









2014 VT 127










Ring v. Carriage House
Condominium Owners’ Association, Maroldt, Morrison and Beck (2013-419)
 
2014 VT 127
 
[Filed 21-Nov-2014]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 



2014 VT 127



 



No. 2013-419



 



David Ring


Supreme Court




 


 




 


On Appeal from




     v.


Superior Court, Lamoille Unit,




 


Civil Division




 


 




Carriage House Condominium
  Owners’ Association, Thomas Maroldt, Edward Morrison and Donna Beck


June Term, 2014




 


 




 


 




Alden
  T. Bryan, J. (Ret.), Specially Assigned




 



Steven H. Atherton, Northfield Falls, for
Plaintiff-Appellant/Cross-Appellee.
 
Brice Simon of Breton & Simon, PLC, Stowe, for
Defendant-Appellee/Cross-Appellant Beck.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Robinson and
Crawford, JJ.[1]
 
 
¶ 1.            
SKOGLUND, J.   This appeal is the culmination of a
longstanding feud stemming from plaintiff David Ring’s renovation of his
recently purchased condominium units and resulting in multiple legal
proceedings as well as several superior court decisions.  Ring argues that
the superior court erred in awarding him only a fraction of his requested
attorney’s fees after determining, following a lengthy bench trial, that
defendants—the condominium owners’ association and some of its individual
members—had breached the covenant of good faith and fair dealing implied in the
parties’ earlier settlement agreement.  He also argues that the court
erred in denying his request for pre-litigation attorney’s fees and prejudgment
interest.  Defendant Donna Beck cross-appeals, arguing that the court
erred in assessing punitive damages against defendants and holding her liable
for punitive damages attributable to her deceased husband, defendant Edward
Morrison, based on her real estate partnership with him.  We affirm.
I.
Facts and Procedural History
¶ 2.            
The membership of Carriage House Condominium Owners’ Association
includes several owners of condominium units in two buildings comprising a
commercial condominium located on Main Street in the Town of Stowe.  In
1996, Ring, a licensed engineer and surveyor, purchased two unfinished units
located in the hayloft space of a former barn, one of the two buildings. 
Among the other unit owners was defendant Thomas Maroldt, who owned a unit in
the barn, and Beck and Morrison, who owned four units, including one in the
barn.  At the same time Ring purchased his units, he obtained rights from
the condominium declarant that allowed him to develop the units without
obtaining approval from the Association.  Association members believed
that the declarant’s development rights either already had been, or could only
be, transferred to the Association.  Ring’s asserted ownership of the
development rights led to legal actions to clarify ownership of those
rights.  When Ring obtained a building permit, the Association sued him
and appealed the Town of Stowe’s issuance of the permit.
¶ 3.            
These disputes were resolved by a 2001 settlement agreement that is at
the heart of the instant case.  Essentially, Ring agreed to give up his
claim to the declarant’s development rights, and the Association agreed to
allow Ring to build the permitted addition, as long as the roof and floor were
“structurally sound” and there was no negative stress impact on the other
units.  A year after the settlement agreement was signed, Maroldt sued
Ring and joined the Association as a necessary party.  Maroldt alleged,
among other things, that Ring was engaged in construction without the
Association’s approval.  Ring counterclaimed, arguing that the Association
had wrongfully withheld its approval.  The lawsuit went to trial in March
2003, and Ring prevailed.  The jury awarded Ring $3600 for his increased
costs resulting from the Association’s violation of the settlement agreement.
¶ 4.            
Six days after the jury verdict, notwithstanding the jury’s conclusion
that Ring had not violated the settlement agreement, the Association sent a
letter to the town zoning administrator stating that Ring’s construction was not
in compliance with the settlement agreement.  The Association also hired
an engineering firm to look into its concerns about the structural integrity of
Ring’s addition.  Based on its understanding that Ring did not intend any
additional structural support for his project, the engineering firm found that
the structure did not meet code requirements.  By May 2003, Ring realized
that the structural impacts of his addition would have to be addressed, and
that cooperating with the Association’s engineering firm would be the easiest
and least expensive way to do so.
¶ 5.            
By the end of September 2003, Ring was agreeable to a plan devised by
the Association’s engineering firm, but some members of the Association,
including Maroldt, Morrison, and Beck, were not.  As the result of letters
from Maroldt and Morrison, the Department of Labor and Industry had another
engineering firm assess the building’s structural systems.  Pressured by
the Department, the Association had its engineering firm come up with another
plan to make Ring’s project structurally sound.  In December 2003, Ring
accepted the new plan and submitted it to the Department, which indicated that
it was satisfied.  Ring went ahead with construction and completed the
work in 2004.  After a final inspection in October 2004, the Association’s
engineering firm wrote a letter to the Association stating that the work had
been completed according to its recommendations.
¶ 6.            
Meanwhile, in July 2003, Maroldt wrote a letter to the Office of
Professional Regulation making allegations against Ring in connection with his
work on the condominium units.  In March 2005, the Vermont Board of
Professional Engineering filed various charges against Ring, all of which were
eventually dismissed following a hearing before the board.  In May 2005,
after Ring had applied for a certificate of occupancy, the Association’s
attorney wrote a letter to the zoning administrator questioning whether the
town could issue a permit for a structurally unsound project such as Ring’s
appeared to be.  The superior court later found that defendants intended
the letter to make it as cumbersome and expensive as possible for Ring to get
his certificate of occupancy.  In the end, despite defendants’ efforts to
thwart his project, Ring was eventually able, with the aid of an attorney, to
renew his zoning permit, which had expired in December 2003, and to obtain a
certificate of occupancy.
¶ 7.            
In July 2006, Ring sued the Association and some of its members,
alleging that they had, by their conduct since the March 2003 jury verdict,
violated the express terms of the 2001 settlement agreement and its implied
covenant of good faith and fair dealing.  Ring sought compensatory and
punitive damages, as well as attorney’s fees.  Defendants asserted several
counterclaims on a variety of theories.  On April 2, 2012, following an
eleven-day bench trial, the superior court determined that Ring was entitled to
$1230 in compensatory damages and $3000 in punitive damages from Maroldt.
¶ 8.            
In arriving at this decision, the court found a “shared responsibility
for David Ring’s troubles in undertaking and completing his project.” 
According to the court, Ring’s questionable purchase of declarant’s development
rights, although seemingly resolved by the 2001 settlement agreement, festered
and established a tone of mistrust.  For their part, although defendants
had legitimate concerns about the structural impacts of Ring’s project and were
understandably put off by Ring’s initial reluctance to discuss his plans to
address those concerns, they continued their efforts to thwart his project long
after the structural concerns had been addressed to the satisfaction of the
state and their own engineering firm.  In determining that defendants had
violated the settlement agreement’s implied covenant of good faith and fair
dealing, the court found that defendants repeatedly engaged in actions to
harass Ring and obstruct his project, even after their legitimate concerns were
satisfactorily addressed, despite their promise to allow the project’s
completion in exchange for his relinquishment of the declarant’s development
rights.  The court concluded that these actions undermined Ring’s right to
receive the benefit of the settlement agreement.
¶ 9.            
The court, however, rejected Ring’s request for nearly $45,000 in
compensatory damages because the requested amount included work that was not
the result of the breach found by the court and because Ring had used an
unreasonably inflated hourly rate to calculate the damages.  Regarding
Ring’s claim for punitive damages, the court concluded that Maroldt’s conduct
warranted an award of $3000, but that the actions of the Association and Beck
“were neither outrageous nor malicious enough to warrant punitive damages,”
given Ring’s own role in fomenting a mistrust and ill will among the
parties.  The court acknowledged that Morrison, Beck’s late husband and
business partner, had, along with Maroldt, continued the fight against Ring
long after any legitimate concerns over Ring’s project had been resolved; the
court, however, noted that Morrison’s estate had not been made a party to the
suit and expressed its belief that the estate could not be held liable for
punitive damages.[2]
¶ 10.        
In response to Ring’s motion to amend, the court increased Ring’s
compensatory award to $4000 and considered whether Beck could be held liable
for any punitive damages assessed based on Morrison’s conduct.  The court stated
that it was mistaken in assuming that Morrison or his estate had been
effectively dismissed from the case, noting that Ring had consented to
substituting Beck and the Association for Morrison “for all purposes in this
action.”  The court stated that, pursuant to the substitution order, Beck
would stand in Morrison’s shoes for all purposes, including the imposition of
punitive damages.  The court then went on to find that Morrison had acted
in bad faith in making repeated attempts to halt or delay Ring’s project by
resurrecting issues that had been resolved and making claims that had no basis
in fact, thereby warranting a punitive damages award against him in an amount
to be determined following a hearing.  The court reiterated that Beck
would be liable for punitive damages attributable to Morrison, but noted that
although Beck signed documents as an Association member and voted with Morrison
and Maroldt at Association meetings, her own conduct, in and of itself, did not
exhibit the type of malice or ill will warranting punitive damages.
¶ 11.        
The superior court later issued two more decisions regarding punitive
damages.  In the first one, the court concluded that no judgment could be
entered against Morrison or his estate for punitive damages, and that Beck
could not be liable for punitive damages attributable to Morrison’s conduct
based on the substitution order, as it had previously determined, because such
an order under Vermont Rule of Civil Procedure 25 is procedural in nature and
does not create survival rights or liabilities.  Nevertheless, the court
determined that Beck should be held jointly and severally liable as her late
husband’s business partner because she and Morrison “together as a partnership
plotted against Mr. Ring, voted in meetings, and made demands on Mr. Ring in
the course of the development of his project.”  The court further stated
that Beck, as Morrison’s partner in their jointly held condominium units, “went
along with all the actions Mr. Morrison took to obstruct the process.”  In
a second subsequent decision on punitive damages, the court increased the award
based on Maroldt’s conduct from $3000 to $8000 and established an award of
$24,000 for Morrison’s conduct, for which the court found Beck liable. 
Thus, the court’s final damage award was $36,000—$4000 in compensatory damages
and $32,000 in punitive damages.
¶ 12.        
 The superior court also issued multiple decisions on Ring’s motion
for attorney’s fees and costs, which he submitted one month after the court’s April
2, 2012 decision.  In its first decision, the court rejected Ring’s
request to recover attorney’s fees and costs incurred before commencement of
the instant litigation.  The court acknowledged that most of the fees
could have been included in Ring’s request for damages because they related to
defendants’ breach of the 2001 settlement agreement, but concluded that they
could not be recovered in a post-trial request for attorney’s fees under
Vermont Rule of Civil Procedure 54(d)(2)(A) because they were not “in
connection with a pending action.”
¶ 13.        
On August 15, 2013, the superior court issued its principal decision on
attorney’s fees.  The court concluded that Ring was entitled to attorney’s
fees as the only prevailing party, and that the language of the settlement
agreement entitled him to reasonable fees.  The court rejected Ring’s
argument that he was entitled to all of his requested attorney’s fees pursuant
to the settlement agreement unless defendants could prove that the fees were
excessive.  Rather, according to the court, notwithstanding the provision
in the agreement requiring the unsuccessful party in any necessary legal action
to pay “all” legal fees and costs, Ring was entitled to only those fees that he
demonstrated were reasonable in the context of the litigation.
¶ 14.        
Ring sought approximately $350,000 in attorney’s fees.  Based on
its line-by-line review of the accompanying affidavits and its examination of
three banker’s boxes of documents concerning the case, the court awarded Ring
$90,000 in attorney’s fees representing an estimated $50,000 for what should
have been sufficient to recover provable damages in the case, plus an estimated
$40,000 in additional fees resulting from a defense to the suit beyond what was
necessary.
¶ 15.        
In limiting the attorney’s fees award to $90,000, the court found that
Ring’s lawsuit was driven primarily by revenge—its purpose was more to punish
defendants than to recover any financial loss—and that the fees were excessive
and unnecessary in comparison to the damages requested and particularly those
ultimately rewarded.  In his motion for reconsideration, Ring objected to
the court’s characterization of his motive for the lawsuit, but the court
stated that it would not change the award even if it withdrew its
characterization of Ring’s motives in filing the lawsuit.  The court
concluded that the litigation expenses in the case escalated out of control
beyond all justification, considering the damages appropriately attributable to
defendants’ behavior and other factors.
¶ 16.        
In another decision, the court ordered defendants to pay costs of
approximately $4000, but denied prejudgment interest on the award of attorney’s
fees and costs, concluding that those damages were unliquidated.  The
court issued its final judgment on September 24, 2013, awarding Ring $4000 in
compensatory damages, $32,000 in punitive damages, $90,000 in attorney’s fees,
approximately $4000 in costs and expenses, and post-judgment interest.
¶ 17.        
Ring appeals, arguing that the superior court erred by: (1) not awarding
him all of his legal fees and costs in accordance with the terms of the
parties’ 2001 settlement agreement; (2) denying his request for pre-litigation
attorney’s fees; and (3) denying his request for prejudgment interest on his
compensatory damage and attorney’s fee awards.  He also argues that the
court violated his constitutional right to a certain remedy by arbitrarily
reducing his contractually guaranteed attorney’s fee award and denying his
request for prejudgment interest.  Beck cross-appeals, arguing that the
superior court erred by: (1) awarding punitive damages without finding that
defendants engaged in criminal or fraudulent conduct; (2) not making sufficient
findings or conclusions to support that award; and (3) holding her responsible
for the punitive damages attributable to the conduct of her late husband and
business partner.
II.
Attorney’s Fees
A.
¶ 18.        
Ring first argues that the superior court employed the wrong legal
standard in considering his claim for attorney’s fees.  According to Ring,
in lieu of the lodestar method, the court should have applied a
nondiscretionary plain-meaning rule that compelled it to award fees according
to the parties’ unambiguous agreed-upon contractual provision mandating that
the unsuccessful party pay all legal fees and court costs.  We conclude
that the court appropriately applied the lodestar method in considering Ring’s
request for attorney’s fees.
¶ 19.        
  Parties are normally responsible for their own attorney’s
fees unless “a statute or agreement that provides otherwise.”  Huard v.
Henry, 2010 VT 43, ¶ 11, 188 Vt. 540, 999 A.2d 1264 (mem.).  In
this case, the parties’ 2001 settlement agreement provided that if either party
reneged on the agreement, resulting in necessary legal action, “the
unsuccessful party will pay all legal fees and court costs.”  Defendants
do not dispute the superior court’s determinations that Ring was the successful
party and that legal action was necessary to vindicate his rights under the
parties’ agreement.
¶ 20.        
Generally, in determining a reasonable attorney’s fee award, courts
should begin by calculating the “lodestar” amount—the number of hours
reasonably spent on the case times a reasonable hourly rate.  Id. 
“Once the court arrives at a lodestar amount, the court can then adjust the
number upward or downward based on a number of factors, including the novelty
of the legal issue, the experience of the attorney, and the results obtained in
the litigation.”  Id. (quotation omitted).  Because the
court’s award is based on the specific facts of each case, “we grant the trial
court wide discretion in making that determination.”  Id.
(quotation omitted).
¶ 21.        
Ring contends, however, that because the parties’ contractual provision
on legal fees explicitly requires the unsuccessful party to pay “all” fees, the
trial court must award all fees expended unless defendants demonstrate that the
fees are excessive.  We decline to diverge from the lodestar method in
cases involving contractual provisions on attorney’s fees or to abandon our
general principles placing upon the requesting party “the burden to provide
evidence of services upon which value can be determined,” Bruntaeger v.
Zeller, 147 Vt. 247, 254, 515 A.2d 123, 128 (1986), and giving the trial
court wide discretion in determining the reasonableness of the requested
fees.  See Monmouth Meadows Homeowners Ass’n v. Hamilton, 7 A.3d 1,
5-6 (Md. 2010) (stating that party requesting attorney’s fees “has the burden
of providing the court with the necessary information to determine the
reasonableness of the request” (quotation omitted)).  We find unpersuasive
those decisions suggesting that trial courts have an unspecified limited amount
of discretion to determine the reasonableness of fees awarded pursuant to
contract.  See, e.g., United States v. W. States Mech. Contractors,
Inc., 834 F.2d 1533, 1549-50 (10th Cir. 1987) (stating that where attorney’s
fees are granted by contract, court has discretion to determine whether fees
are inequitable or unreasonable but may not independently calculate what it
believes to be reasonable fee); McDowell Mountain Ranch Cmty. Ass’n, Inc. v.
Simons, 165 P.3d 667, 671-72 (Ariz. Ct. App. 2007) (stating that although
court may not award unreasonable fees granted by contract, its “discretion is
more narrowly circumscribed when the parties contractually agree that the
prevailing party shall be awarded all its attorneys’ fees”). 
¶ 22.        
Notwithstanding Ring’s suggestion to the contrary, this Court has never
adopted a plain-meaning rule that replaces the lodestar method in cases
involving contractual provisions on attorney’s fees.  We did not supplant
the lodestar method with such a rule in Harsch Properties, Inc. v. Nicholas,
2007 VT 70, ¶ 12, 182 Vt. 196, 932 A.2d 1045, but rather merely stated
that we would rely on the plain meaning of the parties’ written agreement on
attorney’s fees rather than resort to extrinsic evidence.  The parties’
agreement that the unsuccessful party would be responsible for paying “all”
fees does not suggest that the trial court is precluded from considering the
reasonableness of the fees requested.  See Zenner v. Holcomb, 210
P.3d 552, 559 (Idaho 2009) (cautioning “that contractual language such as . . .
‘all attorneys fees’ does not give the prevailing party an unqualified right to
unlimited attorney fees”); McMullen v. Kutz, 985 A.2d 769, 776-77 (Pa.
2009) (joining majority of states “in finding that parties may contract to
provide for the breaching party to pay the attorney fees . . . , but that the
trial court may consider whether the fees claimed to have been incurred are
reasonable, and to reduce the fees claimed if appropriate”).   In
effect, we infer from the contracting parties’ agreement that the unsuccessful
party is responsible for paying only reasonably incurred fees.  See Myers
v. Kayhoe, 892 A.2d 520, 532 (Md. 2006) (“Even in the absence of a contract
term limiting recovery to reasonable fees, trial courts are required to read
such a term into the contract and examine the prevailing party’s fee request
for reasonableness.”).  In short, the court did not apply the wrong legal
standard.
B.
¶ 23.        
Ring further argues, however, that even assuming the lodestar method was
the appropriate method to use, the superior court erred in executing that
method by not identifying sound reasons for imposing such a drastic discount on
the requested fees, by implicitly presuming the necessity of proportionality
between damages and attorney’s fees, and by failing to make adjustments from an
identified lodestar figure based on established law.  We reject each of
these arguments.
¶ 24.        
As noted, Ring requested approximately $350,000 in attorney’s
fees.  In its detailed twenty-seven-page decision on attorney’s fees, the
superior court first determined, following an initial line-by-line examination
of the affidavits submitted in support of the requested fees, that the rates
were reasonable and that the time recorded was actually expended, but that
approximately $35,000 of the fees were for services tangential to the
litigation or plainly excessive and thus should not be allowed.  The court
then undertook an extensive review of each of the nine file folders in three
bankers boxes containing documents from the case, including over one hundred
motions.  In examining the files, the court commented on various motions
and other filings.  The court noted in particular Ring’s unsuccessful
motion for summary judgment and the comments made by the deciding judge, who
made it clear that she thought the motion was a waste of everyone’s time and
money.  The court referred to other futile motions by Ring, including an
effort to have the earlier denial of his ill-advised motion for summary
judgment overturned.  As the superior court pointed out, multiple judges
in the case commented on Ring’s overwritten and unhelpful filings, and the
trial court opined that the eleven-day trial was unnecessarily long.
¶ 25.        
The court then considered each of the so-called Johnson factors
for adjusting the lodestar figure upward or downward.  See Spooner v.
Town of Topsham, 2010 VT 71, ¶ 8, 188 Vt. 293, 9 A.3d 672 (citing Johnson
v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974)). 
The court concluded that most of those factors were not helpful, but found, in
examining the factors, that: (1) there was nothing novel about the case; (2)
the case did not require exceptional legal skill; (3) the litigants were at war
with each other and were willing to spend any amount of money to prevail, even
if it meant destroying any reasonable financial remedy available; (4) the
attorneys fell into the trap of exacerbating their clients’ hostility toward
one another and engaging in aggressive litigation through a wasteful motion
practice; and (5) this case is unique because the level of hostility was so
high and the filings were so excessive.
¶ 26.        
The court agreed with Ring that the law does not require proportionality
between attorney’s fees and damages, but concluded that the absence of a
favorable result could be a factor in determining the appropriate amount of
compensation for attorney’s fees.  The court noted the limited potential
and actual damages in this case, and found no justification for the exorbitant
fees expended.  The court acknowledged that there was no formula for
precisely calculating the appropriate level of a fee award, but concluded that
a limited award was appropriate here because of the level of excessive filings
and litigation driven more by animosity toward the other side than obtaining a
reasonable financial remedy.  The court concluded that $50,000 should have
been sufficient to recover any provable damages in this case, but that the award
would be increased to $90,000 because of the role defendants played in
increasing the costs of the litigation.
¶ 27.        
We reject Ring’s argument that the superior court misapplied the
lodestar method.  While the court arrived at a lodestar figure before
making additional adjustments based on a determination of the reasonableness of
all the hours expended on the case, the court ultimately made a highly
discretionary determination of what amount of the prevailing party’s fees were
reasonably necessary to prosecute the lawsuit.  The “touchstone” of the
lodestar inquiry is reasonableness, Huard, 2010 VT 43, ¶ 14, and
that was the court’s focus.
¶ 28.        
We also reject Ring’s argument that the court did not adequately explain
its award.  After an exhaustive examination of the record, the trial court
gave sound reasons for the limited award, while ultimately having to make an
imprecise judgment call.  This case is similar to Huard. 
There, the prevailing plaintiffs argued that the court provided vague,
nonspecific reasoning in justifying deductions to their requested fees. 
We upheld the award because, even though the court did not itemize what hours
it deducted, it did a painstaking accounting of inefficiencies in the
attorneys’ work.  Id. ¶¶ 13-14.  Moreover, we expressly
held that the court did not err in factoring in the plaintiffs’ retributive
motives and the limited results they obtained through the litigation.  Id. ¶¶
15-17.
¶ 29.        
Nor did the superior court err in considering the potential damages and
those actually proved in comparison to the fees expended.  The question
“is not whether the attorney’s fee award is proportional to the damages, but
rather whether the fee award is reasonable given the demands of the
case.”  Kwon v. Eaton, 2010 VT 73, ¶ 20, 188 Vt. 623, 8 A.3d
1043 (mem.).  There may be certain cases, civil rights cases for example,
where the damage award is relatively small but the overall impact and reach of
the decision is significant, thereby justifying an award of attorney’s fees far
in excess of the compensatory damages awarded.  That is not the case here,
however, where the court explained why the requested fees were not reasonable
given the demands of the case.
C.
¶ 30.        
Ring also argues that the superior court erred by denying him his
pre-litigation attorney’s fees—specifically $8685 expended in connection with
his efforts to obtain his certificate of occupancy and $14,122 expended in
connection with his defense of the attack on his engineering license.  Following
the superior court’s April 2012 decision, Ring filed a post-trial motion
pursuant to Rule 54 to recover attorney’s fees and costs.  One section of
the motion dealt with attorney’s fees incurred prior to the present litigation.
¶ 31.        
In a May 8, 2013 decision, the superior court denied pre-litigation
attorney’s fees.  The court reasoned that because the attorney’s fees were
incurred in previous proceedings related to defendants’ alleged breach of the
2001 settlement agreement and had been paid before the instant litigation
commenced, they were in the nature of damages to be claimed and proved at trial
in this case, not attorney’s fees “in connection with” the pending action to be
requested following final judgment.  See V.R.C.P. 54(d)(2)(A) (“Claims for
attorneys’ fees for services rendered in connection with a pending action . . .
shall be made by motion in the action unless the applicable substantive law
provides for the recovery of such fees as an element of damages to be proved at
trial or in an independent action.”).  The court also concluded that Ring
was not entitled to the fees incurred in proceedings before the Office of
Professional Regulation because of its determination that defendants, and
particularly Maroldt, did not breach the warranty of good faith and fair
dealing by writing the letter that instigated that proceeding.
¶ 32.        
Ring argues that the superior court erred because this Court has held
that, absent a contractual agreement to the contrary, deciding the amount of
attorney’s fees post-trial is permissible, indeed “more efficient because the
evidence need be presented only if the party seeking the award prevailed on the
merits.”  Murphy v. Stowe Club Highlands, 171 Vt. 144, 162, 761
A.2d 688, 701 (2000).  In Murphy, the trial court denied the
prevailing parties’ request for attorney’s fees incurred in that litigation and
recoverable by contract because the parties failed to submit the issue to the
jury as an element of damages.  We reversed the superior court’s ruling
because: (1) the trial judge “is better equipped than the jury to determine the
appropriate” amount of attorney’s fees; (2) “[d]eciding the amount of fees
post-trial is more efficient because the evidence need be presented only if the
party seeking the award prevailed on the merits”; and (3) “post-trial
adjudication is the only way to account fully for the legal services
provided.”  Id.
¶ 33.        
Because Murphy did not concern pre-litigation attorney’s fees,
the case is not on point.  The first and third reasons stated in the
decision do not apply at all, and the second reason would be true of all
damages claimed at a trial—you do not get them if you do not prevail.  We
agree with the trial court that the pre-litigation attorney’s fees that Ring
claimed, which were alleged to have resulted from defendants’ breach of the
settlement agreement and had already been paid prior to the instant litigation,
were more in the nature of damages that should and could have been proved at
trial.  Accordingly, we find no error in the court’s refusal to consider
those damages by post-trial motion.
III.
Prejudgment Interest
¶ 34.        
Next, Ring argues that the superior court erred by denying him
prejudgment interest on his compensatory damages and attorney’s fees.  The
award of prejudgment interest is governed by Vermont Rule of Civil Procedure
54(a), which provides that “the amount of the judgment shall include the
principal amount found to be due, all interest accrued on the amount up to and
including the date of entry of judgment, and all costs allowed to the
prevailing party.”  Prejudgment interest is mandatory when the damages are
liquidated or readily ascertainable at the time of the tort and is
“discretionary in other cases.”  Estate of Fleming v. Nicholson,
168 Vt. 495, 501, 724 A.2d 1026, 1030 (1998); accord Smedberg v. Detlef’s
Custodial Serv., Inc., 2007 VT 99, ¶ 36, 182 Vt. 349, 940 A.2d
674.  Regarding the mandatory awards, “Rule 54 does not require that the
amounts be precisely or infallibly ascertainable, only that they be reasonably
so.”  Smedberg, 2007 VT 99, ¶ 38.  “The principal
rationale for an award of prejudgment interest as of right is that, where
damages are liquidated or determinable by a reasonably certain standard of
measurement, the defendant can avoid the accrual of interest by simply
tendering to the plaintiff a sum equal to the amount of damages.”  Agency
of Natural Res. v. Glens Falls Ins. Co., 169 Vt. 426, 435, 736 A.2d 768,
774 (1999) (quotation omitted).
¶ 35.        
Here, the superior court ruled that prejudgment interest was not
mandatory because the compensatory damages were neither liquidated nor readily
ascertainable at the time of the breach.  Further, the court also declined
a discretionary award of prejudgment interest, concluding that it was not
necessary to make Ring whole.  The court also declined to award
prejudgment interest on the attorney’s fees award because those fees are not
liquidated until fixed by the trial court.  See Salatino v. Chase,
2007 VT 81, ¶ 15, 182 Vt. 267, 939 A.2d 482 (noting general conclusion of
courts that “for purposes of prejudgment-interest
awards, . . . attorney’s fees are not liquidated until
fixed by the trial court following discretionary calculations”).
¶ 36.        
Ring does not contest the fact that the damage and attorney’s fee awards
are unliquidated; rather, he briefly states that the superior court abused its
discretion by not awarding him prejudgment interest because the purpose of
prejudgment interest is to restore the injured person to the position that the
person would have been in absent the harm.  We find no abuse of
discretion.  The superior court detailed what it considered to be the
shared responsibility for the excessive litigation in this case and acted well
within its discretion in denying prejudgment interest for damages that it
considered to be not liquidated or readily ascertainable at the time of the
breach.
¶ 37.        
Finally, we reject Ring’s attempt to constitutionalize his contractual
claims of error by contending that the superior court’s discretionary decisions
on his request for attorney’s fees and prejudgment interest deprived him a
complete remedy in violation of Chapter I, Article 4, of the Vermont
Constitution.  According to Ring, the court violated his right to access
to the courts by arbitrarily limiting his attorney’s fees award based on it
attributing to him retributive motives in filing his lawsuit.  We have
already reviewed the superior court’s award and determined that the court acted
within its discretion based on the facts and circumstances of this case. 
There is no constitutional right to recover all attorney’s fees incurred,
irrespective of their reasonableness.
IV.
Punitive Damages
A.
¶ 38.        
We now turn to Beck’s cross-appeal, in which she challenges the superior
court’s punitive damages award.  She first argues that the court erred by
awarding punitive damages without making sufficient findings and conclusions to
support the award.  Specifically, she contends that the court committed
reversible error by awarding punitive damages in a contract action without
finding that defendants engaged in criminal or fraudulent conduct. 
According to Beck, the superior court based its punitive damage award solely on
an incorrect perception of malice and omitted any finding of fraudulent or
criminal conduct.
¶ 39.        
We disagree.  We have never stated that the award of punitive
damages in contract actions requires a showing that the defendants’ conduct met
the elements of fraud or amounted to a crime.  Rather, it is settled law
in Vermont “that punitive damages are appropriate in contract actions in
certain extraordinary cases where the breach has the character of a
willful and wanton or fraudulent tort.”  Ainsworth v. Franklin Cnty.
Cheese Corp., 156 Vt. 325, 331, 592 A.2d 871, 874 (1991) (quotation
omitted).  A plaintiff must show actual malice on the defendants’ part—as
evidenced by conduct exemplifying personal ill will or showing a reckless or
wanton disregard for the plaintiff’s rights—and also that the defendants’
action were “akin to a willful and wanton, or fraudulent, tort.”  Murphy,
171 Vt. at 155, 761 A.2d at 696.
¶ 40.        
Here, the trial court found that Maroldt and Morrison acted in bad faith
by misrepresenting to government officials that Ring’s project was potentially
unsafe at a time when they knew that it had been approved by the State and
certified as safe by their own engineer. They did so, according to the court,
out of their animosity towards Ring to make it as difficult and expensive as
possible for him to obtain his certificate of occupancy, despite their
agreement not to oppose the project if it was deemed structurally safe. 
These actions were akin to fraudulent conduct and demonstrated not only personal
ill will but also a willful disregard of Ring’s rights.  We conclude that
the evidence and the court’s findings and conclusions support its punitive
damages award.  Cf. Ainsworth, 156 Vt. at 329, 332, 592 A.2d at
873, 875 (finding no error in submitting punitive damage issue to jury where
employee alleged that employer fabricated grounds for termination to deny
severance package); Appropriate Tech. Corp. v. Palma, 146 Vt. 643, 648,
508 A.2d 724, 727 (1986) (concluding that record supported award of punitive
damages where employer knowingly misrepresented its finances to induce employee
to leave his job); Glidden v. Skinner, 142 Vt. 644, 647-48, 458 A.2d
1142, 1144-45 (1983) (concluding that punitive damages were warranted where
defendants induced plaintiffs to sell cows from another farm and work long
hours on defendants’ farm without compensation even though they knew that they
were not going to go through with sale of farm to plaintiffs).
¶ 41.        
In a similar vein, Beck argues that defendants, in particular Maroldt
and Morrison, were merely exercising their right to register their concerns and
disputes with Ring’s construction, albeit in an annoying and pestering manner,
and that the court utterly failed to make findings demonstrating otherwise. 
Again, we disagree.  The court provided a detailed account, including
citation to exhibits, of what actions defendants took to thwart the approval of
Ring’s project based in part on questions concerning its structural safety,
even though they knew that those questions had been adequately addressed and
that the project had been approved by the State and their own engineer.[3]
 
B.
¶ 42.        
Finally, Beck argues that the superior court erred by making her liable
for punitive damages awarded against Morrison based on a partnership
theory.  According to Beck, although the court could arguably hold her
liable for compensatory damages assessed against Morrison due to their
partnership, there is no basis in law or fact to hold her liable for punitive
damages that were assessed based on Morrison’s purportedly malicious conduct.
¶ 43.        
We conclude that the superior court did not err by holding Beck liable
for punitive damages assessed based on Morrison’s conduct.  Beck cites no
case law to support her position, despite the fact that the superior court
carefully examined the relevant law.  “Generally, the courts have held
that a partner who did not authorize, participate in, or ratify the wrongful
act of [a] copartner is not liable for punitive damages awarded in connection
with the partner’s wrongful act, although there is authority to the contrary,
particularly in cases involving fraud.”  M. Rosenhouse, Annotation, Derivative
Liability of Partner for Punitive Damages for Wrongful Act of Copartner, 14
A.L.R.4th 1335, 1336 (1982).
¶ 44.        
The courts have divided, however, on the impact of the Uniform
Partnership Act on this general rule.  A provision of the 1997 Uniform
Partnership Act adopted in Vermont states that a “partnership is liable for
loss or injury . . . or for a penalty incurred” as the result of a partner’s
actionable conduct in the ordinary course of the partnership’s business or with
the authority of the partnership.  11 V.S.A. § 3225(a).  We agree
with the superior court that this provision neither differs materially from,
nor adds any clarification to, the equivalent former provision under the 1914
Uniform Partnership Act with respect to the question of whether a partnership
is liable for punitive damages assessed based on the conduct of one of the
partners.  See 11 V.S.A. § 1205 (repealed in 1999) (stating that
partnership is liable for “loss or injury” or for “any penalty incurred” as
result of any partner acting in ordinary course of partnership business or with
authority of copartners).
¶ 45.        
Courts construing the former act have fallen generally into two
camps.  The first one holds that under the plain meaning of the statutory
provision all partners are jointly liable for punitive damages assessed against
any partner acting within the scope of the partnership’s business,
notwithstanding the other partners’ lack of culpability.  See, e.g., Winant
v. Bostic, 5 F.3d 767, 775 (4th Cir. 1993) (finding partner derivatively
liable for punitive damages for his partner’s acts under North Carolina uniform
partnership provision because acts were carried out in ordinary course of
partnership business); Blue v. Rose, 786 F.2d 349, 352 (8th Cir. 1986)
(upholding punitive damages award because under Missouri law “members of a
partnership are liable for torts committed by any member acting in the scope of
the partnership’s business, even if they do not participate in or have
knowledge of the tort”).  The other camp holds that partners are not
derivatively liable for punitive damages attributable to another partner
without having authorized, ratified, controlled, or participated in the
tortious acts.  See, e.g., WPMK Corp. v. Paradise Palms Vacation Club,
59 B.R. 991, 997 (D. Haw. 1986) (holding under Hawaii law that partnership is
not liable for punitive damages incurred by one of its partners unless it
authorized, controlled, or participated in tortious act or ratified it by
accepting benefits from act with actual or constructive knowledge of facts); Duncan
v. Henington, 835 P.2d 816, 819 (N.M. 1992) (holding under partnership
statute that only partners who participated in tortious act may be held jointly
liable for punitive damages).
¶ 46.        
The courts have arrived at their differing holdings depending on their
common law of derivative liability, particularly with respect to principal and
agent.  Duncan, 835 P.2d at 818.  Here, noting that this Court
has adopted § 909 of the Restatement (Second) of Torts, which sets forth
conditions in which punitive damages can be awarded against a principal for the
tortious acts of an agent, the superior court ruled that partners cannot be
liable for the tortious acts of a partner unless they authorized, ratified,
controlled, or participated in the acts.  See Sweet v. Roy, 173 Vt.
418, 444-45, 801 A.2d 694, 713-14 (2002) (citing Restatement (Second) of Torts
§ 909 (1979) as establishing relevant elements necessary for imposing
punitive damages against principal based on agent’s tortious act); cf. Hyatt
Regency Phoenix Hotel Co. v. Winston & Strawn, 907 P.2d 506, 514-15
(Ariz. Ct. App. 1995) (noting that Arizona specifically rejected § 909 of
Restatement and holding that its partnership statutes permitted punitive
damages to be awarded vicariously to all partners as long as tortious act was
performed in ordinary course of partnership’s business).  Nevertheless,
the court concluded that Beck should be held liable for the punitive damages
awarded based on Morrison’s behavior because they plotted against Ring together
as a partnership, made unreasonable demands on Ring in the course of the
development of his project, and voted at Association meetings to take actions
that unfairly obstructed Ring in obtaining a certificate of occupancy.
¶ 47.        
Without needing to construe § 3225(a), we concur with the superior
court’s judgment that, given the particular circumstances of this case, it is
appropriate to hold Beck liable for the punitive damages attributable to her
late husband and business partner because: (1) their partnership revolved
around their ownership of several condominium units within the Association
that, led by Maroldt and Morrison, unreasonably opposed Ring’s project on his
condominium units; (2) Beck was aware of the obstructive actions taken by her
partner and the Association; and (3) she participated in those actions as a
partner and a member of the Association by voting to take steps to oppose
Ring’s certificate of occupancy long after issues concerning his project’s
structural safety were resolved.
¶ 48.        
The basis of the partnership found by the superior court was Beck’s and
Morrison’s joint ownership of four of the Carriage House Condominium units, one
of which was in the same building as Ring’s units.  As joint owners of
those four units, they participated in the Association’s unreasonable actions
against Ring, which were instigated by Maroldt and Morrison.  As found by
the court, by the end of 2003, Morrison and the other Association members were
fully aware that there were no longer any legitimate structural issues
regarding Ring’s project, and yet they persisted in obstructing Ring’s
certificate of occupancy and renewal of his building permit, despite the
Association’s promise not to oppose the project if issues surrounding its
structural safety were adequately addressed.  The court found that
although Beck was not an instigator in the continued bad faith opposition to
Ring’s project, like her husband and partner Morrison, she participated in that
opposition as Morrison’s business partner and as a member of the Association,
signed several of the documents in that respect, and voted along with Morrison
and Maroldt at Association meetings.  That participation was sufficient
for the court to hold her liable for punitive damages attributable to
Morrison’s actions.
Affirmed.                                                         

 



 


 


FOR THE COURT:




 


 


 




 


 


 




 


 


 




 


 


Associate
  Justice



 







[1] 
Justice Crawford was present for conference on the briefs, but did not
participate in this decision.


[2] 
We have not decided “the question of whether punitive damages can ever be
rightfully awarded against an estate.”  Carpentier v. Tuthill, 2013
VT 91, ¶ 19 n.*, ___ Vt. ___, 86 A.3d 1006. 


[3] 
Beck does not argue that the superior court’s findings and conclusions are
unsupported by the record.  Nor could she do so, considering that she
ordered no transcripts for this appeal, and the only transcript ordered by Ring
was a June 2012 nonevidentiary motion hearing that did not focus on punitive
damages.  As indicated herein, the trial court made numerous findings
regarding Morrison’s actions in unreasonably obstructing Ring’s project and
Beck’s acquiescence and participation in those actions as his business partner
and fellow member of the Association.



