McKinstry v. Fecteau Residential Homes, Inc.

• Decision Date: 18 September 2015
• Docket Number: No. 14–275.,14–275.
• Citation: 131 A.3d 1123
• Parties: Janet McKINSTRY and Mark McKinstry v. FECTEAU RESIDENTIAL HOMES, INC. d/b/a Fecteau Homes.
• Court: Vermont Supreme Court

131 A.3d 1123

Janet McKINSTRY and Mark McKinstry

v.FECTEAU RESIDENTIAL HOMES, INC. d/b/a Fecteau Homes.

No. 14–275.

Supreme Court of Vermont.

Sept. 18, 2015.

Joshua L. Simonds of The Burlington Law Practice, PLLC, and Kathryn G. Kent of Kent Law Practice, PLLC, Burlington, for Plaintiffs–Appellants/Cross–Appellees.

Robert Halpert and Stephen L. Cusick of Zalinger Cameron & Lambek, P.C., Montpelier, for Defendant–Appellee/Cross–Appellant.

Present: REIBER, C.J., DOOLEY, SKOGLUND, ROBINSON and EATON, JJ.

DOOLEY, J.

¶ 1. Plaintiff buyers in this consumer fraud action appeal from an attorney's fee award substantially lower than they requested. Defendant seller has cross-appealed from the damage award. We affirm the damage award, and reverse and modify a portion of the fee award.

¶ 2. The facts, viewed in the light most favorable to the judgment, may be summarized as follows. Fecteau Residential Homes, Inc. (seller) is in the business of selling manufactured modular homes. In early November of 2010, Janet and Mark McKinstry (buyers) entered into a written contract with seller for the purchase of a demonstrator modular home on seller's lot. Buyers tendered a $5000 deposit toward the purchase price, obtained financing, and engaged a contractor to lay the necessary footings and foundation for the home.

¶ 3. Shortly thereafter, however, seller's owner Vic Fecteau called buyers to offer them a new, identical modular home at the same price instead of the demonstrator model for which they had contracted for reasons related to financial difficulties in obtaining a replacement floor model from that particular manufacturer. Buyers rejected the offer, the parties argued, and Fecteau thereupon cancelled the deal and subsequently returned the $5000 deposit. Buyers purchased a slightly larger modular home from a different dealer, which required modifications to the partially completed foundation to install.

¶ 4. Buyers then filed this action under the Consumer Protection Act,¹ 9 V.S.A. §§ 2451 –2480g (Act), alleging that seller misrepresented its intention to sell them the demonstrator model for which they had contracted; that they relied to their detriment on the misrepresentation, in part by paying for a foundation "to meet the dimensions of the home sold to them by [seller]"; and that they incurred additional expenses when forced to install a different model. Buyers sought damages, exemplary damages, and attorney's fees.

¶ 5. Seller subsequently moved for summary judgment, asserting that buyers had failed to establish an essential element of consumer fraud by showing a misrepresentation or omission of material fact at the time of contracting, failed to establish that they were "consumers" within the meaning of the Act, and failed to mitigate their damages. In May 2013, the court issued a written decision, denying the motion. The court found that genuine issues of material fact existed as to whether seller actually intended to sell the demonstration model at the time of contracting, whether buyers were consumers who intended to purchase the home for personal use rather than resale, and whether buyers had suffered any actual damages, which precluded entry of summary judgment.

¶ 6. Following a two-day trial in October 2013, the jury returned a special verdict in favor of buyers, answering "Yes" to the question, "[w]as there consumer fraud," and awarding damages of $1000. Buyers thereafter moved for attorney's fees totaling $69,614.17 and costs of $1,732.40. The motion was supported by their lead attorney's affidavit setting forth his background and experience and that of his associate counsel on the case; their hourly billing rates of $275 and $225 respectively, which they represented to be reasonable, customary, and commensurate with their training and experience; a summary of each attorney's responsibilities and hours billed during the three so-called "phases" of the litigation, described as the preliminary investigation, discovery, and trial; and timesheets detailing the billed hours for each attorney. Seller opposed the motion, asserting that the award of "nominal" or "minimal" damages did not entitle buyers to an award of attorney's fees, or, alternatively, that the award should be "drastically reduced" to reflect buyers' limited success at trial and their attorneys' "unreasonable hourly" rates and "duplicative and excessive" hours. Seller requested that the court take judicial notice of affidavits filed by attorneys in an unrelated consumer-fraud action stating that the standard rate for an experienced attorney in central Vermont is $225 per hour. Seller also moved to offset any attorney's fee award by the $5000 deposit refunded to buyers in order to "preclude double recovery" under the Act.

¶ 7. The trial court issued a written ruling on the motions in April 2014. The court characterized the action as "a strange one" which "puzzled" it from the start owing to buyers' objection to purchasing a "new version of the same home for the same price"; found that the damage award of $1000 was "a nominal amount and significantly less than [buyers] were seeking"; and observed that the action served no broader consumer-protection interest. In addition, the court found "no reason that this case required two attorneys" as the "issues were limited and the facts were not particularly complicated." The court thus concluded: "Given the minimal recovery, the fact that recovery was questionable from the start, and the lack of any public purpose served by this case, the court concludes that a reasonable fee award for the recovery here is $15,000." The court granted buyers' request for costs with the exception of parking and meals, for a total of $1360.

¶ 8. Turning to seller's motion for a $5000 offset, the court concluded that, under the Act, buyers were not entitled to both a return of their consideration and an award of damages, and determined that "the $5000 will be treated as a credit toward the attorney's fees." Accordingly, the court entered judgment for buyers in the amount of $1000 in damages, $1360 in costs, and $10,000 in attorney's fees, for a total award of $12,360.

¶ 9. Seller subsequently moved for judgment notwithstanding the verdict to overturn the entire judgment on the ground that buyers "were not entitled as a matter of law to bring their claim under the [Act] after having accepted return of their consideration." Buyers opposed the motion, and also moved for reconsideration of the attorney's fee award, asserting that the $5000 offset was improper, and that the court had "not provided an adequate explanation for its drastic reduction" in attorney's fees. The court denied seller's motion in a brief entry order, ruling that the election-of-remedies argument was an affirmative defense which was not raised in seller's answer and therefore was waived, and "decline[d] [buyers'] request to reconsider the fee award." These appeals followed.

¶ 10. Turning first to the cross-appeal, seller contends the trial court erred in failing to grant its motions for summary judgment and judgment as a matter of law because the evidence showed no material misrepresentation or omission prior to the signing of the contract. Summary judgment is proper only where the undisputed facts show that the movant is entitled to judgment as a matter of law. Bonanno v. Verizon Bus. Network Sys., 2014 VT 24, ¶ 8, 196 Vt. 62, 93 A.3d 146. The nonmoving party is entitled to "the benefit of all reasonable doubts and inferences." Ianelli v. U.S. Bank, 2010 VT 34, ¶ 7, 187 Vt. 644, 996 A.2d 722 (mem.) (quotation omitted). Similarly, the granting of a motion for entry of judgment as a matter of law is appropriate only where the evidence, viewed in the light most favorable to the nonmoving party, provides no legally sufficient basis for a jury to find for the nonmoving party. Monahan v. GMAC Mortg. Corp., 2005 VT 110, ¶ 2, 179 Vt. 167, 893 A.2d 298 ; Perry v. Green Mountain Mall, 2004 VT 69, ¶ 7, 177 Vt. 109, 857 A.2d 793. To establish a consumer fraud claim under the Act, a plaintiff must show that the defendant made a misrepresentation or omission likely to mislead consumers; that the plaintiff's interpretation of the misrepresentation or omission was reasonable; and that the misrepresentation or omission was material in that it affected the plaintiff's purchasing decision. Jordan v. Nissan N. Am., Inc., 2004 VT 27, ¶ 5, 176 Vt. 465, 853 A.2d 40.

¶ 11. Assessed in light of these standards, the record evidence here was sufficient to support the judgment. Buyers' theory was that seller knew at the time of contracting that it could not obtain financing to replace the demonstrator model but agreed nevertheless to sell it without actually intending to do so, and later sought unsuccessfully to persuade buyers to purchase a new model on order rather than the floor model. Buyers both testified without dispute that, when they expressed an interest in the demonstrator model, Dan Fecteau—the salesperson and owner's son—refused to sell it because he knew that seller could not obtaining financing to replace it; that they later telephoned Dan Fecteau to restate their interest in purchasing only the floor model; and that Dan then spoke with the owner, Vic Fecteau, who agreed to sell it.² Although his deposition and trial testimony were not entirely clear or consistent, Vic Fecteau acknowledged that he was reluctant to sell the demonstrator model out of concern that he could not replace it, that he did not want to "alarm" buyers about the situation, and that nothing in the agreement made the sale contingent on his obtaining a replacement demonstrator model. Thus, resolving all doubts and inferences in favor of the nonmoving party, a fact-finder here could reasonably infer that seller agreed to the sale while harboring an unstated intention not to consummate it, but rather to persuade buyers at a later date to take a different, newly manufactured model.³ Accordingly, we conclude that the evidence...