Tom Carroll Elec. Constr., LLC v. Ward, No. 290-6-1 0 Wmcv (Wesley, J., Nov. 12, 2010)

[The text of this Vermont trial court opinion is un official. It has been reformatted from the origina l. The accuracy of the text and the accompanying data included in the Vermont trial cou rt opinion database is not guaranteed.] S TATE OF V ERMONT S UPERIOR C OURT

Tom Carroll Electrical Construction, LLC │ Plaintiff │ │ W INDHAM U NIT , C IVIL D IVISION v. │ Docket No. 290-6-10 Wmcv Donald Ward │ Defendant │ │

Tom Carroll │ Plaintiff │ │ W INDHAM U NIT , C IVIL D IVISION v. │ Docket No. 291-6-10 Wmcv Donald Ward │ Defendant │ │

ORDER ON PLAINTIFF’S APPEAL OF SMALL CLAIMS JUDGMEN T

Introduction Plaintiffs Tom Carroll Electrical Company, LLC (“LL C”), by its non-attorney representative and sole shareholder, Thomas M. Carr oll, as well as Thomas M. Carroll (“Carroll”) personally and separately, appeal a sma ll claims judgment for $2,975 in favor of Plaintiffs against Defendant Donald Ward (“Ward”). Plaintiffs each filed small claims complaints alleging that Defendant Ward had wrongfu lly withheld and sold property of Plaintiffs that had been stored pursuant to an oral rental agr eement in a storage barn owned by Ward.

Ward counterclaimed for rent in arrears for use of the storage space. At a hearing consolidated to consider common legal issues as to the nature of the parties’ contract, Acting Judge Lawrence G. Slason determine d that Ward was liable to Plaintiffs for converting the property stored in the barn, and tha t Plaintiffs were liable to Ward for overdue2

rent. The Small Claims Court then ordered a furthe r hearing to determine damages. At the subsequent damages hearing, Acting Judge Lance Shad er consolidated the two claims brought by each Plaintiff into one action, held Defendant liab le to Plaintiffs jointly for the jurisdictional maximum of $5,000 for a single small claims case al though each Plaintiff had filed a separate complaint, reduced this amount by the amount of ren t Plaintiffs owed, and awarded Plaintiffs $2,975 total. Plaintiffs now appeal Judge Shader’s decision to of fset the amount of damages owed to Plaintiff by the amount Defendant was owed in overd ue rent, arguing that Defendant had already recovered that amount through the illegal sale of t heir property. Plaintiffs also challenge Judge

Shader’s decision to consolidate the two actions an d make them one case, which capped the amount of damages Plaintiffs could obtain to $5,000 . This Court affirms the judgment of the Small Claims Court in part and reverses in part, fi nding that Judge Shader did not abuse his discretion when he offset the amount of damages owe d to Plaintiffs by the amount they owed in overdue rent, but did commit an error when he faile d to differentiate between the claims for damages in the two actions, limiting the total to t he two claims to the jurisdictional amount for

one small claims action.

Small Claims Record As alluded to above, there were two separate Small Claims Court proceedings — one to determine liability, and another to assess and awar d damages. The Court will discuss relevant portions of the record. Hearing on Liability The facts found at the January 5, 2010 liability he aring appear in Judge Slason’s extensive Decision and Order on Liability dated Mar ch 19, 2010, and are briefly recited here.3

Plaintiff Carroll entered into a verbal agreement w ith Defendant Ward for rental of storage space within a barn owned by Defendant located in Wilming ton, Vermont. In addition to storing his own personal items in the space, Carroll also store d equipment and materials owned by his business, Tom Carroll Electrical Construction, LLC. However, Carroll failed to make any rental payments after March 2009, in default of his contra ctual obligation. After various failed attempts by Defendant to colle ct the rent or otherwise reach a settlement with Carroll, Defendant seized the prope rty stored in the barn and sold it in September 2009. From the sale of Plaintiffs’ property, Defen dant received $1,600 plus $400 for one month’s storage rent from one party, and $100 from another party, for a total of $2,100.

Defendant believed he was entitled to seize and sel l the property pursuant to the Vermont Self Storage Facility Act, 9 V.S.A. § 3901, et seq

. Carroll subsequently filed two small claims complai nts on October 6, 2009 seeking damages for loss of property seized and sold by Def endant. Carroll sought damages in the amount of $1,800 plus court costs for loss of his o wn personal property, and damages of $4,800 plus court costs on behalf of the LLC. Ward counte rclaimed for $300 against each plaintiff for

rent owed. After conducting the liability hearing, Judge Slaso n found Defendant liable to Plaintiffs for the wrongful sale and conversion of Plaintiffs’ property. The Court determined that Defendant did not comply with the statutory require ments of the Vermont Self Storage Facility Act, and thus could not avail himself of the remedi es or protections of the Act. The Court held that without a valid written rental agreement, the Act was not applicable as a matter of law. Decision and Order on Liability, 8. Further, even if the Vermont Self Storage Facility Act were applicable, the Court found that Defendant could no t avail himself of the statutory process for4

disposing of property stored without payment becaus e he had not published the notice of sale in a daily newspaper of general circulation. Id . Moreover, Defendant was found to have failed to sell the property in a commercially reasonable mann er, as he sold the storage items for the amount of rent owed without regard to the actual va lue of the supplies, equipment, tools or personal belongings. Id . at 9. Nevertheless, Judge Slason also found Plaintiff Car roll liable to Defendant for payment of monthly rent from April 2009 to September 2009, which totaled $2,100. Id

. at 11. Judge Slason ordered a hearing on damages at which Plaint iffs would have an opportunity to identify all items of property which were converted, identif y the owner of each item of property, and provide evidence of the value of the property and a ny damages for loss of use. Id . Judge Slason also stated that Defendant would have an offset aga inst Plaintiffs’ damages for the amount of monthly rent that was due and payable at the time o f conversion. Id

. Hearing on Damages On May 3, 2010, at the damages hearing before Actin g Judge Shader, Plaintiff Carroll appeared representing himself, and Defendant Ward w as accompanied by his attorney, Christopher Dugan. Prior to this hearing, Plaintif f Carroll had purported to amend the amounts previously claimed for each of the actions he filed . On the action to recover the value of his personal belongings, Carroll previously claimed $1, 800, but now claimed that the value of the property totaled $6,434,26. With respect to the LL C’s case, Carroll had claimed $4,800 in damages, but now alleged damages totaling $24,182.9 1. During the hearing, Defendant Ward contested the v alidity of the list of items Plaintiff identified as having been stored in the barn, stati ng that he had no recollection of many of the

items claimed. Ward maintained that he would have recognized many of the items had they in5

fact been in the barn since he himself was an elect rician like Carroll, with more than fifty years of experience. Plaintiff was also asked why he sta ted damages in the amount of $4,800 for the LLC and $1,800 for him personally in the original c laims, but was now alleging amounts far higher. Plaintiff responded that he had estimated those earlier figures in haste, but based on a more careful accounting following the hearing on li ability, became convinced that the new figures were more accurate. Plaintiff further ackn owledged that had he been more aware of the actual damages he incurred, he would not have broug ht the claims in Small Claims Court which is subject to a jurisdictional limit of $5,000 per action. Plaintiff asked the Court to award him the jurisdictional maximum of $5,000 for each claim mad e by the two Plaintiffs. Defendant countered by noting that Plaintiff had ample opport unity to amend the original claims and did not do so, and so should be bound to his original numbe rs. In his oral findings, Judge Shader expressed diffic ulty in assessing the fair market value of the items in the storage unit. Plaintiff conced ed that most of the items that were allegedly stored in the barn were used, yet Plaintiff only pr esented evidence of what the value of the items would be if they were purchased new. On the other hand, Judge Shader acknowledged problems with Defendant’s credibility, since he had been in a fiduciary position with respect to the property he seized and should have better accounted for what was in the barn and what was later sold. Resolving the conflicting evidence, Judge Sh ader expressed willingness to side with Carroll insofar as his original claims for damages were concerned, but not for the far greater amounts alleged in his revised accounting. Notwithstanding his findings as to the value of the property claimed in the two small claims actions, and apparently believing that the c onsolidated posture of the cases for hearing left him no other choice, Judge Shader stated that he wa s bound by the jurisdictional limit of $5,000.6

Describing it as something akin to ‘rough justice’, Judge Shader held that the original claims totaling $6,600 represented the fair market value o f the goods, reduced this amount to the jurisdictional maximum of $5,000, further reduced t his amount by the $2,100 credit Defendant was owed for overdue rent, and arrived at a figure of $2,900 plus expenses in favor of Plaintiff. The Court reasoned that this judgment would satisfy both parties as Carroll would be getting his original claim, and Defendant would be receiving th e amount of back rent he was owed. In response to Carroll’s vehement objection on grounds that there were in fact two separate claims made by two different plaintiffs, Defendant argued that Plaintiff originally filed the two claims as an “end around” way of avoiding the $5,000 juris dictional limit. The Court did not rule on this contention, but nonetheless stood by its judgm ent of $2,900 plus expenses in favor of

Plaintiff.

Standard of Review The scope of a Superior Court’s ability to review a determination of the Small Claims Court is limited. “The appeal is limited to questi ons of law,” and more specifically, whether the trial court applied the correct principles of law. V.R.S.C.P 10(d). The appeal must be “based on

the record made in the small claims court.” 12 V.S .A. § 5538. The Superior Court must accept the factual findings of the Small Claims Court unle ss they are clearly erroneous. Bartley-Cruz v.

McLeod , 144 Vt. 263, 264 (1984). As long as there is sub stantial evidence to support a trial court’s finding of fact, deference must be ascribed to that determination. “The evidence must be examined in the light most favorable to the prevail ing party, and the effect of any modifying

evidence must be excluded.” Jarvis v. Koss , 139 Vt. 254, 254-55 (1981).7

Analysis On appeal, and now represented by Norman Smith, Esq ., Plaintiffs raise two issues: (1) the Court failed to reduce its judgment for the rental amount due from Plaintiffs to Defendant by amounts received from the sale of the property; or in other words, the Court should not have set off any judgment rendered in favor of Plaintiff by any amount Plaintiff owed Defendant in overdue rent, and (2) the Court committed reversibl e error in combining the two actions for purposes of awarding damages. Each question will b e addressed below.

A. Set off Amount Plaintiffs argue that the total sale proceeds obtai ned by Defendant pursuant to the

unlawful conversion should have offset the total re nt due from Plaintiffs, resulting in no reduction in the judgment amount in favor of Plaint iffs. Accordingly, even assuming the proceedings had been properly consolidated into a s ingle case, the judgment should have been for $5,000, not $2,900. By Plaintiffs logic, offse tting the judgment by awarding Defendant a

credit for the amount of rent Plaintiff owed had th e effect of doubly rewarding Defendant, the wrongful converter, who already obtained the exact amount of rent that he was owed from the wrongful sale of Plaintiffs’ goods. This Court concludes that Judge Shader did not abu se his discretion in crediting Defendant for the amount of rent he was owed by Pla intiff. Judge Slason had already found that “Defendant will have an offset against Plaintiffs’ damages for the amount of monthly rent that was due and payable at the time of conversion,” an amount determined to be $2,100. This was consistent with fundamental principles of offset, b y which a plaintiff’s judgment may be reduced8

by the amount of a defendant’s counterclaim judgmen t. This requires a separate analysis for the basis for recovery under each claim. Fletcher Hill, Inc. v. Crosbie , 178 Vt. 77 (2005). The purpose of awarding damages for conversion is t o restore plaintiffs to the position they would have been had the wrongful conversion no t occurred. Ordinarily, the measure of damages is the fair market value of the property at the time and place of conversion. Gaylord v .

Hoar , 122 Vt. 146 (1960). Here, Judge Slason was not p ersuaded that the fair market value of the converted property was equivalent to the amount owed in unpaid rent, thus he ordered the further hearing on damages. Had Judge Shader concl uded after hearing all the evidence on damages that, in fact, the value of the converted p roperty was exactly the same as the amount of the unpaid rent, he would have entered judgment of $2,100 on each claim, resulting in a net judgment to Plaintiffs of zero. This would have pr operly reflected that Defendant’s counterclaim for rent had been extinguished by the value of the property he converted, leaving no liability for further damages as a result of the conversion since the property was worth no more than what

was owed in rent. By extending the logic to the facts actually found, it becomes apparent that Judge Shader’s application of a set off results in no “do uble recovery”. Rather, it grants to Plaintiff damages for any proven value of the converted goods that was above the amount applied against the rents owing. In the exact obverse of Plaintiff s’ argument, accepting their premise would put them in a better position than had the conversion n ever taken place. Defendant would effectively have to pay back to Plaintiffs the amount of the un paid rent. No viable theory of damages supports such a result.9

B. Consolidation of Claims Plaintiffs also appeal Judge Shader’s decision to c onsolidate the two claims brought by each plaintiff into one case, which effectively lim ited the Plaintiffs’ recovery to $5,000, the jurisdictional limit that a single plaintiff may se ek in a small claims action. 12 V.S.A. § 5531(a). Plaintiffs also argue that Carroll presented credib le evidence showing the value of his converted personal property to be worth $6,434.26, and the va lue of the LLC’s claim to be worth $24,182.91. Since both amounts exceed the jurisdic tional amount of $5,000, Plaintiffs maintain that they should have been awarded separate judgmen ts of $5,000 each. Because Judge Slason consolidated the matters and r endered a consolidated merits decision, Defendant maintains that no further chall enge is possible, because none of the parties appealed the liability ruling. V.R.S.C.P. 10. Alt ernatively, Defendant argues that Judge Shader’s damages award resulted from findings of fa ct which may not be overturned absent clear error. V.R.S.C.P 10 (d). This Court finds Defendant’s arguments unpersuasive . Judge Slason consolidated the two actions for efficiency purposes, as the two cla ims contained common questions of law and fact. Even if his ruling could be construed as hav ing limited Plaintiffs’ claims within the scope of a single case, it wouldn’t have been a final ord er subject to appeal since he specifically continued the proceedings for further consideration of damages. In any event, Judge Slason’s order gives no indication that he had concluded as a matter of law that Plaintiffs were entitled to seek only a single damages award. Indeed, Judge Sl ason explicitly found Defendant “legally liable to Plaintiffs for the wrongful sale and conv ersion of each Plaintiffs’ property .” Order, 12 (emphasis added). Further, Judge Slason found cred ible evidence at the liability hearing establishing that both personal and LLC property we re stored in the Defendant’s barn.10

In support of Judge Shader’s ruling, Defendant argu ed that it should be sustained because Plaintiffs’ strategy of filing separate claims for the loss of Mr. Carroll’s personal property, as well as for the converted business property held by the LLC, amounted to a so-called “end around” of the small claims jurisdictional limit. Yet, as stated above, Judge Slason made findings directly contradictory to this assertion, and his mandate for further proceedings on damages explicitly contemplated consideration of ev idence to identify property owned by the separate claimants. Furthermore, not only did Judg e Shader fail to make a ruling in response to Defendant’s “end around” argument, but his own find ings as to the reasonable basis for the losses claimed in each of the original complaints a re consistent with Judge Slason’s similar conclusions. These findings were reasonably suppor ted by the evidence, including Judge Slason’s findings that Mr. Carroll’s original estim ate of the value of the converted property owned by each Plaintiff was more credible than his subsequent efforts at a revised accounting. Thus, while Judge Shader cannot be faulted for limi ting Plaintiffs’ claims to the amounts originally sought, he erred by collapsing the two a ctions into one claim, holding himself limited by the $5,000 jurisdictional limit. Since Judge Shader found that Plaintiffs were entit led to the original amounts claimed by Mr. Carroll ($4,800 on behalf of the LLC and $1,800 personally), no remand is required to correct his error of law regarding a single jurisdi ctional limit. Rather, this Court will enter judgment against Defendant for these amounts. Howe ver, the judgments for each Plaintiff will be offset by the $2,100 that Plaintiffs owed Defend ant in back rent on pro rata basis per claim. Accordingly, this Court directs entry of a Small Cl aims Judgment in favor of Plaintiff LLC for $3,270 plus expenses, and entry of a Small Claims J udgment in favor of Plaintiff Carroll for $1,230 plus expenses.11 ORDER WHEREFORE it is hereby ORDERED : The judgment of the Small Claims Court is

AFFIRMED in part, and REVERSED in part. Entry of a Small Claims Judgment in favor of Plaintiff LLC shall issue for $3,270 plus expenses, and entry of a Small Claims Judgment in favor of Plaintiff Carroll shall issue for $1,230 p lus expenses.

Dated at Newfane, Vermont this 11th day of November, 2010.

_____________________________ John P. Wesley Presiding Judge