Estate of Fleming v. Nicholson

Estate of Fleming v. Nicholson  (97-360); 168 Vt. 495; 724 A.2d 1026

[Filed 11-Dec-1998]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 97-360


Estate of Edward Fleming                        Supreme Court

                                                On Appeal from
     v.                                         Chittenden Superior Court

David Nicholson, et al.                         June Term, 1998


Shireen Avis Fisher, J.

       Grant C. Rees of Lobe & Rees, Burlington, for Plaintiff-Appellee.

       Douglas C. Pearson, William H. Quinn, Thomas H. Higgins and James
  Preston of Person, Wadhams, Quinn & Yates, Burlington, for
  Defendants-Appellants.

       Robert M. Paolini, Montpelier, for Amicus Curiae Vermont Bar
  Association

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       JOHNSON, J.  Defendants, David Nicholson and the law firm of Nicholson
  & Taylor, P.C., appeal an order of the superior court granting partial
  summary judgment to plaintiff, estate of Edward Fleming, and an order
  awarding plaintiff prejudgment interest on damages.  In granting summary
  judgment to plaintiff, the court found defendants negligent as a matter of
  law for failing to disclose a lack of a subdivision permit discovered while
  performing a title search on property plaintiff contemplated purchasing. 
  After an evidentiary hearing was held regarding the computation of damages,
  the court calculated and awarded damages to plaintiff in the amount of
  $55,766.00 and prejudgment interest in the amount of $59,695.60. 
  Defendants now argue that the trial court erred in granting summary
  judgment to plaintiff because there was no expert testimony presented
  concerning the standard of care for attorneys in Vermont and because
  defendant Nicholson was reasonable in not disclosing the defect in title. 
  In addition, defendants argue that the court should not have granted
  prejudgment interest because the plaintiff's damages

 


  were not readily ascertainable.  We affirm the grant of summary judgment
  and the award of prejudgment interest.

       In 1988, Edward Fleming retained the law firm of Nicholson & Taylor,
  P.C., to conduct a title search on a parcel of land he was considering
  purchasing.  While performing the search, defendant Nicholson discovered
  that the parcel was carved out of a larger piece of land in 1976 with the
  aid of a deferral of subdivision permit issued by the Department of
  Environmental Conservation (DEC).  Defendant also discovered that in the
  late 1970's, a dwelling and wastewater system were constructed on the
  property without a subdivision permit and in violation of the deferral of
  permit.  At the time of the title search, the DEC followed a 1984 non-
  enforcement policy with regard to subdivision violations.  Relying on this
  non-enforcement policy, defendant decided not to inform Fleming of the
  subdivision violation.  Fleming, believing there were no title defects,
  purchased the property for $66,500.00.  Unbeknownst to Fleming, the DEC
  rescinded the non-enforcement policy in 1989.  In 1991, Fleming refinanced
  his mortgage on the property and died a year later.  In 1994, Fleming's
  estate contracted to sell the property for $94,000.00, but the discovery of
  the subdivision violation terminated the contract.  Fleming's mortgagee
  subsequently foreclosed on the property and sold the property at a
  decreased value of $10,734.00 in 1995.

       The administrator of Fleming's estate, Grant C. Rees, then brought a
  legal malpractice action against Nicholson & Taylor, P.C., and against
  David Nicholson, Esq. and Todd Taylor, Esq. individually.  Plaintiff
  claimed that defendants committed malpractice by failing to inform Fleming
  that the property was subject to a deferral of permit, that the dwelling
  and septic system were constructed in violation of this deferral, and that
  the property lacked a subdivision permit.  Plaintiff moved for summary
  judgment on the issue of defendants' liability, and defendant Taylor filed
  a cross-motion for summary judgment.  The court granted Taylor's motion,
  and plaintiff has not appealed the decision in favor of Taylor.  The court
  granted summary judgment on the issue of liability against defendants
  Nicholson and Nicholson and Taylor, P.C., holding


 


  defendant Nicholson negligent as a matter of law for failing to inform his
  client of the permit deferral and lack of a subdivision permit for the
  dwelling and wastewater system.(FN1)  An evidentiary hearing was held
  regarding the computation of damages (plaintiff waived trial by jury), and
  the court awarded plaintiff damages in the amount of $55,766.00 plus
  $59,695.60 in prejudgment interest.

                                     I.

       Summary judgment is appropriate when there are no genuine issues of
  material fact and the moving party is entitled to judgment as a matter of
  law. See Madden v. Omega Optical, Inc., 165 Vt. 306, 309, 683 A.2d 386, 389
  (1996).  In a legal malpractice action, a plaintiff must prove that the
  attorney was in fact negligent and that this negligence was the proximate
  cause of the plaintiff's injury. See Brown v. Kelly, 140 Vt. 336, 338, 437 A.2d 1103, 1104 (1981).  Generally, negligence by professionals is
  demonstrated using expert testimony to: (1) describe the proper standard of
  skill and care for that profession, (2) show that the defendant's conduct
  departed from that standard of care, and (3) show that this conduct was the
  proximate cause of plaintiff's harm.  See Senesac v. Associates in
  Obstetrics and Gynecology, 141 Vt. 310, 313, 449 A.2d 900, 902 (1982).  If
  the alleged negligent conduct is a matter of judgment unique to that
  profession, the above elements must be established by expert testimony to
  assist the trier of fact in determining negligence. See Tetreault v.
  Greenwood, 165 Vt. 577, 578, 682 A.2d 949, 950 (1996) (mem.) (expert
  testimony required to show that defendant failed to adhere to standard of
  care commonly exercised by Vermont attorneys when conducting title search).

       There are situations, however, where expert testimony is not needed. 
  Where a professional's lack of care is so apparent that only common
  knowledge and experience are needed to comprehend it, expert testimony is
  not required to assist the trier of fact in finding the elements of
  negligence. See Largess v. Tatem, 130 Vt. 271, 279, 291 A.2d 398, 403
  (1972)

 

  (expert testimony required to assist trier of fact in answering scientific
  and technical questions, but not questions that can be answered with
  reference to common knowledge); South Burlington Sch. Dist. v.
  Calcagni-Frazier-Zajchowski Architects, Inc., 138 Vt. 33, 46, 410 A.2d 1359, 1365 (1980) (expert testimony not required where facts are such that
  layperson would know that breach of duty of care was proximate cause of
  injury).

       Here, defendant's lack of care under the circumstances was so apparent
  that no expert testimony was required.  In general, the standard of care to
  which an attorney is held in rendering professional services is the degree
  of care, skill, diligence, and knowledge commonly possessed and exercised
  by a reasonable, careful, and prudent attorney practicing in the
  jurisdiction of Vermont.  See Russo v. Griffin, 147 Vt. 20, 24, 510 A.2d 436, 438 (1986).  Defendant argues that expert testimony was needed to
  assist the trier of fact in determining whether his conduct conformed to
  that standard, that is, whether a reasonable, careful, and prudent Vermont
  attorney would have disclosed the existence of the subdivision violation,
  taking into account the existence of the non-enforcement policy.  We
  disagree.

       Defendant relies on Tetreault to argue that a trier of fact requires
  the guidance of expert testimony in assessing an attorney's conduct with
  respect to a title search.  See Tetreault, 165 Vt. at 578, 682 A.2d  at
  950-51.  Defendant's reliance on Tetreault is misplaced, however, because
  the negligent conduct at issue in Tetreault is distinguishable from the
  conduct at issue in this case.  In Tetreault, the plaintiffs brought a
  malpractice claim against their attorney, claiming that the attorney was
  negligent in failing to discover and advise them of subdivision permit
  violations on the property they were purchasing. See id.  We held that
  expert testimony was required to prove both the standard of care and
  whether there had been a breach of the standard.  The central question
  concerned the process and common activities performed during a title
  search, a task which is unique to the profession and therefore created the
  need for expert testimony.  In the present case, defendant's aptitude in
  performing the title search is not at issue; rather, the finding of
  negligence is premised upon his failure to disclose important information

                                                                        

  to his client, namely, the permit violations that could diminish the value
  of the subject property.

       That defendant's nondisclosure of this information proximately caused
  plaintiff's loss is also apparent.  Defendant ultimately prevented his
  client from making an informed decision about whether to purchase the
  property.  Defendant is the source from which Fleming would have expected
  to receive such information, and absent that information, Fleming would
  have necessarily misapprehended the value of the property.  The issues of
  whether defendant had a duty to disclose the permit violation, whether he
  breached that duty, and whether the breach proximately caused plaintiff's
  injury are not technical issues that require the assistance of an expert in
  order for a trier of fact to be able to comprehend them.  The question,
  then, in reviewing the grant of summary judgment, is whether defendant has
  raised any genuine issues of material fact concerning the elements of
  negligence.  

       Defendant argues that the majority of attorneys in Vermont, with
  knowledge of the non-enforcement policy, would not have disclosed the
  permit violations, and that his conduct was therefore reasonable.  We
  reject the notion that the practice of the majority of attorneys
  conclusively establishes the standard of care.  While the standard of care
  is based on the "degree of skill, diligence and knowledge commonly
  possessed and exercised by a reasonable, careful and prudent" Vermont
  lawyer, Russo, 147 Vt. at 24, 510 A.2d  at 438, the conduct of the majority
  of Vermont lawyers does not define "reasonableness" per se.  It is
  ultimately the role of the courts to define this standard.  "Courts must in
  the end say what is required; there are precautions so imperative that even
  their universal disregard will not excuse their omission."  T.J. Hooper, 60 F.2d 737, 740 (2d Cir. 1932);  see also, e.g., Helling v. Carey, 519 P.2d 981, 983 (Wash. 1974) (where standard practice of ophthalmology profession
  did not require routine pressure tests for glaucoma for patients under 40
  years of age, court may set standard of care and hold doctors negligent as
  matter of law).

       We find that a reasonable, careful, and prudent attorney would
  disclose the existence of the permit violations and non-enforcement policy
  to a client.  In conducting a title search for a



 

  client, an attorney has a duty to inform and explain to the client the
  implications of any clouds on the title that would influence a reasonably
  prudent purchaser not to purchase the property.  See North Bay Council,
  Inc. v. Bruckner, 563 A.2d 428, 431 (N.H. 1989).  After disclosing this
  information, it is possible that a reasonable attorney might advise his
  client to purchase the property even with the encumbrances, but that is not
  the issue at bar.  After conducting the title search for Fleming, defendant
  had a duty to inform and explain to Fleming the implications of the
  deferral of permit, violations thereof, and the lack of a subdivision
  permit.  

       Summary judgment was therefore appropriate in this case because there
  are no issues of material fact in dispute.  We agree with the trial court
  that defendant was negligent as a matter of law and affirm the grant of
  summary judgment.

                                     II.

       We now turn to the question of whether it was error for the trial
  court to award prejudgment interest on the damages assessed in this case. 
  The trial court conducted an evidentiary hearing on the issue of damages,
  and its findings of fact will not be set aside unless clearly erroneous. 
  See V.R.C.P. 52(a)(2).  Defendant argues that the trial court erred in
  awarding prejudgment interest because, defendant alleges, the damages in
  this case were not readily ascertainable.  We disagree.  Even if the
  damages in this case were not readily ascertainable, a question which we do
  not decide today, the trial court maintains the ability to award
  prejudgment interest in a discretionary capacity to avoid injustice. 
  Therefore we will allow the award to stand absent an abuse of discretion.

       In this case, the trial court calculated damages by taking the
  difference between the value of the unencumbered property and the value of
  the encumbered property.  These figures were based on the price for which
  plaintiff purchased the property in 1988, when the defect in title was
  concealed, and the price for which plaintiff was able to sell the property
  at the foreclosure sale in 1995, after the defect had become apparent. 
  Both of these figures represent the fair market value of the property as
  established in transactions between willing sellers and willing



 

  buyers.  The trial court then awarded prejudgment interest based on this
  calculation of damages.

       Defendant relies on our holding in d'Arc Turcotte v. Estate of LaRose,
  153 Vt. 196, 569 A.2d 1086 (1989), to argue that a trial court may not
  award prejudgment interest in a discretionary capacity.  In that case we
  held that, whereas the decision to award prejudgment interest had
  historically been a matter of discretion for the trier of fact, see, e.g.,
  E.T. & H.K. Ide v. Boston & Maine R.R., 83 Vt. 66, 87, 74 A. 401, 409
  (1909) (it is permissible for court to instruct jury that it is within its
  discretion to award prejudgment interest); Wells v. Village of Orleans, 132
  Vt. 216, 224, 315 A.2d 463, 468 (1974) (trier of fact may award prejudgment
  interest if it finds that plaintiff was harmed by delay in reimbursement of
  monetary loss); Hall v. Miller, 143 Vt. 135, 146, 465 A.2d 222, 228 (1983)
  (award of prejudgment interest on unliquidated damages is proper where
  trial court made reasonable finding as to extent of damages); Quinlan v.
  Hamel, 143 Vt. 147, 148, 465 A.2d 232, 233 (1983) (recovery of prejudgment
  interest is discretionary rather than matter of right where damages are not
  liquidated), it was no longer discretionary "where the damages are
  liquidated or reasonably ascertainable as of the date of the tort." 
  Turcotte, 158 Vt. at 199, 569 A.2d  at 1088.  Defendant argues that, because
  the damages in this case were not liquidated or readily ascertainable (FN2)
  at the time of the tort, the award of prejudgment interest was in error.

       Defendant's argument misconstrues the significance of our holding in
  Turcotte.  Rather than restricting the availability of prejudgment
  interest, Turcotte reinforced the availability of prejudgment interest by
  mandating its award in certain cases--those cases where damages are
  liquidated or reasonably ascertainable.  Our holding in Turcotte is thus in
  accordance with V.R.C.P. 54(a) which provides that, "[i]n an action where
  monetary relief is awarded, the



 

  amount of the judgment shall include the principal amount found to be due
  [and] all interest accrued on that amount up to and including the date of
  entry of judgment."  This does not mean, however, that prejudgment interest
  is unavailable in other types of cases.  Contrary to defendant's assertion,
  our holding in Turcotte did not eliminate the traditional discretionary
  capacity of the trier of fact to award prejudgment interest where it is
  required to make the plaintiff whole.

       As recently as our decision in Winey v. William E. Dailey, Inc. we
  recognized that the award of prejudgment interest was mandatory where
  damages were readily ascertainable and discretionary in other cases.  See
  161 Vt. 129, 141, 636 A.2d 744, 752 (1993) (where damages are not readily
  ascertainable, it is within the court's discretion to deny prejudgment
  interest).  Whereas in Winey the trial court determined that the balance of
  equities did not mandate an award of prejudgment interest on certain items,
  in the instant case, the court concluded that they did.  This was within
  the proper scope of the court's discretion.

       The text of § 913 of the Restatement (Second) of Torts, which we
  adopted in Turcotte, see id. at 200, 569 A.2d  at 1088, also supports this
  interpretation:

       (1) Except when the plaintiff can and does elect the restitutional
       measure of recovery, he is entitled to interest upon the amount
       found due
         (a) for the taking or detention of land, chattels or other
         objects of property, or the destruction of any interest in
         them, when the valuation can be ascertained from
         established market prices, from the time adopted for their
         valuation to the time of judgment, or
         (b) except as stated in Subsection (2), for other harms to
         pecuniary interests from the time of the accrual of the cause
         of action to the time of judgment, if the payment of interest
         is required to avoid an injustice.
       (2) Interest is not allowed upon an amount found due for bodily
       harm, for emotional distress or for injury to reputation, but the
       time that has elapsed between the harm and the trial can be
       considered in determining the amount of damages.

  Restatement (Second) of Torts § 913 (1979).  Section 913 sets out three
  rules addressing three different scenarios.  First, where damages can be
  calculated from established market prices (i.e.,

 

  where they are liquidated or readily ascertainable (FN3)), the award of
  prejudgment interest is mandatory.  Second, for other harms to pecuniary
  interests, prejudgment interest should be awarded where required to avoid
  an injustice.  Third, for inchoate damages, which cannot be fixed to any
  definite point in time, any delay in judgment should be considered and
  incorporated as part of the overall damages award.  This three-part scheme
  is reflected in Turcotte and its progeny and was explicitly adopted in
  Vermont when we adopted § 913.  The trial court in this case concluded
  within its discretion that prejudgment interest, which should generally be
  made available to plaintiffs where there has been a delay in judgment, see
  V.R.C.P. 54(a), was necessary to avoid an injustice.  

       Defendant asserts that it is unfair to award prejudgment interest
  because defendant could not have been aware of the extent of damages in
  1988, given that damages were ultimately calculated based on a figure
  obtained from a 1995 transaction.  Defendant is correct that his knowledge
  of the amount owed is a relevant factor in the equitable inquiry. 
  "Ordinarily, if the sum due is sufficiently definite, so that the
  tortfeasor has reason to know the amount he should pay or its approximate
  amount, it would be unjust not to allow interest from the time he should
  have made the payment."  Restatement (Second) of Torts § 913(1) cmt. a. 
  Such knowledge on the part of the defendant, however, is not a requirement
  for a discretionary award of prejudgment interest.  The fact that damages
  were ultimately calculated on the basis of a 1995 figure does not work an
  unfairness against defendant.  The property always possessed an implicit
  price; it simply could not be established through a market transaction
  until it went up for sale 


 

  in 1995.  The measure of damages was conservative, awarding plaintiff the
  difference between the purchase price in 1988 and the sale price in 1995. 
  If there had been no defect in the title, it is much more likely that the
  property would have gained rather than lost value in the intervening years
  (as suggested by the $94,000.00 offer plaintiff received for the property
  in 1994, before the title defect was known).  Although the 1995 value
  provided the measure for the specific amount of damages, the deprivation in
  value to plaintiff actually occurred in 1988.  Contrary to defendant's
  assertion, it would be unfair to allow defendant to benefit from the fact
  that the diminution in value of the property was concealed for so many
  years.

       Because the court as trier of fact in this case possessed the ability
  to award prejudgment interest in a discretionary capacity, we will not
  reverse its decision absent an abuse of discretion.  Here, the court had
  sufficient evidence before it to conclude that there was a determinate sum
  of money due to plaintiff at a specific time, and that plaintiff had
  suffered from the delay in payment of that sum.  Because the trial court
  used a reasonable and established method to calculate damages and
  prejudgment interest in this case, we find no abuse of discretion and
  affirm the award of prejudgment interest.

       Affirmed.

                       FOR THE COURT:



                       _______________________________________
                       Associate Justice



  ------------------------------------------------------------------------
                                  Footnotes

  FN1.  While summary judgment was granted against both Nicholson and
  Nicholson & Taylor, P.C., we discuss only defendant Nicholson's conduct as
  it was the basis for liability.

  FN2.  While some of our cases have used the term "readily
  ascertainable" instead of "reasonably ascertainable," the purpose of
  prejudgment interest as recognized in Turcotte and other cases--to fully
  and accurately compensate the plaintiff where the plaintiff has been
  deprived of a definite sum of money for a definite period of time--makes
  clear that a reasonable calculation of monetary damages should suffice as
  the basis for an award of prejudgment interest.

  FN3.  The mere fact that plaintiff and defendant presented conflicting
  theories of damages does not, as defendant argues, automatically lead to
  the conclusion that the damages were not reasonably ascertainable. 
  Plaintiffs and defendants in a tort action will always have an incentive to
  characterize the correct measure of damages in a way that is advantageous
  to them.  Despite this fact, where the court has the option to rely on an
  established method of calculation, the damages may be said to be reasonably
  ascertainable.  If we accepted defendant's argument, defendants would
  always be able to unilaterally defeat an award of prejudgment interest
  simply by presenting a conflicting theory of damages.