Opinion ID: 2071319
Heading Depth: 1
Heading Rank: 2

Heading: Costs of Defending Previous Action

Text: As with the lost-profits claim, defendant argues that plaintiffs' claim for defense costs was barred by the three-year statute of limitations contained in 12 V.S.A. § 512(5). We reject this argument for reasons similar to those stated earlier with respect to the claim for lost profits. Here, the nature of the injury is loss of money  specifically, attorney's fees  due to defendant's failure to properly survey plaintiffs' real property. Thus, once again, the nature of the injury is not damage to personal property, and the three-year statute of limitations is not applicable. See Fitzgerald, 155 Vt. at 293, 583 A.2d at 601 (six-year statute of limitation governs claim seeking reimbursement from attorney for costs associated with securing return of child). As we stated before, if we were to consider every award of money damages to constitute damage to personal property, irrespective of the source of the damages, then all contract actions would be subject to a three-year statute of limitations, contrary to established law.
Defendant next claims that the court erred in concluding that the engineering firm's wrongdoing was a proximate cause of plaintiffs incurring legal costs to defend the first count of the Burke complaint, which alleged that the Bulls were negligent in failing to cause a marker to be placed in the northeastern corner of the lot they sold to the Burkes. We find no merit to this argument. The evidence indicated that (1) in April 1990, approximately fifteen months before the Burkes purchased their lot from plaintiffs, plaintiffs asked defendant to set the pins for the phase three lots, including lot five; (2) plaintiffs and Mr. Hinsdale reasonably assumed that defendant put the pins in place in May 1990 and then again in the spring of 1991; (3) in July 1991, when the Burkes reported that they could not find the northeastern corner pin on their lot, Mr. Hinsdale and Mr. Bull searched for the pin without success; (4) Mr. Hinsdale called defendant and was informed that the pin had not yet been set; (5) Mr. Hinsdale informed defendant that the pin needed to be placed; (6) the pin was not placed until September 11, 1991; (7) some time between July and September 1991, Mr. Hastings poured a foundation for the Burkes' house; and (8) when defendant finally set the northeastern corner pin for the lot five on September 11, 1991, it became clear that Mr. Hastings had extended the foundation onto an adjoining lot. Given these facts, the trial court correctly concluded that plaintiffs' defense costs were proximately caused by defendant's wrongdoing. Seizing upon the trial court's observation that this is not a true indemnity case because the Burkes did not prevail in their suit against the Bulls (and thus the Bulls were not legally obligated to the Burkes), defendant argues that plaintiffs are not entitled to costs incurred in contesting a count alleging that they, and not defendant, were negligent. Again, this argument has no merit. There is a substantial body of case law which holds that where the wrongful act of one person has involved another in litigation with a third person or has made it necessary for that other person to incur expenses to protect his interests, litigation expenses, including attorney's fees, are recoverable. Albright v. Fish, 138 Vt. 585, 591, 422 A.2d 250, 254 (1980); accord Wyatt v. Palmer, 165 Vt. 600, 602, 683 A.2d 1353, 1356-57 (1996) (mem.). Regardless of whether indemnity is the correct label for this action, Vermont law entitles plaintiffs to seek compensation for their loss, and, without question, a proximate cause of that loss was defendant's wrongdoing. If not for defendant's wrongdoing, plaintiffs would not have incurred legal costs in defending against the Burke lawsuit.
Defendant also asserts that the doctrine of issue preclusion bars plaintiffs from recovering their costs related to defending count two of the Burke suit, a breach-of-warranty claim. The Burkes claimed that they did not receive good title to their lot because the survey that defendant had performed for the Bulls erroneously identified the compass bearing for the eastern boundary of the lot. According to defendant, the doctrine of collateral estoppel precludes plaintiffs from recovering costs in defending against this claim because in the Burke case plaintiffs argued, and the trial court ruled, that the bearing reference was correct. This argument is not persuasive. Collateral estoppel, or issue preclusion, bars the subsequent relitigation of an issue that was actually litigated and decided in a prior case between the parties, so long as there was a final judgment on the merits and the issue was necessary to resolution of the action. See Longariello v. Windham Southwest Supervisory Union, 165 Vt. 573, 574, 679 A.2d 337, 338 (1996) (mem.); American Trucking Ass'ns v. Conway, 152 Vt. 363, 370, 566 A.2d 1323, 1328 (1989). The elements of issue preclusion are the following: (1) preclusion is asserted against one who was a party or in privity with a party in the earlier action; (2) the issue was resolved by a final judgment on the merits; (3) the issue is the same as the one raised in the later action; (4) there was a full and fair opportunity to litigate the issue in the earlier action; and (5) applying preclusion in the later action is fair. Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265, 583 A.2d 583, 587 (1990). Here, at least two of the five elements are not met. First, the issues in the two cases are not the same. In the Burke litigation, the issue was whether the Bulls had breached the warranty of title. In holding that they had not, the superior court stated that the bearings in the survey were internally consistent and thus correct for the purposes of [transferring] title. Therefore, the Burkes received title to the property shown as lot five on the Steeplewood survey, and no breach of warranty occurred. In contrast, at issue in the present action is whether the bearing is incorrect in relation to magnetic north, and whether that error led to the expenses incurred by plaintiffs in the Burke litigation. Because the issues in the two cases are not the same, collateral estoppel does not apply. See American Trucking, 152 Vt. at 369, 566 A.2d at 1327-28. Second, plaintiffs did not have a full and fair opportunity in the Burke proceedings to litigate the principal question at issue in the instant case. In determining whether collateral estoppel should apply, courts must look to the circumstances of each case, including, among other things, the incentive for the party (against whom estoppel is claimed) to litigate the issue. See State v. Stearns, 159 Vt. 266, 269-70, 617 A.2d 140, 141-42 (1992); Trepanier, 155 Vt. at 265, 583 A.2d at 587. Here, plaintiffs had no incentive to convince the factfinder in the Burke litigation that the bearings on lot five as depicted in defendant's survey were incorrect in relation to magnetic north. The only fair and reasonable way for plaintiffs to litigate this issue in the context of the Burke litigation was to file a cross-claim against defendant. They did so, raising essentially the same allegations that they make in the instant action. By stipulation, defendant and plaintiffs agreed to dismissal of the claim in the Burke litigation without prejudice. Collateral estoppel does not bar plaintiffs' claim here.
Defendant's final argument is that the court's award of $15,391 in legal fees associated with the first two counts of the Burke litigation is based on hearsay evidence and is otherwise unsupported by the record. At trial, plaintiffs submitted an exhibit that included all of the legal bills that they incurred in defending against the Burke lawsuit. The first two pages of the exhibit summarized the bills and allocated the expenses attributable to the first two counts of the Burke complaint. Defendant objected only to those first two pages of the exhibit, arguing that they were inadmissible under the hearsay rule because plaintiffs' attorney was not a witness and was not available for cross-examination. Defendant makes the same argument here, further contending that, absent the two pages allocating defense costs, the court's award is unsupported by any evidence and thus cannot stand. We find no abuse of discretion. The attorney for the Hinsdales, co-defendants in the Burke litigation, testified that plaintiffs' attorney was conservative in allocating defense costs attributable to counts one and two of the Burke complaint, given that at least seventy-five percent of the Burke trial concerned defendant's negligence in preparing the survey and its failure to place the northeastern corner pin on lot five in a timely manner. As for pretrial costs, the bills for legal services received after the Burkes added additional counts to their complaint indicated what fees were attributable to which counts. In short, even excluding the first two pages of the exhibit, the court's award is amply supported by the bills entered into the record, the testimony of the attorney for the Hinsdales, and the transcript from the Burke proceedings.