Gilman v. Maine Mutual Fire Insurance Co.

Gilman v. Maine Mutual Fire Insurance Co. (2002-170); 175 Vt. 554; 830 A.2d 71

2003 VT 55

[Filed 03-Jun-2003]

                                 ENTRY ORDER

                                 2003 VT 55

                      SUPREME COURT DOCKET NO. 2002-170

                             OCTOBER TERM, 2002

  Brad Gilman and Lisa Emerson	       }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Orleans Superior Court
                                       }	
  Maine Mutual Fire Insurance Co.,     }
  Conley Country and Michael Conley,   }	DOCKET NO. 257-10-01 Oscv
  and Bruce Bjornlund	

                                                Trial Judge: Dennis R. Pearson

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  The genesis of this suit was a fire in the newly purchased
  home of appellants Brad Gilman and Lisa Emerson.  On October 14, 1998, Brad
  Gilman purchased a home in Derby, Vermont, from Anja Coolbeth.  Ms.
  Coolbeth's realtor, appellee Michael Conley of Conley Country, attended the
  closing with a limited power of attorney signed by Ms. Coolbeth, enabling
  him to "execute and deliver" on her behalf "any and all documents required
  to consummate the sale of real estate."  Appellee Attorney Bruce Bjornlund
  represented Gilman in this transaction.  Within eight weeks of purchase, on
  December 5, 1998, a fire started in the home, apparently caused by a candle
  burning too close to curtains, and caused extensive fire and smoke damage,
  as well as physical injuries to appellant Lisa Emerson.  Although there
  were smoke detectors present in the home at the time of purchase,
  appellants contended that the smoke detectors failed to function as
  intended during the fire.  Appellants filed claims sounding in contract and
  tort against appellees Conley, Conley Country, Bjornlund, and later, their
  insurer, appellee Maine Mutual Fire Insurance Company.  The superior court
  dismissed appellants' claims, and they now appeal that dismissal.  We
  affirm in part, reverse in part, and remand for proceedings consistent with
  this order.

       ¶  2.  In 1998, Maine Mutual issued Gilman a homeowner's fire
  protection insurance policy.  After the fire, Gilman notified Maine Mutual
  of the fire and attendant property loss.  On December 23, 1998, Gilman
  filed a sworn statement of proof of loss and personal property inventory
  enumerating the structural damage, the destroyed personal property items,
  and their value.  Maine Mutual paid Gilman a total of $58,389.07 for
  structural damage and repair, and personal property loss.  The total amount
  paid by Maine Mutual was greater than the amount Gilman claimed in his
  sworn proof of loss because additional living expenses and contractor costs
  were added by the adjuster as part of the claims process.  
   
       ¶  3.  Appellants brought suit on October 9, 2001.  They claimed
  that Conley Country, Michael Conley and Bruce Bjornlund failed to comply
  with or confirm compliance with 9 V.S.A. §§ 2881-2883, Vermont's smoke
  detector statute, and that this failure constituted negligence and/or
  breach of contract, which resulted in physical and property damage. 
  Appellants also asserted a claim of "bad faith" against Maine Mutual,
  alleging that Maine Mutual violated its "obligations of good faith and fair
  dealing in adjusting the fire loss, [and] failing to pay plaintiff what was
  due and owing as a result of the fire."

       ¶  4.  Pursuant to V.R.C.P. 12(b)(6), Conley Country and Michael
  Conley moved to dismiss appellants' suit for failure to state a claim upon
  which relief can be granted.  The trial court, by decision entered on March
  21, 2002, granted the motion to dismiss, finding it "extremely doubtful"
  that §§ 2881-2883 creates a private cause of action, but ruling that, even
  if it did, the statute would apply only to a transferor of property, and
  not to a seller's representative with a power of attorney.  The court also
  noted that Conley "never had title to property."

       ¶  5.  Attorney Bjornlund also filed a motion to dismiss pursuant to
  V.R.C.P. 12(b)(6).  The court granted this motion, holding that appellants'
  complaint failed to state a viable claim against Bjornlund because §§
  2881-2883 created no private cause of action, and that none could be
  implied.  The court further found that there were no facts alleged
  suggesting any legal duty Bjornlund owed to appellants relative to the
  smoke detectors and, therefore, no facts supporting appellants' negligence
  claim.  Finally, the court found that there were no facts alleged to
  establish any contractual undertaking by Bjornlund regarding the smoke
  detectors.

       ¶  6.  Maine Mutual filed a motion for summary judgment, arguing
  that appellants' suit was not commenced within one year of the date of loss
  as required by the operative insurance policy.  The court granted Maine
  Mutual's motion and held that appellants failed to raise a genuine issue of
  fact as to whether the parties were still negotiating with Maine Mutual
  before expiration of the limitations period.  Appellants appeal from these
  decisions. 

       ¶  7.  We begin with appellants' challenge to the trial court's
  grant of summary judgment in favor of the Maine Mutual.  When reviewing a
  grant of summary judgment, this Court applies the same standard of review
  as the trial court: summary judgment is appropriate when the record before
  the court clearly shows that there is no genuine issue as to any material
  fact and the moving party is entitled to judgment as a matter of law.  City
  of Burlington v. Nat'l Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719,
  721 (1994).  Moreover, construction of the legal effect of the parties'
  agreements is a question of law and, as such, is appropriate for resolution
  on summary judgment.  Lussier v. Truax, 161 Vt. 611, 612,  643 A.2d 843,
  844 (1993) (mem.). 
   
       ¶  8.  The undisputed facts establish that Gilman obtained
  homeowners insurance from Maine Mutual in 1998.  After experiencing loss
  from a house fire on December 5, 1998, Gilman filed a sworn statement of
  proof of loss and personal property inventory.  In December 1998 and
  through a series of payments thereafter, Maine Mutual paid Gilman a total
  of $58,389.07 for structural damage, repair, and personal property loss. 
  The only issue raised following Maine Mutual's payment on the claim
  occurred in May and June 1998, when Gilman's contractor contacted Maine
  Mutual's adjuster to discuss several thousand dollars of additional
  payments.  Maine Mutual's files indicated that it had already paid Gilman
  the amount sought by the contractor.  Maine Mutual conveyed this
  information to the contractor at the end of June 1999.  Maine Mutual heard
  nothing further from either the contractor or Gilman about the additional
  payments.   Therefore, as of the end of June 1999, there was no further
  activity on Gilman's claim, and Maine Mutual closed the file accordingly. 
  On October 10, 2001, Gilman filed suit against the insurer.  The insurance
  policy issued by Maine Mutual to Gilman provides in pertinent part that
  "[n]o action can be brought unless the policy provisions have been complied
  with and the action is started within one year after the date of loss." 

       ¶  9.  Gilman's suit against Maine Mutual was filed more than
  thirty-four months after the date of the loss and over two years after
  final payments on the claim were made.  Thus, appellants' claim was
  untimely under the clear and unambiguous language of the policy.  Policy
  provisions establishing limitation periods by contract are valid and
  enforceable against an insured if the limitation period is not less than
  "twelve months from the occurrence of the loss, death, accident or
  default."  8 V.S.A. § 3663; see also Hebert v. Jarvis & Rice and White,
  Inc., 134 Vt. 472, 475, 365 A.2d 271, 273 (1976) (provision providing that
  recovery is barred unless suit initiated in given time valid unless time
  limit unreasonable); Schlitz v. Lowell Mut. Fire Ins. Co., 96 Vt. 334,
  336-37, 119 A. 516, 517 (1923) (policy provision requiring suit to be
  brought within twelve months valid); Morrill & Co. v. New England Fire Ins.
  Co., 71 Vt. 281, 284-85, 44 A. 358, 358-59 (1899) (one-year period valid).

       ¶  10.  Appellants seek to avoid this result by arguing that the date
  from which the contractual period of limitation should be measured is Maine
  Mutual's alleged breach of good faith and fair dealing, and further, that
  the insurer waived any ability to rely on the one-year limitation provision
  by failing to notify appellants that the time limit may be expiring and may
  affect their rights as is provided in Regulation 79-2 S 6 of the Vermont
  Department of Banking, Insurance and Securities pursuant to 8 V.S.A. §
  4812.  However, appellants failed to create a disputed issue of material
  fact by offering no evidentiary support for their claim that, in fact,
  negotiations between  themselves and the insurer had not been concluded, or
  that Maine Mutual had any knowledge of appellants' dissatisfaction with the
  settlement of the claim.  See V.R.C.P. 56(c)(2) ("All material facts set
  forth in the statement required to be served by the moving party will be
  deemed to be admitted unless controverted by the statement required to be
  served by the opposing party.  The statements of material facts required to
  be served under this paragraph . . . shall contain specific citations to
  the record.").  Pursuant to Rule 56(c), it was appellants' obligation to
  respond to Maine Mutual's motion with factual support controverting the
  insurer's assertion.  This they failed to do.  There was no dispute that
  all communications and claims had been concluded by June of 1999. 
  Therefore, the regulation requiring notice of time limitations is not
  applicable, and the motion for summary judgment was properly granted.

       ¶  11.  We now address appellants' claims based on appellees Conley,
  Conley Country, and Bjornlund's alleged failure to comply with Vermont's
  smoke detector statute, 9 V.S.A. §§ 2881-2883.  Appellants' complaint
  alleged that appellees acted negligently when they failed to ensure that a
  legal certificate relating to smoke detectors was properly signed and
  delivered at the closing on the property, as is required by §§ 2882-2883.
  (FN1)   The court expressed doubt that a failure to comply with §§
  2881-2883 creates a private right of action and granted appellees' motions
  to dismiss, finding that "the Conleys were not the 'transferors' of the
  property even if they did facilitate conveyance as sellers' representatives
  via power of attorney." 
        
       ¶  12.  On appeal, appellants do not argue that there is a
  statutorily-created private right of action.  Appellants contend that their
  claim, properly read, alleged that appellees' violation of the statute
  demonstrated negligence and provided evidence of a contractual breach. 
  Appellants also concede that a certificate of compliance was signed by the
  seller, as is required by the statute.  See 9 V.S.A. § 2883.  However,
  appellant Gilman maintains that he did not receive the certificate of
  compliance at the closing and that appellees could not provide a fully
  executed certificate; that is, one signed by the buyer acknowledging
  receipt of same.  Thus, appellants assert that whether the certificate
  contemplated by the statute was provided to buyer at closing is a contested
  issue of fact. (FN2)
   
       ¶  13.  Pursuant to the smoke detector statute, the transferor of a
  single-family dwelling must certify that the dwelling has one or more smoke
  detectors.  Id.  § 2883(a).  The statute also specifies that, if the buyer
  notifies the transferor within ten days from the date of conveyance that
  the dwelling lacks a smoke detector or that a smoke detector is not
  operable, the transferor shall provide the necessary smoke detector within
  ten days from notification.  Id.  § 2883(b). 

       ¶  14.  In reviewing a court's grant of a motion to dismiss, this
  Court accepts all factual allegations pleaded in the complaint as true and
  all reasonable inferences from those facts.  Richards v. Town of Norwich,
  169 Vt. 44, 48-49, 726 A.2d 81, 85 (1999); Ass'n of Haystack Prop. Owners,
  Inc. v. Sprague, 145 Vt. 443, __ A.2d __, __(1985).  A court should not
  dismiss a cause of action for failure to state a claim upon which relief
  may be granted "unless it appears beyond doubt that there exist no
  circumstances or facts which the plaintiff could prove about the claim made
  in his complaint which would entitle him to relief."  Levinsky v. Diamond,
  140 Vt. 595, 600-01, 442 A.2d 1277, 1280-81 (1982), overruled on other
  grounds by Muzzy v. State, 155 Vt. 279, 583 A.2d 82 (1990).  A motion to
  dismiss for failure to state a claim is not favored and rarely granted. 
  Ass'n of Haystack Prop. Owners, 145 Vt. at 446-47, 494 A.2d  at 125 (citing 
  5 Wright & Miller, Federal Practice and Procedure §1357, at 598).

       ¶  15.  Appellants claim that realtor Michael Conley and Conley
  Country negligently failed to provide them with a certificate of compliance
  upon closing, as is required by 9 V.S.A. § 2883(a).  To sustain a claim of 
  negligence, a plaintiff must establish four elements: (1) that the
  plaintiff was owed a legal duty by the defendant; (2) that the defendant
  breached that duty; (3) that the defendant's conduct was the proximate
  cause of the plaintiff's injuries; and (4) that the plaintiff suffered
  actual damage as a result of the negligence.  Knight v. Rower, 170 Vt. 96,
  102, 742 A.2d 1237, 1242 (1999).  In this case, the seller of the
  property, Ms. Coolbeth, appointed Mr. Conley as her attorney in fact for
  the purposes of the sale of the home.  The power of attorney authorized
  Conley to execute and deliver on Ms. Coolbeth's behalf, all "tax forms,
  Survey Affidavits, errors and omissions forms and any other instruments or
  documents necessary to consummate said conveyance." 

       ¶  16.  The trial court held that Conley and Conley Country "were not
  the 'transferors' of the property even if they did facilitate conveyance as
  seller's representatives via power of attorney. Conleys never had title to
  property."  It may be, as the trial court held, that Conley and Conley
  Country were not the sellers of the property because they never held title
  to same.  However, under the power of attorney, it could be argued that
  Conley had the responsibility to deliver to the transferee the smoke
  detector certificate signed by the seller and required by the statute.  We
  find that the court acted too hastily in granting the Conley and Conley
  Country motions to dismiss.  The court dismissed the case against the real
  estate agency and the agent for the seller without examining their
  responsibilities under the statute pursuant to the power of attorney they
  held that allowed them to facilitate the sale of the single-family
  dwelling.  

       ¶  17.  Appellants also claim that Attorney Bjornlund acted
  negligently and violated his contract of employment when he failed to
  ensure that the required certificate of compliance was properly delivered
  to his client, Gilman, at the closing on the property.  The trial court, in
  dismissing the action against Bjornlund for failure to state a claim,
  determined that appellants had alleged no facts that would suggest the
  existence of a legal duty or that would establish any "contractual
  undertaking" by Bjornlund as to fire detectors.  
   
       ¶  18.  In general, the standard of care to which an attorney is held
  in rendering professional services is the degree of care, skill, diligence
  and knowledge commonly possessed and exercised by a reasonable, careful and
  prudent attorney.  See Estate of Fleming v. Nicholson, 168 Vt. 495, 498,
  724 A.2d 1026, 1028 (1998).  Gilman asserts that he hired Bjornlund as his
  attorney to assist with the legal issues involved in the purchase of the
  property and, as part of that employment, Bjornlund had a duty to ensure
  that all proper certificates were provided at the closing, and to advise
  his client of his rights under the smoke detector statute, including,
  presumably, the right to make a claim against the transferor of the
  property that smoke detectors were lacking or not working within the ten
  day statutory period.  Appellants, in their complaint, alleged that the
  smoke detectors were defective, that compliance with the smoke detector
  statute did not occur, and that their legal counsel did not ensure
  compliance at closing with the smoke detector statute.  According to
  appellants, Bjornlund's failure to do so constitutes negligence and was a
  proximate cause of appellants' subsequent injuries.

       ¶  19.  In his pleadings below and here on appeal, Bjornlund argues
  that, as attorney for the buyer, he had no duty to inspect the
  single-family dwelling to verify the seller's contention that the home's
  smoke detectors worked.       

       ¶  20.  The 12(b)(6) inquiry focuses on the absence of any facts,
  reasonable factual inferences, and legal bases for recovery alleged in the
  complaint, attachments thereto, or to matters the court may judicially
  notice.   See Wentworth v. Crawford and Co., __Vt. __, __, 807 A.2d 351,
  352 (2002).  The motion is a test of whether any factual allegations have
  been made by the claimant or can be inferred to support the continuation of
  a cause of action.

       ¶  21.  Again, we find that the court acted too hastily in granting
  Bjornlund's motion to dismiss.  It dismissed the case without exploring the
  fiduciary, contractual, and professional duty owed by an attorney to his or
  her client at a real estate closing, and specifically with reference to
  ensuring that the certificate of compliance required by 9 V.S.A. § 2883 is
  provided.  It may be that the trial court was holding that there were no
  facts to support a finding that Bjornlund had agreed to a "contractual
  undertaking" to inspect the smoke alarms in the dwelling; that was not
  however the claim of appellants.   

       ¶  22.  Consequently, at this early stage of litigation, it cannot be
  held beyond doubt that there exists no circumstances or facts that
  appellants could prove about the claim made in the complaint which would
  entitle them to relief.    

       ¶  23.  We agree with the court that appellants have alleged no cause
  of action against the real estate agency and agent involved in the transfer
  of property based on a claim of breach of contract.  There was no contract
  between appellants and Conley Country or Michael Conley, the agent for the
  seller.  

       The trial court's grant of summary judgment in favor of Maine Mutual
  is affirmed.  The trial court's grant of motions to dismiss in favor of
  Conley, Conley Country, and Attorney Bjornlund is reversed in part and
  affirmed in part, and the cause is remanded for further proceedings
  consistent with this order.


                                       BY THE COURT:



                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice


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                                  Footnotes


       Note:  Justice Morse was present when the case was submitted on the
  briefs but did not participate in this decision.

FN1.  Section 2882.  Installation

    . . . 
    (b) On and after July 1, 1994, a single-family dwelling
    transferred by sale or exchange shall contain one or more smoke
    detectors powered by the electrical service in the building or by
    battery or by a combination of both, and installed in accordance
    with the manufacturer's instructions.
    (c) Nothing in this section shall require an owner or occupant of
    a single-family dwelling to maintain or use a smoke detector after
    installation.

    Section 2883.  Requirements for transfer of dwelling

    (a) On and after July 1, 1994, the transferor of a single-family
    dwelling, whether the transfer be by sale or exchange, shall
    certify to the buyer that the dwelling is provided with one or
    more smoke detectors in accordance with this chapter.  This
    certification shall be signed and dated by the seller.
    (b) If the transferee notifies the transferor within ten days by
    certified mail from the date of conveyance of the dwelling that
    the dwelling lacks a smoke detector or that a smoke detector is
    not operable, the transferor shall comply with this chapter within
    ten days after notification.

FN2.  Appellants raise for the first time on appeal the issue of violation
  of a safety statute as negligence per se.  As it was not presented to the
  court below, we do not consider this argument on appeal.