L'Esperance v. Benware

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L'Esperance v. Benware (2001-404); 175 Vt. 292; 830 A.2d 675

2003 VT 43

[Filed 2-May-2003]

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.

2003 VT 43

No. 2001-404

Cheryl L'Esperance, Matthew and Kyle Supreme Court
L'Esperance, Scott and Daryl Simpson
On Appeal from
v. Rutland Superior Court

Wayne Benware and Sandra Lebo June Term, 2002

Richard W. Norton, J.

Mary C. Welford of Witten Woolmington Bongartz Campbell & Boepple,
P.C., Manchester Center, for Plaintiffs-Appellees.

William J. Blake of Kiel Ellis & Boxer, Springfield, for
Defendants-Appellants.

John J. McCullough and Stephen Norman, Vermont Legal Aid, Inc.,
Montpelier, for Amicus Curiae Vermont Tenants, Inc./CVOEO.

PRESENT: Amestoy, C.J., Dooley, Morse (FN1), Johnson and Skoglund, JJ.

¶ 1. AMESTOY, C.J. In this appeal of a jury verdict awarding
damages to plaintiff-tenants, defendant-landlord claims (1) the evidence
was insufficient to support the jury's finding that landlord was negligent
in failing to provide plaintiff-tenants with safe drinking water; (2) the
trial court erred in concluding that landlord was liable to
plaintiff-tenants under the Consumer Fraud Act for renting her property in
violation of the law; (3) the jury's award of exemplary damages was
erroneous because it was unsupported by the evidence; and (4) the trial
court erred in awarding attorney's fees to plaintiffs. We affirm.

¶ 2. In February 1996, plaintiff-tenants, Cheryl L'Esperance and her
four children, Matthew L'Esperance, Kyle L'Esperance, Scott Simpson II, and
Daryl Simpson began renting a house in Shrewsbury, Vermont from the owner,
Eva Benware Kinney.(FN2) Plaintiffs claim they encountered a number of
problems with the property. They allege that the heat was inadequate, the
water was not working properly, the foundation appeared to be
deteriorating, and the heat and electric bills were extraordinarily high.
In March 1996, plaintiffs became ill with cramping, diarrhea, and vomiting.
At the advice of her doctor, Cheryl L'Esperance contacted the Shrewsbury
town health officer to have the water tested for contamination.

¶ 3. In April, the town health officer sent a water sample taken
from the house to the Vermont Department of Health laboratory. The sample
was found to contain E. coli bacteria. The town health officer requested
the Vermont Department of Labor and Industry to inspect the property. On
April 26, 1996, a Department inspector did so and ordered that the house be
vacated by April 29 due to electrical problems and structural deficiencies,
including an unsound foundation, a cracked and unsupported carrier beam,
and the potential failure of a support column. Cheryl L'Esperance moved
into a motel with her children until they could find other housing. In
early May 1996, plaintiffs were treated for giardiasis.

¶ 4. In July 1998, plaintiffs filed a complaint against landlord
alleging: (1) violation of the rental housing health code; (2) breach of
express and implied warranties of habitability; (3) consumer fraud; (4)
breach of the covenant of quiet enjoyment; (5) intentional infliction of
emotional distress; (6) common law fraud; (7) failure to return a security
deposit; and (8) negligence. Prior to trial, the court granted summary
judgment for landlord on the rental housing health code and warranty of
habitability claims. The court granted summary judgment for plaintiffs on
the claims of landlord=s liability for violation of the consumer fraud act
and for failure to return a security deposit, but left for trial the issue
of damages on each claim. Before trial, plaintiffs voluntarily dismissed
their claims for breach of the covenant of quiet enjoyment, intentional
infliction of emotional distress, and common law fraud.

¶ 5. The remaining claims regarding negligence, and damages for
consumer fraud and failure to return a security deposit, were tried before
a jury in June 2001. The jury found landlord negligent, and awarded
plaintiffs a total of $5000 in compensatory damages. With respect to the
consumer fraud claim, the jury awarded plaintiffs $1200 in compensatory
damages and $3600 in exemplary damages. The jury found that the value of
the security deposit was $400, but declined to award any damages for
willfully withholding the deposit.

¶ 6. Landlord filed post-trial motions requesting the court to
grant judgment notwithstanding the verdict pursuant to V.R.C.P. 50(b) or to
grant a new trial or to alter or amend judgment pursuant to V.R.C.P. 59.
The court denied these motions. Following the court's denial of landlord's
motions, the court held a hearing on plaintiffs' petition for attorney's
fees, costs and interest. On September 28, 2001, the court awarded
plaintiffs $33,315.69 in attorney's fees, costs, and pre-judgment interest.
A final judgment order of $43,736.69, based on the jury's verdict,
post-judgment attorney's fees, and the court's September 28 award, was
entered on October 23, 2001.

¶ 7. On appeal, landlord asserts: (1) that the jury verdict on
plaintiffs' negligence claim is not supported by the evidence and the trial
court committed reversible error in denying landlord a judgment
notwithstanding the verdict or alternatively granting landlord a new trial;
(2) that the trial court committed reversible error by granting judgment in
favor of plaintiffs on liability under the Consumer Fraud Act instead of
submitting the issue to the jury; (3) that the jury verdict on exemplary
damages under the Consumer Fraud Act was unsupported by the evidence; and
(4) that the trial court erred in awarding attorney's fees to plaintiffs
because plaintiffs' entitlement to the fees is limited to the consumer
fraud claim and the trial court failed to reduce the fee award based on
plaintiffs' "limited success" in the case. We address each argument in
turn.

I. Negligence Claim

¶ 8. Landlord's assertion of error with respect to plaintiffs'
negligence claim is predicated on the argument that - even viewing evidence
in the light most favorable to plaintiffs - there was insufficient evidence
to fairly and reasonably support a jury verdict that landlord had breached
her duty to provide a safe and potable water supply and that the breach was
the proximate cause of the injuries suffered by plaintiffs. We disagree.

¶ 9. On appeal, we must determine whether the "result reached by
the jury is sound in law on the evidence produced." Murphy v. Stowe Club
Highlands, 171 Vt. 144, 154, 761 A.2d 688, 696 (2000). Viewing the
evidence in the light most favorable to the nonmoving party, and excluding
the effects of any modifying evidence, this Court will affirm the denial of
a motion for judgment as a matter of law "if any evidence fairly or
reasonably supports" the nonmoving party's claim. Haynes v. Golub Corp.,
166 Vt. 228, 233, 692 A.2d 377, 380 (1997).

¶ 10. Viewing the evidence in the light most favorable to the
nonmoving party, the evidence showed that the water had been contaminated
in the past and that landlord had knowledge of the possibility of
contamination based on past experiences with the water supply at the
property. For example, landlord's daughter, Sandra Lebo, testified that a
spring across the road from the property has supplied the water to the
rental unit for the entire time her family owned the property, from the
mid-1950s to the present. She also said that the water had been
contaminated before and that Ms. Kinney had added Clorox in an attempt to
remedy the situation. Plaintiff testified as to landlord's notice of
contamination problems, stating, "I recall [landlord] saying that she has
had past comments from the health inspectors on what to do and she
basically - basically said didn't [sic] believe them." Landlord's daughter
testified that landlord never treated the water during the time that
plaintiffs lived at the property. The town health officer testified that a
sample of drinking water from the property showed the presence of E. coli
bacteria, which the Vermont Department of Health Laboratory identified as
posing a serious health concern. Finally, the jury heard undisputed
medical testimony that plaintiffs' sickness was related to the presence of
bacteria in the drinking water.

¶ 11. Based on our review of the record, the evidence presented
fairly and reasonably supported plaintiffs' claim, the jury verdict was
sound, and therefore the trial court properly denied landlord's motion.

II. Consumer Fraud Liability

¶ 12. Prior to trial, the trial court granted summary judgment to
plaintiffs on their claim under the Consumer Fraud Act, 9 V.S.A. §§
2451-2480. Landlord moved at trial for reconsideration of the court's
summary judgment order and for judgment as a matter of law pursuant to
V.R.C.P. 50. The court denied these motions and submitted the case to the
jury solely for a determination of damages under the Consumer Fraud Act.
Following trial, landlord filed motions for judgment as a matter of law
pursuant to V.R.C.P. 50 and/or to alter or amend the judgment pursuant to
V.R.C.P. 59 and/or for a new trial. The court denied these motions.
Landlord argues that the trial court committed reversible error by granting
judgment in favor of plaintiffs on the consumer fraud claim and by denying
landlord's post-trial motions. We disagree.

¶ 13. We review an appeal from summary judgment applying the same
standard as the trial court: requiring the moving party to prove that
there is no genuine issue of material fact and that the party is entitled
to judgment as a matter of law. V.R.C.P. 56(c); White v. Quechee Lakes
Landowners' Ass'n, Inc., 170 Vt. 25, 28, 742 A.2d 734, 736 (1999). The
nonmoving party must receive the benefit of all reasonable doubts and
inferences, although contrary allegations must be "supported by specific
facts sufficient to create a genuine issue of material fact." Samplid
Enters., Inc. v. First Vt. Bank, 165 Vt. 22, 25, 676 A.2d 774, 776 (1996).

¶ 14. A landlord can commit a deceptive act prohibited by § 2453 of
Title 9 when a landlord rents property to a tenant that is in violation of
law. Bisson v. Ward, 160 Vt. 343, 351, 628 A.2d 1256, 1261 (1993).
Plaintiffs argued that landlord rented the Shrewsbury property to them when
it was not in compliance with health and safety codes. Plaintiffs
submitted an affidavit and copies of records from the Department of Labor
and Industry in support of the motion for summary judgment. This evidence
submitted by plaintiffs included: 1) a fire inspection report dated October
31, 1994, denying occupancy and declaring that "[i]nspection is required
prior to any occupancy"; and 2) an affidavit of Assistant Fire Marshall
Fran Robillard stating that he noted the inspection requirement on the
above report and sent a copy of the report to Ms. Kinney. He also stated
in this affidavit that when the property was again inspected in April 1996,
he found serious "structural deficiencies, electrical hazards, and other
violations of the life safety code."

¶ 15. Landlord, in response, did not present to the court any
specific facts or evidence contradicting the affidavit and report described
above, but instead repeatedly argued that Ms. Kinney did not know the
property was in violation of law. We have previously held that "the
absence of intent based upon a lack of knowledge or expertise is not a
defense to a claim under the Act." Carter v. Gugliuzzi, 168 Vt. 48, 58,
716 A.2d 17, 24-25 (1998). Ms. Kinney's alleged lack of knowledge is not
material to plaintiffs' claim under the Consumer Fraud Act. Based on the
evidence presented at the time of the summary judgment motion, the trial
court properly granted summary judgment to plaintiffs on their consumer
fraud claim.

¶ 16. Additionally, we find unavailing landlord's argument that
evidence introduced at trial raised a material factual dispute as to
landlord's awareness of the Labor and Industry reports. In denying
landlord's motion for judgment as a matter of law, the trial court properly
noted that the relevant issue for purposes of establishing landlord's
liability under the Consumer Fraud Act remained "whether she rented to the
plaintiffs when it was in violation of the law." The trial court concluded
it was still undisputed that at the time the house was rented to plaintiffs
it was subject to a Department of Labor and Industry inspection report
which not only denied occupancy, but also expressly stated that the
property not be occupied until it was brought into compliance with all
regulations and inspected again. On an appeal of denials of a motion for
judgment as a matter of law, and a motion for a new trial, we view the
evidence in the light most favorable to the plaintiff. Brueckner v.
Norwich Univ., 169 Vt. 118, 120-21, 730 A.2d 1086, 1089 (1999). The trial
court did not err in concluding that landlord was liable to plaintiffs
under the Consumer Fraud Act.

III. Consumer Fraud Damages

¶ 17. Landlord asserts that the jury's award of exemplary damages
under the Consumer Fraud Act was clearly erroneous because it was
unsupported by the evidence. By special verdict, the jury awarded
plaintiffs $1200 in compensatory damages as a result of landlord's
violation of the Consumer Fraud Act, and awarded three times that amount,
$3600, in exemplary damages. See 9 V.S.A. § 2461(b) ("consumer . . . may
sue and recover from the . . . violator . . . exemplary damages not
exceeding three times the value of the consideration given by the
consumer"). We have previously noted that the statute requires an award of
exemplary damages "only where malice, ill will, or wanton conduct is
demonstrated." Bruntaeger v. Zeller, 147 Vt. 247, 252, 515 A.2d 123, 127
(1986). Landlord argues that the evidence produced at trial was
insufficient, as a matter of law, to fulfill the requisite showing for
exemplary damages. See, e.g., Meadowbrook Condo. Ass'n v. S. Burlington
Realty Corp., 152 Vt. 16, 28, 565 A.2d 238, 245 (1989) (fact that the
defendant did not fulfill promise to obtain cable television service
because it did not want to spend the money did not demonstrate the
requisite degree of malice).

¶ 18. Malice is shown through "conduct manifesting personal ill
will, evidencing insult or oppression, or showing a reckless or wanton
disregard of plaintiff's rights," Crump v. P&C Food Mkts. Inc., 154 Vt.
284, 297, 576 A.2d 441, 449 (1990), and it may be inferred from the
surrounding circumstances and the nature of the defendant's conduct.
Ainsworth v. Franklin County Cheese Corp., 156 Vt. 325, 332, 592 A.2d 871,
875 (1991). Here, plaintiffs' evidence included testimony regarding a 1990
Department of Labor and Industry inspection report which ordered landlord
to make repairs due to significant electrical and fire code violations at
the property; a 1994 Department of Labor and Industry report informing
landlord that the house was not to be occupied until further inspection;
landlord's notice in the paper advertising the rental property in the
summer of 1995, despite the fact that there was no evidence of any work
done on the property or of further inspection; a 1996 inspection done by
the Department, only two months after plaintiffs moved into the property,
which revealed severe, long-standing structural and electrical deficiencies
requiring the property to be vacated by plaintiffs and closed.

¶ 19. From the evidence submitted at trial, the jury could have
reasonably concluded that landlord's conduct demonstrated a reckless or
wanton disregard for plaintiffs' safety and rights as tenants. Thus, there
was no error in submitting the issue of damages to the jury, and landlord's
motions were properly denied.

IV. Attorney's Fees

¶ 20. Landlord contends that the trial court erred in awarding
attorney's fees to plaintiffs, arguing that: (1) attorney's fees were
awarded under the Consumer Fraud Act and hence should not apply to
attorney's time spent on alternative claims; (2) the results in this case
warranted a downward departure from the initial fee, given the dismissal on
several claims and the limited damages awarded on successful claims under
the Consumer Fraud Act; and (3) the award of attorney's fees was
unreasonable because the award produced a windfall to plaintiffs' attorney,
the attorney's fees were too high, and the trial court abused its
discretion by failing to consider landlord's financial hardship.

¶ 21. When determining an award of attorney's fees, the trial court
must make a determination based on the specific facts of each case and,
accordingly, we grant the trial court wide discretion in making that
determination. Human Rights Comm'n v. LaBrie, Inc., 164 Vt. 237, 251, 668 A.2d 659, 669 (1995). Generally, we apply the "American rule" requiring
parties to bear their own costs of litigation unless otherwise provided by
contract or statute. DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt.
239, 246, 776 A.2d 413, 419 (2001). In this instance, plaintiffs seek
attorney=s fees under the Vermont Consumer Fraud Act. The Act mandates
that where a plaintiff has made a showing of fraud, the court will award
reasonable attorney's fees. Bisson, 160 Vt. at 346, 628 A.2d at 1258; see
9 V.S.A. § 2461(b) (consumer may sue and recover attorney's fees). Where a
court finds that the Consumer Fraud Act has been violated, it is not within
the court's discretion to determine whether to award such fees, Gramatan
Home Investors Corp. v. Starling, 143 Vt. 527, 535-36, 470 A.2d 1157, 1162
(1983), but rather its task is to determine what constitutes reasonable
fees in each instance.

¶ 22. In calculating the award of attorney's fees, the court looks
to the "most useful starting point," the "lodestar figure," by determining
the number of hours reasonably expended on the case multiplied by a
reasonable hourly rate, and then adjusting that fee upward or downward
based on various factors. See Hensley v. Eckerhart, 461 U.S. 424, 433
(1983) (clarifying the proper formulation for the calculation of attorney's
fees). These factors include, among others, the novelty of the legal
issue, the experience of the attorney, and the results obtained in the
litigation. Id. at 430 n.3.

¶ 23. The trial court found, based on witness testimony, that
plaintiffs' attorney spent a reasonable number of hours on the case at a
reasonable fee of $135.00 per hour, and the court calculated a total
lodestar figure based on these findings. The trial court then decreased
that figure, subtracting two hours from the fees which plaintiffs' attorney
conceded were not properly recoverable.

¶ 24. Landlord argues on appeal that plaintiffs were entitled to
recover attorney's fees only on the consumer fraud claim and not on the
negligence and security deposit claims, and thus the court abused its
discretion in its award of attorney's fees. The court addressed this
argument in its order. In finding a common core of facts for all of
plaintiffs' claims, the court explained,

All of the claims that went to trial arose out of the
consumer transaction which forms the basis of the consumer
fraud claim, namely, the defendant's rental of a substandard
home to the plaintiffs . . . . Most of the evidence presented
at trial, while relevant to the negligence and security
deposit claims, was also relevant to the issue of exemplary
damages on the consumer fraud claim.

Thus, the court concluded that "plaintiffs' lawsuit is not one which can be
viewed as a series of discrete claims so that the hours expended can be
divided on a claim-by-claim basis." In the practice of law, it is quite
common to have several claims arise out of a common core of facts. See
Hensley, 461 U.S. at 435 ("It may well be that cases involving . . .
unrelated claims are unlikely to arise with great frequency."). The court
did not abuse its discretion in finding that the cases involved a common
core of facts.

¶ 25. Landlord also contends that the results in this case are
"limited," and thus warrant a reduction in the attorney's fee award,
pursuant to Hensley, 461 U.S. at 436 ("If . . . a plaintiff has achieved
only partial or limited success, the product of hours reasonably expended
on the litigation as a whole times a reasonable hourly rate may be an
excessive amount . . . . the most critical factor is the degree of success
obtained."). Landlord argues that plaintiffs' success was "limited" based
on the dismissal of several claims and the amount of damages awarded on
plaintiffs' claims under the Consumer Fraud Act. In Hensley, the United
States Supreme Court instructed courts to focus on the significance of the
plaintiff's overall results in relation to the hours reasonably expended on
litigation in cases where the plaintiff's claims contained a common core of
facts or were based on related legal theories. Id. at 435. Where a
plaintiff has achieved excellent results, although through the use of
alternative legal grounds, "the court's rejection of or failure to reach
certain grounds is not a sufficient reason for reducing a fee." Id. A
plaintiff's failure to receive all relief requested is not dispositive, and
the application of a mathematical ratio to compare the total number of
issues raised with the number plaintiff prevailed upon is similarly
unhelpful to a reasonable fee determination. Id. at 435-36 n.11. Here,
the trial court found not only that plaintiffs prevailed, but also that
"they recovered the maximum amount possible under the applicable statute
including exemplary damages" for the consumer fraud claim. The court noted
that the malice standard for an award of exemplary damages is a difficult
one to meet, and thus, plaintiffs' recovery "underscores the plaintiffs'
overall success in pursuing this case." Thus, while plaintiffs did not
prevail on all of their original claims, they were certainly successful in
this suit arising out of a common core of facts, and the trial court
acknowledged this in its determination. See LaBrie, 164 Vt. at 251, 668 A.2d at 669 (finding no abuse of discretion for failure to reduce award of
attorney's fees where plaintiff was successful in suit even though court
did not provide all relief requested).

¶ 26. Landlord also argues that the court's award of attorney's
fees was unreasonable and should have been reduced because it produced a
windfall to the attorney, the court failed to consider the financial
hardship that the award placed upon defendants, and the attorney's fees
were too high.

¶ 27. An attorney does not receive a "windfall" merely because the
award of attorney's fees is not proportionate to the award of damages. See
City of Riverside v. Rivera, 477 U.S. 561, 574 (1986) (rejecting
proposition that fee awards should necessarily be proportionate to damages
recovered). Here, plaintiffs recovered the maximum amount possible under
the Consumer Fraud Act. In Gramatan Home Investors Corp., we recognized
that the relief available under Vermont's consumer fraud laws, including
the provision for attorney's fees, "was fashioned in order to promote and
encourage prosecution of individual consumer fraud claims." 143 Vt. at
536, 470 A.2d at 1162. As the trial court correctly noted, this
legislative intent would be frustrated if the courts were required to
measure a fee award against the limited amount of recoverable damages in a
consumer fraud claim.

¶ 28. Plaintiffs supported their claim for attorney's fees by
presenting the court with itemized billing records and testimony from an
experienced litigator that the submitted attorney invoice was "very
reasonable" and that plaintiffs' claims were all based upon a common core
of facts. The credibility and weight given to the testimony were
determinations committed to the trial court's discretion, not ours.
Bruntaeger, 147 Vt. at 252, 515 A.2d at 126. Where the lower court has
awarded attorney's fees based on the lodestar approach, we will not reverse
that award absent an abuse of discretion. LaBrie, 164 Vt. at 251, 668 A.2d
at 669. Despite landlord's argument to the contrary, which she fails to
support with any legal authority, the court's failure to reduce the fee
award based on the financial hardship to landlord does not constitute an
abuse of discretion in this case. Plaintiffs' counsel submitted sufficient
evidence upon which the trial court could make its decision. Cf.
Bruntaeger, 147 Vt. at 254-255, 515 A.2d at 128 (finding the evidence on
the reasonableness of attorney's fees insufficient where plaintiff
submitted only a bill and did not present any expert testimony). We find
no abuse of discretion here.

Affirmed.

FOR THE COURT

__________________________________
Chief Justice

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Footnotes

FN1. Justice Morse sat for oral argument but did not participate in
this decision.

FN2. Defendant-landlord, Mrs. Kinney, died while this action was pending
and the co-executors of her estate, Wayne Benware and Sandra Lebo, were
substituted by court order as defendants. For clarity, this opinion uses
"landlord" when referring to defendants.

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