Scheidet v. Cambium Group, LLC, No. 78-3-13 Cacv (Teachout, J., Aug. 28, 2013)

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                                                      STATE OF VERMONT

SUPERIOR COURT                                                                                                   CIVIL DIVISION
Caledonia Unit                                                                                             Docket No. 78-3-13 Cacv

Tara Lynn Scheidet
      Plaintiff/Appellee

      v.

Cambium Group, LLC
    Defendant/Appellant


                                                                 DECISION
                                                   SMALL CLAIMS APPEAL


       Defendant/Appellant Cambium Group, LLC appeals from a judgment issued by the Small
Claims Court in favor of Plaintiff/Appellee Tara Lynn Scheidet on February 25, 2013. The Small
Claims Court ruled that Cambium breached its contract to provide website design services for
Ms. Scheidet and awarded damages to Ms. Scheidet in the amount of $4,078.75. On appeal,
Cambium argues that Ms. Scheidet’s lawsuit was precluded by the mediation provision
contained in the parties’ contract, that damages were specifically disclaimed by the contract, and
that Cambium was deprived of due process because the Small Claims Court denied its
counterclaim without allowing it to present any evidence.
       In appeals from Small Claims Court, the Superior Court’s review is based on the record
below and is limited to questions of law. 12 V.S.A. § 5538; V.R.S.C.P. 10. This Court has
reviewed the record of the hearing held in Small Claims Court and Cambium’s memorandum of
law. Ms. Scheidet did not submit any materials on appeal.
                                                                    FACTS
       The Small Claims Court found the following facts. In 2010, Cambium agreed to design
and build three websites, a content management system for the websites, and a customer portal
for Ms. Scheidet’s bridal business. The parties signed a professional services agreement that
outlined the scope of work to be performed, the costs for various portions, and the timeframe
within which each portion was to be completed. The initial agreement, with additional optional
content, ranged in price from $14,500.00 for basic services to roughly $16,000.00 with optional
services included.
      On July 15, 2011, the parties entered into a three-way contract with the Northern
Community Investment Corporation (NCIC) that refined the scope of work to be performed.
NCIC provided partial funding for the website project through a technical assistance grant. This
agreement also called for Cambium to design a website and content management system for Ms.
Scheidet. The 2011 agreement was for the period beginning July 15, 2011 and ending December
31, 2011 and detailed the scope of services to be provided by Cambium. The cost of services was
not to exceed $4,100.
       The Small Claims Court found that Cambium failed to meet any of the deadline dates
under the original professional services agreement. The website testing was to be performed
from March 15 to March 25, 2011, but never occurred. The website was to be launched on
March 30, but did not launch until the end of August. The Court found that the website provided
to Ms. Scheidet by Cambium was not in accordance with the original agreement and was
substantially unusable for its intended purpose as laid out in the scope of work.
        The Small Claims Court further determined that Ms. Scheidet paid Cambium $5,000.00
for the website design and content management system for TaraLynnBridal.com, $2,500.00 for
the creation of a “customer portal,” and $60.00 per month for the hosting fee associated with
maintaining the planned websites. It found that the remaining portions of the contract were
cancelled before completion.
       On June 22, 2012, Ms. Scheidet contracted with FLEK, Inc. to recreate the entire website
by August 15, 2012 before the website’s hosting fees had to be renewed. The Court found that
Ms. Scheidet paid approximately $7,500.00 to Cambium for the incomplete work on the website,
and $4,000.00 to FLEK, Inc. to replace the incomplete website designed by Cambium. It
awarded $4,000.00 to Ms. Scheidet, representing the costs incurred to put her in the position she
would have occupied had Cambium satisfactorily performed under the contract. The Court
denied Cambium’s counterclaim for unpaid invoices and for breach of the proprietary rights
provision of the professional services agreement.
                                           ANALYSIS
       On appeal, Cambium presents three issues for the court to determine: (1) whether Ms.
Scheidet’s lawsuit was precluded by the mediation provision contained in the parties’ contract;
(2) whether the damages award was prohibited under the parties’ contract; and (3) whether
Cambium was deprived of due process when the Small Claims Court failed to acknowledge
Defendant’s evidence in its findings of fact and denied its counterclaim without allowing it to
present any evidence.
        Cambium did not raise its contractual defenses in its answer or at the small claims
hearing. Its first two arguments therefore are waived. See State v. Rideout, 2007 VT 59A, ¶ 19,
182 Vt. 113 (“As a general rule, [the court] will not consider issues that were not raised with
specificity and clarity at trial.”).
        Cambium’s third claim has merit, however. This Court has reviewed the record of the
November 14, 2012 hearing, which proceeded as follows. Ms. Scheidet first presented evidence
in the form of her own testimony and documentary exhibits, including the parties’ professional
services agreement and addenda to those agreements. Ms. Scheidet’s presentation of her case
took up the bulk of the hearing.
        Cambium’s owner, Scott Wells, and its employee Sean Rolfe then testified. They denied
that they had breached the contract and claimed that Ms. Scheidet had indicated that she was
satisfied with their services. They testified that Ms. Scheidet did not pay them for $650 of extra

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work that they performed. Mr. Wells offered the invoices for the unpaid amount into evidence as
Defendant’s Exhibit C. Mr. Wells then began to testify about his counterclaim for breach of the
proprietary rights provision of the professional services agreement. The Court interrupted him
and asked if Ms. Scheidet objected to Exhibit C. Ms. Scheidet objected that the contract was
cancelled by the time the invoices were sent. The Court ruled that the invoices would be
admitted. The Court then stated that it would take the matter under advisement and adjourned the
hearing.
         The record shows that Cambium was not given an opportunity to present any evidence or
testimony regarding its counterclaim, and that the Court cut off Mr. Wells when he began to
testify on that point. The oversight does not appear to have been intentional, but it represents a
serious error in the proceeding. While small claims actions are conducted “in a summary
manner,” a litigant is still entitled to basic due process, including the right to present his or her
own witnesses and exhibits. See V.R.S.C.P. 6(a); Brault v. Town of Milton, 527 F.2d 730, 738–
39 (2d Cir. 1975) (“The court’s function is to assure that no party will be deprived of property
without satisfying the fundamentals of due process . . . .”). The Court’s abrupt adjournment of
the hearing in this case deprived Cambium of its right to present evidence regarding its
counterclaim.
       Moreover, the Court ultimately denied Cambium’s counterclaim without analysis or
explanation. Absent any factual or legal context for the Small Claims Court’s denial of
Cambium’s counterclaim, this Court cannot determine whether that decision was valid. Thus, the
case must be remanded for this reason. Upon remand, the Small Claims Court judge will also
have an opportunity to clarify findings of fact with respect to the credibility of evidence
presented by Defendant on the Plaintiff’s claim.
        Appellant requested that any further hearings be presided over by a “full time Judge.” 12
V.S.A. § 5531(a) provides that where the plaintiff makes a claim for relief greater than
$3,500.00, “the defendant shall have the right to request a special assignment of a judicial
officer. Upon making this request, a superior judge or a member of the Vermont bar appointed
pursuant to 4 V.S.A. § 22(b) shall be assigned to hear the action.” In this case, no timely request
was made prior to the scheduling of the hearing, and the case was scheduled before a duly
authorized Assistant Judge. At this time, the case is being remanded for further proceedings
before the same Assistant Judge who conducted the original hearing. This calls for a reopening
of the same hearing. Defendant’s request is too late in the proceeding for assignment of a judge
pursuant to 12 V.S.A. § 5531(a).
                                              ORDER
       The Small Claims Court’s denial of Cambium’s counterclaim is reversed, and the case is
remanded for the Court to take evidence and make findings regarding Defendant’s counterclaim
and clarify its use of Defendant’s evidence in deciding the facts pertinent to Plaintiff’s claim.
       Dated at St. Johnsbury, Vermont this 28th of August, 2013.
                                                              _________________________
                                                              Mary Miles Teachout
                                                              Superior Court Judge

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