Housing Vermont v. Goldsmith

Housing Vermont v. Goldsmith & Morris  (95-292); 165 Vt 428; 685 A.2d 1086

[Opinion Filed 23-Aug-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. 95-292


Housing Vermont                                   Supreme Court

                                                  On Appeal from
    v.                                            Chittenden Superior Court

Goldsmith & Morris                                April Term, 1996


Linda Levitt, J.

       Neil H. Mickenberg of Mickenberg, Dunn, Sirotkin & Dorsch, Burlington,
  for plaintiff-appellee

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


PRESENT:       Dooley, Morse and Johnson, JJ., Norton, Super. J. and
               Teachout, Super. J. Specially Assigned


       MORSE, J.   Defendant Goldsmith and Morris Architects (Goldsmith)
  appeals from a judgment in favor of plaintiff Housing Vermont in an
  architectural malpractice action. Goldsmith claims that the court erred in
  construing the contract between the parties and in imposing discovery
  sanctions.  We affirm for the most part, but reverse the award of discovery
  sanctions.

       Housing Vermont, a non-profit corporation that develops affordable
  housing, is the assignee of claims originally brought by the Riverside
  Housing Partnership.  Riverside owns the Salmon Run housing project, the
  development at issue.  The Salmon Run Project was initiated by the Davis
  Company in the summer of 1987.  Davis Company secured the resources the
  project required, including architectural and engineering services,
  building permits, financing, and an option on the site.  It sold the
  project to Riverside in November of 1988.  As a component of the sale, the
  Davis Company assigned its rights under all contracts related to the

 

  project to Riverside, including rights to the architectural design services
  of defendant Goldsmith and Morris Architects, and  to the services of Krebs
  and Lansing, a civil engineering firm.

       Located in a ravine, the Salmon Run site was very steep and
  technically difficult to develop.  At the crux of this case is the question
  of responsibility for producing the final grading plan for the space
  immediately surrounding the buildings, an area known as the courtyard.
  Goldsmith contends that Krebs and Lansing was responsible for the final
  grading plan while Housing Vermont claims that the plan was Goldsmith's
  responsibility.

       Goldsmith produced a site plan, "SP-1", which contained grading
  information and was, in fact, used to construct the grades in the
  courtyard.  The steep slopes depicted in SP-1 proved to be unstable and had
  to be redesigned and stabilized at substantial additional cost.  At trial,
  the court found that Goldsmith was responsible for producing the final
  grading plan, and concluded that SP-1 did not meet the standard of care
  required of architects in producing final grading plans.  The court awarded
  Housing Vermont judgment in the amount of $100,469.92 plus prejudgment
  interest and costs.  Upon Housing Vermont's motion, the court also imposed
  discovery sanctions in the amount of $14,446 for Goldsmith's failure to
  admit certain matters of proof.

                                     I.


       Goldsmith's primary claim is that the trial court erred in finding
  that it was responsible for producing the final grading plan for the
  courtyard area.  The agreement between Goldsmith and Riverside was
  initially formalized in a letter and an American Institute of Architects
  (AIA) document called a "Standard Form of Agreement Between Owner and
  Architect."  These documents obligated Goldsmith to produce a site plan for
  construction.  Subsequently the agreement was modified to provide Goldsmith
  with extra compensation for "grading plans to date."  Goldsmith claims that
  nothing on the face of these documents obligated it to create a final
  grading plan and that the court must have erroneously relied on parol
  evidence to support its finding that Goldsmith was responsible for the
  plan.  Goldsmith contends as well that construction of contract terms is a
  question of law, and claims that we must analyze the contract without
  giving any deference to the trial court's interpretation.

 

       We note first that the parol evidence argument was not made before the
  trial court. Indeed, the record reveals that Goldsmith's own examination of
  witnesses elicited some of the evidence in question, and that Goldsmith did
  not object to its admission at trial.  Thus  this claim is waived.  See
  Morais v. Yee, 162 Vt.  366, 372, 648 A.2d 405, 410 (1994) (argument not
  made before trial court will not be considered on appeal).

       Furthermore, although Goldsmith is correct that, generally speaking,
  construction of contract terms is a matter of law, Ianelli v. Standish, 156
  Vt. 386, 389, 592 A.2d 901, 903 (1991), where the meaning of a contract is
  uncertain, the intent of the parties becomes a question of fact.  United
  Railway Supply & Service, Ltd. v. Boston and Maine Corp., 148 Vt. 454, 457,
  535 A.2d 325,327 (1987); Gardner v. West-Col, Inc., 136 Vt. 381, 385,392 A.2d 383,386 (1978).  Thus, the trial court's finding  that Goldsmith was
  responsible for the grading plan is entitled to substantial deference.  See
  Mullin v. Phelps, 162 Vt. 250, 260, 647 A.2d 714, 720 (1994) (trial court's
  findings of fact  reviewed only for clear error).

       A review of the record reveals that the trial court's finding is
  supported by both testimonial and documentary evidence.  The court found,
  based on expert testimony, that an architectural document is not stamped
  with the seal of the architect unless it is true, complete and ready to use
  for construction.  SP-1 was stamped with Goldsmith's seal.  When SP-1 was
  delivered in final form, defendant also signed a "Design Architect's
  Certification and Acknowledgement," which stated that upon the knowledge,
  belief and professional judgment of Goldsmith, soil and ground conditions
  would not impair the structural soundness of the project. In addition,
  Larry Williams, who worked for Housing Vermont's  predecessor in title,
  testified that Goldsmith was responsible for designing the grading plan for
  the courtyard and had assured him that the grades depicted on SP-1 would
  work.  Other testimony indicated that Goldsmith knew that SP-1 was being
  used for construction purposes and did nothing to intervene or to suggest
  that the plan was preliminary and not suitable as a basis for construction. 
  Bearing in mind that the credibility of witnesses and the persuasive effect
  of evidence are for the trial court to determine, this evidence is more
  than adequate to sustain the court's finding.  Roy v. Paquette, 147 Vt.
  332, 333, 515 A.2d 1072, 1073 (1986); see also Mullin, 162 Vt. at 260, 647 A.2d  at 720
  (finding will not be disturbed unless appellant can show there is no
  credible evidence to support it).

       Thus, even if it had not been waived, defendant's parol evidence
  argument would fail.  The parol evidence rule bars the admission of
  evidence of a prior or contemporaneous oral agreement that varies or
  contradicts the terms of a written agreement.  New England Educational
  Training Service, Inc. v. Silver Street Partnership, 156 Vt. 604, 609, 595 A.2d 1341, 1344 (1991).  None of the evidence the court considered
  contradicted the terms of the AIA document or the subsequent written
  modification.  Instead the evidence contradicted the construction of the
  contract that defendant advanced, a construction that the trial court
  rejected.

       Likewise, defendant's promissory estoppel argument must fail.  That
  argument is based on a memorandum sent to defendant by Larry Williams in
  which Williams stated "I need 10 copies of grading plan with first floor
  elevations of buildings for use in estimating site work costs.  Plan to be
  reviewed, revised as required, and drawn in final form by Bob Krebs for
  final pricing."  Defendant contends that he produced a preliminary grading
  plan in reliance on this letter and that plaintiff should be estopped from
  asserting that defendant was responsible for the final grading plan.  The
  parties do not dispute, however, that a contract governed their
  relationship.  Thus the doctrine of promissory estoppel does not apply
  here.  See Estate of Sawyer v. Crowell, 151 Vt. 287, 294, 559 A.2d 687, 692
  (1989) (where relationship governed by contract, promissory estoppel
  doctrine does not arise); Big G. Corp. v. Henry, 148 Vt. 589, 594, 536 A.2d 559, 562 (1987) (doctrine of promissory estoppel applies only where there is
  no contract).

       Instead, at issue in this case is what, exactly, defendant's
  contractual obligations were. As noted above, the court found that
  defendant was responsible for the final grading plan and thus necessarily
  rejected defendant's interpretation of the above memorandum.  The court's
  finding was supported by the record and will not be disturbed. 

                                II.

       Goldsmith claims that the following contract provisions shield it from
  liability for cost

 

  overruns proximately caused by its malpractice:

  § 5.2.1 [T]he Architect cannot and does not warrant or represent that
  bids or negotiated prices will not vary from the Owner's project budget or
  from any estimate of Construction Cost or evaluation prepared or agreed to
  by the Architect.

  § 5.2.2 No fixed limit of Construction Cost shall be established as a
  condition of this agreement by the furnishing, proposal, or establishment
  of a Project budget, unless such limit has been agreed upon in writing and
  signed by the parties hereto.

       Contractual disclaimers of liability for negligence have traditionally
  been disfavored. Colgan v. Agway Inc., 150 Vt. 373, 375, 553 A.2d 143,
  145 (1988). They are subject to more exacting judicial scrutiny than other
  contractual provisions, and thus a greater degree of clarity is required to
  make them effective.  Id.  Such a provision will not be enforced unless its
  language makes the intention of both parties to relieve the defendant of
  liability unmistakable. Id. The language above, a broadly worded
  disclaimer, does not meet this standard.  It contains no reference to
  negligence or wrongful conduct of any kind, and thus cannot insulate
  defendant from liability for malpractice.

                               III.

       We depart from the trial court only on the issue of discovery
  sanctions.  After trial, Housing Vermont moved for attorney's fees under
  V.R.C.P. 37(c) contending that Goldsmith should have admitted its
  responsibility for the final grading plan in response to interrogatories.
  See V.R.C.P. 36 (requests for admission).  Goldsmith did not submit an
  opposing memorandum. The trial court summarily granted the motion. 
  Goldsmith claims that the court erred in granting Housing  Vermont's
  motion, because a genuine issue existed regarding whether defedant was
  responsible for the final grading plan.  Goldsmith argues, as well, that
  there was no need to file an opposing memorandum because the basis for its
  opposition was evident from the trial.

       The purpose of procedural rules such as V.R.C.P. 37(c) is to secure
  the admission of facts that are not disputed, and thereby simplify
  litigation and promote settlement.  See Morgan v. Demille, 799 P.2d 561, 564 (Nev. 1990); Chem-Pac, Inc. v. Simborg, 495 N.E.2d 1124, 1127 (Ill.
  Ct. App. 1986).   In this case, the fact in question was disputed, and the
  "truth" of the matter was established only through lengthy and detailed
  litigation.  Yet Housing Vermont, in essence, wanted Goldsmith to concede
  liability prior to trial, and the court sanctioned it for not doing so. 
  The fact that a matter denied before trial is ultimately found to be true
  does not necessarily mean that denial was unjustified for the purposes of
  Rule 37(c).  See Reporters Notes, V.R.C.P. 37(c)(3) (existence of genuine
  issue as to matter in question justifies denial); Koegel v. R Motors, Inc.,
  448 N.W.2d 452, 456 (Iowa 1989).  If V.R.C.P. 37(c) is extended to cover
  all disputed issues that are established as fact only through a general
  verdict, the prevailing party would routinely be awarded fees and expenses. 
  This is not the purpose of V.R.C.P. 37(c).  Goldsmith was not required to
  concede liability.  See Chem-Pac, 495 N.E.2d  at 1128.

       The award of discovery sanctions in the amount of $14,446 is reversed;
  otherwise, affirmed.

                                        FOR THE COURT:

                                        ________________________________
                                        Associate Justice