2008 VT 96


Northern Security Insurance Co.
v. Mitec Electronics, Ltd. (2007-109)
 
2008 VT 96
 
[Filed 01-Aug-2008]
 
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, Vermont Supreme
Court, 109
  State Street, Montpelier, Vermont05609-0801
of any errors in order that corrections may be made before this opinion goes to
press.

 
 

2008 VT 96

 

No. 2007-109

 

Northern Security Insurance
  Company


Supreme Court


 


 


 


On Appeal from


     v.


Chittenden Superior Court


 


 


 


 


Mitec
  Electronics, Ltd., Mitec Telecom, Inc. and 
Myer T. Bentob


January Term, 2008


 


 


 
Geoffrey W. Crawford, J.
 


 


Bruce
  C. Palmer of DownsRachlin
  Martin PLLC, St. Johnsbury, for Plaintiff-Appellee.
 
Samuel Hoar, Jr. and Douglas D.
  Le Brun of Dinse, Knapp
  & McAndrew, P.C., Burlington,
  for 
  Defendants-Appellants.


 

 
PRESENT:  Reiber, C.J.,
Dooley, Johnson, Skoglund and Burgess, JJ.
 
 
¶ 1.            
REIBER, C.J.   Defendants Mitec
Electronics Limited, Mitec Telecom Incorporated, and
Myer T. Bentob appeal from a series of adverse
superior court orders in a declaratory-judgment action concerning insurance
coverage filed by plaintiff Northern Security Insurance Company (NSIC). 
Defendants’ claims of error fall into three general categories: (1)
jurisdictional; (2) the interpretation of a general release; and (3) plaintiffs’
post-judgment motion seeking to amend its complaint to request recoupment of
attorney’s fees.  We affirm in part and reverse in part.
¶ 2.            
The facts underlying this appeal extend nearly three decades into the
past.  From 1979 until 1985, Mitec Systems, a
Vermont corporation, leased property in the Alling
Industrial Park in Williston, Vermont.  Mitec
Systems allegedly polluted this property, and the groundwater underneath it,
with industrial chemicals used in its manufacturing processes.  The State
and other parties sued “Mitec Systems Corp. d/b/a Mitec Electronics, Ltd.” in 1984 for damages, cleanup
costs, and other relief.  Mitec Systems sought
coverage for those claims under an insurance policy issued by NSIC to Mitec Systems and Mitec Manufacturing
Company, Ltd., a Canadian corporation, ATIMA.
¶ 3.            
In 1988, after the 1984 claims were resolved, Mitec
Systems brought an action against NSIC to recover certain unreimbursed costs of
defense and cleanup.  That coverage action settled in 1989.  The 1989
General Release executed in connection with that settlement recites that, in
exchange for $16,250, “Mitec Systems Corporation,” by
its President and majority shareholder Myer Bentob,
broadly “remise[d], release[d] and forever discharge[d]” NSIC
from all, and
all manner of action and actions, cause and causes of action, . . . claims and
demands whatsoever, in law or in equity, which against the said [NSIC] ever
had, now has or which its successors, affiliates or assigns hereafter can, shall
or may have.
 
Later in 1989,
the Vermont Secretary of State dissolved Mitec
Systems for failing to file annual reports.
¶ 4.            
 Some nine years later, in 1997, Gerald and Nancy Bates, who live
near the Williston industrial park, sent a letter to Mitec
Telecom, a Canadian corporation formed in 1996 as a result of the amalgamation
of Mitec Electronics and another Canadian
corporation, asserting pollution-related claims against Mitec
Systems, Mitec Electronics, and Mitec
Telecom.  The letter warned Mitec Telecom to
expect a settlement demand from the Bates’s counsel,
and noted that the State of Vermont was still investigating previously
unexplored federal remedies relating to the earlier pollution.  In
June 1997, Mitec Telecom informed NSIC about the
letter and demanded coverage under the same policy that provided coverage
against the 1984 lawsuit, asserting that it had acquired Mitec
Systems’ rights to coverage under the NSIC-issued CGL policy, but not stating
how or why.  See N. Sec. Ins. Co. v. Mitec
Telecom, Inc., 38 F. Supp. 2d 345, 346 n.1 (D. Vt. 1999).  NSIC
notified Mitec Telecom in November 1997 that it would
not provide coverage under the policy, and simultaneously brought an action in
Washington Superior Court seeking a declaration that it had no duty to defend Mitec Telecom.  Id. at 346.   The
suit was removed to federal court, and Judge Sessions concluded that the demand
letter did not constitute a “suit” and was therefore insufficient to trigger NSIC’s duty to defend.  Id. at 349.
¶ 5.            
In 1999, the Bates plaintiffs filed suit in superior court, seeking
damages and other relief arising from Mitec Systems’
pre-1989 pollution in the Williston industrial park.  The suit named Mitec Systems, Mitec Electronics,
the Beatrice Alling Trust, and Beatrice Alling as defendants.  Myer Bentob
was not a named defendant.  NSIC agreed to defend all three Mitec companies in the Bates suit, subject to a September
1999 bilateral non-waiver agreement, which provided as follows:
Should [NSIC] establish
a lack of defense coverage of any party by judgment of a court of competent
jurisdiction, it may withdraw from the defense of that party on 30 days written
notice of its intent to withdraw.  In such event, [NSIC] reserves its
right to argue and seek an order from a court that it may recoup from Mitec its costs of defending that party.  Mitec expressly denies that [NSIC] would have any such
right to recoupment and by executing this Agreement does not waive its right to
make this assertion in any proceeding.
 
The non-waiver agreement purported
to bind, on the one hand, “Mitec Electronics, Ltd.
(through the authorized agent of a majority of its former shareholders), Mitec Systems Corporation (through the authorized agent of
its former shareholders), and Mitec Telecom, Inc.
(through its duly authorized agent), collectively called ‘Mitec’
“ and, on the other hand, NSIC.  The agreement was signed by Myer Bentob on behalf of each of the three named Mitec companies, and by NSIC’s
general counsel.
¶ 6.            
In October 1999, NSIC filed this complaint for declaratory relief in the
Washington Superior Court, naming Mitec Electronics, Mitec Systems, Mitec Telecom, and
Myer Bentob as defendants.  NSIC sought a
judgment declaring that it was under no obligation to provide coverage for Myer
Bentob, Mitec Systems, Mitec Electronics, or Mitec
Telecom.   Beginning with a jurisdictional order dated August 25,
2003, and in a succession of decisions thereafter, the superior court concluded
that it had jurisdiction over all of the named defendants and that no coverage
was available to any of them because of the 1989 general release. 
¶ 7.            
The August 25, 2003 order, a declaratory judgment order dated April 13,
2004, and a judgment dated July 1, 2004, give rise to several claims in the
instant appeal, concerning the court’s jurisdiction and the scope and effect of
the general release.  First, defendants argue that NSIC failed to state a
claim for which relief can be granted against Myer Bentob,
who was not a defendant in the Bates lawsuit.  See V.R.C.P.
12(b)(6).  The Mitec defendants also contend
that the superior court lacked jurisdiction over Mitec
Telecom and Mitec Electronics because neither company
had purposefully availed itself of the privilege of conducting activities in
Vermont.  See Hanson v. Denckla, 357 U.S.
235, 253 (1958).
¶ 8.            
Defendants raise two claims about the general release: (1) it did not
bind any entity but Mitec Systems; and (2) it did not
extend to future or unknown claims.  The first claim rests on defendants’
assertions that Mitec Telecom was not a successor,
affiliate, or assign of Mitec Systems and that, at a
minimum, the term “affiliate” is ambiguous in the context of the release and
should therefore be construed against NSIC.  As to the second claim,
defendants argue that a general release does not bar future claims unless it
contains explicit language doing so, and that there was no such language in
this release.
¶ 9.            
The remainder of defendants’ claims arise from the superior court’s
actions after the declaratory judgment in favor of NSIC was entered on July 1,
2004.  In it, the superior court ruled that the general release between Mitec Systems and NSIC 
. . . bars any
and all coverage for defense or indemnity of past or future claims, whether
known or unknown, arising out of the Alling
Industrial Park (‘AIP’) Site concerning pre-1989 operations and contamination
at the AIP, including the [Bates lawsuit].
 
The judgment
further declared that the general release binds Mitec
Electronics and Mitec Manufacturing, “both of which
are ‘affiliates’ of Mitec Systems Corp” and “Mitec Telecom, Inc., as a purported or potential
successor-in-liability or affiliated company to the other Mitec
companies.”[1]
 Further facts pertinent to the post-judgment claims of error are
adduced below.
¶ 10.        
We consider the jurisdictional claims first, then turn to the effect of
the general release, and finally to the claims arising from the post-judgment
amendment.
I.  Myer Bentob
¶ 11.        
Appellants argue that no claim for which relief can be granted was
asserted against Myer Bentob, and that the superior
court accordingly did not have jurisdiction to adjudicate the question of
whether he had coverage.  We agree.
¶ 12.        
In this action, NSIC sought a declaration that “neither the Policy nor
any other policy of insurance it has issued provides coverage . . . for the
liabilities asserted” in the Bates lawsuit.  As noted above, Mr. Bentob was not named in the Bates lawsuit and, naturally
enough, did not seek coverage for liabilities arising out of it.  As to
Mr. Bentob, the declaration requested would have been
that he was not entitled to something he had never sought, and which he had no reason
to seek.  Whether he was entitled to such a declaration is just the sort
of “abstract question or hypothetical threat [that] is not a sufficient basis
for a declaratory judgment.”  Williams v. State, 156 Vt. 42, 60,
589 A.2d 840, 851 (1990).  Mr. Bentob should
have been dismissed from the action.  V.R.C.P. 12(b)(6).[2]
II.  Personal Jurisdiction: Mitec
Telecom and Mitec Electronics
¶ 13.        
Mitec Telecom and Mitec
Electronics also moved to dismiss based on Rule 12(b)(2) of the Vermont Rules
of Civil Procedure.  The superior court denied the motion, noting that “Mitec’s request to [NSIC] to defend the underlying [Bates]
action was made in Vermont.  The tort alleged in the underlying case was
committed in Vermont, and the underlying Bates lawsuit is pending in
Vermont.”  The court concluded that “no matter what the corporate
viability of any Mitec entity, once it requests
defense and coverage in Vermont, it is engaging in business here. 
Defendants cannot claim coverage and simultaneously disclaim the carrier’s
ability to adjudicate coverage responsibility.”  We review the superior
court’s decision on the motion to dismiss de novo.  Godino
v. Cleanthes, 163 Vt. 237, 239, 656 A.2d 991, 992-993 (1995).
¶ 14.        
Vermont’s long-arm statute, 12 V.S.A. § 855, confers jurisdiction to the
full extent allowed by the United States Constitution.  Brown v. Cal
Dykstra Equip. Co., 169 Vt. 636, 636, 740 A.2d 793, 794 (1999) (mem.).  Our inquiry focuses on whether the defendant
has sufficient contacts with Vermont that maintaining the lawsuit here does not
“offend traditional notions of fair play and substantial justice.”  Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quotation omitted). 
The central question in determining whether specific jurisdiction may be
exercised is whether the defendant has purposefully availed itself of the
privilege of acting in the forum state.  This requirement “gives a degree
of predictability to the legal system that allows potential defendants to
structure their primary conduct with some minimum assurance as to where that
conduct will and will not render them liable to suit.”  World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).  Put another
way, the purposeful-availment requirement “ensures
that a defendant will not be haled into a jurisdiction solely as a result of
‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts, or of the ‘unilateral
activity of another party or a third person.’ “ Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations
omitted).
¶ 15.        
Personal jurisdiction must be proved independently as to each
defendant.  Schwartz v. Frankenhoff, 169
Vt. 287, 294, 733 A.2d 74, 80 (1999).  “[W]here no evidentiary hearing is
held on the jurisdictional issue, ‘the Court must consider the pleadings and
affidavits in a light most favorable to the plaintiff.’ “  Genesis Ins.
Co. v. Alfi, 425 F.Supp.2d 876, 879 (S.D. Ohio
2006) (citation omitted).  NSIC was required to “make only a prima facie
showing of jurisdiction, or, in other words, demonstrate facts which would
support a finding of jurisdiction.”  Godino,
163 Vt. at 239, 656 A.2d at 992.
¶ 16.        
Mitec Telecom and Mitec
Electronics assert that the superior court had before it “no competent
‘evidence of specific facts’ or ‘affirmative proof’ as to Telecom’s [or]
Electronics’ . . . contacts with Vermont.”  The Mitec
defendants take particular issue with the court’s purported reliance on
opposing counsel’s own statements as “virtually the exclusive source for the
‘facts’ on which the court relied in reaching its decision.”  Accordingly,
defendants characterize the court’s jurisdictional conclusions as “ludicrous”
and “inane.”  There is no error, and the tenor of appellants’
protestations does not create error where none exists.[3]
¶ 17.        
The genesis of this controversy was the demand to NSIC by Mitec Telecom and Mitec
Electronics for insurance coverage in the Bates Vermont lawsuit.  The only
theory under which that coverage is available is that Mitec
Telecom and Mitec Electronics are assignees,
successors, or affiliates of either Mitec
Manufacturing or Mitec Systems, which were the named insureds in the NSIC policy.[4]  Defendants now assert that Mitec Telecom “bore no relationship with [Mitec] Systems,” but this assertion is belied by both the
opinion and Mitec Telecom’s pleadings in the coverage
action in the federal district court.  See Northern Sec. Ins. Co. v. Mitec Telecom, Inc., 38 F. Supp. 2d at 346 n.1 (“Mitec Telecom has alleged that it ‘acquired [Mitec Systems’]’ rights under the . . . policy issued by
[NSIC.]”).  Mitec Telecom and Mitec Electronics now dismiss the federal court’s statement
as “cryptic” and a “mere interlocutory order” that has no preclusive
effect.  But Mitec Telecom cannot disavow its
own statement in the earlier litigation.  That statement was quoted
verbatim by the federal court in its order, and is part of the record in this
case.
¶ 18.        
In sum, Mitec Telecom and Mitec
Electronics claim coverage, under a policy purchased in Vermont from a Vermont
agent and issued by a Vermont company, for liability arising out of claims relating
to real property in Vermont, while simultaneously disclaiming Vermont courts’
jurisdiction to rule on that very coverage claim.  The Due Process Clause
does not require such an odd result, and the trial court did not err in
concluding that it had jurisdiction over Mitec
Telecom and Mitec Electronics in the coverage
dispute.
III. 
The General Release
¶ 19.        
Defendants contend that the 1989 release, executed by Myer Bentob on behalf of Mitec
Systems, does not bar Mitec Telecom from obtaining
coverage under the policy for liabilities arising from the Bates lawsuit. 
They advance two reasons for this: (1) the release does not bar future and
unknown claims; and (2) the release does not bind any entity other than Mitec Systems.  The superior court concluded, to the
contrary, that “the Mitec defendants in existence in
1989 [i.e., Mitec Manufacturing and Mitec Electronics] were affiliates of Mitec
Systems for the purposes of the release and are . . . precluded from raising
any claims against [NSIC] based on the policy.”  Mitec Electronics and Mitec
Manufacturing merged in 1991, and in 1996 merged with another Canadian
corporation to form Mitec Telecom.  Accordingly,
the court granted summary judgment to NSIC on this issue, declaring that NSIC
was not obligated to defend or indemnify any defendants.
¶ 20.        
We review the grant of summary judgment de novo, applying the same
standard as the trial court.  Johnson v. Harwood, 2008 VT 4, ¶ 5,
___ Vt. ___, 945 A.2d 875.  Summary judgment is appropriate when there is
no genuine issue of material fact and the moving party is entitled to judgment
as a matter of law.   Bacon v. Lascelles,
165 Vt. 214, 218, 678 A.2d 902, 905 (1996).  A release between an insurer
and its insured is a contract, Leo v. Hillman, 164 Vt. 94, 104, 665 A.2d
572, 579 (1995), and its interpretation is a question of law.  Morisseau v. Fayette, 164 Vt. 358, 366, 670
A.2d 820, 826 (1995).  As with any contract, our task in interpreting it
is to ascertain the intent of the parties at the time of execution. 
Releases must be specific in order to be valid and are interpreted narrowly, as
a general matter.  Inv. Props., Inc. v. Lyttle,
169 Vt. 487, 497, 739 A.2d 1222, 1229 (1999).
¶ 21.        
The release here provided as follows:
Mitec Systems Corporation[,] for and in consideration of
the sum of [$16,250] paid by [NSIC] . . . by these presents does for its
successors, affiliates and assigns, remise, release and forever discharge
[NSIC] . . . of and from all, and all manner of action and actions, cause and
causes of action, suits, debts, dues, sums of money, accounts, reckoning,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims and demands whatsoever, in law or in equity, which against the said
[NSIC,] its successors, affiliates or assigns ever had, now has or which
hereafter can, shall or may have for, upon or by reason of any matter, cause or
thing whatsoever from the beginning of the world to the day of the date of
these presents.  Included herein, but not in limitation hereof, are all
claims that were asserted or could have been asserted in Mitec
Systems Corporation v. Northern Security Insurance Company, Chittenden
Superior Court, Docket No. S515-88CnC.
 
A. Whether the release extends to future, unknown
claims
¶ 22.        
Defendants would have us find error in the superior court’s conclusion
that this language operates to bar coverage for future claims, including the
Bates lawsuit, arising out of events that occurred before the release was
executed.  Defendants assert that the release bars coverage only for
claims arising out of lawsuits filed against Mitec
before the release was executed, but not for after-filed claims, like this one,
that arise out of events that occurred before the release.  We
disagree.
¶ 23.        
None of our cases is directly on point, but the release we are called
upon to interpret today is strikingly similar to one that was before the United
States Court of Appeals for the Third Circuit in Fisher Development Co. v.
Boise Cascade Corp., 37 F.3d 104 (3d Cir. 1994).  There, Fisher
released Boise Cascade from all claims that it “ever had, now has, or hereafter
can, shall, or may have, for, upon or by reason of any matter, cause or thing
whatsoever, from the beginning of the world to the day and date of these
Presents.”  Id. at 106.  Noting that this release was of a
type “regularly utilized,” the Third Circuit concluded that “[i]ts language evidences an intent
on the part of Fisher to release all claims based on events occurring
from ‘the beginning of the world’ to the date of the execution of the
release.”  Id. at 108 (emphasis added).  The court went on:
“[W]e can only take the phrase ‘hereafter may have’ to mean that the parties
wished to release not only those claims of which they were currently aware, but
also those they might subsequently discover based on their relationship
prior to the execution of the release.”  Id. (emphasis
added).  The Third Circuit declined to consider extrinsic evidence
purportedly bearing on the question of whether the release barred future claims
arising from past events, instead concluding that the release unambiguously
barred such claims.  Id. at 109 (“While [the release] does not use
the words ‘future unknown liability,’ future unknown liabilities based on
events occurring before the release are clearly covered.”).
¶ 24.        
The language in the release before us is virtually indistinguishable
from the language analyzed in Fisher, and we decline to give it the
crabbed reading proposed by defendants.  That reading would render
portions of the release mere surplusage, a result we
strive to avoid in interpreting contracts.  See Isbrandtsen
v. N. Branch Corp., 150 Vt. 575, 580, 556 A.2d 81, 85 (1988) (noting that
we strive to give effect to all material parts of contracts).  Nor are we
persuaded by defendants’ argument that the release “makes no reference to
unknown or future claims” and that such claims are therefore not released. 
The release here explicitly covers claims that Mitec
Systems or its successors, affiliates, and assigns “hereafter can, shall, or
may have.”  This language plainly refers to the future, and to claims that
Mitec Systems or its successors “may have” but which
were not known at the time of the release.  We agree with the Fisher
court that such language unambiguously includes future claims arising out of
events—here, the pollution in the Alling Industrial
Park—that occurred before the release.  
¶ 25.        
Defendants also cite several cases construing language different from
that in the instant release, in support of an inference that only language
like that cited in those cases will operate to bar future claims.  See,
e.g., Boles v. Blackstock, 484 So.2d 1077,
1080-81 (Ala. 1986) (release barring recovery for “all injuries, known and
unknown” and “precluding forever any further or additional claims arising out
of [a particular] accident” was unambiguous); Bernstein v. Kapneck, 430 A.2d 602, 609 (Md. 1981) (release of
claims “known and unknown, and which have resulted or may in the future
develop” barred claim for damages for later-discovered personal injuries; “the
release could not be more clear, more specific, more complete, more
all-inclusive or more all-embracing”); Emery v. Mackiewicz,
240 A.2d 68, 70 (Pa. 1968) (release barring “claims that are known and unknown,
suspected and unsuspected” would be given effect; “release . . . could not
possibly be . . . more completely all-inclusive and
all-embracing”).  
¶ 26.        
It needs no prolonged discussion, however, to conclude that those cases
do not, and as a matter of logic cannot, have the effect defendants urge. 
The cases simply hold that future claims based on past events are barred
by particular releases, not that such claims are not barred by other
releases.  Several of the courts in the cases cited were at pains to state
that the language they interpreted was so completely clear that it would
“turn[] the English language on its head” to conclude that the releases did not
bar future, unknown claims.  Bernstein, 430 A.2d at 609; accord Emery,
240 A.2d at 70 (“It would make a mockery of the English language and of the Law
to permit this release to be circumvented or held to be nugatory.”). 
While the release here may not rise to the same level of redundancy as those in
Emery and Bernstein, it is nonetheless unambiguous.
 Accordingly, the trial court did not err in concluding that the release
barred coverage for future unknown liabilities, including the Bates lawsuit,
that arose from the Alling pollution.
B.  Whether Mitec
Telecom is bound by the release
¶ 27.        
It remains to determine, however, whether the release barred Mitec Telecom’s coverage claims.  Mitec
Telecom contends that it is not a successor, affiliate, or assign of Mitec Systems, and that its coverage rights—which it
asserts derive from Mitec Manufacturing’s rights—are
therefore unaffected even if the release does extend to future claims by Mitec Systems’ successors.  We do not agree.
¶ 28.        
In interpreting the language of the release, as with any contract, our
goal is to give effect to the intent of the parties.  State v. Philip
Morris USA, Inc., 2008 VT 11, ¶ 13, ___ Vt. ___, 945 A.2d 877.  We
presume that the parties’ intent is reflected in the plain language of the
release when that language is clear.  In re Adelphia Bus. Solutions of
Vt., Inc., 2004 VT 82, ¶ 7, 177 Vt. 136, 861 A.2d 1078.
¶ 29.        
The release here binds “successors, affiliates, and assigns” of Mitec Systems.   Defendants’ principal argument
against the superior court’s conclusion in this regard is that the court
erroneously concluded that Mitec Telecom is a
“successor to two affiliates” of Mitec Systems. 
According to defendants, Telecom itself is neither a successor to, nor an
affiliate of, Mitec Systems, and thus is not bound by
the release.  The argument very nearly defeats itself.  A general
release is meant to buy peace from a discrete set of claims.  Here, NSIC
paid consideration to Mitec Systems in exchange for a
release from liability for coverage claims by Mitec
Systems and its successors and affiliates.  NSIC’s
purchase would be hollow indeed if the releasor’s
affiliates—i.e., Mitec Manufacturing or Mitec Electronics—could unilaterally reimpose
liability on NSIC simply by changing their corporate form once, to become a
“successor to two affiliates.” 
¶ 30.        
The summary-judgment evidence amply supported this conclusion.  The
trial court’s summary-judgment order largely cited plaintiff’s pleadings and
exhibits for factual support.  The “once-removed” citations here
erect no great obstacle to our review, and we decline to reverse on that basis,
as defendants urge us to.  We briefly recount the undisputed facts relied
on by the superior court.
¶ 31.        
The court found that Mitec Electronics
provided a letter of credit to the State on behalf of Mitec
Systems as part of the 1986 settlement of the original pollution claims. 
Defendants do not dispute this fact.  The court also found that Mitec Systems sold its assets to Mitec
Manufacturing at an inflated price (many of these assets, it is worth noting,
were purchased from Mitec Manufacturing just a few
years before).  Contrary to the claim that defendants continue to
press—that there was a “complete lack of any corporate relationship among
Systems, Electronics, and Telecom”—the trial court found that there was
a “unity of control and ownership” of all the Mitec
companies; that the companies all “worked hand in glove as if part of a larger
company”; and that Mitec had shown no facts that
would rebut that conclusion.  There was no error in concluding that Mitec Telecom, as successor to one or more affiliates of Mitec Systems, was bound by the general release.
¶ 32.        
Finally, we note again that Mitec Telecom
explicitly claimed coverage as a successor to Mitec
Systems in the earlier federal action arising out of the Bates-lawsuit coverage
dispute, see supra, ¶¶ 17-18, which is to say that Mitec
Telecom’s own explicit understanding, at least in 1999, was that it was itself
a successor to Mitec Systems.  Mitec Telecom cannot avoid the release. 
IV.  The Rule 15 Motion
¶ 33.        
On July 16, 2004, NSIC moved, pursuant to V.R.C.P. 15(a), to amend its
complaint to insert a “Count II,” seeking reimbursement of fees, after the
existing declaratory-judgment count.  That same day, defendants filed a
timely notice of appeal.  On July 30, 2004, the trial judge instructed
counsel for both parties to discuss whether the court had jurisdiction over the
motion to amend in light of the notice of appeal.  The parties were unable
to reach agreement on the issue, and NSIC filed a supplementary memorandum in
support of the motion to amend on September 3, 2004.  Before defendants
responded to that memorandum, the docket clerk erroneously filed the notice of
appeal with this Court.  On October 5, 2004, the parties filed a joint
motion and stipulation requesting that we remand the matter to the superior
court to determine “whether there has been a final order in this case from
which an appeal lies and, if not, whether it should grant [NSIC’s]
Motion to Amend.”  We dismissed the appeal and remanded “pursuant
to the stipulation.”
¶ 34.        
We review the superior court’s decision on the motion to amend the
complaint for abuse of discretion.  Perkins v. Windsor Hosp. Corp.,
142 Vt. 305, 313, 455 A.2d 810, 815 (1982).  Amendments may be allowed
with leave of the court at any time.  Lillicrap
v. Martin, 156 Vt. 165, 170, 591 A.2d 41, 43-44 (1991). Our review is
complicated somewhat by the court’s decision to treat the motion to amend the
complaint, see V.R.C.P. 15(a), as a motion to amend the judgment,
see V.R.C.P. 59(e).  Our review of Rule 59 motions is also for abuse of
discretion.  Davis v. Manning, 143 Vt. 311, 314, 465 A.2d 1352,
1353 (1983).  We view the evidence in the light most favorable to the
prevailing party when reviewing the disposition of a Rule 59 motion.  Newkirk
v. Towsley, 134 Vt. 237, 238, 357 A.2d 117, 118
(1976).
A.  The order of filing
¶ 35.        
We first consider defendants’ contention that filing the notice of
appeal divested the superior court of jurisdiction to consider the motion to
amend the complaint.  Defendants argue, citing the superior court’s docket
sheet, that the notice of appeal was filed before the motion to amend, thereby
rendering the latter a “nullity.” 
¶ 36.        
The trial court—the very tribunal in which both the motion to amend and
the notice of appeal were filed—found that it “cannot determine which of the
two was first filed on July 14th.”  Accordingly, the trial court treated
the motions as simultaneously filed.  Defendants cite only the
trial court’s docket sheet to support their contrary contention that the motion
to amend was filed after the notice of appeal, and yet do not explicitly claim
error in the trial court’s finding that it could not determine the order of
filing.  We will not assume, based only on defendants’ conclusory
statements, that the trial court misinterpreted its own docket sheet or
docketing practices, and we will treat the motion to amend and the notice of
appeal as simultaneous.  Defendants have other claims, however.  
B.  The right to amend 
 
¶ 37.        
Defendants argue that, even if the notice of appeal is deemed to have
been filed after—or at the same time as—the motion to amend, the right to amend
the complaint had terminated because the action was already final.  We
agree.  
¶ 38.        
Rule 15(a) provides that leave to amend the complaint “shall be freely
given when justice so requires,” and we have repeatedly held that trial courts
are to be liberal in permitting amendments to the pleadings.  See, e.g., Lillicrap, 156 Vt. at 170, 591 A.2d at 44; Desrochers v. Perrault, 148 Vt. 491, 493, 535
A.2d 334, 336 (1987).  This policy of liberality rests on three principal
goals: (1) to ensure maximum opportunities for claims to be decided on their
merits rather than on procedural niceties; (2) to provide notice of claims and
defenses; and (3) to enable parties to raise claims that were overlooked or
unknown earlier in the proceedings.  Bevins
v. King, 143 Vt. 252, 255, 465 A.2d 282, 283 (1983).
¶ 39.        
Defendants argue that NSIC’s right to amend
the complaint under Rule 15 terminated when judgment was entered.  As the
record makes clear, judgment was entered on June 1, 2004.  At that time,
the action was final under our rules.  See V.R.C.P. 58 and 79.  We
therefore agree with defendants that the right to amend under Rule 15 no longer
attached when the motion was filed on June 14.  It remains to decide
whether the trial court properly concluded that Rule 59(e) provided a
procedural avenue for NSIC’s recoupment claim.
C. 
Rule 59(e)
¶ 40.        
Defendants contend that the superior court erred in “[f]abricating” a Rule 59(e) motion, and in deciding that
motion without notice or briefing when it “clearly was not ripe for
decision.”  But it is clear from the record that defendants were on notice
that the motion might be treated as a Rule 59(e) motion.  NSIC’s reply to defendants’ motion to strike the motion to
amend explicitly averred that the motion to amend could be considered under
V.R.C.P. 59.  We do agree with defendants, however, that the court erred
in determining that Rule 59(e) was available to plaintiffs under these facts.
¶ 41.        
Rule 59(e) allows motions to “alter or amend the judgment” if made
within ten days of the entry of judgment.  The motion to alter “allows the
trial court to revise its initial judgment if necessary to relieve a party
against the unjust operation of a record resulting from the mistake or
inadvertence of the court and not the fault or neglect of a party.”  Osborn
v. Osborn, 147 Vt. 432, 433, 519 A.2d 1161, 1163 (1986) (quotation
omitted).  “The ‘narrow aim’ of Rule 59(e) is ‘to mak[e]
clear that the district court possesses the power’ to rectify its own mistakes
in the period immediately following the entry of judgment.”  Greene v.
Town of Blooming Grove, 935 F.2d 507, 512 (2d Cir. 1991) (quoting White
v. N.H. Dep’t of Employment Sec., 455 U.S. 445, 450 (1982)).  
¶ 42.        
The superior court determined, citing authorities construing Rule 59(e),
that it would be “manifest injustice” to put NSIC in the “position of having
paid out a very substantial amount to defend a pollution claim, having won the
issue that it was not actually obligated to have borne those expenses, and yet
being barred from ever recovering them because a res judicata
defense will be interposed to a . . . later action initiated for the
purpose.”  See 11 C. Wright et al., Federal Practice and Procedure, §
2810.1, at 124-126 (2d ed. 1995) (noting that one of the “four basic grounds”
on which a Rule 59(e) motion may be granted is to prevent manifest injustice).
¶ 43.        
The cases cited in the treatise relied on by the trial court are
illustrative of the “manifest injustice” cases generally, and are also
strikingly dissimilar from the facts before us here.  In the first case
cited, Atlantic States Legal Foundation, Inc. v. Karg
Brothers, Inc., 841 F. Supp. 51 (N.D.N.Y. 1993), the district court granted
a motion under F.R.C.P. 59(e) to prevent the injustice that would have resulted
from the court’s own earlier misinterpretation of the governing law.  Id.
at 54 (“Now, after reconsidering its prior analysis in the context of the
relevant statutory scheme . . . the court believes that its earlier ruling was
in error.”).  In the second case in the treatise, Database America,
Inc. v. Bellsouth Advertising & Publishing Corp., 825 F.Supp. 1216 (D.N.J. 1993), the “manifest injustice”
language was the barest dictum.  Database America was ultimately
decided on the basis that the district court, having already transferred the
case at issue to another court, had no jurisdiction over the Rule 59(e) motion
in the first instance.  
¶ 44.        
NSIC admits, as it must, that it “could have brought a contingent claim
for reimbursement sooner,” but argues that “it was not compelled to do so,
particularly prior to termination of the defense or favorable ruling on
coverage.”  The same treatise cited by the superior court for the
“manifest injustice” standard also discusses cases like this one, where a party
could have, but did not, raise a particular claim for relief in its complaint:
“The Rule 59(e) motion may not be used . . . to raise arguments . . .
that could have been raised prior to the entry of judgment.”  11 C. Wright
et al., supra, § 2810.1, at 127-28 (emphasis added).  Illustrative
of this line of cases is the United States Court of Appeals for the Seventh
Circuit’s decision in Federal Deposit Insurance Corp. v. Meyer, 781 F.2d
1260 (7th Cir. 1986).  There, an attempt was made, via a Rule 59(e) motion,
to challenge an affidavit introduced without objection at trial.  The
appellate court rejected the attempt, holding that “[m]otions . . . to alter or amend a judgment must clearly
establish either a manifest error of law or fact or must present newly
discovered evidence.”  Id. at 1268.  To similar effect, under
more similar procedural facts, is another Seventh Circuit case, Harris v.
City of Auburn, 27 F.3d 1284 (7th Cir. 1994), in which the court rebuffed
an attempt to amend a complaint using Rule 59(e).  The court held as
follows:
But, the
presumption that leave to amend shall be freely given pursuant to Rule 15(a)
disappears after judgment has been entered.  First Nat’l Bank v. Cont’l Ill. Nat’l Bank, 933 F.2d 466, 468 (7th Cir.
1991).  At this juncture, the party making a Rule 59(e) motion so that it
can amend its complaint had better provide the district court with a good
reason to grant its motion.
 
Id. at
1287.  The Harris court went on to conclude that a power outage in
an attorney’s office was not a “good reason” to grant the motion under Rule
59(e).  Id.  It bears repeating that NSIC has not advanced any
reason for not including the attorney’s fees claim in the complaint, apart from
the unsupported statement that the claim did not “ripen” until the Bates
lawsuit settled and the declaratory judgment was entered.
¶ 45.        
We have not reviewed facts exactly like those presented here, but did
once suggest in dicta that a party awarded its “costs of action” might have
used a timely Rule 59(e) motion as a vehicle to determine whether that phrase
included attorney’s fees.  State v. Champlain Cable Corp., 147 Vt.
436, 441, 520 A.2d 596, 600 (1986).  In Champlain Cable, of course,
the State had actually requested attorney’s fees in its complaint, and had
received a judgment that was ambiguous as to those fees.  Id. at
438, 520 A.2d at 598.  The Champlain Cable dictum is consistent
with the corrective purpose of Rule 59(e); there, the court’s arguably
ambiguous order might have provided a basis for Rule 59(e)’s
availability.  Here, by contrast, NSIC’s
complaint did not so much as mention reimbursement of attorney’s fees. 
Thus, any supposed “mistake” in the judgment here was entirely due to the
“fault or neglect” of a party, and is outside the power of Rule 59(e) to
correct.  See Osborn, 147 Vt. at 433, 519 A.2d at 1163 (purpose of
Rule 59(e) is to allow correction of mistakes made by the court).  
¶ 46.        
Accordingly, we conclude that the superior court abused its discretion
in granting NSIC’s post-judgment motion to amend the
complaint or vacate the judgment.  Neither Rule 15 nor Rule 59(e) provides
relief from NSIC’s own failure to timely raise the
recoupment claim.  Because we conclude that the trial court erred in
considering the recoupment claim at all, we do not review the court’s
disposition of the claim itself.  
The award of attorney’s fees
is vacated; the judgment as to Myer Bentob is
vacated; the judgment below is affirmed in all other respects.
 
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Chief
  Justice

 





[1]
The court also concluded that the release bound Myer Bentob. 
In light of our conclusion that the court lacked jurisdiction over Mr. Bentob, we do not consider defendants’ claim that the court
erred in concluding that the release applied to him.


[2] 
In light of this conclusion, we have no occasion to consider defendants’ arguments
concerning Mr. Bentob’s asserted lack of minimum
contacts with Vermont. 
Nor do we consider the impact on Mr. Bentob of any of
the remaining contentions on appeal.


[3] 
Defendants’ briefs before this Court lack the professional tone we expect from
members of the bar.  The derisive references to the trial court’s
“hyperbole” and “erudition,” and to the court’s decision as “ludicrous,”
“inane,” “risibl[e],” and “disingenuous” distract
from the arguments on the merits in this case and do not advance the quality of
justice in Vermont.  “A lawyer is a representative of clients, an officer
of the legal system and a public citizen having special responsibility for the
quality of justice. . . .  A lawyer should demonstrate respect for the
legal system and those who serve it, including judges, other lawyers and public
officials.”  Preamble: A Lawyer’s Responsibilities, Vermont Rules of
Professional Conduct.
 


[4] 
Mitec Telecom has been reticent, in this case and in
the federal suit in which it claimed coverage under the same policy, to declare
precisely how it came to benefit from the insurance policy.  See Northern
Security Ins. Co. v. Mitec Telecom, Inc., 38 F. Supp.
2d 345, 346 n.1 (D. Vt. 1999) (noting that, although “Mitec
Telecom has alleged that it ‘acquired’ [Mitec
Systems’] rights under the . . . [NSIC] Policy,” Mitec
Telecom had not “provided the Court with facts concerning a relationship . . .
between Mitec Systems and Mitec
Telecom”).



