Sutton v. Purzycki
|10 November 2022
|Donald James Sutton, Jr. v. Felicity Purzycki
|Vermont Supreme Court
On Appeal from Superior Court, Bennington Unit, Civil Division June Term, 2022 Cortland Corsones, J.
Antonin I.Z. Robbason of Ryan Smith &Carbine, LTD Rutland, for Plaintiff-Appellant/ Cross-Appellee.
Merrill E. Bent of Woolmington, Campbell, Bent &Stasny P.C., Manchester Center, for Defendant-Appellee/Cross-Appellant.
PRESENT: Reiber, C.J., Eaton, Carroll and Waples, JJ., and Teachout, Supr. J. (Ret.), Specially Assigned
¶ 1. This civil action stems from a dispute between former business partners regarding the turnover of records pursuant to a stipulated judgment entered following the dissolution of their business relationship. Plaintiff filed a complaint seeking to enforce the stipulated judgment's record turnover requirement and pleading various related causes of action for injuries arising out of defendant's failure to turn over the records immediately following the judgment. The trial court dismissed the related claims as time-barred and, following prolific motion practice and several hearings, adjudicated the enforcement claim on the merits in favor of defendant. We agree with the trial court's orders in all but one aspect. Because we come to a different conclusion on whether certain types of documents are subject to the stipulated judgment's turnover requirement, we remand for the trial court to modify its judgment consistent with this opinion.
¶ 2. The factual and procedural background of this case is complex. Unless otherwise indicated, the following facts are undisputed. Plaintiff Donald James Sutton, Jr. owns and operates multiple tree nursery and landscaping businesses. Plaintiff hired defendant Felicity Purzycki to work at his business Elhannon Nurseries, LLC (EN) in 2006 as a parttime bookkeeper and later as a fulltime office employee. In this role, defendant had access to EN's digital and physical files. In 2009, plaintiff and defendant formed Elhannon Wholesale Nurseries, LLC (EWN) with plaintiff owning 75% and defendant owning 25%. EWN took over a tree nursery formerly operated by EN and acted as a wholesale provider of trees to EN, which did landscape contracting. Defendant also solely owned a separate landscaping business, Apex Nurseries, Inc. Defendant continued to handle bookkeeping for EN and took on EWN's bookkeeping as well.
¶ 3. Eventually, the parties' business relationship deteriorated, resulting in a lawsuit that was settled with a stipulated judgment on June 20, 2011. The stipulated judgment addresses various issues to tie up the separation of the parties' business interests, such as indemnity and liabilities. Of note for the present appeal, the stipulated judgment states, Per the stipulated judgment, Apex was placed in a receivership, a certified public accountant was appointed the receiver, and the receiver was authorized to conduct an audit of Apex and EWN.
¶ 4. The events following the stipulated judgment are contested and revolve around the extent of defendant's compliance with the requirement that she turn over various business records. Details of the specific exchanges are immaterial to the outcome of this case. Suffice to say plaintiff asserts that defendant failed to turn over the business records required. In the years following the stipulated judgment, plaintiff was involved in two federal lawsuits, to which defendant was not a party, but during which she provided EN and EWN business records pursuant to court orders. Plaintiff then sued defendant in federal district court in Vermont alleging various causes of action regarding a 2010-2011 barter transaction between defendant, acting on behalf of EWN, and a third party. Although the substance of that lawsuit centered on whether defendant was authorized to conduct the barter transaction, the matter of defendant's alleged possession of business records in violation of the stipulated judgment arose at various points throughout those proceedings. However, the federal court explicitly did not rule on any claims for business records. In July 2019, it entered its final judgment, which was later affirmed on appeal. See Elhannon Wholesale Nurseries, LLC v. Purzycki, 838 Fed.Appx. 627 (2d Cir. 2021).
¶ 5. In May 2019, plaintiff filed a complaint against defendant in Vermont superior court that included seven counts. In Count I, plaintiff alleged that defendant failed to turn over certain business records as required under the stipulated judgment and requested the court enforce the stipulated judgment and require defendant to turn over said business records to achieve compliance. In Counts II-VII, plaintiff sought relief for harms sustained due to defendant's alleged failure to comply with the stipulated judgment.
¶ 6. Defendant filed a motion to dismiss plaintiff's complaint, which the trial court denied as to Count I but granted as to Counts II-VII. Defendant argued, inter alia, that plaintiff's claims were barred by the statute of limitations and claim preclusion. Starting with the statute of limitations, the trial court concluded that Counts II-VII were subject to a different, shorter limitations period than Count I and were time-barred. The court then concluded that Count I was not barred by the statute of limitations or doctrine of claim preclusion. Thus, the litigation continued as to Count 1.
¶ 7. On November 25, 2019, plaintiff filed a motion to enforce prior judgment, arguing defendant had not fulfilled her obligation to turn over records under the stipulated judgment. Following three hearings over the course of 2020, the trial court ruled on plaintiff's motion on November 12, 2020, and concluded that defendant promptly returned all EWN business records to plaintiff or made them available for copying. It determined that she had some copies of business records in her attorneys' possession but that they had all been previously made available to plaintiff. The court, however, decided that the stipulated judgment prohibited defendant from retaining copies of EWN records and ordered her to transfer any remaining copies to plaintiff. It declined to award plaintiff attorney's fees to the extent he was requesting them because it found that defendant's failure to turn over copies was not a willful violation of the stipulated judgment. The court noted that its ruling on the motion to enforce seemed coextensive with Count I of the complaint but set the case for a status conference to determine whether further proceedings would be required.
¶ 8. Plaintiff then moved to amend the trial court's order on the motion to enforce in December 2020. He sought to correct certain findings for being inconsistent with the evidence in the record, delete the paragraph on attorney's fees and leave the issue open for further motion practice, and add certain instructions to ensure defendant's compliance with the 2011 stipulated judgment. On February 1, 2021, the court granted defendant's motion in part, amending certain findings that did not change the legal outcome of its order, and denied the motion in all other respects.
¶ 9. On December 29, 2020, in response to various motions seeking the court's intervention to facilitate defendant's transfer of business records to plaintiff, the trial court altered its order on the motion to enforce to provide more detailed instructions for compliance. One emblematic point of contention was the transfer of a thumb drive containing the backup of a work computer defendant used in her role as bookkeeper. Plaintiff argued that he needed the original thumb drive while defendant wanted to copy the records on the thumb drive to a new thumb drive for turnover because the original contained attorney work product that could not be removed. The court allowed defendant to copy the records from the original thumb drive onto a new thumb drive for turnover and kept the original under seal with the court.
¶ 10. In February 2021, plaintiff filed a motion to direct defendant to turn over documents subject to the stipulated judgment. He argued that various documents were still missing and therefore defendant was not in compliance with the stipulated judgment or the trial court's November 2020 order on the motion to enforce. Following a hearing, the trial court denied the motion on March 5. It concluded that defendant had complied with its November 2020 order and therefore fulfilled her turnover obligations. However, it instructed defendant to advise her attorneys that they could not return any EWN documents in their possession to her.
¶ 11. The same day, the court issued its decision on the merits. It determined that plaintiff's motion to enforce was coextensive with Count I, the sole remaining claim in plaintiff's complaint. Concluding there was nothing left to be determined, it dismissed Count I and stated that its November 2020 order on the motion to enforce, as amended on December 29, 2020, and February 1, 2021, would serve as its final decision on the merits.
¶ 12. On April 2, plaintiff filed a motion to amend the decision on the merits and requested a hearing under Vermont Rules of Civil Procedure 52(b), 54(b), 59(e), and 60(b). He again contended that the trial court's findings were contrary to the evidence. He also asserted that newly discovered evidence unveiled during the turnover process demonstrated that the court's findings and conclusions regarding defendant's compliance with her turnover...
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