New England Youth Theatre, Inc. v. Envtl. Compliance Servs., No. 138-4-12 Wmcv (Carroll, J., Feb. 26, 2013) 

[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.]

VERMONT SUPERIOR COURT 

SUPERIOR COURT CIVIL DIVISION 

Windham Unit Docket No. 138-4-12 Wmcv 

New England Youth Theatre, Inc., 

 Plaintiff 

 v. 

Environmental Compliance Services, Inc., 

Joseph S. Pieciak, Jr., Elm Street Realty, Inc., 

and Corner Realty, Inc. 

 Defendants 

 

Decisions on Motion to Dismiss and Motion to File Surreply 

Factual Background 

 Defendant, Environmental Compliance Services, Inc., moves to dismiss Plaintiff’s 

claims for professional negligence and negligent misrepresentation. On August 30, 2012, the 

Court granted Defendant’s first motion to dismiss. The current motion raises new legal issues 

and requires separate consideration. The Court relies on the facts provided by Plaintiff for this 

motion. 

 Joseph Pieciak owned and controlled Elm Street Realty and Corner Realty. In 1994, he 

used Elm Street Realty to purchase Lot 56 in Brattleboro. In 1997, Pieciak used Corner Realty to 

purchase Lots 54 and 55. Before purchasing the lots, Pieciak had ERD Environmental (ERD) 

conduct environmental site assessments. In 1996, ERD issued reports to Pieciak that did not 

identify all of the environmental problems with the lots. 

 In 2002, Pieciak requested Banknorth refinance his debts in regard to the lots. Banknorth 

required Pieciak to obtain more recent environmental assessments. In 2003, Pieciak hired 

Environmental Compliance Services (ECS), Defendant, to update ERD’s reports. Defendant 

conducted the environmental assessments in the winter of 2004. Defendant relied on the parts of 

ERD’s reports and also failed to observe all of the environmental issues associated with the sites. 

 In 2006, New England Youth Theatre (NEYT), Plaintiff, signed a purchase and sale 

agreement with Pieciak for all three lots. Chittenden Bank, NEYT’s lender, required NEYT to 

obtain assurances about potential environmental liabilities of the sites. Pieciak referred NEYT to 

the 2004 ECS reports. NEYT did not know of any environmental risks at the time of purchase. In 

2007, the Vermont secretary of state involuntarily terminated Elm Street Realty and Corner 

Realty for failure to file an annual report. The corporations have not been reinstated. 
2 

 In 2008, Plaintiff wanted to sell a portion of the property to Fulcrum Arts. Fulcrum Arts 

hired KAS and GCM Environmental to conduct new environmental assessments. The new 

environmental consultants found significant environmental liabilities on the properties. Fulcrum 

backed out of the deal. NEYT now works with the Vermont Department of Environmental 

Conservation and the Environmental Protection Agency to develop a corrective action plan. 

 The first motion to dismiss concerned Plaintiff’s direct claims against Defendant for 

professional negligence and negligent misrepresentation. The Court granted the motion to 

dismiss because Plaintiff lacked privity or near privity of contract with Defendant. The amended 

complaint alleges Pieciak assigned any claims against ECS to NEYT as part of a settlement. 

Plaintiff now makes claims for professional negligence (Count III), negligent misrepresentation 

(Count IV), and breach of contract (Count V) as an assignee from Pieciak. 

Procedural History 

 Defendant filed this motion to dismiss (Motion No. 4) on August 17, 2012. Plaintiff 

opposed the motion on September 7, 2012. Defendant filed a response to Plaintiff’s opposition 

on September 24, 2012. Plaintiff filed a motion for permission to file a surreply on October 9, 

2012 (Motion No. 6). On the same day, Plaintiff also filed the surreply. On October 22, 2012, 

Defendant opposed Plaintiff’s motion to file a surreply and addressed the merits of the surreply. 

Standard of Review 

The Court disfavors and rarely grants motions to dismiss. See Bock v. Gold, 2008 VT 

81, ¶ 4, 184 Vt. 575. The Court uses motions to dismiss to evaluate the law in a pleading. Powers 

v. Office of Child Support, 173 Vt. 390, 395 (2002). Accordingly, the Court will only grant a 

motion to dismiss when there are “no facts or circumstances, consistent with the complaint that 

would entitle Plaintiff to relief.” Bock, 2008 VT 81, ¶ 4. “[T]he threshold a Plaintiff must cross 

in order to meet our notice-pleading standard is ‘exceeding low.’” Id. (quoting Henninger v. 

Pinellas County, 7 F. Supp. 2d 1334, 1336 (M.D. Fla. 1998)). The Vermont Supreme Court 

continues to apply a relaxed notice-pleading standard. Bock, 2008 VT 81, ¶ 5, n. For this motion, 

the Court assumes the truth of all facts offered by the non-moving party. Id. at ¶ 4. 

Discussion 

 Defendant moves for dismissal on four grounds: (1) terminated corporations may not 

assign tort claims; (2) professional negligence and negligent misrepresentation claims do not fall 

under Vermont’s survival statute; (3) the assignment of these claims violates public policy; and, 

(4) Plaintiff failed to assert a valid claim for professional negligence. The Court will respond to 

each of Defendant’s arguments and then evaluate whether to accept Plaintiff’s surreply. 

1. An Involuntarily Terminated Corporation’s Power to Assign Claims 

The first issue raised by this motion is whether terminated corporations may assign 

claims. The secretary of state will terminate a corporation for failure to file an annual report. 11A 

V.S.A. § 14.20(a). An involuntarily terminated corporation may prevent a proceeding against the 
3 

corporate name, suspend a proceeding by or against the corporation that was pending at the 

termination date, and terminate the authority of the corporation’s registered agent. Id. § 14.20(d). 

The dissolved corporation may do anything “necessary to wind up and liquidate its business and 

affairs.” Id. § 14.05(a)(5). A dissolved corporation lacks the enumerated powers granted to an 

involuntarily terminated corporation in § 14.20(d). See id. §§ 14.05(b)(5)–(7). 

The parties dispute the meaning of section 14.20. Defendant argues 14.20(d) is an 

exclusive list of the powers of an involuntarily terminated corporation. In contrast, Plaintiff 

argues the list is not exclusive and the Court should treat terminated corporations like dissolved 

corporations. The powers explicitly granted to involuntarily terminated corporations are denied 

to dissolved corporations. Compare id. § 14.05(b)(5)–(7), with id. § 14.20(d). The legislature’s 

extension of additional powers to terminated corporations suggests terminated corporations also 

have the powers of dissolved corporations. Furthermore, the powers granted to nonprofit 

corporations and a case interpreting an older version of the statutes indicate a terminated 

corporation may assign its claims. See 11B V.S.A. §§ 14.05, 14.20, 14.21; Daniels v. Elks Club 

of Hartford, 2012 VT 55, ¶ 57, n. 15; Black River Ass’n v. Koehler, 126 Vt. 394, 397–98 (1967). 

For guidance on what powers terminated corporations have, the Court may look to Title 

11B, which applies to nonprofit corporations. See Daniels, 2012 VT 55, ¶ 57, n. 15. In Daniels, 

the Vermont Supreme Court evaluated the liabilities of a terminated non-profit corporation and 

its members. See id. ¶ 2. Although the Court decided the cases on other grounds, a footnote 

provides a clue on the court’s interpretation of both Title 11A (business corporations) and Title 

11B (nonprofit corporations). The court noted: “Although the statues applicable to business 

corporations and those applicable to nonprofit corporations have some language difference, the 

substance of the current statutes is essentially the same.” Id. at n. 15. 

The nonprofit corporations statute suggests a terminated corporation may assign claims. 

The secretary of state may dissolve a nonprofit corporation for failing to file a biennial report. 

11B V.S.A. § 14.20(2). A dissolved nonprofit corporation may also do “every other act 

necessary to wind up and liquate its assets and affairs.” Id. § 14.05(8). Thus, a nonprofit 

corporation that fails to file the proper report assign claims. To the extent nonprofit corporations 

and business corporations have parallel powers, a terminated business corporation may also 

assign its assets. See Daniels, 2012 VT 55, n. 15. 

Black River, which interpreted a predecessor statute, also suggests a terminated 

corporation may assign claims. 126 Vt. at 397–98. In Black River, the secretary of state dissolved 

a corporation for not filing an annual report.1

Id. at 396. Nevertheless, the court allowed the 

assignment because another provision of the statute allowed a terminated corporation “three 

years to enable it gradually to close its affairs, to dispose of its property...” See id.; see also 11 

V.S.A. § 491 (repealed in 1971). The court “perceive[d] no intent by the legislature to deprive a 

corporation, whose charter has been forfeited for failure to file an annual report, from the 

remedial provisions of § 491 applicable to corporations whose charters are otherwise annulled.” 

 

1

 11 V.S.A. § 423, which was repealed in 1971, indicated: “A corporation, having a capital stock, which fails to file 

the annual report required by section 421 of this title within three months of the date therein required, shall cease to 

exist and the secretary of state shall notify such corporation of such termination.” See Black River, 126 Vt. at 396. 
4 

Black River, 126 Vt. at 397–98. The authority to assign claims is part of the power of winding up 

a corporation. Id. at 397. 

In the instant case, Elm Street Realty and Corner Realty could assign claims under 11A 

V.S.A §§ 14.05, 14.20. The statutory language suggests section 14.20(d) gives terminated 

corporations powers that exceed dissolved corporations. Terminated corporations therefore 

maintain the powers of dissolved corporations in addition to their section 14.20(d) powers. 

Moreover, reading the nonprofit corporations act and the business corporation act together 

indicates terminated corporations have the powers of dissolved corporations. Finally, Black 

River’s interpretation of the predecessor statute also supports reading these statutes to grant 

involuntarily terminated corporations the power to assign claims as part of the powers to wind up 

the corporations. 

2. Survival of the Causes under 14 V.S.A. § 1451 

The next issued raised by Defendant is whether professional negligence and negligent 

misrepresentation claims survive the death of the original holder of legal title. See 14 V.S.A. 

§ 1451. The survival of causes statute provides “damages done to real or personal estate shall 

survive...” Id. The Vermont Supreme Court ruled the language of a predecessor statute “should 

be construed... liberally.” Dana v. Lull, 21 Vt. 383, 390 (1849). Defendant cites Jones v. Ellis’ 

Estate to demonstrate fraud does not survive the death of the original title holder. 68 Vt. 544, 547 

(1896). Plaintiff’s claims are professional negligence and negligent misrepresentation and not 

fraud. These are not the same torts. Accordingly, the Court liberally interprets 14 V.S.A. § 1451 

and allows causes of action to survive transfer. 

3. Assignment of Claims and Vermont Public Policy 

Defendant next argues allowing assignment of professional negligence related claims 

violates public policy. For example, New Jersey courts forbid the assignment of tort claims 

before judgment. See Integrated Solutions, Inc. v. Serv. Support Specialties, Inc. ̧124 F.3d 487, 

490 (3d. Cir. 1997). Plaintiff admits a minority of jurisdictions follow its arguments. See Sprint 

Commc’ns Co. v. APCC Servs. Inc., 554 U.S. 269, 273–86 (2008) (discussing the history of 

claim assignments). As described by Justice Breyer, there is not a general public policy against 

allow assignment of claims. See id. The Court will not prohibit the assignment of claims as a 

general matter, but will consider reasons for banning the assignment of specific claims. 

 Defendant’s justifications for banning the assignment of tort claims in this case are 

unpersuasive. Defendant asserts there is a risk of collusion because the terminated companies 

had no reason to dispute liability or damages. Although collusion may eventually be a concern, it 

raises factual questions that the Court will not decide on a motion to dismiss. See Bock, 2008 VT 

81, ¶ 4 (discussing the standard of review on motions to dismiss). 

Defendant also asserts that because some states prevent the transfer of legal malpractice 

claims, the Court should ban the assignment of all professional malpractice claims. See, e.g., Del. 

CWC Liquidation Corp. v. Martin, 584 S.E.2d 473, 479 (W.Va. 2003) (barring the assignment of 

a legal malpractice claim). The comparison is unpersuasive because the justification for barring 
5 

assignment for legal malpractice claim is based on the fiduciary duties owed by an attorney. See 

id. Environmental consultants do not owe fiduciary duties on par with the duties of attorneys. In 

this case, there is no specific reason to ban the assignment. 

4. Professional Services and the Economic Loss Rule 

 Finally, Defendant asserts the economic loss rule blocks Plaintiff’s claims for negligent 

misrepresentation and professional negligence. “The economic-loss rule prohibits recovery in 

tort for purely economic losses.” EBWS, LLC v. Britly Corp., 2007 VT 37, ¶ 30, 181 Vt. 513. 

Nevertheless, “[p]urely economic losses may be recoverable in professional services cases 

because the parties have a special relationship, which creates a duty of care independent of 

contractual obligations.” Id. ¶ 31. The court reasoned the type of relationship determines whether 

the professional services exception to the economic loss rule applies. Id.

 Although no Vermont cases address whether environmental consultants fall under the 

professional services exception, a few cases provide examples. EBWS held that construction 

contractors do not fall under professional services. Id. at ¶ 32. Lamell Lumber Corp v. Newstress 

International Inc. found a specialized kiln manufacture provided professional services. 2007 VT 

83, ¶ 16, 182 Vt. 282. Lamell also characterized a previous case involving an architect as a 

professional services case. See id.; see also Howard v. Usiak, 172 Vt. 227, 230, 237 (2001) (suit 

against architect). The court also distinguished a construction contractor from “an engineer, 

architect or other professional” while discussing the professional services exception. See Long 

Trail House Condo. Ass’n v. Engelberth Const., Inc., 2012 VT 80, ¶ 22. From that distinction, 

the Court infers architects and engineers qualify under the professional services exception. 

 Under these circumstances, the Court cannot rule environmental consultants are outside 

of the professional services exception. The Court requires facts to make this decision. As 

suggested in Long Trail House, architects and engineers are within the exception. See id. The 

Court would require facts relating to the practices of environmental engineers and information 

about the specific practices of ECS. The Court cannot decide whether environmental consultants 

fall within the professional services exception on the basis of this motion to dismiss alone. See 

Bock, 2008 VT 81, ¶ 4. 

 The Court must deny Defendant’s motion to dismiss. At least for a motion to dismiss, 

Defendant has well pleaded claims for assigned professional negligence, negligent 

misrepresentation, and breach of contract. See id. Nothing in this order changes the Court’s 

August 30, 2012 order on Defendant’s motion to dismiss. 

5. Plaintiff’s Motion to File a Surreply 

Defendant also argues the Court should deny Plaintiff’s motion to file a surreply because 

it raises no new legal issues. Vermont case law on when to allow surreplies is relatively 

undeveloped. See e.g., Needham v. Coordinated Apparel Grp., Inc., 174 Vt. 263, 265 n.1 (2002); 

Colchester v. Vt. Dep’t of Taxes, Nos. S0861-10 CnC, S0933-10 CnC, S1524-10, CnC, 2011 WL 

8472917 (Vt. Super. Ct. Aug. 24, 2011); In re: Appeal of Colchester, No. S0933-10 CnC, 2011 

WL 346535 (Vt. Super. Ct. Jan. 28, 2011). Judge Toor faced an opposition to a surreply because 
6 

it was not accompanied by a motion and recited cumulative arguments. Colchester, 2011 WL 

8472917, n.4. The court found neither “of those arguments as a reason to disregard the surreply.” 

Id. In a separate case, the court allowed a surreply to clarify the arguments and considered the 

response to the surreply. In re: Appeal of Colchester, 2011 WL 346535. 

The Court allows the Plaintiff’s surreply and Defendant’s response to the surreply to the 

extent it is helpful in clarifying the arguments. See id. In particular, the Court found the 

discussion of the Vermont survival of causes statute to be helpful and not duplicative of the 

arguments in the earlier filings. Accordingly, the Court grants the motion to file a surreply. 

Order

 The Court denies Defendant’s Motion to Dismiss. The Court grants Plaintiff’s motion to 

file a surreply. 

Dated at Newfane, Vermont on February, 2013 

 

 Karen R. Carroll 

 Superior Court Judge