Willard v. PARSONS HILL PARTNERSHIP

• Citation: 882 A.2d 1213
• Decision Date: 05 August 2005
• Docket Number: No. 03-494, No. 03-499.
• Parties: Candace A. WILLARD, et al. v. PARSONS HILL PARTNERSHIP, et al. Brent E. Poulin, et al. v. Parsons Hill Partnership, et al.
• Court: United States State Supreme Court of Vermont

882 A.2d 1213

Candace A. WILLARD, et al. v. PARSONS HILL PARTNERSHIP, et al.

Brent E. Poulin, et al. v. Parsons Hill Partnership, et al.

Nos. 03-494, 03-499.

Supreme Court of Vermont.

August 5, 2005.

John Paul Faignant of Miller Faignant & Behrens, P.C., Rutland, for Plaintiffs-Appellants Willard, et al. and Cross-Appellee Taggart Brothers, Inc. (03-494).

John J. Welch, Jr. of John J. Welch, Ltd., Rutland, for Plaintiffs-Appellants Poulin, et al. (03-499).

Robert A. Mello of Robert A. Mello & Associates, P.L.C., South Burlington, for Defendants-Appellees.

Present: DOOLEY, JOHNSON and SKOGLUND, JJ., and REISS, District Judge, and GIBSON, J. (Ret.), Specially Assigned.

¶ 1. JOHNSON, J.

Plaintiffs sue their landlord and others for damages, alleging a knowing and willful breach of the common-law warranty of habitability. Plaintiffs claim that landlord knowingly supplied its tenants with water containing levels of toxins well in excess of public health standards for approximately fourteen years. Plaintiffs further allege that, despite a "Do Not Drink" order issued by the Department of Health, defendants took no action to notify tenants of the problem, or to fix it. Defendants moved for summary judgment, arguing that plaintiffs' claims under the common law were preempted by statute, and that, notwithstanding plaintiffs' allegation of lack of knowledge, plaintiffs could not satisfy the elements of the statutory cause of action because no tenants had notified landlord of the breach. To the extent that there was notification, defendants argued that the water system was fixed in a timely manner following receipt of the written notice from some of the tenants. In addition, the individual partners of the landlord argued that they were not proper parties to plaintiffs' suit. Defendants also cross-claimed against a contractor under an express indemnity agreement related to work the contractor performed on the water system that was eventually identified as the source of the contamination. The trial court granted summary judgment for all defendants, and dismissed defendants' cross-claim. We reverse and remand on plaintiffs' claim under the common law, and hold that it is not preempted by a statute that is addressed solely to patent defects that tenants are capable of discovering. We affirm the trial court's judgment on the cross-claim.

¶ 2. In 1982, a group of individuals formed defendant Parsons Hill Partnership, a limited partnership organized under Vermont law, for the purposes of developing low-income family housing in Castleton, Vermont. Yvonne Rooney was named the general partner. Later that year, the partnership obtained state approval to construct the project and to operate a water system to provide water to the housing units.

¶ 3. Vermont Department of Health water tests conducted at the project in early 1983 revealed that the water contained unsafe levels of Perchloroethylene (PCE) — a known toxin. The tests showed PCE levels at 790 parts per billion (ppb) — levels well in excess of the Environmental Protection Agency's maximum contaminant level of 20 ppb. Based on these results, the Department of Health assigned the water "No Drink" status. After being notified verbally, Yvonne Rooney received written confirmation of these results from the state. The letter requested that the tenants be notified of the water's unsafe status. Despite this request, tenants allege that neither Yvonne Rooney nor anyone associated with or employed by the partnership took any action to warn the tenants or to furnish them with uncontaminated water prior to August 1997.

¶ 4. Tenants contend that they drank, bathed in, cooked with, and cleaned with the PCE-contaminated water for fourteen years until one of them inadvertently learned of the problem in July 1997. While conducting internet research as part of her employment, tenant Candace Willard discovered information on a state web site indicating that the water at Parsons Hill was contaminated with PCE. After doing further research on the potentially dire health consequences associated with PCE exposure, Willard informed other tenants of her findings and they hired a consultant and an attorney.

¶ 5. On August 11, 1997, counsel for eight tenant families sent a letter to counsel for Parsons Hill Partnership to provide "notice under 9 V.S.A. Section 4458 that Parsons Hill Partnership and Yvonne Rooney are in breach of their obligations for habitability with regard to the water at the Parsons Hill apartments." Section 4458 is the warranty-of-habitability enforcement provision in the Residential Rental Agreements Act.¹ Apparently in response to the tenants' concerns, the state brought a temporary water system to Parsons Hill to provide the tenants with contaminant-free drinking and cooking water.

¶ 6. The following month, the eight tenant families who sent the partnership notice under the statute, along with a number of other tenant families, filed a complaint for damages against various individual partners, corporations, and the partnership. Among other things, their complaint alleged that the partnership violated the common-law warranty of habitability by failing to remedy the water contamination within a reasonable time after first receiving the state's notice describing the problem in 1983. Despite having referenced the statute in their notice letter, the tenants did not assert a statutory claim. Specifically, they alleged that the water contamination that the partnership and its individual partners failed to remedy for approximately fourteen years was a habitability defect that the tenants were incapable of discovering because of its latent nature and its origin in a facility controlled and operated by the partnership.

¶ 7. Plaintiffs' complaint alleged that for fourteen years several state officials had been working with Yvonne Rooney, as well as Catherine and William Rooney — who were limited partners and were also at various times operators of the water system — to ascertain the source of the PCE contamination. Plaintiffs further allege that levels of contamination had fluctuated over that period, but had regularly exceeded safe levels. During that same period, the state sent numerous letters to, or otherwise communicated with, Yvonne, Catherine, and William Rooney informing them that tests continued to show PCE contamination in the water and reminding them that the "Do Not Drink" water advisory should remain in place until the state changed that status. Despite these directives, the tenants allege that, prior to August 1997, defendants neither notified them of the problem nor took any steps to furnish uncontaminated water to the tenants' rental units.

¶ 8. After years of investigation, the state, in conjunction with the partnership and the Rooneys, identified the PCE contamination's source as an underground storage tank that was part of the water system operated by the Rooneys. Shortly thereafter, in October 1997, the defective tank was disconnected and replaced.

¶ 9. Plaintiffs conducted extensive discovery and reached a settlement with numerous defendants on all counts except the warranty-of-habitability count against the partnership and the Rooneys. These remaining defendants then moved for summary judgment. In considering the motion, the trial court refused to recognize the viability of the tenants' common-law claim, and instead applied the statute with its tenant-notice provision, § 4458(a). Because of its decision to apply the statute, the trial court divided the otherwise similarly-situated plaintiffs into two groups: those who sent the partnership the statutory notice letter before initiating this lawsuit, and those who did not. For purposes of convenience, we will identify the notice group as the "Willards" and the nonnotice group as the "Poulins."²

¶ 10. The trial court applied the statute to both tenant groups, concluding that the Legislature had preempted the common-law habitability remedy by passing § 4458. Notwithstanding the fact that defendants had received several written notices of the water problem from the state over a fourteen-year period, the trial court ruled that the Poulins' failure to give the partnership written notice of the alleged habitability defect pursuant to § 4458 barred their claim. The court stated that "[h]abitability issues only become relevant when the defects, patent or latent, come to light," regardless of how long the landlords had known of and failed to repair them, apparently concluding that notice from the state to the partnership was not sufficient to bring the defect "to light."

¶ 11. Even though the Willards also brought their claim under the common law, the trial court credited them for complying with the statute's notice requirement. Nonetheless, the court concluded that they could not prevail because they could not show that defendants "fail[ed] to make repairs within a reasonable time," or that the contaminated water system "materially affect[ed] the health and safety" of the tenants. The court based its conclusions on its view that the reasonable time in which defendants were required to make repairs was measured from August 1997 when the Willards gave written notice of the water defect, instead of 1983 when Yvonne Rooney received written notice of the PCE contamination from the Department of Health. The court concluded that defendants had remedied the habitability defect within a reasonable time because the undisputed facts showed that, within weeks of the Willards' letter, the state "was promptly on the scene with a ... [water tank] for drinking and cooking water." In light of the short period between the tenants' notice letter and defendants' remedial action, the court concluded that "it cannot be said that the contaminated water system `materially affect[ed] health and safety,'" even though plaintiffs alleged that they had been drinking PCE-contaminated water for many years.

¶ 12. We review a trial...