Court: District Court, D. Vermont; July 30, 2015; Federal District Court
Plaintiffs John Ruggieri-Lam and Maria L. Fredurra initiated legal action against Oliver Block, LLC, alleging breach of contract and breach of the covenant of good faith and fair dealing related to the sale of a commercial building in Woodstock, Vermont. They are seeking specific performance and have filed a petition for a writ of attachment on the property, asserting a high likelihood of success on their breach-of-contract claim.
The case's factual background indicates that both plaintiffs are principals of Stonewall of Woodstock Corp., which operates a restaurant in a building owned by Oliver Block. The sole owner of Oliver Block is Dr. Richard Coburn, who also owns other properties in the Woodstock area. Since beginning their lease two years prior, plaintiffs expressed interest in purchasing the French-Cabot building, but Dr. Coburn had consistently refused to sell.
On April 1, 2015, Dr. Coburn sent a fax to Mr. Ruggieri-Lam regarding a purchase proposal for the French-Cabot building, which included terms of sale and other property details. He also reached out to other potential buyers but did not disclose this to the plaintiffs until June 2015. Following the fax, negotiations ensued, and by late May, the plaintiffs offered to buy the French-Cabot building for $1,425,000 with seller financing and a $25,000 down payment. Dr. Coburn responded by instructing his attorney to draft a purchase and sale agreement.
Plaintiffs received a first draft of a purchase and sale agreement from Mr. Urso and requested revisions. On June 2, 2015, Mr. Urso emailed an unsigned agreement for the French-Cabot building, outlining a purchase price of $1,425,000 and a $25,000 deposit. The plaintiffs signed the agreement and returned it with the deposit. Mr. Urso confirmed receipt of the signed agreement and deposited the check into his law firm's trust account. However, Dr. Coburn, representing Oliver Block, never signed the agreement. Despite multiple requests for Dr. Coburn's signature, Mr. Ruggieri-Lam believed it unnecessary for legal validity but thought it would facilitate closing.
Unbeknownst to the plaintiffs, Dr. Coburn was negotiating with other buyers, including Ken Sturm, who was interested in both the French-Cabot building and the Morgan Block. After Mr. Sturm was made aware of the plaintiffs' offer, he submitted a competing offer that included a $50,000 deposit. By June 11, 2015, Dr. Coburn communicated new terms for the sale, including a purchase price of $1,640,000 for the French-Cabot building and $800,000 for the Morgan Block, alongside a $50,000 down payment and 6% interest rates.
On June 15, 2015, during a meeting with plaintiffs, Dr. Coburn indicated he had received a better offer but allowed the plaintiffs to respond. They negotiated terms, expressing willingness to revise their offer to match the new prices and interest rates. During this meeting, plaintiffs also requested a key to a portion of the property ("the wedge") for temporary housing for an employee, which Dr. Coburn provided. They subsequently began preparations to clean the area for use.
Dr. Coburn sold buildings to Mr. Sturm’s company under a revised agreement that stipulated the same purchase prices but included higher initial principal payments and interest rates. On June 16, 2015, Mr. Ruggieri-Lam emailed Mr. Sbeglia expressing concerns about potential misconduct in their real estate dealings, highlighting a previously firm agreement for the Woodstock Property sale and dissatisfaction with being potentially sidelined in favor of another party. Mr. Sbeglia responded within two hours, asserting that Dr. Coburn had provided an opportunity to match a competing offer essential for resolving significant title issues. On June 22, 2015, Mr. Urso returned the plaintiffs' deposit, and the following day, the plaintiffs filed a lawsuit claiming anticipatory breach of contract and breach of the covenant of good faith and fair dealing, seeking specific performance.
Under Rule 64 of the Federal Rules of Civil Procedure, federal court litigants can seek prejudgment remedies available in the state where the court is located. Vermont Rule 4.1 allows for the attachment of real estate to secure potential judgments. For an order of attachment to be issued, the court must find a reasonable likelihood that the plaintiff will recover a judgment equal to or greater than the attachment amount. The burden of proof lies with the plaintiff to demonstrate this likelihood, which should be supported by affidavits and evidence presented at a hearing. Additionally, the court considers defenses and evidence from the defendant.
Oliver Block contends that the plaintiffs have not established a reasonable likelihood of success due to noncompliance with Vermont’s statute of frauds, which requires certain contracts, including those for the sale of real estate, to be in writing and signed by the party being charged.
The statute of frauds aims to ensure the seriousness of land transactions and protect them from unreliable oral testimony. It requires that contracts for the sale of real estate include signatures, identification of parties, property description, and price, though not every detail must be written. In this case, the plaintiffs argue that an email from Mr. Urso, which included an attachment of the Agreement, constitutes a signed offer that they accepted. The court disagrees, highlighting that the lack of a signature from Dr. Coburn or an authorized representative undermines the plaintiffs' claim. The statute of frauds mandates that contracts for real estate must be signed by the party against whom enforcement is sought or by a representative with written authority.
The court notes that unsigned offers in real estate transactions are generally unenforceable, contrasting this with the sale of goods, where certain conditions may allow enforcement without a signed contract. The plaintiffs present several arguments for enforcement, asserting that Mr. Urso’s signed email satisfies the statute, that various markings on the Agreement constitute a signature, that the statute does not apply to unsigned contracts previously prepared by the enforcing party, and that the statute is limited to instances reliant solely on oral testimony.
However, the court emphasizes separating contract formation from the statute of frauds requirements, acknowledging that while the statute allows for multiple writings to form a contract, at least one must bear the signature of the party to be charged. The statute anticipates a signed contract by both parties, with an exception allowing for a single signature from the party to be charged. The court ultimately reinforces that a written agreement signed by both parties is fundamental under the statute of frauds.
A written contract can be enforced against a party who signed it, even if the other party has not signed, provided the essential elements of offer, acceptance, and consideration are met. According to Vermont law, particularly the case First Nat. Bank of St. Johnsbury v. Laperle, a written offer can suffice as a memorandum if the person making the offer is the party to be charged. For contracts under the Statute of Frauds, any writing signed by or on behalf of the party to be charged must indicate that a contract has been made or offered. Vermont case law mandates that the offer must be in writing and signed by the opposing party or their authorized representative.
In this instance, an email dated June 2 referenced an attached Agreement containing all necessary terms and was signed electronically by "Frank" Urso, which is valid under the statute. However, there is no evidence that Dr. Coburn provided written authorization for his lawyer to offer to sell Oliver Block’s land, which is required by the Statute of Frauds. Both the signature and evidence of the agent's authority to sign are critical under Vermont law, as established in Pike Indus. Inc. v. Middlebury Assocs. and Couture v. Lowery.
The plaintiffs argue that written authorization is unnecessary if the agency relationship is undisputed, but they fail to provide supporting case law, contradicting established requirements. The case cited by plaintiffs, Right Printing Co. Inc. v. Stevens, does not exempt attorney agreements from the Statute of Frauds requirements. Since there is no written authorization from Dr. Coburn allowing Mr. Urso to offer the sale, the email signature does not fulfill statutory requirements. The court notes that while there is no dispute about the document's authenticity, the lack of a proper signature prevents enforcement under the Statute of Frauds. The statute aims to prevent deception and establish clear rules for enforceability, with a signature being essential for binding parties. Consequently, without a valid signature, the Agreement cannot be enforced.
The statute of frauds does not exempt an unsigned agreement from its requirements based on Vermont case law. While exceptions exist, such as a party being bound by an oral agreement when the other side has signed, the precedent set in First Nat'l Bank of St. Johnsbury v. Laperle clarifies that both parties must sign to establish obligations, which is not the case here. The plaintiffs failed to demonstrate that the statute of frauds applies only when the sole basis for enforcement is oral testimony; the statute accommodates situations where a written contract is transmitted by an agent. However, Mr. Urso lacked the authority to bind Oliver Block in a contract, and the court does not need to determine his authority since a valid contract formation was not established. The requirements of a writing and a signature are independent, and an unsigned document does not exempt the plaintiffs from proving both. The court finds the application of the statute of frauds fair, noting that both parties are experienced in real estate. The defendant's conduct indicated an effort to solicit multiple offers without a written commitment. Since the plaintiffs could not provide a signed agreement, they did not meet the statute's standards. The court refrains from addressing the offer and acceptance issues due to the statute of frauds being sufficient for dismissal. Even if an agreement was reached, the plaintiffs could not show they relied on it in a way that would justify specific performance, as their actions did not significantly alter their relationship with the defendant. Consequently, the plaintiffs’ petition for a writ of attachment on Oliver Block’s property is denied.
