Retrovest Associates, Inc. v. Bryant

Citations: 573 A.2d 281; 153 Vt. 493; 1990 Vt. LEXIS 39Docket: 86-213

Court: Supreme Court of Vermont; January 26, 1990; Vermont; State Supreme Court

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In Retrovest Associates, Inc. v. Thomas W. Bryant and Yola M. Carlough, the Supreme Court of Vermont affirmed a lower court's ruling that awarded damages to defendants Bryant and Carlough while denying plaintiff Retrovest Associates' request for foreclosure and attorney's fees. The case originated when the defendants hired Retrovest to inspect and renovate an old farmhouse in Stowe, Vermont. After identifying minor issues, the defendants purchased the property and allocated $40,000 for renovations, which included significant structural work that was not initially anticipated.

As renovations progressed, disputes arose over delays and rising costs, ultimately leading to the discovery that several structural components needed replacement. By October 1983, the parties renegotiated their financial arrangement, resulting in a note signed by the defendants for up to $20,000 to cover unpaid invoices. However, after failing to make payments according to the note's schedule, Retrovest initiated a foreclosure action in June 1984. The defendants countered with claims of duress and consumer fraud.

At trial, the jury dismissed the defendants' consumer fraud claim but awarded them $30,130 for breach of contract, while Retrovest received $23,000 for the October 24 agreement. The trial court later consolidated the verdicts, resulting in a net award of $7,130 to the defendants and dismissed the foreclosure action, denying Retrovest's request for attorney's fees. Retrovest appealed on three grounds: contesting the jury's damage award to the defendants, challenging the dismissal of the foreclosure claim, and disputing the denial of attorney's fees. The Supreme Court upheld the trial court's decisions.

The measure of damages for a contractor's breach of a construction contract is defined as the reasonable cost of reconstruction and completion, provided it does not lead to unreasonable economic waste. In this case, the jury evaluated substantial evidence regarding renovation costs and the parties' initial contract understanding. Despite conflicting evidence, the jury was tasked with determining damages based on available evidence, as difficulty in calculating damages does not prevent a reasonable estimation. The court affirmed the jury's $30,130 verdict, finding it supported by the evidence, despite the plaintiff's argument that the jury's calculation should align with specific amounts provided by the defendants' expert witness. The expert's lists indicated total repair costs of $57,800 and $16,325, but the jury had the discretion to accept or reject individual items and consider other evidence presented, including the defendants' testimonies about additional items and the importance of timely project completion. The jury's verdict could be justified through various theories, allowing for a broad range of damage amounts. The trial court consolidated the verdicts, ordering the plaintiff to pay the difference of $7,130, plus interest, concluding that no debt was owed to the plaintiff, thus making foreclosure unavailable.

Plaintiff asserts its right to foreclose on the note, claiming the jury verdict supports this position. Additionally, plaintiff seeks attorney's fees and costs totaling $11,175.28 based on an affidavit submitted post-trial. However, the jury's award of $23,000 raises questions about whether it was derived from the note, especially since the court had instructed the jury to consider the October 24 agreement as an executory contract, not strictly a promissory note. The verdict exceeded the maximum amount outlined in the note, suggesting the jury rejected the notion that the note defined the full agreement. If the verdict stemmed from an unwritten agreement rather than the note, foreclosure would not be a viable remedy, and each party would bear its own costs.

Even if the verdict related to the secured note, the trial court's denial of foreclosure was justified. A mortgage must be discharged when the underlying debt is settled, or when the mortgagor demonstrates an offset covering the debt. The court had issued a consolidated judgment that allowed for the defendants' counterclaim for fraud to offset the mortgage note. A mortgage debt can be negated by claims the mortgagee owes the mortgagor. If the mortgagor's damages from the mortgagee's breach exceed the note's amount, the mortgagor cannot be deemed in default.

The court's order effectively extinguished the debt underpinning the foreclosure action. Furthermore, foreclosure actions are inherently equitable, allowing the court to consider the overall circumstances of the case. Even if the verdicts were not consolidated, the trial court retains the authority to assess "the equities of the situation" before deciding on foreclosure. Lastly, the plaintiff's claim for attorney's fees and costs presumes the jury verdict was based on the note, which is not substantiated. Moreover, awarding attorney's fees in foreclosure cases is at the trial court's discretion.

In Vermont, even if a mortgage deed stipulates that the mortgagor will pay the mortgagee's attorney's fees in case of foreclosure, the court retains the discretion to determine what constitutes a "just" fee (12 V.S.A. 4527). In a relevant case, the trial court denied attorney's fees to the plaintiff after a jury found the plaintiff liable for fraud and deceit, concluding it would be unjust to grant fees to a party deemed a nominal "loser" after extensive evidence evaluation. The court's decision was affirmed, highlighting the trial court's appropriate discretion.

The action involved both legal and equitable claims, tried together with separate jury and court findings, following Vermont Rules of Civil Procedure (V.R.C.P. 39(d)). The jury's verdict came first, leading to the court's findings consistent with that verdict. Notably, the jury awarded the plaintiff an amount exceeding the promissory note's face value, indicating an understanding that the agreement extended beyond the note's limits. 

Defendants raised a jurisdictional claim regarding the plaintiff's appeal process, but this was dismissed earlier by the court. The plaintiff contested the rationale for the jury's verdicts, arguing inconsistencies; however, the court found that the two verdicts could coexist despite their tension. 

Evidence presented suggested that the jury considered various aspects of the case, including completion and repair costs, and the jury's conclusions were deemed rational. The jury's calculations appeared to align closely with the evidence presented, despite the defendants' counsel's claims regarding the methodology for determining the verdict. Lastly, the mortgage deed includes provisions for reimbursement of collection costs, including reasonable attorney's fees, in the event of default.