Roberts v. Chimileski

• Decision Date: 07 February 2003
• Docket Number: No. 01-158.,01-158.
• Court: Vermont Supreme Court
• Parties: Marcel ROBERTS, David Currier and Roberts Real Estate, v. Robert CHIMILESKI, William Davies, Robert Davis, Gregory Howe, Michael Loignon, John Monette and Andrew Pepin.

820 A.2d 995

Marcel ROBERTS, David Currier and Roberts Real Estate, v. Robert CHIMILESKI, William Davies, Robert Davis, Gregory Howe, Michael Loignon, John Monette and Andrew Pepin.

No. 01-158.

Supreme Court of Vermont.

February 7, 2003.

Present DOOLEY, MORSE and JOHNSON, JJ., CHEEVER, Superior Judge, Specially Assigned, GIBSON, Associate Justice (Ret.), Specially Assigned.

ENTRY ORDER

¶ 1. This appeal involves legal malpractice claims arising out of the formulation of a development scheme that sought to circumvent Act 250 permit requirements. Plaintiffs Marcel Roberts and David Currier appeal a superior court decision upholding the findings of a special master denying recovery for legal malpractice against defendants Robert Chimileski, William Davies, Robert Davis, Gregory Howe, Michael Loignon, John Monette, and Andrew Pepin. Plaintiffs contend that (1) the special master should not have heard expert testimony to establish the standard of care of a Vermont attorney with regard to the practice of reviewing Environmental Board decisions; and (2) the failure to disclose the inherent risk of a development plan in questionable conformity with an unsettled area of the law constituted legal malpractice as a matter of law. We affirm.

¶ 2. As found by the special master and adopted by the trial court, the facts are as follows. In July 1984, Roberts, a real estate developer, consulted attorney Monette about Act 250 permit requirements concerning the subdivision of land into ten or more lots. At that time, Act 250 had just been amended to define a "lot" as any undivided interest in land and not just parcels under ten acres. See 10 V.S.A. § 6001(11). Additionally, the 1984 version of 10 V.S.A. § 6001(19) defined "subdivision" as

a tract or tracts of land, owned or controlled by a person, which have been partitioned or divided for the purpose of resale into ten or more lots within a radius of five miles of any point on any lot, and within any continuous period of 10 years after the effective date of this chapter. In determining the number of lots, a lot shall be counted if any portion is within five miles.

10 V.S.A. § 6001(19) (1984) (amended 1987) (emphasis added). Thus, after the 1984 amendment of subsection 11, developers subdividing land into lots of any size needed to acquire an Act 250 permit if they "owned or controlled" the land being subdivided. See 10 V.S.A. § 6081(a) (no person may sell any interest in a subdivision without a permit).

¶ 3. In response to his inquiry, Monette advised Roberts that subsequent land sales could still occur legally without a permit if the original owner prepared the subdivision first and then conveyed the lots to Roberts so that Roberts would not "control" the lots during subdivision. Under this arrangement, Roberts would cover the costs and handle the preparation of the subdivision plan. Monette and Howe concede, however, that the definition of "control" was legally ambiguous at the time. There is no evidence that any of the defendants warned Roberts and his associates of the potential illegality of this modus operandi ("m.o."), apparently believing that they had no duty to advise plaintiffs of the m.o.'s risk because it was too remote and tenuous.

¶ 4. Roberts and his associates, including plaintiff Currier, subsequently completed over 100 real estate transactions employing the m.o. between 1984 and 1990. Roberts and his associates were represented mostly by Howe and Monette and occasionally by the other defendants in both the purchase and sale of these properties.

¶ 5. In 1987, the Vermont Environmental Board issued declaratory rulings in In re Eastland, Decl. Ruling # 177 (Vt. Envtl. Bd. June 29, 1987), and In re Vitale, Decl. Ruling # 183 (Vt.Envtl.Bd. July 9, 1987), holding that a permit was required under circumstances very similar to the m.o. because a buyer who manipulated the property before a sale fell within Act 250's definition of "control." The Board's decisions were not widely circulated although a brief description of the pending appeal to this Court in Eastland appeared in a 1988 issue of the Vermont Bar Journal. In 1989, this Court affirmed the Environmental Board's Eastland decision, In re Eastland, Inc., 151 Vt. 497, 562 A.2d 1043 (1989), and the opinion was circulated to attorneys who received this Court's decisions through subscription.

¶ 6. Upon learning of the Supreme Court's Eastland decision, Monette and Howe advised Roberts and Currier that the decision raised serious doubts about the legality of the m.o. Roberts and Currier proceeded to make one more m.o. transaction after receiving this information. The State subsequently prosecuted Roberts and Currier for making illegal subdivisions between 1986 and 1990.

¶ 7. Roberts and Currier commenced this malpractice action in 1993 against Howe, Monette, and several other attorneys who had represented Roberts and Currier in m.o.-type transactions. Roberts and Currier argued that defendants had breached the standard of care of a Vermont attorney by failing to research and advise them of the ambiguous meaning of "control" with regard to Act 250 jurisdiction from 1985 to this Court's 1989 Eastland decision. With the exception of Monette and Howe, all of the defendants filed motions to sever that were deferred to the conclusion of the trial. Monette and Howe then filed a motion for summary judgment, arguing that the standard of care did not require them to review Environmental Board annotations and that their conclusions were made on a then-unsettled area of the law without the benefit of hindsight. The trial court denied the motion for summary judgment and then granted the parties' request for a trial by a special master. Both parties presented expert testimony regarding the standard of care for a Vermont attorney during the ten-day trial before the special master.

¶ 8. In his final report, the special master made the following findings and conclusions of law: (1) an attorney in Vermont does not breach the standard of care if the attorney conducts reasonable research into an unsettled area of the law and informs the client of the risks involved in proceeding under an unsettled interpretation; (2) Monette and Howe had not conducted reasonable research because they had failed to review the Environmental Board declaratory rulings, annotated in the Board's rules; (3) the failure to review the Board's annotations was not the proximate cause of plaintiffs' injury because such research would not necessarily have revealed the Eastland decision or any other ruling that would have changed the assessment of the m.o.; (4) Monette had breached the standard of care through his representation in the one m.o. transaction that occurred after our Eastland decision, in which he failed to advise Roberts of the risk; and (5) Monette had no liability for the post-Eastland transaction because Roberts had already been informed of the Eastland decision and the potential risk of the m.o. and had "knowingly and voluntarily assumed the risk."

¶ 9. The trial court upheld the master's findings, added its own conclusions, and dismissed with prejudice all claims against Howe, Monette, and the other defendants. The court concluded that defendants could not be held negligent for their participation in the m.o. because the definition of "control" was a professional opinion regarding the interpretation of an unsettled area of the law, and they were thus shielded by the "judgmental immunity" doctrine, which protects attorneys from liability when their opinions are based on speculation into an unsettled area of the law. In terms of whether defendants could be held negligent for their alleged failure to perform adequate research, the court agreed with the special master's findings that a reasonable, careful, and prudent Vermont attorney would have reviewed Environmental Board case annotations—something defendants failed to do—but that such a review would not have disclosed any reason to question the assessment of the m.o. The court further found that plaintiffs had failed to prove that there was a prevailing practice to go behind the published annotations and study the full Board decisions. Thus, plaintiffs had failed to prove a standard of care that defendants breached and which breach was the proximate cause of harm to plaintiffs. The trial court did not address whether defendants could be found negligent for failure to inform plaintiffs of the risks associated with their advice that the m.o. was lawful. Plaintiffs subsequently brought this appeal.

¶ 10. Plaintiffs first challenge the trial court's finding that they failed to demonstrate that the existing standard of care for a Vermont attorney required an investigation beyond the annotations to review the Environmental Board's decisions. Plaintiffs argue that under Estate of Fleming v. Nicholson, 168 Vt. 495, 724 A.2d 1026 (1998), the court should have looked to common knowledge instead of expert testimony to determine whether Monette and Howe had breached the standard of care. We disagree.

¶ 11. We held in Nicholson that expert testimony is not necessary to detrmine the elements of negligence "[w]here a professional's lack of care is so apparent that only common knowledge and experience are needed to comprehend it. . . ." Nicholson, 168 Vt. at 497-98,724 A.2d at 1028. In doing so, we distinguished Nicholson from Tetreault v. Greenwood, 165 Vt. 577, 578, 682 A.2d 949, 950 (1996) (mem.), where we found that expert testimony was required to demonstrate that a Vermont attorney had breached the standard of care by failing to discover subdivision permit violations during a title search. Our holding in Nicholson concerned the nondisclosure of title information, not the methods employed to conduct a title search unique to the legal profession in Vermont at issue in Tetreault. Nicholson, 168 Vt. at 498,

724 A.2d at 1028-29.

¶ 12. The question of whether Monette and Howe should have...