Maintenance Management v. Pelino, No. 1345-02 Cncv (Katz, J., Sept. 25, 

2003) 

[The text of this Vermont trial court opinion is unofficial. It has been 

reformatted from the original. The accuracy of the text and the 

accompanying data included in the Vermont trial court opinion database is 

not guaranteed.] 

STATE OF VERMONT SUPERIOR COURT

Chittenden County, ss.: Docket No. 1345-01 CnCv 

 

MAINTENANCE MANAGEMENT 

v. 

PELINO 

ENTRY 

 Contractor Maintenance Management requests reconsideration of 

our declining to apply the Prompt Pay Act, 9 V.S.A. § 4001–4009, and 

requests under the Act that we grant attorneys fees to the substantially 

prevailing party and a penalty of 1% interest per month. 

 Whether the Prompt Pay Act applies to the relationship between 

contractor and Pelinos depends on the language of the Act, which makes it 

quite clear that it applies only when there is an oral or written contract, 9 

V.S.A. § 4001 (5). Despite that language, there is no reason to foreclose its 
application in implied contracts. See Jenkins, Inc. v. Walsh Bros., Inc., 

2001 ME 98. This issue, however, is not dispositive. 

 The Prompt Pay Act awards attorney fees to the “substantially 

prevailing party.” 9 V.S.A. § 4007 (c). As this is contrary to the traditional 

“American Rule” where parties pay their own attorney fees regardless of 

who prevails, DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239, 246 

(2001), it is a derogation of the common law and must be interpreted 

strictly. Bruntaeger v. Zeller, 147 Vt. 247, 255 (1986). Contractor argues 

that there is no difference between “substantially prevailing party” and 

“prevailing party.” For support, he cites to Buckhannon Board & Care 

Home, Inc. v. W. Va. Dep’t of Health & Human Resources, 532 U.S. 598 

(2001) and more generally to Union of Needletrades, Indus. & Textile 

Employees v. I.N.S., 336 F.3d 200 (2d Cir. 2003). In the first case, the 

Court does not even address the difference between “substantially 

prevailing” and “prevailing.” In the second case, the Second Circuit draws 

a very different distinction than what contractor argues. The Second 

Circuit does not say that the two terms are synonymous. On the contrary, 

the court rejects the “catalyst” interpretation of “substantially prevailing” 

that previously gave it a broader application, which made it 

indistinguishable with “prevailing.” Union, 532 F.3d at 205 (defining the 

“catalyst” as basing application on the manner and method of recovery). 

More importantly, both cases endorse a more restrictive interpretation of 

“substantially” that would limit the application of attorney fee provisions 

based on the amount or degree of recovery, thereby making “substantially 

prevailing” a subset of “prevailing.” Union, 532 F.3d at 207–08. Such an 

interpretation also gives meaning to every word in the statute, Reed v. 

Glynn, 168 Vt. 504, 506 (1998), because “substantially” is no longer 

superfluous. Finally, it emphasizes a measure of discretion in the court on 

the question of whether to award fees. Without such discretion, a $1 
victory would carry with it a fee award which might drive the case more 

than would the merits. Applying this rationale, contractor has provided no 

evidence, and has not argued, that he substantially prevailed. Given the 

high bar set by 9 V.S.A. § 4007 (c) and the lack of evidence, Attorney fees 

are inappropriate. 

 As to the Prompt Pay Act’s penalty provisions, the plain language of 

§ 4007 (a) allows an owner or contractor to withhold all or part of a 

payment based on a good faith claim arising from “unsatisfactory job 

progress” or “disputed work.” This provision appears to enunciate the 

common sense principle that when there is a fundamental dispute over what 

was owed, there cannot be punishment for litigation that resolves it. 

Where, as here, the homeowner substantially prevails on a number of issues 

that good faith is shown. Since Pelinos withheld their payment based on a 

good faith dispute over the nature, amount, quality, and cost of the work, § 

4007 (a) applies to prevent any penalties from attaching. Contractor 

provides no reasoning why this section should not apply here. 

 For the foregoing reasons, Maintenance Management’s motion to 

reconsider is rejected. 

 Dated at Burlington, Vermont________________, 2003. 

 ________________________ 

 Judge