Starr v. Galfetti, No. 83-2-15 Wncv (Teachout, J., May 20, 2015)

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                                                      STATE OF VERMONT

SUPERIOR COURT                                                                                         CIVIL DIVISION
Washington Unit                                                                                        Docket No. 83-2-15 Wncv

TRACEY STARR                                                                                                 on appeal from
           Defendant–Appellant                                                                         Docket No. 360-6-14 Wnsc

           v.

TERI GALFETTI
     Plaintiff–Appellee

                                                   SMALL CLAIMS APPEAL
                                                          Decision

        Tracey Starr, Defendant in the Small Claims case below, appeals from the Findings and
Conclusions and Judgment of the Small Claims Court dated January 7, 2015. Both parties
represented themselves in Small Claims Court. Mr. Starr challenges the ruling that he is
obligated to reimburse Ms. Galfetti for half of the cost she paid to repair a shared, private water
line that connects both their homes to the City of Montpelier’s public water system.

       In an appeal from a Small Claims Court judgment, it is not the function of the Superior
Court to substitute its own judgment for that of the Small Claims Court Judge. See Whipple v.
Lambert, 145 Vt. 339, 340–41 (1985). Rather, the role of the Superior Court is to determine
whether or not the evidence presented at the hearing supports the facts that the Judge decided
were the credible facts, and whether or not the Judge correctly applied the proper law and
procedure.

        In the Findings and Conclusions, the Small Claims Judge found that the parties had made
an agreement, which was a binding contract, that required Mr. Starr to pay half of the repair
expense, that he breached that obligation by not reimbursing Ms. Galfetti for half after she had
paid the whole cost of $6,394.00, and he thus owes her $3,197.00 plus costs. Mr. Starr appealed.

        Overshadowing this case is the circumstance that Ms. Galfetti has not allowed water to be
restored to Mr. Starr’s home until he pays his share. (The valve to restore water to his home is
on her property.) The Small Claims Judge noted that he had no authority to order Ms. Galfetti to
restore water service to Mr. Starr’s home, which is true because the Small Claims Court only has
authority to issue judgments for money and not orders for action to be taken or not taken.1 The
Judge nonetheless found that Mr. Starr had breached the agreement that the parties had made,
and that he owed her the money.

        On appeal, Mr. Starr claims that the Judge erred in his finding of fact about the terms of
the agreement. He disputes that any agreement he made requires him to reimburse her as a

1
    The Civil Division of the Superior Court, in a proper action, does have that power.
precondition to the restoration of water to his home. The issue before this Court is thus whether
or not the evidence presented at the hearing supported the Court’s finding of fact that the parties
had made an enforceable contract with the terms as found by the Small Claims Judge, and if so,
that such contract was breached by Mr. Starr.

                                                          Facts

        The shared, private water line extends from the City water main to Ms. Galfetti’s house,
where it enters the basement, proceeds to the other side, and then extends to Mr. Starr’s house,
which is immediately behind Ms. Galfetti’s house. Mr. Starr’s house has no other source of
water. According to the testimony, the shared line has been in place since the homes were in
common ownership many years ago and the deeds to the houses are silent about the parties’
respective rights and obligations. In January 2012, the privately owned portion of the line
ruptured in some manner between Ms. Galfetti’s house and the public line. The City turned the
water off until the private line could be repaired.

        The evidence supports the fact that Ms. Galfetti and Mr. Starr agreed to split the cost of
the repair. The evidence also supports the finding that they made an agreement that it was
important to restore water service to both homes as soon as possible. However, at the time they
reached this agreement, neither had the ready means to pay for the repairs. They learned of the
possibility of grant money available through the City. The evidence supports an agreement that
each would apply for a Housing Preservation Grant loan through the City. This type of loan
apparently provides upfront funding for the repair, resulting in a lien against the property with no
obligation to pay back the grant funds until the house is sold or refinanced.2 Both parties began
the process of applying for such a grant.

        What happened was that Ms. Galfetti applied for a loan for the full amount and proceeded
with her application more quickly than Mr. Starr, although he also pursued a loan. When Ms.
Galfetti’s loan was approved, she immediately had the repair work done. As she testified at the
small claims hearing, “time was of the essence.” While a lack of running water in a house is a
serious habitability defect any time of the year, it is all the more so in the winter, when the water
may be needed to operate a boiler and pipes with still water are more likely to burst.

        In the course of the repair work, a valve on the line leading to Mr. Starr’s house was
closed. The valve is in Ms. Galfetti’s basement. The valve was left closed by a plumber at the
conclusion of the repair work. As such, Ms. Galfetti had water; Mr. Starr did not. Ms. Galfetti
sought payment from Mr. Starr for half of the repair expense she had paid out of grant funds.
She refused to turn his water back on until he paid her. All of the evidence at the hearing was to
the effect that Mr. Starr had been diligently pursuing his Housing Preservation Grant loan so that
he would be able to pay his share of the expense but the process was not moving as quickly on
his application as it did for Ms. Galfetti.

2
  There is some indication in the record that these are interest-free loans; if there is interest, the rate is unknown. If a
judgment for Ms. Galfetti that is collectible immediately and accrues interest at 12% per year were upheld, there is a
possibility that such a judgment would have given Ms. Galfetti a substantial windfall in that she would receive a
cash payment or judgment with interest running while she had no obligation to use the funds to retire the loan until
some indefinite time in the future.

                                                             2
        At this point, the relationship between the parties appears to have soured significantly.
Since the repair in the winter of 2012, Ms. Galfetti has refused to restore water to Mr. Starr’s
home. He has refused to pay his half of the repair expense.3 He is concerned that the lack of
water running through the line from Ms. Galfetti’s house to his for the last few winters probably
has caused that line to burst.

        The deeds to the houses are silent as to the parties’ rights and obligations with respect to
the water line.4 The parties to a shared easement are free to agree to the details of their
obligations to each other. Restatement (Third) of Property (Servitudes) § 4.13 cmt. a. This is
what the Small Claims Court concluded had happened in this case: that the parties came to an
agreement—made a contract--about repairing the water line. The Court further found that Mr.
Starr broke the agreement or breached the contract. It ruled that Ms. Galfetti was entitled to
compensation based on breach of contract.

        The problem with the Court’s ruling is that while there is evidence that the parties agreed
to share the expense of the repair 50/50, and they agreed on each applying for a Housing
Preservation Grant loan to raise funds because each presumably was unable to pay for the repair
out of pocket, there is no evidence of any agreement as to two terms that are critical to the
Court’s ruling:

    1. That either party could unilaterally pay for the entire repair and then be entitled to
       immediate reimbursement from the other (while the funding party has no obligation to
       repay until sale of the property, which could be years away); and
    2. That Mr. Starr could not have water until he paid his share of the funding.

To Mr. Starr’s argument that the agreement was that water would be restored as soon as possible
no matter who was paying for it upfront—due to the urgency of the situation and because one
loan necessarily would come through before the other—the Small Claims Court ruled:

         The problem with this argument is that there is no evidence to support Mr. Starr’s
         contention of an implied term. While the parties intended to take actions that
         would repair the leak and restore the flow of water from the City’s lines to the
         houses, there was no discussion about whether a party would have a right to block
         the flow of water after the repair if the other failed to contribute.

3
  Frustrated by the lack of water at his house, Mr. Starr sued the City of Montpelier in the Civil Division of the
Superior Court. That suit ended in a judgment for the City on the grounds that the City had no responsibility as a
matter of law for what happened. He has never sued Ms. Galfetti.
4
  Ordinarily, then, the Court would look to the law of easements to resolve this dispute. In that regard, the Court
notes that, in the absence of detailed arrangements between the parties, the law anticipates that the parties will
“exercise their respective rights and privileges in a spirit of mutual accommodation.” Restatement (Third) of
Property (Servitudes) § 4.10 cmt. a. Parties who share the use of a servitude, such as the water line in this case, are
obligated to share the responsibility for maintaining it and to not interfere with each other’s use and access to it. Id.
§§ 4.9, 4.13 cmt. d. Conflict resolution in this area of the law often requires resort to the strong public policy
favoring the productive use of land. Id. § 4.9 cmt. b. As a general matter, intentionally depriving a residential home
of potable water, rendering it uninhabitable, is substantially at odds with public policy.


                                                            3
Small Claims Decision 5–6. The Court went on to note that the circumstances that confronted
the parties had never been anticipated by them. With no such agreement in place, however, the
Court then should have resorted to the law of easements. Instead, it reasoned without reference
to the law of easements that Ms. Galfetti was within her rights to resort to “self-help,” and in
doing so it seems to have reasoned that there was an implied term that Ms. Galfetti had a right to
withhold water service until paid for half the cost. The Small Claims Court claimed to be basing
the decision on breach of contract but there was no evidence at the hearing that the parties had
agreed to either of the two terms described above, both of which are critical to its ruling.

        The Court found that the parties agreed to split the cost of the repair and to do so by both
applying for loans. That agreement is supported by evidence introduced at the hearing. Neither
the findings nor the evidence at trial reveals any meeting of the minds on anything else, much
less how they would handle what in fact occurred. “An enforceable contract must demonstrate a
meeting of the minds of the parties: an offer by one of them and an acceptance of such offer by
the other.” Starr Farm Beach Campowners’ Ass’n, Inc. v. Boylan, 174 Vt. 503, 505 (2002). The
general agreement to split the cost of the repair through mutual applications for public grants is
an insufficient basis to warrant any inference that the parties agreed that Ms. Galfetti could
refuse to restore Mr. Starr’s water supply or had any self-help right to do so, or that she had a
right to current indemnification for her unilateral decision to pay for the entire repair through a
grant for the full amount that did not need to be repaid until the house sold.

       There was insufficient evidence at the hearing to support the Small Claims Court’s
findings of the contract terms that were the basis of the Court’s finding of breach of contract.
Ms. Galfetti’s evidence was insufficient to prove the contract that she claimed was breached.
The Small Claims Court ruled in her favor in error.

         This Court is aware that this ruling does not resolve the problem between the parties, and
that is unfortunate. However, on an appeal from a Small Claims ruling, this Court is limited to
determining whether or not the Small Claims ruling was properly decided. It does not have the
authority to take over the case and decide it on grounds that were not presented by the parties.
Other legal avenues for resolving the parties’ disagreements remain available.


                                             ORDER

        For the foregoing reasons, the judgment of the Small Claims Court is reversed. Judgment
will enter for Mr. Starr.

       Dated at Montpelier, Vermont this ____ day of May 2015.


                                                      _____________________________
                                                      Mary Miles Teachout
                                                      Superior Judge



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