Title: Gettis v. Green Mountain Economic Development Corp.

State: vermont

Issuer: Vermont Supreme Court

Document:

Gettis v. Green Mountain Economic Development Corp.  (2004-262); 179 Vt. 117; 
892 A.2d 162

2005 VT 117

[Filed 28-Oct-2005]



  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.


                                 2005 VT 117

                                No. 2004-262


  Patricia A. Gettis and James N. Gettis     Supreme Court

                                             On Appeal from
     v.                                      Windsor Superior Court


  Green Mountain Economic Development        April Term, 2005
  Corporation, Connecticut River Valley
  Revolving Loan Fund and Town of Hartford


  Theresa S. DiMauro, J.

  Christopher D. Roy of Downs Rachlin Martin PLLC, Burlington, for
  Plaintiffs-Appellants.

  Peter G. Beeson of Devine, Millimet & Branch, P.A., Manchester, New
  Hampshire, for  Defendant-Appellee Green Mountain Economic Development
  Corporation.

  Robert S. DiPalma of Paul, Frank + Collins, P.C., Burlington, for
  Defendant-Appellee Connecticut River Valley Revolving Loan Fund.

  James F. Carroll and Susan P. Ritter of English, Carroll & Ritter,
  P.C., Middlebury, for Defendant-Appellee Town of Hartford d/b/a Hartford
  Business Revolving Loan Fund.

  PRESENT:     Reiber, C.J., Dooley, Johnson and Skoglund, JJ., and Allen,
               C.J. (Ret.),  Specially Assigned  

        
       ¶ 1.     DOOLEY, J.  Plaintiffs, Patricia and James Gettis, appeal a
  superior court order granting summary judgment to defendants, Green
  Mountain Economic Development Corporation, Connecticut River Valley
  Revolving Loan Fund, and the Town of Hartford.  Defendants were involved in
  loan transactions with plaintiffs.  The trial court determined that: (1)
  all of plaintiffs' claims for non-economic damages were barred by the
  statute of limitations; (2) defendants were entitled to summary judgment on
  plaintiffs' claims for economic damages; (3) plaintiffs could not establish
  a prima facie case for tortious interference with contractual relations and
  prospective economic advantage; and (4) there were no grounds for punitive
  damages.  We affirm the first two of the court's decisions and do not reach
  the remainder.

       ¶ 2.     The parties submitted statements of undisputed facts in
  support of their summary judgment motions.(FN1)  From these statements, the
  trial court determined which of the material facts were undisputed and used
  those facts to render its decision.  The following statement of facts is
  primarily based on the recitation of facts in the summary judgment
  decision.  

       ¶ 3.     For several years, plaintiffs ran an inn and a catering
  business under the auspices of Gettis, Inc., a subchapter S corporation. 
  In the early 1990s, they sold the inn in order to focus on their catering
  business.  Eventually, they sought start-up funding to open a gourmet,
  take-out delicatessen to augment their catering business. 
   
       ¶ 4.     After being denied loans by other lenders, plaintiffs
  approached Green Mountain Economic Development Corporation [GMEDC] for
  assistance.  GMEDC is a regional development corporation that acts as a
  loan administrator for the other defendants, Connecticut River Valley
  Revolving Loan Fund [CRV] and Town of Hartford Business Revolving Loan Fund
  [the Town].  Plaintiffs further developed their business plan with the
  assistance of Lenae Quillen-Blume, a small business development advisor for
  the Small Business Administration [SBA], whose office was located in the
  GMEDC building.  Plaintiffs have alleged that Ms. Quillen-Blume was acting
  for GMEDC in her interactions with plaintiffs. 

       ¶ 5.     Through GMEDC, plaintiffs submitted a "Financing Proposal" to
  the Town and CRV, seeking a total of $75,000 in financing.  Both lenders
  initially denied the application.   Plaintiffs revised their application,
  reducing their loan request from the Town and CRV to a total of $35,000. 
  On September 20, 1996, James Saudade, executive director of GMEDC, 
  informed plaintiffs that their loan would not be recommended for approval
  due to insufficient collateral and a concern about non-competition
  provisions in the proposed lease for their business location.  Plaintiffs
  worked to address those concerns and identified an alternative location for
  their business.  

       ¶ 6.     On October 30, 1996, CRV approved a $15,000 loan to Gettis,
  Inc., and on November 26, 1996, the Town of Hartford Selectboard approved a
  $20,000 loan to Gettis, Inc.  Both loans were conditioned upon zoning and
  permit approval.  Throughout November and early December 1996, plaintiffs
  applied for zoning approval, arranged for health and fire inspections, and
  worked to secure other necessary permits and licenses. 

       ¶ 7.     On December 10, 1996, the parties closed on the two loans,
  totaling $35,000, even though plaintiffs had not received zoning approval
  and other permits as required by the loan agreement.  On December 18, the
  Town issued conditional use approval for the delicatessen.  The site
  development plan was approved on December 23.  The Town issued a zoning
  permit for construction and operation of the delicatessen on January 10,
  1997.  
   
       ¶ 8.     At the time of the loans, it was expected that the loan
  proceeds would cover necessary equipment and facilities renovations. 
  Patricia Gettis had already expended over $15,000 on renovations by the
  time the loans closed, so that the sum was immediately reimbursed.  By late
  January 1997, plaintiffs recognized, however, that the renovations would
  cost much more than expected because of regulatory requirements imposed by
  the Vermont Department of Labor and Industries, and that the loan funds
  would not cover both the renovations and equipment.  They determined that
  they would need an additional $20,000 to purchase equipment.  They
  contacted their GMEDC loan administrator, Margo Watson, who advised them to
  complete the renovations and to purchase the necessary equipment with
  personal credit cards.  She assured them that funds for an additional
  consolidated loan at a lower interest rate would soon be available to
  replace the credit card debt.  Using their credit cards, plaintiffs bought
  over $20,000 worth of business equipment, which was ultimately subject to
  the lenders' security interests.  

       ¶ 9.     On February 27, 1997, plaintiffs opened "A La Carte," their
  new delicatessen.  In March 1997, plaintiffs met with the loan
  administrator, Margo Watson, and the SBA advisor to discuss the
  consolidation loan they desired.  They presented the loan administrator
  with documentation of business equipment purchases they had made on their
  credit cards.  She informed them at that meeting that funds for the
  consolidation loan they sought would not be available for another six
  months. 
   
       ¶ 10.    In September 1997, and again in early October, Ms. Gettis
  was hospitalized with an unprecedented flare-up of her inflammatory
  arthritis.  Her doctor associated the flare-ups with stress and overwork,
  which, according to Ms. Gettis, was caused by the business's financial
  difficulties.  Ms. Gettis continued to work despite her doctor's pleas to
  stop.  She continued to suffer from aggravated arthritis throughout the
  period A La Carte was in business.  On October 3, 1997, while Ms. Gettis
  was hospitalized, Mr. Gettis met with the loan administrator and the SBA
  business development advisor, who informed him that no additional loan
  funds would be available to replace plaintiffs' credit card debt. 

       ¶ 11.    A year later, in early October 1998, the lenders agreed to
  allow plaintiffs to make interest-only payments from December through
  March, spreading the principal due during those months over the remainder
  of the year.  On October 9, the loan administrator sent plaintiffs a letter
  asking them to make payments on their loans immediately, as no payment had
  been received since August 1998.  She also requested that plaintiffs return
  signed letters acknowledging their agreement with the proposed modified
  payment plan.  On November 3, the executive director of GMEDC sent another
  letter to plaintiffs, warning them that GMEDC still had not received
  payment.  He informed them that the modified payment plan was conditioned
  upon plaintiffs bringing their loans current.   No payments were made. 

       ¶ 12.    On December 1, 1998 the GMEDC executive director sent
  letters declaring plaintiffs in default on their loans from CRV and the
  Town and demanding payment in full within fifteen days.  A La Carte closed
  its doors permanently at the end of December 1998.  Defendants never
  repossessed their collateral.  Plaintiffs eventually filed for bankruptcy.

       ¶ 13.    Plaintiffs filed suit against defendants GMEDC, CRV, and the
  Town on December 12, 2001.  The counts of the complaint were: (1) breach of
  contract; (2) negligent or intentional breach of fiduciary duty; (3) breach
  of the implied covenant of good faith and fair dealing; (4) equitable and
  promissory estoppel; (5) negligent or intentional misrepresentation; (6)
  tortious interference with contractual relations and prospective economic
  advantage (against GMEDC only); (7) tortious interference with prospective
  economic advantage (against the Town and CRV only); and (8) negligent or
  intentional infliction of emotional distress.  
   
       ¶ 14.    The exact bases for plaintiffs' claims are often not
  specified, but have emerged in the briefing and argument.  The central
  factual allegation behind virtually all of plaintiffs' counts is contained
  in paragraph fifty-six of the complaint as follows:

       But for the unexpected imposition of personal credit card
       debt that needed to be serviced with payments much higher
       than would have been the case if additional loan proceeds had
       been advanced, the Gettises' business would have met or
       exceeded the expectations and projections set forth in the
       original business plan.  Thus, but for the burden of personal
       credit card debt, their business would have been on the track
       to success.

  The first count is based on the failure of defendants to provide additional
  loans to pay off the credit card debt.  The fourth and fifth counts raise
  various arguments on that subject.  According to plaintiffs' fourth count,
  defendants should be estopped from enforcing the loan terms because they
  induced plaintiffs' financial failure through the credit card debt and the
  failure to provide business loans to eliminate that debt.  The fifth count
  alleges misrepresentation because defendants knew they would not extend
  further credit when they induced plaintiffs to incur credit card debt, but
  stated that they would provide further loans.  The bases for the second,
  third and eighth counts are not specified, but again appear to be the
  statement in paragraph fifty-six or a variation on that theme.
   
       ¶ 15.    In the sixth count, plaintiffs allege that GMEDC
  tortiously interfered with their loan contracts with CRV and the Town by
  instructing plaintiffs to purchase equipment with credit cards and
  preventing plaintiffs' performance of their loan obligations.  The seventh
  count alleges that "CRV/RLF and the Town intentionally and improperly
  interfered with the Gettises' prospective contractual relations with other
  actual and potential lenders with whom the Gettises already had, or could
  otherwise have, pursued supplemental loans."  The complaint also contains
  vague allegations that suggest that the Town's zoning actions or
  representations were linked to the unanticipated regulatory requirements
  imposed by the Department of Labor and Industries and, as a result, the
  Town was responsible for plaintiffs' inability to finish the renovations
  and purchase the equipment with the loan amounts provided.  To the extent
  plaintiffs made such allegations, they waived them in their response to
  defendant's motion for summary judgment either by not actually responding
  to defendants, or by their express waiver.  Plaintiffs seek relief in the
  form of compensatory damages for economic, emotional, and physical
  injuries, as well as punitive damages. 

       ¶ 16.     Defendants submitted several different motions for summary
  judgment on the following grounds: (1)  the statute of limitations barred
  plaintiffs' claims for damages for physical and emotional injuries; (2)
  plaintiffs failed to establish a causal connection between defendants'
  conduct and the damages alleged; (3) plaintiffs failed to present a prima
  facie case for tortious interference with contractual relations and
  tortious interference with prospective economic advantage; (4) plaintiffs
  failed to present a prima facie case for negligent and intentional
  infliction of emotional distress; (5) the Town is immune from claims
  regarding its governmental function of issuing land use permits; and (6)
  the Town is immune from claims of punitive damages.
   
       ¶ 17.     Along with their summary judgment motions, defendants
  submitted a lengthy statement of undisputed material facts.  Plaintiffs
  submitted a counter statement, disputing some of the facts in defendants'
  statement and agreeing with others.  The trial court ultimately granted
  summary judgment in favor of defendants on all claims, using several
  different rationales.  The court granted summary judgment on counts one
  through five-the contract-related claims-for failure to establish that
  defendants' actions caused plaintiffs' injury.  The court also found that
  the statute of limitations barred plaintiffs' claims for damages for
  physical and emotional injuries, which were found in several claims, but
  especially in the intentional infliction of emotional distress claim (claim
  eight).  The court held that plaintiffs did not establish a prima facie
  case against GMEDC for tortious interference with contractual relations, or
  for tortious interference with prospective economic advantage against any
  defendant (claims six and seven).  Finally, the court denied plaintiffs'
  claim for punitive damages because it found no actual damages.  The trial
  court did not decide whether plaintiffs established a prima facie case for
  intentional infliction of emotional distress or whether the Town would
  qualify for municipal immunity, as it granted summary judgment on all
  claims before it reached those issues.

       ¶ 18.     Plaintiffs appeal all of the superior court rulings.  We
  conclude that we need reach only two of those decisions-that plaintiffs'
  claims for non-economic loss are barred by the statute of limitations, and
  that plaintiffs' claims for economic loss fail for lack of causation-in
  order to dispose of this appeal.
   

       ¶ 19.     We note that plaintiffs criticize the superior court for
  failing to state the Rule 56 standard for ruling on a summary judgment
  motion, and for finding facts that were disputed.  The standard for summary
  judgment is familiar-whether the materials properly before the court "show
  that there is no genuine issue as to any material fact and that any party
  is entitled to a judgment as a matter of law."  V.R.C.P. 56(c)(3).  We
  review a grant of summary judgment using the same standard as the trial
  court, giving the benefit of all reasonable doubts and inferences to the
  non-moving party.  Fireman's Fund Ins. Co. v. CNA Ins. Co., 2004 VT 93, ¶ 
  8, 177 Vt. 215,