Case Title: Jipac, N.V. v. Silas

Citation: 174 Vt. 57, 800 A.2d 1092

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2002-05-31T00:00:00Z

Document:
Jipac, N.V. v. Silas (2000-424); 174 Vt. 57; 800 A.2d 1092

[Filed 31-May-2002]


       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. 2000-424


Jipac, N.V.	                                 Supreme Court

                                                 On Appeal from
     v.	                                         Orleans Superior Court


Paul Silas, David Currier and 	                 March Term, 2002
Marcel Roberts

Mary Miles Teachout, J.

Matthew T. Daly and Susy Rachel DiCello of Doremus, Kantor & Daly, Burlington,
  for Plaintiff-Appellant.

Robert M. Fairbanks of Gaston, Durrance & Fairbanks, Montpelier, for 
  Defendant-Appellee Silas.

Robert F. O'Neill of Gravel and Shea, Burlington, for Defendants-Appellees 
  Currier and Roberts.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       DOOLEY, J.   Plaintiff Jipac, N.V., which sued defendants Paul Silas,
  David Currier, and  Marcel Roberts for default on a promissory note,
  appeals the superior court's decision to order  rescission of the parties'
  contract for the purchase of land that plaintiff subdivided and sold to 
  defendant Paul Silas without obtaining a required Act 250 permit.  We
  conclude that the superior  court acted within its discretion in ordering
  the remedy, and therefore affirm its judgment.



       On June 25, 1989, Jipac conveyed eight individual lots by eight
  separate warranty deeds to  Silas, who executed, in favor of Jipac, a
  $70,000 promissory note secured by a mortgage on the lots  conveyed.  The
  note was guaranteed by defendants Currier and Roberts.  As part of the
  transaction,  Jipac provided Silas with an Act 250 disclosure statement
  certifying facts indicating that the lots did  not require an Act 250
  permit.  See 10 V.S.A. § 6007(a) (before subdividing land, seller shall
  prepare  Act 250 disclosure statement that must be provided to buyer within
  ten days of entering into  purchase and sales agreement).

       Silas stopped making payments on the note in the summer of 1990.  In
  February 1992, Silas  informed Jipac that he was entitled to rescind the
  transaction because the State of Vermont had taken  the position that the
  conveyance violated Act 250.  In response, Jipac sued defendants on the
  note.   Defendants sought rescission of the transaction in a counterclaim
  based on the absence of an Act 250  permit.  After Jipac's motion for
  judgment on the pleadings was denied, the superior court action  was stayed
  pending resolution of Jipac's appeal to the environmental board of the
  district  commissioner's 1994 advisory opinion that an Act 250 permit was
  required for conveyance of the  lots.  In December 1997, the board upheld
  the district commissioner's ruling that an Act 250 permit  was required.

       The board rejected Jipac's position that it was exempt from Act 250
  regulation because it had  subdivided only nine lots.  Jipac now
  acknowledges that the sale of the subdivided lots was unlawful.  See 10
  V.S.A. § 6081(a).  Act 250 does not specify what private remedy applies to
  an unlawful  subdivision.  It does provide that a violation of the Act "is
  punishable by a fine of not more than  $500.00 for each day of the
  violation or imprisonment for not more than two years, or both."  Id.  §
  6003.

 

       On August 29, 2000, following a November 1999 hearing on the parties'
  opposing motions  for summary judgment, the superior court ordered
  rescission of the transaction.  The court canceled  the promissory note,
  voided the warranty deeds, and vested title to the property back to Jipac.  
  Defendants were awarded a judgment for sums paid on the note.  The total
  judgments for defendants  were just over $80,000. (FN1)  The court stated
  that rescission was the appropriate remedy because  the lots were not
  transferable as sold, and there is a presumption that a buyer intends to
  purchase land  that can be resold.  In the court's view, because nothing
  could be done with the lots absent an Act  250 permit, damages would not
  provide defendants with the benefit for which they bargained.

       On appeal, Jipac argues that defendants were not entitled to
  rescission because they failed to  mitigate their damages by seeking to
  obtain an Act 250 permit under an environmental board rule  providing an
  abbreviated process for innocent purchasers of land lacking a required
  permit.  See 10  V.S.A. § 6025(c) (requiring innocent purchaser rule). 
  According to Jipac, because defendants failed  to avail themselves of the
  so-called "innocent purchaser" rule, they are foreclosed from obtaining 
  rescission as a remedy.  Jipac contends that the trial court could have
  awarded defendants damages  for expenses involved in obtaining an Act 250
  permit, and thus rescission is not warranted.

       To support its arguments, Jipac relies primarily on Robitaille v.
  Rubin, 159 Vt. 152, 615 A.2d 1025 (1992) and Paradise Rest., Inc. v.
  Somerset Enters., 164 Vt. 405,