc., 892 F.2d 178, 181 (2d Cir.1989). Only disputes over facts which might affect the outcome of the suit under the governing law preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
Upon review of the submissions of the parties, the Court finds the following facts undisputed. See Local Rule 5(c). In May 1987, H. Arthur and Nancy S. Loux conveyed a three acre parcel of land to James Gabelhart, Trustee of C & H Associates. Gabelhart granted the Louxs a mortgage on the land to secure the $517,500 promissory note he gave the Louxs.
On May 1, 1987, the Louxs assigned the Gabelhart mortgage to First National Bank of Vermont (hereinafter "the Bank") as collateral for a $133,345.50 loan. On December 8, 1987, the Louxs satisfied their loan obligations to the Bank. Upon repayment of the loan, the Bank agreed to reassign the Gabelhart mortgage to the Louxs.
Carroll Cooley is the branch manager of the Windsor branch of the First National Bank of Vermont. His duties include responsibility for daily transactions, managing the office and execution of documents on behalf of the bank. On December 8, 1987, the Louxs satisfied their loan obligation to the Bank by delivering the final payment to Cooley. However, instead of reassigning the mortgage to the Louxs, Cooley mistakenly filed a discharge of the mortgage on the Windsor Land Records.
On August 1, 1988, James Gabelhart filed a petition for bankruptcy protection under Chapter 11. The Louxs sought relief from the automatic stay so they could foreclose their mortgage, which was in default. Citing the Bank's discharge of the mortgage, Gabelhart took the position that the bankruptcy estate had acquired the mortgaged property free of any lien.
After several years of litigation, the Bankruptcy Court found that the disputed property was not part of the Gabelhart bankruptcy estate. On or about July 14, 1992, the District Court affirmed the Bankruptcy Court's decision. However, the Bankruptcy Court did not determine the issue of whether the Bank had, in fact, properly discharged the Loux mortgage.
Meanwhile, in October 1988, the Bank learned of the mistake and executed and recorded a Cancellation of Discharge and a Reassignment of the Mortgage to Louxs. The Bank then brought the instant suit in Windsor Superior Court seeking a declaration that the purported mortgage discharge was ineffective. The Louxs filed a counterclaim against the Bank and a third-party complaint against Carroll Cooley.
In October 1991, the Windsor Superior Court granted the Bank's request for relief and declared the mortgage discharge ineffective. However, the Superior Court did not resolve the Louxs' counterclaims or third-party complaint against Cooley.
In early 1993, the Federal Deposit Insurance Corporation was appointed receiver of the First National Bank of Vermont (hereinafter "the FDIC"). The FDIC removed the action to this Court. On February 15, 1994, the Court dismissed the Louxs' claims against the FDIC absent opposition. See paper 71.
On September 9, 1994, then Chief Judge Fred I. Parker granted in part Cooley's Motion for Judgment on the Pleadings. See paper 83. By that ruling, the Court dismissed the plaintiffs' breach of contract claim under Count I and their breach of fiduciary duty claim under Count III. However, the Court held that the Louxs' third-party complaint does state a claim against Cooley for negligence. Judge Parker noted:
While it is true that the complaint does not specifically allege that Cooley owed any particular duty to plaintiffs, when viewed in the light most favorable to plaintiffs, the facts alleged do give rise to an inference that Cooley owed bank customers, in this case, the Louxs, a duty of reasonable care in performing his job. The fact that Cooley's negligence, if any, occurred during the course of his employment does not serve to shield him from personal liability.... An agent may be held personally liable for his own tortious conduct within the scope of his employment.
Slip op. at 9-10 (citations and footnotes omitted).
The Louxs claim that the defendant's conduct harmed them because they were unable to obtain title to their property in a timely manner. They seek compensation for emotional injury, loss of income, and depreciation in the market value and physical damage to the property. See Plaintiff's State of Facts (paper 90) at para. 14.
The defendant argues that he cannot be held liable in negligence to the Louxs "as a matter of law because of his failure to perform duties owed to his principal." Defendant's Memorandum of Law in Support of Motion for Summary Judgment (paper 85) at 1. As noted supra, this Court rejected that argument when considering defendant's Motion for Judgment on the Pleadings.
In Vermont, corporations "are liable for their negligent torts, and for negligence of their officers and servants acting in the course of their official duty or employment, in the same manner and to the same extent that individuals are liable under the same circumstances." Garafano v. Neshobe Beach Club, Inc., 126 Vt. 566, 569, 238 A.2d 70 (1967); see Hardwick-Morrison Co. v. Albertsson, 158 Vt. 145, 149, 605 A.2d 529 (1992). Therefore, "a corporate officer can be held liable for a tort in which he personally participated and the person wronged may proceed against...
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