Limoge v. People's Trust Co.

Limoge v. People's Trust Co.  (97-419); 168 Vt. 265; 719 A.2d 888

[Filed 4-Sep-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. 97-419


Raymond and Patricia Limoge                  Supreme Court

                                             On Appeal from
    v.                                       Chittenden Superior Court

People's Trust Company                       May Term, 1998

     v.

Synergy Group, Inc. d/b/a
Smith Bell Real Estate


Linda Levitt, J.

       Jon R. Eggleston and Robert A. Pinel of Miller, Eggleston & Cramer,
  Ltd., Burlington, for Plaintiffs-Appellants

       David H. Greenberg, Burlington, for Defendant-Appellee Peoples Trust
  Co.

       Michael Harris of Sutherland & Collins, Inc., Burlington, for
  Defendant-Appellee Synergy Group, Inc.


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


       DOOLEY, J.   Plaintiffs Raymond and Patricia Limoge appeal from an
  order of the Chittenden Superior Court granting summary judgment to
  defendant People's Trust Company of St. Albans on claims arising out of
  plaintiffs' purchase of a camp and land in Milton, Vermont from People's
  Trust.  Plaintiffs claim that the acreage of the lot is not as represented
  in the contract for sale and the deed, and that People's Trust is liable
  for the reduced value of the lot based on theories of negligent
  misrepresentation and breach of warranty.   On appeal, plaintiffs argue
  that the trial court erred in granting summary judgment based on a warranty
  disclaimer in the deed and without considering whether People's Trust
  violated a covenant of good faith and fair dealing implied in the sales
  contract.  We conclude that the superior court

 

  properly granted summary judgment on the deed warranty theory and properly
  rejected the claim based on an implied covenant of good faith and fair
  dealing because the claim was not properly pleaded.  We also conclude,
  however, that summary judgment was improperly granted on the negligent
  misrepresentation theory and reverse and remand for trial of that claim.

       Plaintiffs sought a parcel of land on Lake Champlain on which to build
  a year-round home and found in Milton a lot, with a camp, being sold by
  Synergy Group, Inc. d/b/a Smith Bell Real Estate as the realtor for the
  owner, People's Trust Company of St. Albans.  The lot was one of five
  acquired by People's Trust in a foreclosure proceeding.  Agents for Smith
  Bell presented the  property to the plaintiffs as .53 acres in size with
  road frontage on Camp Road, a Milton town road, as depicted on a town tax
  map.  Prior to signing a sales agreement, plaintiffs specifically inquired
  about the presence of road frontage.  Direct access to the town road was
  important to plaintiffs because they intended to build a year-round
  residence on the property and believed road access was necessary to meet
  zoning requirements.  Based on the representations of the agents,
  plaintiffs decided to purchase the property.

       On April 12, 1995, plaintiffs executed a sales agreement with People's
  Trust.  An addendum to the agreement contained a disclaimer stating that
  the property was sold "as is" with no warranty, expressed or implied, as to
  the merchantability of the property.  The disclaimer goes on to state that
  there is no warranty with respect to "structures" and with respect to the
  heating or cooling system, electrical system, water supply system, sewage
  disposal system, and all appliances found in the house.  The disclaimer
  makes no reference to boundaries or acreage.

       On April 21, 1995, People's Trust closed the sale with plaintiffs,
  conveying a limited warranty deed which described the property as "[a] camp
  property located on the easterly shore of Lake Champlain containing .53
  acres."  The deed also contained the disclaimer described above and limited
  the warranty obligation to "lawful claims arising from the Grantor's acts
  or from encumbrances created during the period of the Grantor's ownership
  of the Property."

       Shortly before the sale to plaintiffs, People's Trust sold an
  adjoining lot to third parties

 

  who hired a surveyor to determine their boundaries. The survey showed that
  part of the land plaintiffs thought they had purchased actually belonged to
  the third party.  Specifically, the survey showed that the back line of
  plaintiffs' property does not abut the town road, but is instead closer to
  the lake.  As a result, plaintiffs have access to their property only
  through a private road, called the old camp road.  The exact size of
  plaintiffs' lot is disputed, but is no greater than .43 acres.

       There is substantial dispute about whether Smith Bell, as agent for
  People's Trust, should have known of the acreage discrepancy.  Smith Bell
  argues that it took all reasonable steps to determine the size and shape of
  the lot.  Similarly, there is dispute over the consequences of the
  discrepancy, particularly the lack of direct access to the town road.  
  Plaintiffs assert that they spent $85,000 to $90,000 on the camp to convert
  it to year-round use, but now cannot use it for that purpose because of
  lack of direct access to the town road.  Smith Bell responds that Milton
  zoning regulations prohibit year-round-occupancy irrespective of access to
  the town road.  These disputes are not resolved on the summary judgment
  record.

       Plaintiffs filed a complaint against People's Trust, which then
  asserted a third-party claim against Smith Bell.  Both plaintiffs and
  People's Trust moved for summary judgment,  and the court granted People's
  Trust's motion on September 12, 1997.  The court found the acreage shortage
  did not violate the limited warranty contained in the deed.  On the
  negligent misrepresentation claim, the court held that there were disputed
  issues of material fact as to whether People's Trust was negligent, but in
  light of the limited warranty and the disclaimer, plaintiffs could not
  justifiably rely on the acreage representation.

       On appeal, plaintiffs argue that the lower court should not have
  granted summary judgment against them because 1) they could justifiably
  rely on People's Trust's representations of the lot's acreage and
  boundaries; 2) People's Trust breached covenants of title by not conveying
  the property specified; and 3) People's Trust breached implied warranties
  of good

 

   faith and fair dealing by not conveying the property specified.(FN1)

       We begin by noting that when reviewing a grant of summary judgment
  "[w]e apply the same standard as the trial court: summary judgment is
  appropriate when the record clearly indicates there is no genuine issue of
  material fact and that the moving party is entitled to judgment as a matter
  of law.  Lane v. Town of Grafton, 166 Vt. 148, 150, 689 A.2d 455, 456
  (1996) (citations omitted).

       Plaintiffs first argue that the trial court erred in holding that the
  disclaimer in the sales agreement and the deed precluded plaintiffs from
  justifiably relying on the representations of the bank's agent as to the
  acreage and boundaries of the lot.  Plaintiffs proceeded on a theory of
  negligent misrepresentation.  We have adopted the Restatement (Second) of
  Torts definition of negligent misrepresentation:

     One who, in the course of his business, profession, or
     employment, or in any other transaction in which he has a
     pecuniary interest, supplies false information for the guidance of
     others in their business transactions is subject to liability for
     pecuniary loss caused to them by their justifiable reliance upon the
     information, if he fails to exercise reasonable care or competence
     in obtaining or communicating the information.

  Restatement (Second) of Torts § 552(1) (1977); see Silva v. Stevens, 156
  Vt. 94, 108, 589 A.2d 852, 860 (1991).  As the trial court found, the tort requires that
  plaintiff show "justifiable reliance upon the information" provided by the
  alleged tortfeasor.  See id.  Justifiable reliance is determined under an
  objective standard; in Silva, we affirmed a jury instruction that stated
  that purchasers may justifiably rely on a representation "when the
  representation is not obviously false and the truth of the representation
  is not within the knowledge of, or known by the plaintiffs."  Id.

       As in this case, the seller claimed in Silva that a disclaimer stating
  that the property was

 

  sold "as is" provided an affirmative defense to the negligent
  misrepresentation claim.  We held, however, that the "as is" clause does
  not "denote an exclusion of tort liability."  Id. at 112, 589 A.2d  at 862. 
  Thus, we held that the clause defeated neither a fraud claim nor a claim
  based on negligent misrepresentation.  See id, 589 A.2d  at 862-63.  The
  weight to be given the clause in determining whether there was a
  misrepresentation and whether there was justifiable reliance is to be
  decided by the fact-finder.  See id. at 113, 589 A.2d  at 863.

       Silva governs here.  Plaintiff Raymond Limoge, testified in his
  deposition that he relied upon the representations of the Smith Bell agents
  that the lot contained .53 acres and abutted the town road.  He testified
  that he read the disclaimer to apply to the camp and not to the land. In
  view of this evidence, the superior court could not hold, as it did, that
  plaintiffs could not justifiably rely on the representations of defendant s
  agents.

       People's Trust argues that the summary judgment decision should be
  upheld on the alternative ground that plaintiffs failed to plead negligent
  misrepresentation in their complaint. Plaintiffs' complaint against
  People's Trust alleged that "defendant, and defendant's agents,
  misrepresented the boundaries and acreage of the property."  It did not
  state explicitly whether plaintiffs were relying on deceit, that is,
  intentional misrepresentation, or on negligent misrepresentation, or both. 
  The answer filed by People's Trust did not seek a more definite statement. 
  Plaintiffs specified their theories of liability in their memorandum in
  support of their motion for summary judgment: "The Limoges allege breach of
  warranties, negligent misrepresentation and breach of the implied covenant
  of good faith and fair dealing against the bank."  People's Trust did not
  object to consideration of the negligent misrepresentation theory, and the
  trial court decided the summary judgment motion based on that theory.

       Issues not raised in the trial court may not be raised for the first
  time on appeal.  See, e.g., Town of Hinesburg v. Dunkling, 9 Vt. L.W. 101,
  103-04 (1998) (failure to raise due process challenge in summary judgment
  filings in trial court prevented issue from being raised in Supreme Court). 
  We conclude that People's Trust has waived any objection to consideration

 

  of plaintiff's claim of negligent misrepresentation.  If People's Trust
  believed that a claim of negligent misrepresentation was not properly
  before the trial court, it needed to raise that to the trial court, not
  initially to us.

       Smith Bell urges us to affirm on the alternative theory that its
  employees were not negligent as a matter of law.  It relies on evidence in
  support of its summary judgment motion showing that, before representing
  the lot as .53 acres with access to the town road, its employees consulted
  the mortgage deed that was foreclosed and its supporting title search, the
  foreclosure decree, statements of a former owner and an adjacent landowner,
  and town tax records.  All of these sources supported its representations.

       The duty of Smith Bell was to use "reasonable care or competence in
  obtaining or communicating the information."  Restatement (Second) of Torts
  § 552(1).  The comment amplifies the standard:

     What is reasonable is, as in other cases of negligence, dependent
     upon the circumstances.  It is, in general, a matter of the care and
     competence that the recipient of the information is entitled to
     expect in light of the circumstances and this will vary according to
     a good many factors.  The question is one for the jury, unless the
     facts are so clear as to permit only one conclusion.

  Id., cmt. e.  In defining the relevant circumstances, we have drawn from
  fraud law.  See Provost v. Miller, 144 Vt. 67, 69, 473 A.2d 1162, 1163
  (1984) (standard of liability of fraud that broker is not responsible for
  making untrue statements based on information supplied by seller is
  applicable to negligent misrepresentation claim).  One circumstance is
  explained in the early case of Cabot v. Christie, 42 Vt. 121, 126 (1869):

     We think it very clear that a party may be guilty of fraud by
     stating his belief as knowledge.  Upon a statement of the
     defendant's mere belief, judgment, or information, the plaintiff
     might have regarded it prudent to procure a measurement of the
     land before completing his purchase.  A statement, as of
     knowledge, if believed, would make a survey or measurement
     seem unnecessary.  A representation of a fact, as of the party's
     own knowledge, if it prove false, is, unless explained, inferred to
     be wilfully false and made with intent to deceive, at least in
     respect to the knowledge which is professed. . . . If the defendant

 

     had only a belief or opinion as to the quantity of land, it was an
     imposition upon the plaintiff to pass off such belief as knowledge.

  See also Cunningham v. Miller, 150 Vt. 263, 265, 552 A.2d 1203, 1204-05
  (1988) (quoting Cabot).

       We agree with the trial court that there is jury question whether
  Smith Bell was negligent and, therefore, whether People's Trust was liable
  as the seller.  Given the importance to plaintiffs of the size of the lot
  and the availability of road access, a jury could find that Smith Bell did
  not do enough to determine the truth of the representations it was making
  as facts of its own knowledge.  We cannot conclude that summary judgment
  was properly awarded to the bank based on the alternative theory advanced
  by Smith Bell.

       Plaintiffs next contend that People's Trust breached deed covenants by
  not conveying the full acreage specified in the deed with the same
  boundaries as represented on the Milton town tax map.  The facts relative
  to this claim are generally undisputed.  Consistent with Smith Bell's
  representations that the lot contained .53 acres and abutted the town road,
  the deed from People's Trust to plaintiffs described the property as a 
  "camp property located on the easterly shore of Lake Champlain containing
  .53 acres."  The deed then went onto describe the property by reference to
  prior deeds.  Specifically, the property is described as "Parcel 4" in the
  foreclosure decree under which People's Trust obtained the property.  That
  decree also described the property as "containing .53 acres."  In order to
  determine that the property does not actually abut the town road, and thus
  is not .53 acres, one has to go back to earlier deeds and a 1935 plot plan.

       Plaintiffs emphasize that at the time the contract to sell was signed
  People's Trust owned the land that would fill out plaintiffs' lot to .53
  acres and abut the town road.  That land is part of "Parcel 1" in the
  foreclosure decree under which People's Trust acquired the property and was
  sold to a third party shortly before People's Trust passed the deed to
  plaintiffs.

       Plaintiffs' complaint alleged that the "discrepancy in the acreage of
  the parcel is a breach

 

  of the warranties given by [People's Trust] in its deed to plaintiffs."
  Specifically, plaintiffs argue that People's Trust breached two covenants,
  an implied covenant of marketable title, and an express covenant of limited
  warranty, by conveying an adjoining parcel to a third party.

       We emphasize at the outset that although plaintiffs claim that the
  contract to sell required that People's Trust convey property that abutted
  the town road, plaintiffs did not claim an actionable breach of that
  contract in their complaint.  Thus, as presented to the trial court, the
  case was one of alleged breach of deed warranties only.  We stress this
  point primarily to narrow the claim to one of a land quantity discrepancy
  that does not involve a claim that a metes and bound description was
  erroneous.  The deed provided an acreage description but nowhere stated
  that the land abutted the town road.

       We conclude that neither of plaintiffs' theories that People's Trust
  violated deed covenants are broad enough to reach the quantity discrepancy
  in plaintiffs' deed.  In reaching this conclusion, we do not rely on the
  limitations the bank imposed on the covenant of warranty. We believe the
  result would be the same had People's Trust provided an unlimited warranty.

       The basic rule is provided in Wilder v. Davenport, 58 Vt. 642, 646
  (1886):  "A statement of the number of acres, more or less, is mere matter
  of description and not an agreement or covenant on the part of the
  grantor." The rationale for the rule is described in the early case of
  Beach v. Stearns, 1 Aik. 325, 328 (1825):
  
     The words, "containing thirty-four acres and nineteen rods," added
     to the description of the land in the deed, certainly do not import
     any agreement, or amount to any stipulation, on the part of the
     defendant, that the land granted contained that quantity, but are a
     mere estimate or enumeration of quantity thrown into the deed, as
     descriptive of the land conveyed.  It is a principle laid down and
     settled by repeated decisions, that when a piece of land is
     conveyed by metes and bounds, or any other certain description,
     the boundaries or lines given will control the quantity, although
     not correctly stated in the deed. . . . The words in the deed
     expressing the quantity, therefore, cannot be considered as
     amounting to an agreement or covenant on the part of the
     defendant, but must be regarded, as the parties undoubtedly
     intended them, as mere matter of description.

 

  See also White v. Miller, 22 Vt. 380, 385 (1850) ("It has long been held
  that the statement of a precise quantity of land, as conveyed by a deed,
  does not bind the grantor to make good that quantity.").  In Harlow v.
  Green, 34 Vt. 379 (1861), a case similar to this one, the issue was whether
  plaintiff, purchaser, could bring a fraud action against a land seller for
  misrepresenting the quantity of land to be sold.  The Court held he could
  bring such an action, in part because "it is not usual in this state that
  deeds of conveyance contain any covenants as to the quantity of the land."
  Id. at 382; see also Cabot, 42 Vt. at 125 (if purchaser is to recover at
  all in acreage deficiency case, it is by fraud action).

       Plaintiffs emphasize that this Court has repeatedly stated that the
  covenant of seisin, implied in the deed, requires the grantor to have "the
  very estate, both in quantity and quality, which he purports to convey."  
  Mills v. Caitlin, 22 Vt. 98, 106 (1849).  They argue that this covenant was
  broken when People's Trust conveyed part of the agreed lot to a third party
  so the deed to plaintiffs did not convey what People's Trust purported to
  convey.  It is apparent that the dispute revolves around what People's
  Trust purported to convey.  Under our general rule, as stated above, the
  bank purported to convey "Parcel 4," which it received in a foreclosure,
  whatever the size of that parcel might be.  We find this rule to be in
  accord with that applied by courts in other states.  See, e.g., Etheridge
  v. Fried, 360 S.E.2d 409, 410 (Ga. Ct. App. 1987) (where discrepancy
  involved only quantity of land conveyed, seller conveyed what he purported
  to convey); Kendall v. Lowther, 356 N.W.2d 181, 190 (Iowa 1984) (same).  We
  cannot accept plaintiffs' theory that People's Trust purported to convey a
  particular acreage.

       We conclude that the trial court was correct in granting People's
  Trust summary judgment on plaintiffs' claim that the bank violated
  covenants expressed or implied in the deed it conveyed to plaintiffs.

       Finally, plaintiffs argue that the trial court erred in granting
  People's Trust summary judgment on plaintiffs' claim that the bank violated
  the covenant of good faith and fair dealing implied in the contract for
  sale of the property.  The trial court refused to address this claim,

 

  finding that the claim was not alleged in plaintiffs' complaint.  Civil
  Rule 8(a) requires that the complaint contain "a short and plain statement
  of the claim showing that the pleader is entitled to relief."  V.R.C.P.
  8(a).  "The test of whether a particular pleading is sufficient under Rule
  8(a) is whether it gives fair notice of the claim and the grounds upon
  which it rests."  Molleur v. Leriche, 142 Vt. 620, 622, 458 A.2d 1139, 1140
  (1983) (quoting Mancini v. Mancini, 136 Vt. 231, 234, 388 A.2d 414, 416
  (1978)).

       We find no reference to breach of a covenant of good faith and fair
  dealing in plaintiffs complaint, nor any request to amend the complaint. 
  The complaint stated that the acreage discrepancy breached "the warranties
  given by defendant in its deed."  As we noted above, there is no allegation
  that any of People's Trust's acts or omissions violated any covenants in
  the contract for sale.  Accordingly, we conclude that the trial court was
  correct in refusing to address this claim, which was raised for the first
  time in the memorandum in support of plaintiffs' motion for summary
  judgment.

       The superior court's grant of summary judgment on plaintiffs' claim of
  negligent misrepresentation is reversed and remanded.  In all other
  respects, the judgment for defendant People's Trust Company is affirmed.

                              FOR THE COURT:



                              _______________________________________
                              Associate Justice



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



FN1.  On motion of the plaintiffs to clarify the status of Smith Bell
  on appeal, the Court has previously determined that Smith Bell properly
  appears here as an appellee even though it is not the party for which
  judgment was entered by the trial court.  We rejected the plaintiffs'
  contention that Smith Bell lacks an appropriately significant interest in
  the issues on appeal.