Russell v. Atkins

Russell v. Atkins  (94-651); 165 Vt 176; 679 A.2d 333

[Opinion Filed 12-Apr-1996]


       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. 94-651


Robert Russell, et al.                       Supreme Court

                                             On Appeal from
    v.                                       Chittenden Superior Court

David and Betty Atkins                       January Term, 1996


Merideth Wright, J.

Stephen Norman, Vermont Legal Aid, Inc., Burlington, for plaintiffs-appellants

Mark L. Sperry and Eric M. Knudsen of Langrock Sperry & Wool,
  Burlington, and Edwin L. Hobson of Linton & Hobson, Williston, for
  defendants-appellees


PRESENT:  Gibson, Dooley, and Morse, JJ., Martin, Super. J. and
  Levitt, Dist. J., Specially Assigned


       MORSE, J.   Plaintiffs appeal the superior court's grant of summary
  judgment to defendants David and Betty Atkins, owners of the Westbury
  Mobile Home Park, in a landlord/tenant dispute arising out of the proposed
  sale of the Park.  Plaintiffs make three claims on appeal.  In claim I
  plaintiffs seek specific performance of an alleged contract to sell the
  park, claiming that the trial court erred in concluding that no contract
  existed.  In claim II plaintiffs argue that defendants violated 10 V.S.A. §
  6242(c)(2) by failing to negotiate in good faith, and committed unfair and
  deceptive business practices in violation of 9 V.S.A. § 2453(a) by
  threatening to evict tenants who did not arrange for the purchase of their
  mobile home lots under a condominium conversion plan.  Plaintiffs contend
  that the trial court erred in concluding that defendants' conduct did not
  constitute consumer fraud.  In claim III plaintiff Russell, in a separate
  cause of action, argues that defendants committed an unfair business
  practice when they agreed to lease a lot to him only on the condition that
  he buy a mobile home from them.  He contends that the trial court erred in
  dismissing his claim.  We dismiss claim I, affirm claim II,

 

  and reverse the grant of summary judgment in claim III.

       Plaintiffs are current or former tenants of the Park, which contains
  250 lots leased as sites for mobile homes.  Park tenants own their mobile
  homes and lease only the sites on which the homes sit.

       In January 1989, defendants gave notice of their intent to sell the
  Park and their asking price as required by 10 V.S.A. § 6242(a) (Supp.
  1989).  Under § 6242(a)(3), as then enacted, an owner who received notice
  that a majority of adult residents were interested in buying the Park,
  could "not make a final unconditional acceptance of an offer to purchase
  the park except one from a resident group representing a majority of the
  adult residents or from a nonprofit corporation approved by a majority of
  the adult residents."  Section 6242(b)(1) obligated the owner to "negotiate
  in good faith with the resident group . . . or a nonprofit corporation . .
  . concerning the purchase of the park."

       The tenants, acting through the Kellogg Woods Homeowners Association,
  gave notice of their interest in purchasing the Park, and approved Housing
  Foundation Inc. (HFI) as their designee nonprofit corporation.  HFI
  tendered a purchase and sale agreement for the full asking price of
  $5,000,000 and a $5000 deposit within the ninety-day period specified in §
  6242(a)(3). The purchase and sale agreement included many terms not
  contained in the notice of intent to sell, including unusual financing
  contingencies.  Defendants returned the contract and deposit promptly to
  HFI and notified the tenants that the Park was no longer for sale.

       In December 1989, defendants gave their tenants a prospectus called a
  "blue book," which described an offer to sell individual lots as
  condominiums for $33,000 each.  Consistent with the Condominium Ownership
  Act, 27 V.S.A. §§ 1301-1339, the offer stated that the tenants could be
  evicted if they did not arrange for the purchase of their lots.  Id. §
  1333(a). The "blue book" also contained an offer to sell the whole property
  to the tenants for $8,000,000 under 10 V.S.A. § 6242(a).  Kellogg Woods
  represented the tenants, who again elected to purchase the Park and gave
  appropriate notice.  During these negotiations, Kellogg

 

  Woods, HFI, and plaintiffs commenced this action in Chittenden Superior
  Court.  Both Kellogg Woods and HFI settled and voluntarily dismissed their
  claims with prejudice.  Only plaintiffs, acting as individuals, have
  pursued this action.  No sales of the Park or any condominium lots have
  taken place.

                                I.

       Plaintiffs first argue that defendants' initial notice of intent to
  sell was an offer, and that HFI's acceptance created an enforceable
  contract.  They seek specific performance of the terms of the first notice,
  or a declaration that defendants abrogated their duty to negotiate in good
  faith under 10 V.S.A. § 6242(c)(2).  We need not reach the merits of this
  issue because plaintiffs' claim is barred by res judicata.

       "The doctrine of res judicata, also known as claim preclusion, bars
  the litigation of a claim or defense if there exists a final judgment in
  former litigation in which the `parties, subject matter and causes of
  action are identical or substantially identical.'"  Berlin Convalescent
  Center, Inc. v. Stoneman, 159 Vt. 53, 56, 615 A.2d 141, 143 (1992) (quoting
  Berisha v. Hardy, 144 Vt. 136, 138, 474 A.2d 90, 91 (1984)).  "It bars not
  only issues actually litigated but also those that `should have been raised
  in previous litigation.'" Id., 615 A.2d  at 143-44 (quoting American
  Trucking Ass'ns v. Conway, 152 Vt. 363, 370, 566 A.2d 1323, 1328 (1989)). 
  Res judicata is intended to protect the courts and the parties from the
  burden of relitigation, id. at 57, 615 A.2d  at 144, and a court may raise
  it on its own where the parties have failed to do so. Merrilees v.
  Treasurer, 159 Vt. 623, 623, 618 A.2d 1314, 1315 (1992) (mem.).  All the
  elements of res judicata are present here.

       Plaintiffs, along with a majority of the Park's adult residents, acted
  through Kellogg Woods to nominate HFI as their agent for negotiating the
  purchase of the Park.  Under the statute, their only means of participating
  in the negotiations that form the basis of their claim was though HFI.  See
  10 V.S.A. § 6242(b)(1) (Supp. 1989) (park owner shall negotiate in good
  faith with resident group representing majority of adult residents or
  nonprofit corporation

 

  approved by majority of adult residents).  After defendants returned HFI's
  purchase and sale agreement and deposit, HFI brought a claim against
  defendants in Chittenden Superior Court identical to the one plaintiffs now
  assert.  This claim was ultimately settled and voluntarily dismissed with
  prejudice.

       As a general rule, settlement of a lawsuit by an agent binds the
  principal so long as the agent has authority to settle. See New England
  Education and Training Serv., Inc. v. Silver Street Partnership, 148 Vt.
  99, 102, 528 A.2d 1117, 1119 (1987).  The authority may be "`proven from
  the facts and circumstances attending the transaction in question.'"  Id.
  at 103, 528 A.2d  at 1119 (quoting Stevens v. Frost, 32 A.2d 164, 168 (Me.
  1943)).

       Here, both HFI and Kellogg Woods approved the settlement and
  dismissal.  Plaintiffs never challenged HFI's or Kellogg Woods' authority
  to settle.  Under these circumstances, plaintiffs are bound by the
  dismissal of the suit.  Littlefield v. Town of Colchester, 150 Vt. 249,
  251, 552 A.2d 785, 786 (1988) (dismissal with prejudice is treated as
  adjudication on merits).

                                II.

       Next, plaintiffs claim that defendants committed unfair and deceptive
  business practices in violation of 9 V.S.A. § 2451(a) by threatening to
  evict tenants who failed to arrange for the purchase of their lots.  The
  "threat" arose in the context of a condominium conversion plan described in
  the aforementioned "blue book."  The Condominium Ownership Act permits the
  eviction of tenants who fail to purchase their units after a statutorily
  prescribed period.  27 V.S.A. § 1333(a).  The mobile home park statute, in
  contrast, states that "[a] mobile home resident may only be evicted for
  nonpayment of rent or for a substantial violation of the lease terms of the
  mobile home park, or if there is a change in the use of the park land . . .
  or a termination of the mobile home park." 10 V.S.A. § 6237(a).

       Because they proposed both a condominium conversion and a sale of the
  Park, defendants included notice of their intention to sell the park
  pursuant to 10 V.S.A. § 6242(a), and "written notice to vacate or purchase"
  pursuant to 27 V.S.A. § 1331(a) in the "blue book."  During the

 

  proceedings below plaintiffs, concerned about potential eviction,
  petitioned for, and were awarded declaratory relief to the effect that
  mobile home residents are protected by the mobile home statute even where
  the park is undergoing a condominium conversion.

       The court ultimately granted summary judgment to defendants on the
  consumer fraud claim concluding that, because plaintiffs did not rely on
  the eviction notice to their detriment, they do not have an actionable
  claim under the Consumer Fraud Act, 9 V.S.A. §§2451-2480g. We agree.  Under
  9 V.S.A. § 2461(b), a cause of action is available only to consumers who
  contract for goods or services in reliance on, or sustain damages as a
  result of, false or misleading representations.  There is no evidence here
  that plaintiffs either relied on or were damaged by any false or misleading
  representations.  Far from relying on the alleged threat of eviction,
  plaintiffs petitioned for, and were awarded, declaratory relief.

       Moreover, as the court stated, defendants acted reasonably in
  providing notice pursuant to both statutes.  The condominium ownership
  statute compelled defendants to "give . . . tenant[s] . . . minimum written
  notice to vacate or purchase the[ir] unit[s]."  27 V.S.A. § 1333 (a). 
  Defendants were not authorized to decide on their own that this section did
  not apply to mobile home parks, and thus were not free to ignore the
  statutory mandate.  Rather they were entitled to have a court determine
  which of the two statutes controlled the eviction issue without having
  their attempt to comply with both construed as consumer fraud.  The award
  of summary judgment will not be disturbed.

                               III.

       Finally, plaintiff Russell separately claims that defendants violated
  the Consumer Fraud Act, 9 V.S.A. §§ 2451-2480g, by conditioning the lease
  of a mobile home site on the purchase of a mobile home from them.  The
  trial court again granted summary judgment in favor of defendants,
  reasoning that such a "tying scheme" was permissible under the mobile home
  statute, and thus was not actionable as consumer fraud.  In reaching its
  conclusion the court relied on the fact that pertinent language in the bill
  was omitted from the Mobile Home Parks Act, 10

 

  V.S.A. §§ 6201-6265.

       Legislative history reveals that, as originally introduced, the
  statute read: "Entrance shall not be denied or allowed on the basis of
  purchasing a mobile home from the park owner." 1973, H. 134, § 6254.  The
  Legislature struck this language prior to enactment.  See 10 V.S.A. §§
  6236-6240 (Cum. Supp. 1974) (language omitted).  Though the statute is
  silent on the tying issue, neither expressly allowing nor forbidding it,
  the trial court reasoned that the legislature omitted the tying language in
  order to permit the practice, and awarded summary judgment on the basis
  that "tying" was not prohibited under the Consumer Fraud Act.

       The Consumer Fraud Statute, however, explicitly states that "in
  construing [the Act] the courts of the state will be guided by the
  construction of similar terms contained in section 5(a) of the Federal
  Trade Commission Act as . . . amended by the Federal Trade Commission and
  the courts of the United States."  9 V.S.A. § 2453(b).  Under § 5(a)(1) of
  the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1), which is identical
  to 9 V.S.A. § 2453, the FTC has declared that it is illegal to tie or
  condition the leasing of lots in mobile home parks to the purchase of homes
  from the park owner.  In re Mobile Homes-Mulitiplex Corp, 94 F.T.C. 151,
  156, (1979); In re MacLeod Mobile Homes, Inc., 94 F.T.C. 144, 148 (1979). 
  Thus, contrary to the trial court's interpretation of the Mobile Home Park
  Act, plaintiff's claim was actionable.

       Legislative intent is the polestar in interpreting the meaning of a
  statute.  State v. Forcier, 162 Vt. 71, 74, 643 A.2d 1200, 1202 (1994).  We
  will not presume that legislative silence bars an otherwise actionable
  claim.  See id. at 75, 643 A.2d  at 1202 (where meaning of statute is plain,
  statute must be enforced according to express terms).  The legislature's
  previous mandate that the statute should be construed consistently with the
  Federal Trade Commission Act may have been the reason that the tying
  provision was not expressly included, leaving the legality of "tying" to
  federal law.

       The trial court also stated that plaintiff Russell had not shown
  "uncontested facts supporting all the elements of illegal tying."  This is
  an improper basis for granting summary judgment.  The nonmoving party is
  not required to show "uncontested facts" in order to survive a motion for
  summary judgment.  Rather, summary judgment is appropriate only where,
  giving the nonmoving party the benefit of all reasonable doubts and
  inferences, there are no genuine ssues of material fact, and the moving
  party is entitled to judgment as a matter of law.  Baldwin v. Upper Valley
  Serv., Inc., 162 Vt. 51, 55, 644 A.2d 316, 318 (1994).  If the facts
  supporting plaintiff's claim are contested, evidently genuine issues of
  material fact remain.   Moreover, as noted above, we are not persuaded that
  defendant is entitled to judgment as a matter of law. Neither component of
  the two-part test for summary judgment is met here.

       Claim I is dismissed; claim II is affirmed; the award of summary
  judgment on claim III is reversed, and the cause is remanded.

                              FOR THE COURT:



                              _______________________________________
                              Associate Justice