Case Title: Roberts v. Chimileski

Citation: 175 Vt. 480, 2003 VT 10, 820 A.2d 995

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2003-02-07T00:00:00Z

Document:
Roberts v. Chimileski (2001-158); 175 Vt. 480; 820 A.2d 995

2003 VT 10

[Filed 07-Feb-2003]

                                 ENTRY ORDER

                                 2003 VT 10

                      SUPREME COURT DOCKET NO. 2001-158

                               JUNE TERM, 2002

  Marcel Roberts, David Currier and 	}	APPEALED FROM:
  Roberts Real Estate 	                }
                                        }
       v.	                        }	Orleans Superior Court
                                        }	
  Robert Chimileski, William Davies,   	}
  Robert Davis, Gregory Howe,           }	DOCKET NO. 167-9-93 Oscv
  Michael Loignon, John Monette and  	}
  Andrew Pepin                          }
                                                Trial Judge: Matthew I. Katz

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

       ¶  1.  This appeal involves legal malpractice claims arising out of
  the formulation of a development scheme that sought to circumvent Act 250
  permit requirements.  Plaintiffs Marcel Roberts and David Currier appeal a
  superior court decision upholding the findings of a Special Master denying
  recovery for legal malpractice against defendants Robert Chimileski,
  William Davies, Robert Davis, Gregory Howe, Michael Loignon, John Monette,
  and Andrew Pepin.  Plaintiffs contend that (1) the Special Master should
  not have heard expert testimony to establish the standard of care of a
  Vermont attorney with regard to the practice of reviewing Environmental
  Board decisions; and (2) the failure to disclose the inherent risk of a
  development plan in questionable conformity with an unsettled area of the
  law constituted legal malpractice as a matter of law.  We affirm.

       ¶  2.  As found by the Special Master and adopted by the trial
  court, the facts are as follows.  In July 1984, Roberts, a real estate
  developer, consulted attorney Monette about Act 250 permit requirements
  concerning the subdivision of land into ten or more lots.  At that time,
  Act 250 had just been amended to define a "lot" as any undivided interest
  in land and not just parcels under ten acres.  See 10 V.S.A. § 6001(11). 
  Additionally, the 1984 version of 10 V.S.A. § 6001(19) defined
  "subdivision" as

    a tract or tracts of land, owned or controlled by a person, which
    have been partitioned or divided for the purpose of resale into
    ten or more lots within a radius of five miles of any point on any
    lot, and within any continuous period of 10 years after the
    effective date of this chapter.  In determining the number of
    lots, a lot shall be counted if any portion is within five miles.
   
  10 V.S.A. § 6001(19) (1984) (amended 1987) (emphasis added).  Thus, after
  the 1984 amendment of subsection 11, developers subdividing land into lots
  of any size needed to acquire an Act 250 permit if they "owned or
  controlled" the land being subdivided.  See 10 V.S.A. § 6081(a) (no person
  may sell any interest in a subdivision without a permit).

       ¶  3.  In response to his inquiry, Monette advised Roberts that
  subsequent land sales could still occur legally without a permit if the
  original owner prepared the subdivision first and then conveyed the lots to
  Roberts so that Roberts would not "control" the lots during subdivision. 
  Under this arrangement, Roberts would cover the costs and handle the
  preparation of the subdivision plan.  Monette and Howe concede, however,
  that the definition of "control" was legally ambiguous at the time.  There
  is no evidence that any of the defendants warned Roberts and his associates
  of the potential illegality of this modus operandi ("m.o."), apparently
  believing that they had no duty to advise plaintiffs of the m.o.'s risk
  because it was too remote and tenuous.

       ¶  4.  Roberts and his associates, including plaintiff Currier,
  subsequently completed over 100 real estate transactions employing the m.o.
  between 1984 and 1990.  Roberts and his associates were represented mostly
  by Howe and Monette and occasionally by the other defendants in both the
  purchase and sale of these properties.

       ¶  5.  In 1987, the Vermont Environmental Board issued declaratory
  rulings in In re Eastland, Decl. Ruling #177 (Vt. Envtl. Bd. June 29,
  1987), and In re Vitale, Decl. Ruling #183 (Vt. Envtl. Bd. July 9, 1987),
  holding that a permit was required under circumstances very similar to the
  m.o. because a buyer who manipulated the property before a sale fell within
  Act 250's definition of "control."  The Board's decisions were not widely
  circulated although a brief description of the pending appeal to this Court
  in Eastland appeared in a 1988 issue of the Vermont Bar Journal.  In 1989,
  this Court affirmed the Environmental Board's Eastland decision,  In re
  Eastland, Inc., 151 Vt. 497, 562 A.2d 1043 (1989), and the opinion was
  circulated to attorneys who received this Court's decisions through
  subscription.

       ¶  6.  Upon learning of the Supreme Court's Eastland decision,
  Monette and Howe advised Roberts and Currier that the decision raised
  serious doubts about the legality of the m.o.  Roberts and Currier
  proceeded to make one more m.o. transaction after receiving this
  information.  The State subsequently prosecuted Roberts and Currier for
  making illegal subdivisions between 1986 and 1990.
   
       ¶  7.  Roberts and Currier commenced this malpractice action in 1993
  against Howe, Monette, and several other attorneys who had represented
  Roberts and Currier in m.o.-type transactions.  Roberts and Currier argued
  that defendants had breached the standard of care of a Vermont attorney by
  failing to research and advise them of the ambiguous meaning of "control"
  with regard to Act 250 jurisdiction from 1985 to this Court's 1989 Eastland
  decision.  With the exception of Monette and Howe, all of the defendants
  filed motions to sever that were deferred to the conclusion of the trial. 
  Monette and Howe then filed a motion for summary judgment, arguing that the
  standard of care did not require them to review Environmental Board
  annotations and that their conclusions were made on a then-unsettled area
  of the law without the benefit of hindsight.  The trial court denied the
  motion for summary judgment and then granted the parties' request for a
  trial by a Special Master.  Both parties presented expert testimony
  regarding the standard of care for a Vermont attorney during the ten-day
  trial before the Special Master.

       ¶  8.  In his final report, the Special Master made the following
  findings and conclusions of law: (1) An attorney in Vermont does not breach
  the standard of care if the attorney conducts reasonable research into an
  unsettled area of the law and informs the client of the risks involved in
  proceeding under an unsettled interpretation; (2) Monette and Howe had not
  conducted reasonable research because they had failed to review the
  Environmental Board declaratory rulings, annotated in the Board's rules;
  (3) the failure to review the Board's annotations was not the proximate
  cause of plaintiff's injury because such research would not necessarily
  have revealed the Eastland decision or any other ruling that would have
  changed the assessment of the m.o.; (4) Monette had breached the standard
  of care through his representation in the one m.o. transaction that
  occurred after our Eastland decision, in which he failed to advise Roberts
  of the risk; and (5) Monette had no liability for the post-Eastland
  transaction because Roberts had already been informed of the Eastland
  decision and the potential risk of the m.o. and had "knowingly and
  voluntarily assumed the risk."

       ¶  9.  The trial court upheld the Master's findings, added its own
  conclusions, and dismissed with prejudice all claims against Howe, Monette,
  and the other defendants.  The court concluded that defendants could not be
  held negligent for their participation in the m.o. because the definition
  of "control" was a professional opinion regarding the interpretation of an
  unsettled area of the law, and they were thus shielded by the "judgmental
  immunity" doctrine, which protects attorneys from liability when their
  opinions are based on speculation into an unsettled area of the law.  In
  terms of whether defendants could be held negligent for their alleged
  failure to perform adequate research, the court agreed with the Special
  Master's findings that a reasonable, careful, and prudent Vermont attorney
  would have reviewed Environmental Board case annotations - something
  defendants failed to do - but that such a review would not have disclosed
  any reason to question the assessment of the m.o.  The court further found
  that plaintiffs had failed to prove that there was a prevailing practice to
  go behind the published annotations and study the full Board decisions. 
  Thus, plaintiffs had failed to prove a standard of care that defendants
  breached and which breach was the proximate cause of harm to plaintiffs. 
  The trial court did not address whether defendants could be found negligent
  for failure to inform plaintiffs of the risks associated with their advice
  that the m.o. was lawful.  Plaintiffs subsequently brought this appeal.

       ¶  10.  Plaintiffs first challenge the trial court's finding that
  they failed to demonstrate that the existing standard of care for a Vermont
  attorney required an investigation beyond the annotations to review the
  Environmental Board's decisions.  Plaintiffs argue that under Estate of
  Fleming v. Nicholson, 168 Vt. 495,