Winey v. William E. Dailey, Inc.

• Decision Date: 05 November 1993
• Docket Number: No. 91-559,91-559
• Parties: Lee WINEY v. WILLIAM E. DAILEY, INC.; Richard and Deborah Cutler, d/b/a Cutler Construction Co.; and Ray and Scott Racicot.
• Court: Vermont Supreme Court

Page 744

636 A.2d 744

161 Vt. 129

Lee WINEY v. WILLIAM E. DAILEY, INC.; Richard and Deborah Cutler, d/b/a

Cutler Construction Co.; and Ray and Scott Racicot.

No. 91-559.

Supreme Court of Vermont.

Nov. 5, 1993.

David Putter of Saxer, Anderson, Wolinsky and Sunshine, Montpelier, for plaintiff-appellee.

Lee Winey, pro se.

Michael B. Clapp of Dinse, Erdmann & Clapp, Burlington, for defendant-appellant.

Before GIBSON, DOOLEY, MORSE and JOHNSON, JJ., and PECK, J. (Ret.), Specially Assigned.

DOOLEY, Justice.

This action arises out of the construction of a home for plaintiff, Lee Winey, in the Town of Shaftsbury. Alleging breach of contract, fraud and consumer fraud, she sued the foundation contractor, William E. Dailey, Inc.; the general contractor, Cutler Construction Company, along with owner Richard Cutler and his wife, Deborah Cutler; and the plumbing, heating and electrical contractors. The case went to trial against the foundation and general contractors and resulted in a plaintiff's verdict for $70,000 against each defendant on the breach of contract theories. The jury also awarded $3,628 to the general contractor pursuant to a counterclaim for unpaid bills. Defendant Richard Cutler has appealed the verdict against him, alleging an error in the jury charge and that the amount of the verdict is not supported by the evidence. Plaintiff has cross-appealed, alleging with respect to Richard Cutler that the trial court erred in directing a verdict against her on her fraud-in-the-inducement claim and her similar consumer fraud claim, in its instructions on consumer fraud, and in its failure to award prejudgment interest. She also claims that the court erred in granting a directed verdict for Deborah Cutler. We affirm in part and reverse and remand in part.

For purposes of this opinion, we will refer to Richard Cutler and Cutler Construction Company as defendant. The construction business was not incorporated. Plaintiff alleged that it was a partnership or joint venture of Richard and Deborah Cutler. Richard Cutler argued that it was a sole proprietorship owned by him. The proper characterization of the business is relevant to the potential liability of Deborah Cutler.

Plaintiff and defendant entered into a written agreement on August 14, 1984 for defendant to serve as general contractor to build a house for plaintiff in accordance with certain blueprints. The anticipated completion date was March 10, 1985. The contract contained a provision that allowed plaintiff to terminate it if defendant's billing rose above $215,000. It provided defendant a contractor's fee of $20,000 and required defendant to bill for material and subcontractor payments at cost. It also required plaintiff to reimburse for wages paid by defendant and set forth a wage rate by type of workers on the job.

When defendant's billings reached almost $300,000, plaintiff exercised her right to terminate the contract. Defendant had about $25,000 worth of work to do to complete the house.

Four breach of contract theories were submitted to the jury: (1) defendant failed to perform in accordance with the plans and specifications, and any authorized changes; (2) defendant failed to ensure that all labor and materials were of good quality; (3) defendant overbilled for labor and materials; and (4) defendant billed for labor and materials not used in the house construction. The jury found that defendant had breached the contract by deviating from plans and specifications, overbilling for labor or materials, and billing for labor or materials not used on the job. It found defendant did not fail to provide good quality labor and materials.

Certain fraud and consumer fraud claims also went to the jury. Plaintiff alleged that defendant had defrauded her by charging her for labor and materials not expended in the construction of the house and in overstating the cost of labor and materials. Plaintiff's consumer fraud claim was based upon the same allegations, and, additionally, that defendant had concealed deviations from specifications and construction done in a defective and unworkmanlike manner. The jury found for defendant on the fraud and consumer fraud claims.

I.

A.

We first address plaintiff's arguments that despite the verdict in her favor, she is entitled to a new trial on her fraud and consumer fraud claims and her claims against Deborah Cutler. First, plaintiff alleges that the court erred in failing to submit to the jury her fraud-in-the-inducement claim. Her claim was that defendant told plaintiff that he would complete the house for $215,000, exclusive of the cost of the foundation, although he personally believed he would charge her $270,000 plus the price of the foundation. She testified that she relied on the estimate in deciding to hire defendant. The trial court refused to charge this theory because it found no evidence that defendant made a knowing misrepresentation of his estimate.

Plaintiff's claim to recovery on this theory is grounded in her position that misrepresentation of a construction estimate is actionable in these circumstances. Our cases have often drawn a distinction between a statement of fact and a statement of opinion, holding that misrepresentation of the former can be fraud, but misrepresentation of the latter cannot. See Proctor Trust Co. v. Upper Valley Press, Inc., 137 Vt. 346, 350, 405 A.2d 1221, 1224 (1979) ("mere expressions of opinion" cannot be basis for fraud action).

This generalization is not, however, without exceptions. Misrepresentation of opinion can be the basis of a fraud claim if it is part of a scheme to defraud. See White v. Pepin, 151 Vt. 413, 419, 561 A.2d 94, 98 (1989). Plaintiff has alleged such a scheme here. She has claimed that defendant intentionally "low balled" the estimate in order to induce her to hire him. Once hired, he knew that she would be required to pay much more to complete the house and was unlikely to stop construction work before completion.

Another exception also applies. With respect to promises to perform, we have held that misrepresentations about future actions can be fraudulent if defendant, at the time of the statement, intends to act differently from the promise. See Union Bank v. Jones, 138 Vt. 115, 121, 411 A.2d 1338, 1342 (1980). A similar theory applies to opinions. The Restatement (Second) of Torts states the principle as follows:

A representation of the state of mind of the maker or of a third person is a misrepresentation if the state of mind in question is otherwise than as represented. Thus, a statement that a particular person ... is of a particular opinion or has a particular intention is a misrepresentation if the person in question does not hold the opinion or have the intention asserted.

Restatement (Second) of Torts § 525 comment c (1977). In this case, plaintiff alleged that defendant had a firm opinion about the cost of constructing the house but he intentionally stated an opinion $55,000 less in order to induce plaintiff to hire him. In such circumstances, a misrepresentation of defendant's opinion can be actionable.

Defendant argues, however, that there is no factual basis for plaintiff's allegation. Since the trial court granted a directed verdict against plaintiff, in addressing this question, we must view the evidence in the light most favorable to plaintiff, excluding any modifying evidence. See Marchelewicz v. Wehner, 159 Vt. 310, 313, 618 A.2d 1293, 1294 (1992).

Plaintiff testified that defendant Richard Cutler told her that the job could be completed for $215,000 plus the cost of the foundation, and they modified some of the specifications to get down to that figure. Further, she testified that the right to terminate when bills reached $215,000 was inserted in the contract as a result of the estimate. She stated that she would not have entered the contract had she known the price would exceed $215,000.

Richard Cutler testified that he believed, at the time he entered the contract, that the price for his work would be $270,000. He did not provide an estimate for that amount to plaintiff.

Defendant relies on a number of worksheets that were exhibits and, in his view, reconciled the different numbers. The worksheets are ambiguous, and, in any event, are modifying evidence, which is not considered in ruling on a directed verdict motion. Viewing the evidence in the light most favorable to plaintiff, there was sufficient evidence to support her fraud-in-the-inducement theory, and it should have been submitted to the jury.

B

Plaintiff restates her argument under a consumer fraud theory. The Vermont Consumer Fraud Act prohibits "unfair or deceptive acts or practices in commerce," 9 V.S.A. § 2453(a), and authorizes the consumer to recover damages caused by the violation. Id. § 2461(b). The Act provides "a much broader right than common law fraud." Poulin v. Ford Motor Co., 147 Vt. 120, 124, 513 A.2d 1168, 1171 (1986). Thus, plaintiff need only show that there was a representation likely to mislead her, that she interpreted it reasonably under the circumstances and that the misleading nature of the representation was likely to affect her conduct or decision with respect to the contract. See Peabody v. P.J.'s Auto Village, Inc., 153 Vt. 55, 57, 569 A.2d 460, 462 (1989). Plaintiff's case, if accepted by the jury, met this standard. We note that courts in other states with similar statutes have reached the same conclusion on comparable fact patterns. See Quate v. Caudle, 95 N.C.App. 80, 381 S.E.2d 842, 845 (1989); Eastlake Constr. Co. v. Hess, 102 Wash.2d 30, 686 P.2d 465, 476 (1984). The court erred in failing to submit this consumer fraud theory to the jury. ¹

C.

Plaintiff's third claim is that the court erred in charging the jury on the consumer fraud theories that were submitted to the jury. The court submitted to the jury the following consumer fraud theories: (a) defendant intentionally charged for labor and material not used...