Mansfield v. Heilmann, Ekman, Cooley & Gagnon, Inc.

308 A.3d 533

2023 VT 47

Scott MANSFIELD et al.

v.HEILMANN, EKMAN, COOLEY & GAGNON, INC.

No. 22-AP-301

Supreme Court of Vermont.

June Term, 2023

August 18, 2023

On Appeal from Superior Court, Chittenden Unit, Civil Division, Samuel Hoar, Jr., J.

Pietro J. Lynn and Aliza A. Harrigan of Lynn, Lynn, Blackman & Manitsky, P.C., Burlington, for Plaintiffs-Appellants.

John F. Evers of Shoup Evers & Green, Burlington, for Defendant-Appellee.

PRESENT: Reiher, C.J., Eaton, Carroll and Cohen, JJ., and Johnson, J. (Ret.), Specially Assigned

EATON, J.

¶ 1. Plaintiffs appeal the trial court’s grant of summary judgment in favor of defendant on their legal-malpractice and Vermont Consumer Protection Act (VCPA) claims for failure to establish proximate cause. We conclude that summary judgment was appropriate on the legal-malpractice claim but not on the VCPA claim, and thus reverse and remand.

¶ 2. The litigation underlying the present appeal came before this Court in Mongeon Bay Properties, LLC v. Mallets Bay Homeowner’s Ass’n, 2016 VT 64, 202 Vt. 434, 149 A.3d 940. To frame the issues presented in this appeal, we briefly restate the factual and procedural history. Mongeon Bay Properties, LLC (MBP) owned property abutting Lake Champlain in Colchester, Vermont, and leased the property to Malletts Bay Homeowner’s Association, Inc. on a long-term basis. The Association’s members subleased individual plots from the Association and owned their own homes thereon. Some of these homes were on the lakefront. Under the lease, set to expire in 2036, the Association had the obligation to keep the property in good condition.

¶ 3. In 2011, following major erosion damage on a portion of the embankment on the lakefront, MBP’s manager, Bruce Mongeon, notified the Association that it was in default for failing to maintain the property and gave the Association forty- five days to make specified, substantial repairs. After the Association failed to make the repairs, MBP filed a complaint against the Association in January 2012 seeking damages and to void the lease for the Association’s violation of its terms.

¶ 4. The Association retained defendant Heilmann, Ekman, Cooley & Gagnon, Inc. in March 2012. Prior to retaining defendant, an Association representative met with a partner of the firm, Thomas Heilmann, to whom they had been referred. The retainer agreement, signed by Heilmann, states that the firm "may assign tasks to [its] associates and paralegals in a manner commensurate with the level of complexity and expertise required." Following retention of the firm, an associate attorney primarily handled the Association’s case.

¶ 5. In the following months, the Association took steps to address MBP’s complaints. The parties each sought summary judgment in their favor, and the trial court denied these motions.

¶ 6. The extent to which settlement negotiations were possible is contested. It is disputed whether, at a pretrial conference, the judge indicated that mediation would be pointless. Mongeon stated in a deposition taken during the discovery process that MBP’s objective in the litigation was to terminate the lease; however, plaintiffs propose that this was a strategy to incentivize the Association to perform satisfactory repairs and in fact MBP was open to settlement. Later in the discovery process, the associate attorney wrote a letter stating that he understood that Mongeon was "not interested in any settlement short of terminating" the lease but inviting Mongeon’s counsel to "let [him] know if [Mongeon’s] opinion changes" because of the "significant costs and risks to each side" were the case to proceed to trial. The letter also stated that the Association was "open to avoiding these costs and risks if possible." Whether MBP’s counsel ever received this letter is contested. However, it is undisputed that the associate attorney never communicated a settlement offer to MBP nor did defendant attempt to pursue mediation.

¶ 7. Following a bench trial, the trial court concluded that the Association breached the lease and was in default but declined to grant MBP’s request for lease forfeiture. Instead, it awarded MBP damages for remediation and attorney’s fees and costs. Both parties appealed. The Association argued that it was not in breach of the lease. MBP appealed the trial court’s denial of its request to terminate the lease.

¶ 8. This Court reversed the trial court’s decision, concluding that the Association breached the lease and that MBP was entitled to termination of the lease. Mongeon Bay Props., LLC, 2016 VT 64, ¶ 69, 202 Vt. 434, 149 A.3d 940. Ultimately, the lease was terminated, and the Association’s members were evicted.

¶ 9. Members then sued the Association, alleging that it was negligent in its administration of the provisions of the lease requiring it to keep the property in good condition. Members and the Association settled in 2018. As part of the settlement, the Association assigned members its right to sue defendant for legal malpractice. The Association dissolved later that year.

¶ 10. Members then entered an agreement with MBP whereby Mongeon would serve as a witness in a legal-malpractice case against defendant in exchange for the opportunity to receive a portion of members’ recovery against defendant.

¶ 11. The Association and members filed a complaint against defendant in the instant case in December 2019, alleging legal malpractice and a violation of the VCPA. The crux of their legal-malpractice claim is a lost opportunity to settle. They assert that defendant was negligent because it should have tried to settle the underlying litigation between the Association and MBP. They propose that, had defendant tried to settle, the Association and MBP would have likely agreed to terms involving repairs and payment of MBP’s attorney’s fees thus avoiding lease termination and eviction of the Association’s members. For the VCPA claim, plaintiffs propose that Heilmann made misleading representations regarding what his level of involvement in the Association’s case would be. They allege that the Association relied on these material misrepresentations when retaining defendant.

¶ 12. During the discovery process, Mongeon provided multiple affidavits and was deposed. He repeatedly stated that, despite his deposition in the underlying litigation that MBP was seeking lease termination and MBP’s successful appeal of the bench-trial ruling denying lease termination, MBP would have settled the original lawsuit against the Association on appropriate terms. He averred that acceptable terms would have included the Association agreeing to perform the work necessary to remediate and stop the erosion on the lakefront banks, committing to fixing two seawalls identified as being at risk of future failure if and when they failed, and paying MBP’s accrued attorney’s fees. Plaintiffs also hired an expert, attorney Richard Cassidy, who opined that the case brought by MBP against the Association would likely have settled along the lines described by Mongeon had defendant made reasonable settlement efforts. Defendant moved for summary judgment on plaintiffs’ legal-malpractice claim. Defendant argued that, even if it breached its duty of care to the Association by failing to attempt to settle the underlying litigation, plaintiffs did not establish proximate cause, because they could not demonstrate that the underlying litigation was more likely than not to settle.

¶ 13. The trial court granted summary judgment in favor of defendant. On the legal-malpractice claim, the trial court concluded that the undisputed material facts demonstrated that plaintiffs could not establish that defendant’s alleged negligence proximately caused their claimed damages. Without analyzing the VCPA claim, for which neither party requested summary judgment, it entered judgment for defendant on all of plaintiffs’ claims, stating that "[a]ll of [p]laintiff’s claims fail for lack of competent proof of proximate cause."

¶14. On appeal, plaintiffs argue that the trial court’s grant of summary judgment for lack of proximate cause on its legal-malpractice and VCPA claims was in error. Defendant counters that summary judgment was appropriate and proposes that members lack standing to bring their claims.

[1, 2] ¶ 15. We review the trial court’s grant of summary judgment de novo. Tillson v. Lane, 2015 VT 121, ¶ 7, 200 Vt. 534, 133 A.3d 832. "Summary judgment is proper only where the material undisputed facts show that the moving party is entitled to judgment as a matter of law." Morisseau v. Hannaford Bros., 2016 VT 17, ¶ 12, 201 Vt. 818, 141 A.3d 745 (citing V.R.C.P. 56(a)).

¶ 16. First, we conclude that we need not address members’ standing to sue. Second, we determine that summary judgment in favor of defendant was appropriate on the legal-malpractice claim because the Association failed to establish proximate cause. Third, we conclude that judgment was inappropriate on the VCPA claim, because a showing of proximate cause is not required for the Association’s claim.

I. Standing

¶ 17. Defendant argues that members lack standing to bring their claims. We need not reach this argument on appeal. There is no dispute that the Association has standing to sue. See 11A V.S.A. § 14.05(a) (explaining that corporations continue to legally exist after dissolution); Fund Liquidation Holdings LLC v. Bank of Am. Corp., 991 F.3d 370, 383-84 (2d Cir. 2021), cert. denied, — U.S. —; 142 S. Ct. 757, 211 L.Ed.2d 475 (2022) (explaining that dissolved corporation’s standing to sue requires legal existence, which is matter of state law). Because the Association has standing and we can resolve the issues presented by evaluating the Association’s claims, we do not need to evaluate the standing of additional plaintiffs. Gen. Bldg. Contractors Ass’n v. Pennsylvania, 458 U.S. 375, 402 n.22, 102 S.Ct. 3141, 73 L.Ed.2d 835 (1982). However, defendant correctly observes that if members seek damages different from those...