Title: Record v. Kempe

State: vermont

Issuer: Vermont Supreme Court

Document:

Record v. Kempe (2005-224)

2007 VT 39

[Filed 04-May-2007]

       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.


                                 2007 VT 39

                                No. 2005-224


  Bernard G. Record and Anna A. Record           Supreme Court
  a/k/a Ann F. Record
                                                 On Appeal from
       v.                                        Windham Superior Court


  G. Steven Kempe and Lucy Mary Kempe            May Term, 2006


  Karen R. Carroll, J.

  L. Raymond Massucco of Massucco Law Offices, P.C., Bellows Falls, for
    Plaintiffs-Appellees.

  Herbert G. Ogden of Ogden Law Offices, P.C., Rutland, for
    Defendants-Appellants.


  PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.

       ¶  1.  SKOGLUND, J.   Defendants Mr. & Mrs. Kempe appeal a jury
  verdict in favor of plaintiffs Mr. & Mrs. Record on plaintiffs' claim that
  defendants breached a contract for the sale of plaintiffs' home. 
  Plaintiffs asserted they were entitled to retain defendants' deposit as
  authorized in the purchase and sale contract because defendants breached
  the contract.  Defendants countered that they were entitled to return of
  the deposit because it was plaintiffs, in fact, who had breached the
  contract for sale.  The jury found in favor of plaintiffs.  We affirm.
   
       ¶  2.  In June 2001, defendants contracted to purchase plaintiffs'
  home and made a deposit of $21,600.  The contract provided that if
  defendants discovered a defect in the title, defendants were required to
  notify plaintiffs, and plaintiffs would then have a minimum of thirty days
  from the date of notice to cure the defect.  Specifically, the contract
  provided:

    Purchaser . . . shall notify Seller in writing prior to the date
    set for closing of the existence of any encumbrances or defects
    which are not excepted in this Contract . . . .  In such event,
    Seller shall have an additional thirty (30) days from the time
    Seller receives such notice to remove the specified encumbrances
    or defects . . . .  If, at the expiration of 30 days from the
    receipt of such notice or on the date set for closing, whichever
    is later, Seller is unable to convey marketable title free and
    clear of such encumbrances and defects, Purchaser may terminate
    this Contract, and, if so, shall receive back all deposit money
    and may, in addition, pursue all legal and equitable remedies
    provided by law.
        
       ¶  3.  Three days before the scheduled closing date, defendants'
  lawyer discovered a cloud on the title.  The existence of the cloud on
  title is not disputed. (FN1)  Defendants' lawyer telephoned plaintiffs'
  lawyer, described the title defect, and declared that his clients would buy
  the property only if the defect was cured.  The next day, defendants'
  lawyer faxed a note to plaintiffs' lawyer which stated in total: "Buyers do
  not want to close with matter unresolved - 60 day contract extention
  [sic]."  In addition, plaintiff Mrs. Record testified at trial that
  defendant Mr. Kempe specifically represented to her that defendants were
  willing to extend the contract for sixty days.  The day after the lawyers
  first discussed the problem with the title, plaintiffs' attorney left for
  vacation, returning to Vermont thirteen days into the cure period. (FN2)  
  Sixteen days into the cure period, defendants sent a letter by certified
  mail to plaintiffs purporting to cancel the contract due to the cloud on
  the title and also because they were unwilling to pay the two extra
  interest payments that would come due on their bridge loan during a
  sixty-day delay.

       ¶  4.  Plaintiffs brought this action, asserting their right to retain
  defendants' deposit because defendants had breached the contract. 
  Defendants counterclaimed, alleging that plaintiffs breached the contract
  by failing to cure the title defect, and that defendants were entitled to
  recover their deposit as a result.

       ¶  5.  One of the issues the parties focused on at trial was whether
  plaintiffs would have been able to cure the title defect in the time
  allotted.  In written discovery to plaintiffs, defendants asked plaintiffs
  to admit that they could not have accomplished a timely cure regardless of
  whether the grace period was thirty or sixty days.  Plaintiffs failed to
  answer the discovery request, and defendants moved for partial summary
  judgment, relying in part on plaintiffs' implied admission that they could
  not have cured the defect in time.  The court granted plaintiffs' request
  to withdraw the admission and denied summary judgment.

       ¶  6.  Defendants later moved to prevent plaintiffs from introducing
  evidence tending to demonstrate that the parties had made an oral
  modification to the contract to extend the cure period from thirty to sixty
  days.  The court also denied this motion, instead placing the issue of oral
  modification before the jury.  
   
       ¶  7.  The jury returned a verdict in favor of plaintiffs, and the
  court awarded plaintiffs their attorneys' fees.  Defendants filed this
  appeal.  On appeal, defendants assert that they should have been granted
  summary judgment based on plaintiffs' implied admission that they could not
  cure the title defect in the time allowed.  Defendants also argue that the
  superior court erred by instructing the jury that defendants were required
  to prove that it would be "impossible" for plaintiffs to cure the title
  defect in time.  Instead, defendants allege, they were required to prove
  only that plaintiffs' performance was "highly unlikely."  Defendants allege
  further error in the superior court's failure to instruct the jury that, in
  order for any oral modification of the contract to be valid, plaintiffs had
  to show they relied on the modification to their detriment.  Finally,
  defendants claim that plaintiffs' lawyer should not have been permitted to
  both serve as a lawyer and a witness during the trial. (FN3)  We address these
  in turn.

                                     I.


       ¶  8.  Defendants argue that, because plaintiffs had failed to timely
  respond to defendants' requests for admissions, plaintiffs impliedly
  conceded that they could not have cured the defect in title within either
  the thirty days provided in the purchase and sale contract or the sixty-day
  period allegedly created by oral modification.  See V.R.C.P. 36(a)
  (providing that an issue subject to a request for admission is deemed
  admitted if the party to whom discovery is directed does not answer or
  object to the request within thirty days).  The superior court granted
  plaintiffs' request to withdraw the implied admission, and denied
  defendants' motion for summary judgment.  Defendants argue that this was
  error.
   
       ¶  9.  While we review de novo the legal conclusion underlying a
  decision to grant or deny summary judgment, defendants do not directly
  attack the merits of the summary judgment ruling.  Rather, defendants take
  issue with the superior court's decision to allow plaintiffs to withdraw
  their discovery response. (FN4)  Discovery rulings such as this are
  discretionary, and discretionary rulings "are not subject to review if
  there is a reasonable basis for the court's action."  Cliche v. Fair, 145
  Vt. 258, 261,