Opinion ID: 2754089
Heading Depth: 1
Heading Rank: 2

Heading: The Homeowners’ Appeal

Text: ¶ 18. In 2004, shortly after the Hayeses were killed in the car accident, the co-administrators of the Hayeses’ estates sent a letter to the homeowners in the subdivision stating that, effective immediately, the homeowners would be responsible for maintaining and plowing the subdivision’s roads. The homeowners refused to assume that responsibility, and the estates have continued to maintain the roads and water and sewer systems at their own expense throughout this litigation. ¶ 19. In the probate proceeding, the homeowners argued that when they bought their properties the Hayeses promised to maintain the roads at their own expense and eventually pave them and dedicate them to the Town. With respect to the water and sewer infrastructure, they argued that the Hayeses never disclosed to the homeowners that this infrastructure was privately owned, and instead led them to believe that they were directly connected to Town-owned facilities. They sought an order requiring the estates to fund the infrastructure maintenance pending dedication of the infrastructure to the Town. After a hearing, the probate court ordered the estates to set aside $1 million to inspect the subdivision’s water and sewer systems and make any necessary updates and repairs, to dedicate the updated systems to the Town, and to pave the subdivision’s roads and dedicate them to the Town. In so ruling, the probate court denied the estates’ objection to admission of the testimony of several homeowners regarding oral agreements between them and the Hayeses concerning maintenance of the subdivision’s roads, ruling that the testimony was admissible under an exception in the dead man’s statutes “to meet or explain the testimony of living witnesses produced against” them. 12 V.S.A. § 1603. ¶ 20. On appeal de novo to the superior court, the homeowners requested that the court order the estates to dedicate the infrastructure to the Town, to pay the Town $600,000 should the Town accept the dedication, and to maintain the infrastructure at the sole expense of the estates. In support of their request, they sought to prove that the Hayeses made an enforceable promise to the homeowners to maintain the roads and then dedicate them to the Town. They pointed to one deed, from the Hayeses to the Norses, which provided that maintenance of the roadway would be maintained by the Hayeses until such time as the roadway was turned over to the Town of Manchester. [6] The homeowners also sought to introduce testimony of various witnesses concerning the Hayeses’ intentions with respect to maintaining and dedicating the roads, and concerning various promises made by Richard Hayes to individual homeowners in connection with the maintenance and dedication of the roads. ¶ 21. The estates sought to exclude “the testimony of any witness concerning conversations with or representations of the decedents on the issue of the decedents’ responsibility for maintenance of any of the infrastructure at Mountain View Estates, the decedents’ plans for the ultimate disposition of the infrastructure, or any related matters,” based on the dead man’s statutes. See 12 V.S.A. §§ 1602-1603. The first statute precludes a party from testifying in his or her own favor when the other party to the contract in issue is dead, except, in relevant part, “to meet or explain the testimony of living witnesses produced against” that party. Id . § 1602(1). The second statute similarly restricts parties from testifying about contracts they had with persons no longer living when an executor or administrator is the other party to a proceeding. Id . 1603. ¶ 22. The homeowners and the Town argued that the co-administrators had waived any right to object to such testimony by testifying themselves to their parents’ intent regarding the maintenance and disposition of the infrastructure. ¶ 23. In a mid-trial decision, the superior court concluded that the dead man’s statutes applied, but that the estates “partially waived” the protections under the statutes by not objecting during the probate division hearing to Jeffrey Hayes’ testimony that his father intended to build out the infrastructure and dedicate it to the Town once it was finished. Concluding that testimony concerning Richard Hayes’s statements to others regarding his plan for the development and its infrastructure was admissible “to meet or explain the testimony of living witnesses produced against them,” the court ruled that testimony about statements of Richard Hayes regarding his plan for the development were admissible. However, the court declined to consider any testimony by any person concerning any particular promises or commitments made by Richard Hayes, as well as any testimony regarding Richard Hayes’s statements concerning financial responsibility for maintaining the infrastructure up to the time when it would be dedicated to the Town. ¶ 24. As a result of this ruling, the superior court declined to allow or consider [7] the testimony of a number of homeowners who would have testified that they relied on Richard Hayes’s promise to maintain the roads and ultimately dedicate them in agreeing to buy their properties. [8] The court apparently also struck testimony from the co-administrators themselves, both of whom testified that they knew their father had promised the homeowners that he would maintain the roads. [9] In particular, Deborah testified that her father had told her that he would maintain the roads until he turned them over to the Town, and that she knew her parents had promised to maintain the roadways for the homeowners until they were dedicated to the Town. Jeffrey likewise testified that he knew his father had told people that he would take care of the roads. ¶ 25. In its April 22, 2013 decision on the merits, the superior court first considered the enforceability of the alleged oral agreement to maintain and repair the roads, water, and sewer system. The court acknowledged that the statute of frauds generally bars claims regarding oral agreements concerning interests in real estate, but recognized that an equitable exception applies if the proponent of the agreement can show that (1) there was an oral agreement, (2) upon which they reasonably relied, (3) by changing their position so that they cannot be returned to their former position, and (4) the other party to the agreement knew of such reliance. In re Estate of Gorton , 167 Vt. 357, 361, 706 A.2d 947, 951 (1997). The court concluded that this exception did not apply because the homeowners failed to prove that they had an oral agreement with the developers for the maintenance and repair of the roads, water system, and sewer system until the Town accepted their dedication. Although the court found that the evidence presented at the trial established unequivocally that it was Richard Hayes’s intention, throughout his lifetime, to dedicate the subdivision water and sewer system to the Town, and to offer the roads to be accepted as public roadways for which the Town would assume maintenance responsibility, the court concluded that the homeowners had not adduced “any credible evidence tending to show that there was ever a meeting of the minds” on these matters. Accordingly, the court ruled that the homeowners were not entitled to an order requiring the estates to pay for ongoing maintenance to any part of the infrastructure, could not compel the estates to offer the infrastructure for dedication to the Town, and were not entitled to any funding from the estates to pay for inspecting or updating the sewer system. ¶ 26. The homeowners argue that the superior court committed reversible error by: (1) improperly applying the dead man’s statutes to exclude testimony concerning promises that the Hayeses made to certain homeowners; (2) concluding that they did not enter into a binding contract with the Hayeses; and (3) failing to consider their promissory estoppel argument. ¶ 27. The homeowners first contend that the superior court improperly applied the dead man’s statutes to exclude testimony from both the co-administrators and certain homeowners that Richard and Nadine Hayes had promised the homeowners that they would maintain the private roads in the subdivision until those roads were dedicated to the Town. According to the homeowners, the co-administrators’ testimony was admissible because the co-administrators were not parties to the alleged contract, and the homeowners’ testimony was admissible because it was presented in response to the co-administrators’ testimony concerning promises Richard Hayes had made to homeowners. We agree on both counts.
¶ 28. In essence, the dead man’s statutes restrict testimony concerning an alleged contract with a person who is no longer living. The statutes “must be construed in favor of the challenged witness” because they were enacted to allow testimony that was otherwise inadmissible at common law, rather than to create rules of disqualification, and because it “can be the cause of tremendous injustice by preventing proof of reasonable and valid claims.” In re Estate of Farr , 150 Vt. 196, 199, 552 A.2d 387, 390 (1988). ¶ 29. As noted, § 1602 precludes a party from testifying in his or her own favor when the other party to the contract is dead, unless certain listed exceptions apply, including when the testimony is presented to meet or explain the testimony of living witnesses produced against him or her. Section § 1603 is similar to § 1602 but applies only when an executor or an administrator is a party: “When an administrator is a party, the other party shall not be permitted to testify in his own favor, unless the contract in issue was originally made with a person who is living, . . . except . . . to meet or explain the testimony of living witnesses produced against him.” In this case, § 1603 applies because this dispute is between the co-administrators of the estates and the homeowners who allege that they had a contract with the decedents. See Farr , 150 Vt. at 198, 552 A.2d at 390. ¶ 30. In addition to the exceptions to disqualification recognized in these statutes, this Court has recognized that the disqualification of testimony based on the dead man’s statutes is waived if the party benefitting from the statutes acts inconsistently with the statutory disqualification by, for example, testifying in his or her own favor to the contract at issue or examining the disqualified party about the contract. Id . at 199, 522 A.2d at 390. The benefitting party must act consistently with the statutory disqualification “at all stages of the proceeding to avoid a finding of waiver.” Id . at 199, 552 A.2d at 390 (affirming trial court’s finding of waiver where party seeking benefit of disqualifying statute testified as to intent underlying contract in question). “Thus, failure to object in the probate court will be a waiver of the disqualification for all further proceedings.” Id . ¶ 31. With respect to the superior court’s reliance on the dead man’s statutes to exclude testimony by either of the co-administrators, that decision was erroneous for two reasons: neither of the co-administrators was a party to the alleged contracts and neither of them testified in their own favor. With respect to the co-administrators’ testimony, this case is governed by In re Estate of Maggio , 2012 VT 99, 193 Vt. 1, 71 A.3d 1130. That case involved the terms of an agreement to dissolve a partnership between a decedent and a living party. The trial court ruled against the estate, in part based on interrogatory answers by the decedent’s widow, and primary beneficiary, describing her understanding of the terms of the partnership dissolution between decedent and the other party. The decedent’s widow appealed, arguing, among other things, that the trial court’s reliance on her sworn testimony about the terms of the contract ran afoul of the dead man’s statutes. ¶ 32. We affirmed, ruling in relevant part that the dead man’s statutes did not preclude admission of the widow’s answers to interrogatories concerning her understanding of the terms of the dissolution of a partnership agreement between the decedent and his former partner for two independent reasons: the wife had not been a party to the agreement between her husband and his former partner, and the widow’s answers to interrogatories were to her detriment rather than in her favor. Id . ¶ 19. The statutes bar testimony only by surviving parties to a purported contract, not other witnesses with knowledge of the agreement. Id . Moreover, the statutes preclude living parties to a contract with a decedent from testifying in their own favor , not from offering testimony against their own interests. Id . ¶ 33. Similarly, in this case, although the co-administrators are heirs to their parents’ estates, neither of them was a party to the alleged oral contracts between Richard Hayes and the homeowners. Nor can their testimony regarding their father’s promises to dedicate the infrastructure to the Town upon completion of the subdivision and to maintain the subdivision roads until that time be considered testimony in their favor. As noted above, Jeffrey Hayes testified that he knew from his parents’ arguments and from letters given to homeowners that his father had told the homeowners he would take care of the subdivision’s roads, and Deborah Hayes-McGraw testified that her father told her he would maintain the roads until they were dedicated to the Town and that she knew her parents had made such promises to the homeowners in the subdivision. Because Jeffrey Hayes was not a party to the alleged oral agreements and neither he nor Deborah Hayes-McGraw testified in the estates’ favor, the dead man’s statutes did not bar their testimony concerning promises their father had made to homeowners about maintaining and dedicating the subdivision’s infrastructure. [10] Thus, the superior court erred by excluding from consideration any of their testimony.
¶ 34. We also conclude that the superior court erred by excluding testimony that the homeowners presented, or would have presented, concerning statements Richard Hayes made to them about maintaining and dedicating the subdivision’s infrastructure. This testimony fits within the statutory exception of testimony made “to meet or explain the testimony of living witnesses produced against them”—in this case, the co-administrators. 12 V.S.A. § 1603. Although the co-administrators’ testimony noted above was not made in their favor, the co-administrators were witnesses produced against the homeowners, and their testimony could be construed as establishing the full extent to which promises were made to the homeowners. Once the co-administrators broached the subject of promises made to the homeowners in their testimony, the homeowners had the right to meet or explain the nature and extent of those promises. ¶ 35. The homeowners’ response to the co-administrators’ testimony should not have been limited to testimony concerning Richard Hayes’s general intentions concerning maintenance and dedication of the roadways. The co-administrators’ testimony—including the testimony that should not have been excluded from consideration by the superior court—opened the door under § 1603 to testimony concerning the scope and the details of specific promises made to specific homeowners about maintenance and dedication of the roadways. Cf. Abbiati v. Buttura & Sons, Inc. , 161 Vt. 314, 321-22, 639 A.2d 988, 992-93 (1994) (concluding that objection based on dead man’s statutes waived where plaintiff opened door in her case-in-chief). ¶ 36. Further, the superior court’s erroneous decision to exclude from its consideration most of the co-administrators’ and homeowners’ testimony concerning promises that the Hayeses had made to the homeowners was plainly prejudicial. Disregarding that testimony, the court found no meeting of the minds as to those promises concerning real estate and thus refused to enforce the oral promises as an equitable exception to the Statute of Frauds. If the superior court had considered all of the testimony of the co-administrators concerning their parents’ promises to homeowners, and the specific testimony of several homeowners indicating that they relied upon promises the Hayeses made to them about maintenance of the infrastructure pending its dedication to the Town, the court could have concluded that the equitable exception to the Statute of Frauds applied. See In re Estate of Gorton , 167 Vt. at 362, 706 A.2d at 951 (holding that court may enforce oral agreement for transfer of land where plaintiffs can show existence of agreement upon which other party knew plaintiffs had reasonably relied by irretrievably changing their position). Accordingly, the matter must be remanded for the superior court to consider the additional evidence and to determine anew whether there were enforceable promises concerning maintenance of the infrastructure pending its dedication to the Town. [11] The court may take additional evidence if necessary to arrive at an informed decision.
¶ 37. Finally, the homeowners argue that the superior court failed to consider their promissory estoppel argument. The doctrine of promissory estoppel applies “where there is no contract, where the promise is gratuitous, and there is unbargained-for reliance.” Big G Corp. v. Henry , 148 Vt. 589, 594, 536 A.2d 559, 562 (1987) (quotation omitted). At trial, the homeowners argued that they relied upon an oral promise as part of an agreement for the sale of real property. On remand, the superior court should address the homeowners’ promissory estoppel argument as an alternative theory of recovery. Affirmed in part, reversed in part, and remanded for further proceedings concerning the homeowners’ claims . FOR THE COURT: