Title: Schmitt v. Lalancette

State: vermont

Issuer: Vermont Supreme Court

Document:

Schmitt v. Lalancette (2001-453); 175 Vt. 284; 830 A.2d 16

2003 VT 24

[Filed 21-Mar-2003]

       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.

                                 2003 VT 24

                                No. 2001-453

  Paul F. Schmitt	                         Supreme Court

                                                 On Appeal from
       v.	                                 Orange Superior Court

  Richard Lalancette, P.E. and Home	         September Term, 2002
  Inspection Consultants of Central 
  Vermont, Inc.  

  Stephen B. Martin, J.

  Andrea L. Gallitano of Otterman and Allen, P.C., Barre, for
    Plaintiff-Appellant. 

  Timothy L. Taylor and William H. Meub of Meub Associates, Inc.,
    Rutland, for Defendants-Appellees.

  PRESENT:  Amestoy, C.J., Dooley, Morse (FN1), Johnson and Skoglund, JJ.

        
       ¶  1.  JOHNSON, J.  This appeal challenges a court order limiting
  discovery and independent investigation before trial.  Appellant Paul
  Schmitt appeals from a jury verdict finding that appellee Richard
  Lalancette was not liable to Schmitt in connection with a house inspection
  that Lalancette performed for Schmitt.  Schmitt claims Lalancette's
  inspection failed to identify serious structural flaws in the house and
  that Lalancette was liable for both breach of contract and violation of
  Vermont's Consumer Fraud Statute, 9 V.S.A. §§ 2451-2480g.  During
  discovery, Schmitt requested the names of other customers referred to
  Lalancette by the realtor who brokered Schmitt's home purchase.  The trial
  court not only denied Schmitt's discovery request, but issued a protective
  order preventing Schmitt from contacting former customers of Lalancette
  whose names Schmitt obtained through independent investigation. 

       ¶  2.  Schmitt seeks a new trial on the grounds that (1) the
  protective order limiting discovery and precluding independent
  investigation imposed by the trial court was an abuse of discretion, and
  (2) the trial court improperly granted Lalancette's motion for directed
  verdict on Schmitt's consumer fraud claim.  Because we agree with appellant
  that the trial court abused its discretion in issuing the protective order,
  we reverse and remand for a new trial.  In light of our disposition, it is
  not necessary to reach Schmitt's claim under the Consumer Fraud Act.

       ¶  3.  In 1997, Schmitt was shown a 200-year-old home in East Corinth
  by Vermont realtor Ann Swanson, and decided to purchase the house. 
  Concerned about the extent to which the property might be in need of
  expensive repairs, Schmitt made the closing contingent upon the outcome of
  a home inspection.  He asked Swanson if she knew of any local home
  inspectors, and Swanson recommended Lalancette.  Schmitt hired Lalancette
  to inspect the property.  In his written report, Lalancette gave the home
  an overall rating of average, indicating that it was in need of only minor
  structural and mechanical repairs to some of its components.  Schmitt
  purchased the home and hired a general contractor and architect to make the
  necessary repairs.  The architect and general contractor both identified
  serious structural defects in the property that had been glossed over in
  Lalancette's written report. 
   
       ¶  4.  Schmitt spent almost $80,000 performing remedial work on his
  home.  He contacted Lalancette and demanded that Lalancette reimburse these
  costs.  Lalancette denied responsibility, and at that point, Schmitt filed
  suit seeking to recover the money he had to spend on repairs from
  Lalancette.  His amended complaint demanded damages on two grounds: (1)
  breach of contract and (2) unfair or deceptive acts or practices in
  commerce in violation of Vermont's Consumer Fraud Statute, 9 V.S.A. §§
  2451-2480g.  

       ¶  5.  During discovery, Schmitt sought to determine whether other
  home buyers had received inaccurate reports from Lalancette.  His theory
  was that there had been collusion between Lalancette and the realtor, Ann
  Swanson.  According to Schmitt's theory, Lalancette was improperly
  motivated not to issue reports that would prevent real estate closings in
  order to receive continued referrals from Swanson.  Schmitt requested
  seventeen reports that Lalancette's firm had prepared in the course of home
  inspections performed for clients referred by Swanson.  Schmitt asserted
  that the reports were relevant for two reasons.  First, examining the
  reports and interviewing the homeowners would enable Schmitt to determine
  the accuracy of the reports, which would be relevant to a determination of
  Lalancette's competency in the performance of home inspections.  Second, if
  the reports together with interviews of the former customers revealed a
  recurring pattern of under-reporting serious problems with the houses that
  would be obvious to a trained eye, Schmitt asserted that he would have
  evidence consistent with his theory that Lalancette had an improper motive
  to prepare positive reports that would facilitate a sale.  Schmitt stated
  that obtaining the reports without being able to contact the homeowners
  would be useless to his investigation because without interviewing the
  homeowners he would be unable to determine the accuracy of the reports, and
  it was the accuracy of the reports, not their comprehensiveness, that was
  at issue in his case.  
   
       ¶  6.  Lalancette at first categorically refused to release the
  reports, and then offered to provide redacted reports, with the names and
  identifying information of the homeowners deleted.  The offer was
  contingent upon Schmitt agreeing not to attempt to identify or speak to the
  homeowners of the properties in question.  Schmitt refused to agree to this
  condition, and sought full disclosure of the reports and the names of the
  homeowners.  Lalancette objected on the grounds that the reports requested
  were irrelevant to the subject matter of the dispute and beyond the scope
  of discovery.  Furthermore, Lalancette asserted that he could not disclose
  the reports because of a contractual confidentiality agreement with former
  clients, which would expose Lalancette to liability for breach of contract
  if he revealed their names to Schmitt.  Schmitt then filed a motion to
  compel Lalancette to reveal the seventeen reports in question.  Lalancette
  cross-filed a motion for a protective order prohibiting Schmitt from
  contacting any of Lalancette's former clients.   

       ¶  7.  The trial court ordered Lalancette to release the reports, but
  only after redacting the names and addresses of Lalancette's former
  clients.  To enforce its determination that the identities of the
  homeowners were not discoverable, the trial court issued a protective order
  that specifically forbid Schmitt or his agents from contacting Lalancette's
  clients.  The order prohibited Schmitt from learning the identity of
  Lalancette's former clients through independent investigation or from
  contacting any of Lalancette's former clients whom he was able to identify
  from public information. 

       ¶  8.  The order was subsequently amended to permit Schmitt to contact
  five of Lalancette's former clients who had independently sued Lalancette
  and had already been disclosed by Lalancette.  The trial court prohibited
  Schmitt, consistent with its earlier order, from contacting a former client
  of Lalancette, Tyler Yandow, of whom Schmitt had learned from his own
  investigation of the public records of the Board of Professional
  Engineering.  The case proceeded to trial on September 4, 2001.  The jury,
  presented with only the breach of contract claim after the trial court
  issued a directed verdict on Schmitt's consumer fraud claim, returned a
  verdict for Lalancette.  This appeal followed. 

       ¶  9.  The question for review is whether the trial court abused its
  discretion under V.R.C.P. 26(c) in issuing a protective order preventing
  Schmitt or his agents from independently contacting such former clients as
  they were able to identify through their own investigations. (FN2)  We
  apply a deferential standard of review to trial court rulings on discovery,
  which are left to the sound discretion of the trial judge.  See, e.g.,
  Castle v. Sherburne Corp., 141 Vt. 157, 164,