Bull v. Pinkham Engineering Assocs.
Annotate this Case
Bull v. Pinkham Engineering Assocs. (98-431); 170 Vt. 450; 752 A.2d 26
[Filed 21-Apr-2000]
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. 98-431
John W. and Melinda H. Bull Supreme Court
On Appeal from
v. Addison Superior Court
Pinkham Engineering Assoc. Inc. September Term, 1999
Michael S. Kupersmith, J.
James W. Runcie of Ouimette & Runcie, Vergennes, for Plaintiffs-Appellees.
Michael B. Clapp, Burlington, for Defendant-Appellant.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
SKOGLUND, J. This appeal concerns a lawsuit in which landowners
allege that the engineering firm they hired breached its duty to properly
survey their proposed residential subdivision, thereby causing them to
incur legal fees in a related lawsuit and to lose an opportunity to
develop a portion of their property. Following an evidentiary hearing, the
superior court awarded plaintiffs John Bull and Melinda Hinsdale (formerly
Bull) $55,000 in lost profits and $15,391 in attorney's fees and expenses
for defending the prior related claim. Defendant Pinkham Engineering
Associates, Inc. appeals that judgment, arguing that (1) plaintiffs'
claims are barred by the three-year statute of limitations governing
actions seeking compensation for damages to personal property; (2) the
record does not support the trial court's findings concerning the
contractual duty owed by defendant to plaintiffs and the amount of damages
caused by defendant's conduct; and (3) the doctrine of collateral estoppel
bars plaintiffs from claiming that defendant's survey was incorrect. On
cross-appeal, plaintiffs claim that they are entitled to prejudgment
interest on their damage awards. We affirm the trial court's decision,
except that we grant plaintiffs' request for prejudgment interest on the
award of attorney's fees.
The trial court made the following findings. In 1986, plaintiffs
bought a farm in Ferrisburgh, Vermont. Shortly thereafter, they began to
look into the possibility of subdividing a portion of the farm for the
development of residential lots. They enlisted the help of Mrs. Bull's
brother, Clark Hinsdale, a licensed real-estate broker who had experience
in subdividing and developing property. They decided to develop
thirty-five acres located on the westerly portion of the farm, a woodland
area with little or no agricultural value. Mr. Hinsdale prepared a
preliminary sketch laying out fifteen lots for a subdivision to be called
Steeplewood. The sketch, which was based on the Ferrisburgh tax map,
indicated that the southern boundary of the subdivision coincided with the
southern boundary of plaintiffs' property; however, the tax map (and
therefore the sketch) incorrectly located the southern boundary of
plaintiffs' land a few hundred feet to the north of the actual boundary.
Upon Mr. Hinsdale's recommendation, plaintiffs hired defendant to do
the surveying and engineering work for the subdivision. When Mr. Young,
defendant's chief of surveying, indicated that it would helpful to be able
to refer to surveys of adjoining lands, Mr. Hinsdale provided defendant
with copies of the surveys of properties to the west owned by Cutting and
to the north owned by Pickett. Mr. Hinsdale told Mr. Young that there was
no need for defendant to re-survey the property lines between the Bull
property and the Cutting or Picket properties. Mr. Hinsdale never asked
defendant to complete a perimeter survey of the Bull property.
In preparing its survey of the Steeplewood subdivision, defendant
based all of the bearing references on references in the Pickett and
Cutting surveys, yet did not indicate on the Steeplewood survey that it
had done so. Nor did defendant independently verify the accuracy of the
bearings contained in the prior surveys, even though it would have taken
only a matter of minutes to do so. As a result, all of the bearings on
the Steeplewood survey were off by approximately eight and one-half
degrees.
Nor did defendant survey the southern boundary of the proposed
subdivision to determine whether the sketch taken from the Ferrisburgh tax
map accurately depicted the location of that
boundary. In fact, as noted, the tax map and sketch inaccurately depicted
the southern boundary of the subdivision (and plaintiffs' property) a few
hundred feet to the north of the actual boundary.
Plaintiffs and Mr. Hinsdale proceeded to implement the subdivision
plan in three phases. In late 1989 or early 1990, after the first two
phases were complete, plaintiffs decided to go ahead with phase three,
which involved the preparation and sale of lots five, seven, and eight. In
April 1990, Mr. Hinsdale asked defendant to stake out the center line of
an east-west road running through the subdivision and set the corner pins
for the phase three lots. Contrary to what it had done in the two
earlier phases of the development, defendant set only the corner pins
adjacent to the road and did not mark the rear corners of the lots. Nor
did defendant inform plaintiffs or Mr. Hinsdale that the rear corner pins
for the three lots had not been set.
In the spring of 1991, Mr. Hinsdale discovered that defendant had
still not set the rear corner pins of the phase three lots. After
advising Mr. Young that the pins had not been set, Mr. Hinsdale reasonably
expected defendant to do so. In July 1991, plaintiffs sold lot five to
William and Geraldine Burke. After purchasing the lot, Mr. Burke notified
plaintiffs that he could not find the pin marking its northeastern corner.
Mr. Bull and Mr. Hinsdale spent three hours trying to locate the pin by
compass, but were unable to do so. Mr. Hinsdale then telephoned defendant
to report that he could not locate the pin. When Mr. Hinsdale was informed
that the pin had not been placed yet, he requested that it be set
immediately.
Some time before September 11, 1991, the date defendant finally set
the pin, Christopher Hastings, the contractor hired by the Burkes to build
their home, poured a foundation for the house. Because the northeastern
corner marker had not been set, Mr. Hastings attempted to locate the
easterly boundary by taking a bearing from the southeastern corner of the
lot. Because defendant's survey was off by eight and one-half degrees,
the line the contractor determined for the eastern boundary was incorrect,
and part of the foundation was located beyond the boundary line separating
lots five and seven. After discovering the error, the Burkes halted
construction of the house, which was never completed.
In December 1991, the Burkes filed suit against plaintiffs, Mr.
Hastings, and defendant. They alleged that (1) plaintiffs were negligent
in failing to cause the northeastern boundary pin to be put in place in a
timely manner; (2) the incorrect compass bearing in their warranty deed
for lot five constituted a breach of warranty; (3) defendant negligently
identified an incorrect compass bearing on the eastern boundary of lot
five; and (4) Mr. Hastings negligently placed the foundation of their
house. After a jury trial, the superior court directed a verdict for all
defendants on all counts. The court ruled that the first count failed as a
matter of law because no testimony was presented as to the cost of repair
or the diminution in value of the property. The court held that the
second count also failed as a matter of law because the compass bearings
for the subdivision were internally consistent and thus correct for
purposes of conveying the title to lot five. A three-justice panel of
this Court affirmed the decision. See Burke v. Bull, No. 94-432 (August
4, 1995) (mem.).
In February 1996, plaintiffs brought suit against defendant, seeking
to recover the legal costs they incurred in defending against the Burke
complaint, and the damages resulting from their lost opportunity to
include within the Steeplewood subdivision their land located to the south
of the southern boundary of the subdivision as depicted on defendant's
survey. Following an evidentiary hearing, the superior court awarded
plaintiffs $15,391 for legal costs associated with defending the Burke
complaint and $55,000 for lost development opportunities. Defendant
appeals, raising several issues, and plaintiffs cross-appeal, arguing that
the court erred in failing to grant prejudgment interest on their damage
awards.
As an initial matter, we emphasize our standard of review. We will
not set aside the trial court's findings unless they are clearly
erroneous, and we will uphold the court's conclusions as long as they are
reasonably supported by the findings. See Morgan v. Kroupa, 167 Vt. 99,
104, 702 A.2d 630, 633 (1997). Findings are viewed in the light most
favorable to the judgment, disregarding modifying evidence, and will not
be disturbed merely because they are contradicted by substantial evidence;
rather, an appellant must show that there is no credible evidence to
support them. See Bianchi v. Lorenz, 166 Vt. 555, 562, 701 A.2d 1037, 1041
(1997).
I. Lost Profits
A. Statute of Limitations
Defendant first contends that plaintiffs' claim for lost profits is
barred by 12 V.S.A. § 512(5), which provides that an action for damage to
personal property caused by the act or default of another must be
commenced within three years after the cause of action accrues. According
to defendant, § 512(5) governs because the nature of the claimed harm is
the relevant inquiry, and in this case the nature of the harm is
plaintiffs' loss of cash, which is personal property. We find no merit to
this argument.
Plaintiffs' claim for lost profits stemming from defendant's alleged
breach of its contractual duty cannot be construed as claim for damage to
personal property. Therefore, the claim is governed by 13 V.S.A. § 511,
the "catchall statute that applies to civil actions generally." Fitzgerald
v. Congleton, 155 Vt. 283, 287, 583 A.2d 595, 598 (1990). In cases such as
this, where there is no claim of damage to personal property, we have held
that § 511 applies to actions seeking damages for economic loss, including
loss stemming from injury to real property. See, e.g., Investment
Properties, Inc. v. Lyttle, ___ Vt. ___, ___, 739 A.2d 1222, 1228 (1999) (§
511 governs indemnity action seeking money damages resulting from
defective flooring in condominiums); Congdon v. Taggart Brothers, Inc.,
153 Vt. 324, 325, 571 A.2d 656, 657 (1989) (§ 511 governs action against
builder for damages resulting from fire allegedly caused by negligent
design and construction of building); Alpstetten Ass'n v. Kelly, 137 Vt.
508, 513, 408 A.2d 644, 646 (1979) (§ 511 governs claim alleging tortious
act resulting in interference with use and enjoyment of real property
governed); Union School District No. 20 v. Lench, 134 Vt. 424, 425, 365 A.2d 508, 509 (1976) (§ 511 governs claim against architect for economic
loss resulting from negligent repair of roof); cf. Stevers v. E.T. & H.K.
Ide Co., 148 Vt. 12, 13, 527 A.2d 658, 659 (1987) (§ 512(5) governs claim
alleging that insecticide killed one cow and injured others).
Defendant correctly states that it is the nature of the harm done,
rather than the plaintiff's characterization of the cause of action, that
determines which statute of limitations governs. See
Fitzgerald, 155 Vt. at 288, 583 A.2d at 598. Here, plaintiffs incurred
economic loss as the result of not being able to develop two additional
lots on their property. The nature of the harm done is the diminution of
the value of their real property rather than damage to personal property.
Accordingly, the claim is governed by the six-year statute of limitations
contained in § 511. If we were to accept defendant's reasoning that cash
is personal property, and thus any claim of economic loss is subject to §
512(5), then virtually all contract actions would be subject to a three-
year statute of limitations, contrary to established law.
Defendant asserts, however, that even if § 511 governs, plaintiffs'
cause of action accrued in 1987, when plaintiffs received defendant's
survey and were put on notice of its defects. See University of Vermont
v. W.R. Grace & Co., 152 Vt. 287, 290-91, 565 A.2d 1354, 1357 (1989)
(cause of action governed by § 511 accrues when plaintiff discovers, or
through reasonable diligence should have discovered, injury). We
disagree. Defendant failed to meet its burden of proving that the
six-year limitations period expired before plaintiffs initiated their
lawsuit. See V.R.C.P. 8(c) (statute of limitations is affirmative
defense); Monti v. Granite Savings Bank and Trust Co., 133 Vt. 204, 209,
333 A.2d 106, 109 (1975) (defendant has burden of establishing
statute-of-limitations defense). Although the trial court declined to make
a finding on when the Bulls knew or should have known that the southern
boundary depicted on defendant's survey was inaccurate, the evidence
indicated that not until after July 1991, when the problems with the Burke
lot arose, did plaintiffs suspect that the southern boundary depicted on
the survey (as well as the tax map and Mr. Hinsdale's original subdivision
sketch) might not accurately reflect the actual southern boundary of their
property. See Capital Candy Co. v. Savard, 135 Vt. 9, 12, 369 A.2d 1361,
1362 (1976) (trial court's inability to make finding on issue is equivalent
of making finding against party with burden of proof on issue).
At best, from defendant's perspective, the evidence indicated that
sometime in 1991 Mr. Bull observed the southern boundary of the
subdivision in the field and recognized that it was located north of the
actual southern boundary line of his property. Further, notwithstanding
defendant's
assertions to the contrary, none of the evidence at trial demonstrated that
plaintiffs acted unreasonably in assuming, until that time, that
defendant's survey accurately depicted the southern boundary of their
property. Given that plaintiffs' lawsuit was filed within six years of
1991, it was not barred by § 511.
B. Breach of Duty
Defendant next claims that the trial court erred in concluding that
the engineering firm owed plaintiffs a duty to verify the southern
boundary of their property. Defendant reasons as follows. Plaintiffs,
not defendant, established the outer boundaries of the proposed
subdivision, as depicted on Mr. Hinsdale's preliminary sketch. Because
plaintiffs never specifically asked defendant to verify those outer
boundaries, the firm's only duty was to make an accurate survey of the
lots within the subdivision boundaries established by plaintiffs. Because
the survey was internally consistent, defendant did not breach its duty to
plaintiffs. This argument is neither persuasive nor supported by the
record.
The trial court made undisputed findings that (1) the preliminary
sketch of the proposed subdivision provided to defendant by Mr. Hinsdale
indicated that the subdivision's southern boundary was to coincide with
the southern boundary of plaintiffs' property; (2) defendant knew that the
preliminary sketch was based upon the Ferrisburgh tax map; (3) tax maps are
not intended to be used in establishing the boundaries on any survey, and
it would not be in accordance with professional surveying standards to do
so; (4) the physical characteristics of plaintiffs' property should have
indicated to defendant that the tax map (and therefore the sketch) might
not have accurately depicted the southern boundary of the property; (5)
without attempting to verify the accuracy of the southern boundary of the
proposed subdivision, or stating on its survey that the bearings indicated
therein were based exclusively on other unverified surveys, defendant used
the tax map to guess at the location of the southern boundary line of the
property (and thus the subdivision).
The trial court also found that professional survey standards require
that a survey must verify
the perimeter boundaries of the parcel to be surveyed. Defendant contends
that this finding cannot stand because plaintiffs failed to present expert
testimony to support it. In response, plaintiffs point to testimony
indicating that defendant was aware that preparing an accurate survey
required researching the deeds of adjoining owners to verify the perimeter
boundaries of the land to be surveyed.
Given the nature of a survey, see Black's Law Dictionary 1296 (5th ed.
1979) (defining "survey" as process by which "land is measured and its
boundaries and contents ascertained"), we doubt that expert testimony is
required to support the challenged finding. See Estate of Fleming v.
Nicholson, 168 Vt. 495, 497-98, 724 A.2d 1026, 1028 (1998) ("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."); cf.
Hostetler v. W. Gray & Co., 523 So. 2d 1359, 1368 (La. Ct. App. 1988)
(engineering company breached duty owed to purchasers of lot by relying on
previous preliminary topographical survey to determine location of
easement without independently verifying accuracy of survey). In any
event, we need not decide this issue because the unchallenged findings
cited above, even when not bolstered by the challenged finding, support
the trial court's conclusion that defendant breached its duty to use
reasonable care in surveying the proposed subdivision. See Peckham v.
Peckham, 149 Vt. 388, 390, 543 A.2d 267, 269 (1988) (erroneous
nonessential finding does not require reversal); see also Peters v.
Mindell, 159 Vt. 424, 429, 620 A.2d 1268, 1271 (1992) (every contract
includes implied duty to perform with care, skill, reasonable expedience,
and faithfulness); Thompson v. Green Mountain Power Corp., 120 Vt. 478,
485, 144 A.2d 786, 790 (1958) ("Foreseeable consequences may be
significant in the determination of the scope of legal duty and whether a
duty of care has been violated.").
C. Damages
Next, defendant contends that the evidence does not support the
court's conclusion that plaintiffs were entitled to $55,000 in lost
profits as the result of not being able to develop their land
located to the south of the southern boundary of the subdivision depicted
in defendant's survey. Again, we disagree. Mr. Bull testified at trial
that after the sale of lots fourteen and fifteen - the two southernmost
lots depicted on the survey - plaintiffs' land located to the south of
those lots could not be developed into two additional lots because there
was no longer any access to them. He also testified that the isolated
parcel could not be reached from, and was of no value to, the main farm.
Defendant did not contest this evidence at trial. Based on Mr. Bull's
unchallenged testimony, the trial court found that there was no access for
possible development of plaintiffs' land south of the subdivision.
Defendant asserts on appeal that the isolated parcel can be accessed
by building another road outside the subdivision, and thus the court
should have calculated the damages based on the increased cost in
developing the parcel independently of the Steeplewood subdivision. We
conclude that this argument was not properly preserved. As noted,
plaintiffs presented uncontested evidence that there was no access to the
parcel after lots sixteen and seventeen were sold. Defendant did not
cross-examine plaintiffs or present its own testimony on this point, even
though it had the burden of showing that plaintiffs could have mitigated
their damages. See Cartin v. Continental Homes of New Hampshire, 134 Vt.
362, 367, 360 A.2d 96, 100 (1976) (while there is general duty to mitigate
damages, burden of showing that mitigation could have been accomplished is
on party asserting it). In its response to plaintiffs' proposed findings,
defendant made the following singular statement: "The Bulls could access
the area in question through their property facing on Dakin Farm Road."
Apart from an exhibit indicating the existence of this road, the record
contains no evidence supporting this statement.
We do not believe that defendant's single statement following
completion of the four-day evidentiary hearing adequately preserved for
appeal his argument that plaintiffs' damages for lost profits should be
limited to the difference between the profit plaintiffs would have realized
had they developed the area in question as part of the subdivision, and
the profit they would have realized had they developed the property
independently after discovering that defendant's survey was incorrect.
Contentions not raised or fairly presented to the trial court are not
preserved for appeal. See Lamphere v. Beede, 141 Vt. 126, 129, 446 A.2d 340, 341 (1982); Monti v. Town of Northfield, 135 Vt. 97, 99, 369 A.2d 1373, 1376 (1977) (matters raised for first time on appeal are not
considered on appellate review). In order to effectively raise an
objection, a party must present the issue with specificity and clarity in
a manner that gives the factfinder a fair opportunity to rule on it. See
State v. Ringler, 153 Vt. 375, 378-79, 571 A.2d 668, 670 (1989). Having
failed to do so here, defendant has waived any right to raise the issue
for the first time on appeal. Moreover, even if we were to consider the
issue, defendant plainly failed to meet its burden at trial of showing that
plaintiffs could have mitigated their damages.
II. Costs of Defending Previous Action
A. Statute of Limitations
As with the lost-profits claim, defendant argues that plaintiffs'
claim for defense costs was barred by the three-year statute of
limitations contained in 12 V.S.A. § 512(5). We reject this argument for
reasons similar to those stated earlier with respect to the claim for lost
profits. Here, the nature of the injury is loss of money - specifically,
attorney's fees - due to defendant's failure to properly survey
plaintiffs' real property. Thus, once again, the nature of the injury is
not damage to personal property, and the three-year statute of limitations
is not applicable. See Fitzgerald, 155 Vt. at 293, 583 A.2d at 601
(six-year statute of limitation governs claim seeking reimbursement from
attorney for costs associated with securing return of child). As we stated
before, if we were to consider every award of money damages to constitute
damage to personal property, irrespective of the source of the damages,
then all contract actions would be subject to a three-year statute of
limitations, contrary to established law.
B. Proximate Cause
Defendant next claims that the court erred in concluding that the
engineering firm's wrongdoing was a proximate cause of plaintiffs
incurring legal costs to defend the first count of the Burke complaint,
which alleged that the Bulls were negligent in failing to cause a marker to
be
placed in the northeastern corner of the lot they sold to the Burkes. We
find no merit to this argument. The evidence indicated that (1) in April
1990, approximately fifteen months before the Burkes purchased their lot
from plaintiffs, plaintiffs asked defendant to set the pins for the phase
three lots, including lot five; (2) plaintiffs and Mr. Hinsdale reasonably
assumed that defendant put the pins in place in May 1990 and then again in
the spring of 1991; (3) in July 1991, when the Burkes reported that they
could not find the northeastern corner pin on their lot, Mr. Hinsdale and
Mr. Bull searched for the pin without success; (4) Mr. Hinsdale called
defendant and was informed that the pin had not yet been set; (5) Mr.
Hinsdale informed defendant that the pin needed to be placed; (6) the pin
was not placed until September 11, 1991; (7) some time between July and
September 1991, Mr. Hastings poured a foundation for the Burkes' house; and
(8) when defendant finally set the northeastern corner pin for the lot
five on September 11, 1991, it became clear that Mr. Hastings had extended
the foundation onto an adjoining lot. Given these facts, the trial court
correctly concluded that plaintiffs' defense costs were proximately caused
by defendant's wrongdoing.
Seizing upon the trial court's observation that this is not a true
indemnity case because the Burkes did not prevail in their suit against
the Bulls (and thus the Bulls were not legally obligated to the Burkes),
defendants argue that plaintiffs are not entitled to costs incurred in
contesting a count alleging that they, and not defendant, were negligent.
Again, this argument has no merit. "There is a substantial body of case
law which holds that where the wrongful act of one person has involved
another in litigation with a third person or has made it necessary for that
other person to incur expenses to protect his interests, litigation
expenses, including attorney's fees, are recoverable." Albright v. Fish,
138 Vt. 585, 591, 422 A.2d 250, 254 (1980); accord Wyatt v. Palmer, 165
Vt. 600, 602, 683 A.2d 1353, 1356-57 (1996) (mem.). Regardless of whether
indemnity is the correct label for this action, Vermont law entitles
plaintiffs to seek compensation for their loss, and, without question, a
proximate cause of that loss was defendant's wrongdoing. If not for
defendant's wrongdoing, plaintiffs would not have incurred legal costs in
defending against the Burke lawsuit.
C. Collateral Estoppel
Defendant also asserts that the doctrine of issue preclusion bars
plaintiffs from recovering their costs related to defending count two of
the Burke suit, a breach-of-warranty claim. The Burkes claimed that they
did not receive good title to their lot because the survey that defendant
had performed for the Bulls erroneously identified the compass bearing for
the eastern boundary of the lot. According to defendant, the doctrine of
collateral estoppel precludes plaintiffs from recovering costs in
defending against this claim because in the Burke case plaintiffs argued,
and the trial court ruled, that the bearing reference was correct.
This argument is not persuasive. Collateral estoppel, or issue
preclusion, bars the subsequent relitigation of an issue that was actually
litigated and decided in a prior case between the parties, so long as
there was a final judgment on the merits and the issue was necessary to
resolution of the action. See Longariello v. Windham Southwest Supervisory
Union, 165 Vt. 573, 574, 679 A.2d 337, 338 (1996) (mem.); American
Trucking Ass'ns v. Conway, 152 Vt. 363, 370, 566 A.2d 1323, 1328 (1989).
The elements of issue preclusion are the following:
(1) preclusion is asserted against one who was a party or in privity
with a party in the earlier action; (2) the issue was resolved by a
final judgment on the merits; (3) the issue is the same as the one
raised in the later action; (4) there was a full and fair opportunity
to litigate the issue in the earlier action; and (5) applying preclusion
in the later action is fair.
Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265, 583 A.2d 583, 587
(1990).
Here, at least two of the five elements are not met. First, the
issues in the two cases are not the same. In the Burke litigation, the
issue was whether the Bulls had breached the warranty of title. In
holding that they had not, the superior court stated that the bearings in
the survey were "internally consistent" and thus correct "for the purposes
of [transferring] title." Therefore, the Burkes received title to the
property shown as lot five on the Steeplewood survey, and no breach of
warranty occurred. In contrast, at issue in the present action is whether
the bearing is incorrect in relation to magnetic north, and whether that
error led to the expenses incurred by plaintiffs in the Burke
litigation. Because the issues in the two cases are not the same,
collateral estoppel does not apply. See American Trucking, 152 Vt. at 369,
566 A.2d at 1327-28.
Second, plaintiffs did not have a full and fair opportunity in the
Burke proceedings to litigate the principal question at issue in the
instant case. In determining whether collateral estoppel should apply,
courts must look to the circumstances of each case, including, among other
things, the incentive for the party (against whom estoppel is claimed) to
litigate the issue. See State v. Stearns, 159 Vt. 266, 269-70, 617 A.2d 140, 141-42 (1992); Trepanier, 155 Vt. at 265, 583 A.2d at 587. Here,
plaintiffs had no incentive to convince the factfinder in the Burke
litigation that the bearings on lot five as depicted in defendant's survey
were incorrect in relation to magnetic north. The only fair and
reasonable way for plaintiffs to litigate this issue in the context of the
Burke litigation was to file a cross-claim against defendant. They did so,
raising essentially the same allegations that they make in the instant
action. By stipulation, defendant and plaintiffs agreed to dismissal of
the claim in the Burke litigation without prejudice. Collateral estoppel
does not bar plaintiffs' claim here.
D. Allocation of Defense Costs
Defendant's final argument is that the court's award of $15,391 in
legal fees associated with the first two counts of the Burke litigation is
based on hearsay evidence and is otherwise unsupported by the record. At
trial, plaintiffs submitted an exhibit that included all of the legal
bills that they incurred in defending against the Burke lawsuit. The first
two pages of the exhibit summarized the bills and allocated the expenses
attributable to the first two counts of the Burke complaint. Defendant
objected only to those first two pages of the exhibit, arguing that they
were inadmissible under the hearsay rule because plaintiffs' attorney was
not a witness and was not available for cross-examination. Defendant
makes the same argument here, further contending that, absent the two
pages allocating defense costs, the court's award is unsupported by any
evidence and thus cannot stand.
We find no abuse of discretion. The attorney for the Hinsdales,
co-defendants in the Burke litigation, testified that plaintiffs' attorney
was conservative in allocating defense costs attributable
to counts one and two of the Burke complaint, given that at least
seventy-five percent of the Burke trial concerned defendant's negligence
in preparing the survey and its failure to place the northeastern corner
pin on lot five in a timely manner. As for pre-trial costs, the bills for
legal services received after the Burkes added additional counts to their
complaint indicated what fees were attributable to which counts. In
short, even excluding the first two pages of the exhibit, the court's
award is amply supported by the bills entered into the record, the
testimony of the attorney for the Hinsdales, and the transcript from the
Burke proceedings.
III. Pre-judgment Interest
Plaintiffs argue on cross-appeal that the trial court erred by failing
to grant them prejudgment interest as a matter of right on their damage
awards. In a one-page argument, they briefly assert that they are
entitled to prejudgment interest because the amount of their damages was
readily ascertainable on a date certain. We agree that plaintiffs'
attorney's fees in the underlying action were readily ascertainable at the
time that they were incurred, but we conclude that plaintiffs have failed
to demonstrate that they were entitled to prejudgment interest on their
award for lost profits.
"Prejudgment interest may be awarded as damages for detention of money
due for breach or default. This interest is awarded as of right when the
principal sum recovered is liquidated or capable of ready ascertainment
and may be awarded in the court's discretion for other forms of damage."
Newport Sand & Gravel Co. v. Miller Concrete Constr., Inc., 159 Vt. 66, 71,
614 A.2d 395, 398 (1992). The principal rationale for awarding
prejudgment interest as of right is that, where damages are liquidated or
readily ascertainable, "'the defendant can avoid the accrual of interest
by simply tendering to the plaintiff a sum equal to the amount of
damages.'" Agency of Natural Resources v. Glen Falls Ins. Co., ___ Vt.
___, ___, 736 A.2d 768, 774 (1999) (quoting Johnson v. Pearson Agri-Sys.,
Inc., 350 N.W.2d 127, 130 (Wis. 1984)).
We have little from the record to work with on this issue. The trial
court did not indicate why it chose to deny prejudgment interest.
Plaintiffs make a rather sparse assertion that the amounts of both awards
are readily ascertainable, and defendant does not respond at all to their
argument. We
agree with plaintiffs that the amount and allocation of their attorney's
fees in the underlying litigation were readily ascertainable, and thus
plaintiffs have a right to prejudgment interest on that award from the
time they incurred the fees. With respect to the claim for lost profits,
however, plaintiffs have failed to demonstrate that they are entitled to
prejudgment interest as a matter of right, and they do not argue that the
trial court abused its discretion by failing to grant prejudgment interest
on that award. Plaintiffs neither explain in detail how their lost profit
damages were readily ascertainable, nor cite any case law discussing the
propriety of awarding prejudgment interest on damage awards for lost
profits. Cf. Investors Title Co. v. Chicago Title Ins., 983 S.W.2d 533,
538 (Mo. Ct. App. 1998) (in suit for breach of contract, prejudgment
interest is generally not allowable on damage award for lost profits);
Republic Textile Equip. v. Aetna Ins., 360 S.E.2d 540, 545 (S.C. Ct. App.
1987) (in negligence action, prejudgment interest is generally not awarded
on claims for lost profits or similar consequential losses). Given the
paucity of the briefing, we make no general ruling on this point of law,
but decline to disturb the trial court's decision in this case not to
award prejudgment interest on plaintiffs' damage award for lost profits.
The superior court's August 13, 1998 decision is affirmed in all
respects, except that prejudgment interest is granted on plaintiffs' award
for attorney's fees incurred in the underlying litigation.
FOR THE COURT:
_______________________________________
Associate Justice
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