EBWS, LLC v. Britly Corp.

2007 VT 37, 928 A.2d 497, 181 Vt. 513, 2007 Vt. 37, 2007 Vt. LEXIS 69
Supreme Court of Vermont·Decided May 25, 2007·No. 2005-449·Published·Cited by 61 cases

Opinion

928 A.2d 497 (2007)
2007 VT 37

EBWS, LLC
v.
BRITLY CORPORATION.

No. 05-449.

Supreme Court of Vermont.

May 25, 2007.

*500 William L. Durrell and David R. Bookchin of Benjamin, Bookchin, Colburn & Durrell, P.C., Montpelier, for Plaintiff-Appellee/Cross-Appellant.

Thomas M. Higgins and Robin Ober Cooley of Pierson Wadhams Quinn Yates & Coffin, Burlington, for Defendant-Appellant/Cross-Appellee.

*501 Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.

¶ 1. REIBER, C.J.

This dispute arises from a construction contract in which defendant Britly Corporation agreed to build a creamery for plaintiff EBWS, LLC. After EBWS filed suit for alleged defects in construction, the superior court granted summary judgment for Britly on EBWS's claims of consumer fraud and negligence. Following a trial on the remaining claims, a jury awarded EBWS direct and consequential damages for breach of contract and breach of an express warranty. Both parties now appeal. Britly claims that the superior court erred in admitting evidence of consequential damages and by denying its motion for a new trial. In its cross-appeal, EBWS argues that the court erred in granting summary judgment on its consumer fraud and negligence claims, and by denying its request for attorney's fees, costs and prejudgment interest. We conclude that the court erred in allowing consequential damages in this case, and remand for further consideration of attorney's fees. In all other respects, we affirm.

¶ 2. The Ransom family owns Rock Bottom Farm in Strafford, Vermont, where Earl Ransom owns a dairy herd and operates an organic dairy farm. In 2000, the Ransoms decided to build a creamery on-site to process their milk and formed EBWS to operate the dairy-processing plant and to market the plant's products. In July 2000, Earl Ransom, on behalf of EBWS, met with Britly's president, Larry Tassinari, to discuss building the creamery. Although Tassinari has no formal training in architecture or building design, he has been in the construction business for twenty-eight years and over the last ten years has constructed an average of five commercial buildings per year. After several months of negotiations, in January 2001, EBWS and Britly entered into a contract requiring Britly to construct a creamery building for EBWS in exchange for $160,318. EBWS contracted directly with other entities to perform the site work, electrical, heating and plumbing on the building. The creamery was substantially completed by April 15, 2001, and EBWS moved in soon afterward. On June 5, 2001, EBWS notified Britly of alleged defects in construction.

¶ 3. On September 12, 2001, EBWS filed suit against Britly for damages resulting from defective design and construction. The complaint included several causes of action: (1) negligent design and execution, (2) negligent supervision, (3) consumer fraud, (4) breach of express warranties, (5) breach of contract, (6) breach of fiduciary duty, and (7) unjust enrichment. Britly claimed that the defects were minor and not attributable to its work. In addition, Britly counterclaimed for breach of contract and unjust enrichment.

¶ 4. In response to opposing motions for summary judgment, the trial court dismissed EBWS's consumer fraud claim on January 5, 2004. The court also issued a show cause order for EBWS to demonstrate why its negligence claims should not be dismissed as a matter of law pursuant to the economic-loss rule. Both parties submitted responses on the issue and, on the first day of trial, the court dismissed the negligence claims.

¶ 5. The trial proceeded on EBWS's contract claims. EBWS and Britly both presented expert testimony regarding which construction defects were attributable to Britly and what the cost would be to repair the problems. EBWS's expert estimated the repairs would cost $38,020 and would require the creamery to cease operations for three weeks. Amy Huyffer, the CEO *502 of EBWS, testified that during a three-week shut-down the creamery would suffer losses of $35,711. She explained that loss would come from two sources: milk the creamery would be required to purchase and dump, and employee wages it would be obligated to pay. Britly's principal, Tassinari, testified that Britly was not responsible for the plumbing, heating and site work of the building and that many of the drainage problems were attributable to work done by others. He further testified that EBWS owed $16,785 for work and materials in unpaid change orders. Britly's expert testified that to fix the ponding and mold problems the floor and walls could be cut and patched with concrete mortar. He estimated the repairs would take three to four days and cost between $7,000 and $8,500.

¶ 6. Following a three-day trial, the jury found Britly had breached the contract and its express warranty, and awarded EBWS: (1) $38,020 in direct damages, and (2) $35,711 in consequential damages. The jury also awarded Britly $3,500 in damages on its counterclaim. Britly filed a motion for judgment as a matter of law or alternatively for a new trial. EBWS filed a motion for attorney's fees. The trial court denied the motions, and both parties appealed.

I.

A. Consequential Damages

¶ 7. We begin by addressing Britly's claim that consequential damages are not available as a matter of law. "A motion for judgment as a matter of law is granted only where there is no legally sufficient basis for a reasonable jury to find for the nonmoving party." Perry v. Green Mountain Mall, 2004 VT 69, ¶ 7, 177 Vt. 109, 857 A.2d 793. The relevant facts pertaining to this issue are not in dispute, and thus, our review of the court's legal conclusion is nondeferential and plenary. N.A.S. Holdings, Inc. v. Pafundi, 169 Vt. 437, 438-39, 736 A.2d 780, 783 (1999).

¶ 8. The jury's award to EBWS included compensation for both direct and consequential damages that EBWS claimed it would incur while the facility closed for repairs. Direct damages are for "losses that naturally and usually flow from the breach itself," and it is not necessary that the parties actually considered these damages. A. Brown, Inc. v. Vt. Justin Corp., 148 Vt. 192, 196, 531 A.2d 899, 901 (1987). In comparison, special or consequential damages "must pass the tests of causation, certainty and foreseeability, and, in addition, be reasonably supposed to have been in the contemplation of both parties at the time they made the contract." Id. at 196, 531 A.2d at 902.

¶ 9. In this case, the trial court concluded that EBWS was not entitled to future lost profits, but did allow EBWS to present evidence of costs it would incur during a three-week closure — specifically, ongoing payments for milk and staff wages. On appeal, Britly contends that these damages are not available as a matter of law because the payments are prospective and voluntary and thus neither certain nor foreseeable. EBWS counters that Britly failed to properly preserve this argument below. We conclude that Britly properly preserved its objection and that the court erred in submitting these elements of damages to the jury.

¶ 10.

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EBWS, LLC v. Britly Corp., 2007 VT 37, 928 A.2d 497, 181 Vt. 513, 2007 Vt. 37, 2007 Vt. LEXIS 69 (Vt. 2007).

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