2014 VT 25


 
Murphy v. Sentry Insurance
(2012-335 & 2012-384)
 
2014 VT 25
 
[Filed 07-Mar-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 25

 

Nos. 2012-335 & 2012-384

 

Sandra J. Murphy, Personal
  Representative and Administrator of the Estate of Christopher Murphy


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Chittenden
  Unit,


 


Civil Division


 


 


Sentry Insurance


March Term, 2013


 


 


 


 


Helen
  M. Toor, J.


 

Steven A. Bredice
of Powell Orr & Bredice PLC, Williston, for
Plaintiff-Appellant.
 
Robert G. Cain and Andrew A. Beerworth
of Paul Frank + Collins P.C., Burlington, and
  Christopher J. Lynch of LeClairRyan, Hartford, Connecticut, for Defendant-Appellee.
 
 
PRESENT:  Reiber, C.J.,
Dooley, Skoglund, Burgess and Robinson, JJ.
 
 
¶ 1.            
BURGESS, J.   Plaintiff Sandra J. Murphy appeals from a
superior court decision that vacated a jury verdict in her favor and entered
judgment as a matter of law for defendant Sentry Insurance.  Plaintiff
contends that there was sufficient evidence to establish Sentry’s liability for
her husband’s workplace death under the Restatement (Second) of Torts
§ 324A based on a negligent inspection theory.  Plaintiff also argues
that the court erred in awarding costs to Sentry.  We affirm.  
¶ 2.            
Decedent died in 2004 after a forklift he was operating for his
employer, Pete’s RV Center, tipped over.  Pete’s is a recreational vehicle
dealership in Williston, Vermont, owned by David McGinnis and Terry
Shepard.  At the time of the accident, the
decedent was operating a forklift equipped with an unapproved towing
attachment, and using the forklift to tow a fifth-wheel camper.  In its
capacity as Pete’s general liability insurer, Sentry had performed a safety
survey at Pete’s in April 2002.  Plaintiff sued Sentry, alleging in
relevant part that Sentry was negligent in performing the April 2002 safety
survey because it failed to identify and warn of the dangers of using forklifts
with unapproved towing attachments.  
¶
3.            
The following evidence was presented at trial.  As indicated, as of
April 2002, Sentry was employer’s general liability insurer only.  That
month, Gary Smith, a senior safety consultant with Sentry, met with owner
McGinnis at Pete’s for an initial safety consultation and survey.  At that
time, Pete’s indoor facility consisted of a large building containing a
showroom, offices, a parts department, and an RV products store, as well as a
service department with a welding unit, numerous tools and one Toyota
forklift.  The outdoor premises included a six-acre lot with between 150
and 200 RVs, trucks with tow hitches, and a propane filling station.  
¶
4.            
Smith testified at trial that as a general matter, the purpose of
Sentry’s free loss-prevention services was to “assist the insured . . . with
their safety program.  It’s really a value added service that [Sentry]
provide[s] for [its] customers.”  Smith also stated, generally, that these
services promote employee safety, that Sentry tries to improve employee safety
at the businesses that Sentry insures, and that Sentry’s services are “strictly
as advisory in nature.  It’s a consultation visit . . . it’s
not mandatory.”  McGinnis understood that to control losses and promote
safety for Pete’s employees and managers Sentry would “look around the
dealership, see if we had any issues that might be a potential safety problem
or claim, future claim for the company.”  
¶
5.            
Smith explained Sentry’s standard inspection procedure as follows. 
First, Smith would deliver and review various education materials, such as
safety and health guidelines and write-ups on miscellaneous safety areas. 
He would then review Sentry’s “Safety at Your Service” website, and inquire how
Sentry could assist the insured.  Next, Smith would take
a “brief walkthrough” of the insured’s premises.  Smith noted that
Sentry informed the insured that Sentry was “not their safety program,” and
that the walkthrough was “strictly advisory in nature” and “certainly not a
floor-to-ceiling or wall-to-wall” inspection.  Smith reiterated that it
was “a walkthrough making general observations.  If we see something out
of the ordinary that could produce a loss producing situation then . . . we’ll
stop.  We’ll talk about it.  And we’ll make the appropriate
recommendation.”  
¶
6.            
At the time of his inspection of Pete’s, it was standard for Smith to
take hand-written notes and fill in blanks on a preprinted “loss control form”
to memorialize his observations.  Though Smith testified that he had no
independent recollection of the April 2002 inspection at Pete’s, his report
stated that equipment in the service department included one forklift, which
was established at trial to be a Toyota forklift.  Asked if he saw any
attachments for the forklift, Smith stated, “[a]ccording
to my report I did not, because if I had seen any attachments there would have
been a reference to that in my report.”  
¶
7.            
The location of the forklift tow attachment at the time of Smith’s visit
was discussed extensively at trial.  Owner Shepard did not accompany Smith
on his walkthrough, but he testified that the forklift was parked in a
designated spot when not in use.  Shepard stated that on a typical day,
“[t]here would probably be somebody on the forklift almost all the time all
day” and that if the forklift was not unloading a delivery truck “then the
attachment would be on it.”  Both McGinnis and Shepard testified
that they had no recollection of discussing the forklift attachment with
Smith.  McGinnis had no memory that he or Smith observed a forklift in
operation during the April 2002 visit, and there was no evidence to dispute
Smith’s testimony that, based on his report, he
observed no tow attachment at Pete’s.  
¶
8.            
Whether Smith saw or should have seen the forklift attachment is
connected to notice of the attachment’s purpose, illegality, and the role it
was claimed to ultimately play in the June 2004 fatality.  Pete’s
employees used the Toyota forklift with the tow attachment to move RV inventory
around the lot.  Shepard built the attachment for the Toyota forklift and
decided that it was safe to use.  It is undisputed that Pete’s was not
authorized by the forklift manufacturer to add the after-market tow attachment, and that its unapproved use violated the
law.  
¶
9.            
After the April 2002 inspection, Smith followed up on his survey of
Pete’s in an April 16, 2002 letter.  The letter noted that Smith’s visit
had been in connection with Sentry’s general liability insurance
coverage.  It further listed four motor-vehicle claims creating losses from
1999 to 2000, and observed that an “analysis of losses reflects that a motor
vehicle safety program should be developed along with a driver training
program.”  The letter also confirmed that Smith discussed Sentry’s website
and provided information on how Pete’s could obtain additional information
regarding the website and order safety lessons.  
¶
10.        
The letter made the following five recommendations, which were “offered
to assist [Pete’s] in controlling [its] losses”: (1) protect the propane gas
station against collision and fence it to prevent tampering; (2) develop and
communicate a written vehicle-safety policy; (3) schedule driver meetings
to demonstrate management interest in a safe driving record; (4) require
employees to sign a sexual harassment policy; and (5) conduct a security
evaluation and implement measures to detect and deter theft or vandalism of
inventory.  
¶
11.        
In March 2004, almost two years after Sentry’s general liability
inspection, Pete’s acquired two Yale forklifts intended for use in a remote
warehouse.  As he did for the Toyota forklift, Shepard built tow
attachments for the Yale forklifts to move RVs.  The Yale forklifts were
much smaller and less stable than the Toyota, and were more prone to tip over
when used with the attachments.  
¶
12.        
The accident that killed plaintiff’s husband occurred on June 15,
2004.  On that day, the decedent was using a Yale forklift to tow an RV at
the warehouse.  As he proceeded down a ramp, the unit jackknifed and the
forklift flipped, landing on top of him.  Following the accident, Sentry
inspected Pete’s and sent a follow-up letter with urgent new recommendations to
avoid the use of after-market forklift attachments prohibited by law and
emphasizing the danger of such unauthorized modifications.  
¶
13.        
McGinnnis testified that, had Sentry warned
Pete’s of the dangers associated with using an unapproved attachment on the
forklift, “We would have listened.  We would have talked about it.”  Asked
if he would have taken the forklift out of service if cautioned that this
equipment was dangerous and a threat to employee safety, he answered “[i]t’s hard to say. . . . [A]t the time,
it was the only method we had for moving units.  So it’s difficult to say . . . how we would have answered
that . . . .”  Counsel further inquired: “[I]f you
were told that it presented . . . an employee hazard as
expressed eventually in the [post-accident] letter that you received from
Sentry, would you have ignored that warning or would you have heeded it and
begun to find a replacement for the forklift?”  McGinnis answered:
“Yes.  We would have taken it seriously and at least started looking at
all alternatives.”  Shepard testified that had Sentry informed Pete’s, as it
did after the accident, of the danger of unapproved forklift attachments,
Pete’s would not have purchased the Yale forklifts or fabricated towing
attachments for them.  
¶
14.        
In her lawsuit, plaintiff alleged in relevant part that Sentry was negligent
in its April 2002 inspection because it failed to discover and warn Pete’s
about the danger of using unapproved towing attachments.  Sentry moved for
judgment as a matter of law at the close of the evidence, which the court
denied.  The jury found in plaintiff’s favor on the negligence
claim.  
¶ 15.         Sentry
subsequently renewed its motion for judgment as a matter of law, and the court
granted its request.  The court agreed with Sentry that there was no
evidence to show Sentry’s liability under § 324A of the Restatement (Second) of
Torts (1965).  That provision states: 
Liability to Third Person for Negligent Performance of
Undertaking.  One who undertakes, gratuitously or for
consideration, to render services to another which he should recognize as
necessary for the protection of a third person or his things, is subject to
liability to the third person for physical harm resulting from his failure to
exercise reasonable care to protect his undertaking, if 
 
 
(a) his failure to exercise reasonable care increases
the risk of such harm, or 
 
 
(b) he has undertaken to perform a duty owed by the
other to the third person, or 
 
 
(c) the harm is suffered because of reliance of the
other or the third person upon the undertaking.  
 
Vermont
formally adopted § 324A in Derosia v.
Liberty Mutual Insurance Co., 155 Vt. 178, 182-83, 583 A.2d 881, 883
(1990).  
¶ 16.         Turning
to the first prong of § 324A, the court concluded that there was no evidence
upon which the jury could find an increased risk of harm based upon Sentry’s
actions, and nothing Sentry did increased the risk that already existed. 
The court explained that Sentry did not affirmatively bless the use of the
attachment or the forklift, and did not encourage its use.  Sentry did not
suggest changes to its use that made it more dangerous.  There was no
action by Sentry that created any greater risk than already existed from the
use of the small forklift and homemade attachment to move huge vehicles as
heavy as ten thousand pounds.  
¶ 17.         The
court similarly concluded that there was no evidence to show that Pete’s
changed its position in reliance upon Sentry’s safety survey.  While
plaintiff argued that continuing to use the same type of forklift attachment
was a change in position, the court found that no reasonable jury could so
conclude.
¶ 18.         Finally,
the court considered whether Sentry had “undertaken to perform a duty” that
Pete’s owed to the decedent.  The court reasoned that the Restatement
first requires an undertaking to provide services that the provider should
recognize as necessary to protect a person or property, and then that the
undertaking was to perform a duty owed by the other to a third person.  It
explained that both criteria must be met to establish liability.  
¶ 19.         In
this case, the evidence showed that Sentry did offer some service to
Pete’s.  The important question was what services Sentry undertook to
provide, and whether those included performing at least part of Pete’s duty to
provide its employees with a safe workplace.  The court concluded that the
jury could not reasonably find that in conducting the April 2002 general
liability inspection, Sentry took on even a portion of Pete’s duty to provide a
safe workplace for the decedent.  Had this been a workers’ compensation
inspection, the court noted, it might have supported a claim that Sentry
assured Pete’s that its current workplace practices were adequate to protect
its employees.  The inspection at issue was not directed at workers’
compensation claims, however, and thus, the focus was not on employee
safety.  Unlike Derosia, 155 Vt. 178, 583
A.2d 881, the court explained, which involved a series of worker’s compensation
inspections, Pete’s could not have reasonably concluded that Sentry was taking
on any part of its duty to provide a safe workplace for its employees. 
The general liability policy addressed claims against Pete’s by third
parties.  The court concluded that the 2002 inspection was never designed
to reduce claims related to employee safety, nor could the jury reasonably so
conclude.
¶ 20.         In
reaching its decision, the court was unpersuaded by certain trial testimony
cited by plaintiff.  Plaintiff pointed to an exchange in Smith’s deposition
as evidence that the inspection at issue was designed to address employee
safety.  The court found the cited testimony to be general background
testimony about the inspector’s job and not directed to what Sentry did for
Pete’s.  The testimony did not address the inspection in question, nor did
it address the difference between a workers’ compensation inspection and a
general liability inspection.  The court found the need for evidence about
what Sentry undertook to do in this particular case, and thus, it concluded
that the slim reed of testimony cited by plaintiff could not support the
verdict here.  
¶ 21.         Aside
from the lack of any affirmative evidence to support the idea that the
inspection supplanted Pete’s duty, the court noted that the relevant policy in
place at the time of the April 2002 inspection stated that, while Sentry had
the right to make inspections at any time, any inspections would “relate only
to insurability” and Sentry did “not make safety inspections.”  The policy
also provided that Sentry did “not undertake to perform the duty of any person
or organization to provide for the health or safety of workers or the
public.”  
¶ 22.         The
court also rejected plaintiff’s assertion that the inspection covered the
entire workplace.  It found that the inspector walked through the
workplace, but there was no evidence that he inspected every piece of equipment
in the workplace or assessed how all of that equipment was used.  There
was no evidence that he inspected the forklift or attachment at issue in this
case, or that he was asked or expected to do so.  There was no reasonable
basis, the court concluded, for the jury to find that as a result of the 2002
walkthrough, Sentry undertook to assure a safe workplace for Pete’s employees,
or to assure the safety of all the equipment that employees were using. 
Thus, for all of these reasons, the court granted Sentry’s motion for judgment
as a matter of law.  
¶ 23.         Following
this decision, Sentry moved for costs.  Plaintiff opposed the request,
arguing that a defendant can never be awarded costs unless it recovers on a
counterclaim.  The court found this argument unsupported by the law. 
For reasons explained in more detail below, the court granted Sentry’s motion and
awarded Sentry $17,490.74 in costs.  Plaintiff appeals from these
decisions.  
I.
¶
24.        
We begin with the court’s decision to grant Sentry judgment as a matter
of law.  We review this decision de novo, using the same standard as the
trial court.  Downtown Barre Dev. v. GU Mkts.
of Barre, LLC, 2011 VT 45, ¶ 8, 189 Vt. 637, 22 A.3d 1174 (mem.).  “Judgment as a
matter of law is appropriate where a party’s claims hold no legally sufficient
evidentiary basis for a reasonable jury to find for the nonmoving party.”
 Schaad v. Bell Atl. NYNEX Mobile, Inc., 173 Vt. 629, 631, 800 A.2d
455, 458 (2002) (mem.) (quotation and alteration
omitted).  In conducting our analysis, we view the evidence “in the
light most favorable to the nonmoving party” and “exclude the effects of any
modifying evidence.”  Id. (quotation omitted).  
¶
25.        
To establish her claim, plaintiff needed to provide sufficient evidence
to satisfy any subsection of § 324A of the Restatement.  As set forth
above, these Restatement provisions ensure that before a party “is held liable
for negligent performance of his undertaking, he in some positive way must have
contributed to the injury, either by increasing the risk of harm, by
interposing himself between another person and the duty that the other person
owed to someone else, or by inducing reliance on his undertaking.”  Blessing
v. United States, 447 F. Supp. 1160, 1199 (E.D. Pa. 1978) (citations
omitted).  We agree with the trial court that plaintiff did not provide
sufficient evidence here to support a finding in her favor under any of the
subsections of § 324A.  
A.
¶
26.        
Plaintiff first argues that the jury could have reasonably concluded
that Sentry’s alleged negligent inspection increased the risk of physical harm
to the decedent.  According to plaintiff, Sentry should have warned Pete’s
in April 2002 of the risk posed by the use of unapproved forklift
attachments.  Plaintiff maintains that Sentry’s “failure to warn” Pete’s
about this issue in 2002 increased the risk of the harm to the decedent because
the attachment system was later transferred from the Toyota forklift to
smaller, less stable, forklifts.  
¶
27.        
We reject plaintiff’s arguments.  As we indicated in Derosia, 155 Vt. at 188, 583 A.2d at 887, a party
must engage in negligent conduct that “directly increases risk of harm” to fall
within § 324A(a).  That is, a plaintiff must
identify “sins of commission rather than omission.”  Patentas
v. United States, 687 F.2d 707, 716 (3d Cir. 1982); see also Deines v. Vermeer Mfg. Co., 752 F. Supp. 989,
994 (D. Kan. 1990) (“To avail himself of [§324A(a)],
plaintiff must show some affirmative action by the defendant.”).  “It is
well established that mere negligence in failing to discover a danger on the
part of a defendant, even if proved, would not subject the defendant to
liability under § 324A(a).”  Deines, 752 F. Supp. at 995 (citing cases).  In a similar
vein, liability will not be imposed simply because a defendant’s alleged
“failure to advise” permitted the continuation of an
existing risk.  Id. (citing cases); see also Myers v. United
States, 17 F.3d 890, 902-03 (6th Cir. 1994) (holding that mere failure to
detect another’s violation of safety regulations, without more, does not give
rise to duty under § 324A(a)); Howell v. United States, 932 F.2d 915,
918-19 (11th Cir. 1991) (holding that “for purposes of the § 324A ‘good samaritan’ doctrine, a risk is only increased when a
nonhazardous condition is made hazardous through the negligence of a person who
changed its condition or caused it to be changed”).
¶
28.        
As the Myers court explained, 
The
test is not whether the risk was increased over what it would have been if the
defendant had not been negligent.  Rather, a duty is imposed only if the
risk is increased over what it would have been had the defendant not engaged in
the undertaking at all.  This must be so because the preliminary verbiage
in Section 324A assumes negligence on the part of the defendant and further
assumes that this negligence caused the plaintiff’s injury.  If we were to
read subsection (a) as plaintiffs suggest, i.e., that a duty exists where the
negligence increased the risk over what it would have been had the defendant
exercised due care, a duty would exist in every case.  Such a reading
would render subsections (b) and (c) surplusage and
the apparent purpose of all three subsections to limit application of the
section would be illusory.  
 
17 F.3d at 903.  Thus, as the Myers court held,
a party must prove facts showing that the alleged tortfeasor
“affirmatively either made, or caused to be made, a change in the conditions
which change created or increased the risk of harm.”  Id.
¶
29.        
The Patentas court echoed these
sentiments.  In Patentas, the plaintiffs
alleged that the Coast Guard negligently inspected a ship.  The inspection
occurred shortly before the vessel caught fire and exploded.  The Coast
Guard inspected the vessel to examine an area where an earlier fire had
occurred and to determine if the vessel could safely continue discharging her
cargo.  The plaintiffs argued that a reasonable inspection would have
disclosed the defects that caused the first fire; these same defects caused the
later fire and explosion.  The court rejected the argument that the Coast
Guard increased the risk of explosion by failing to discover the cause of the
earlier fire and failing to stop the discharge.  
¶
30.        
As indicated above, the court identified the critical defect as the
plaintiffs’ “inability to identify sins of commission rather than omission.” 
Patentas, 687 F.2d at 716. 
Like the Myers court, it rejected a reading of the Restatement that
required only a showing that a defendant’s “failure to exercise reasonable
care” increased the risk of harm.  It noted, moreover, that “the comment
to section 324A(a) makes clear that ‘increased risk’
means some physical change to the environment or some other material alteration
of circumstances.”  Id. at 716-17.
 That critical component was lacking in Patentas. 

¶
31.        
Plaintiff’s evidence here suffers from the same flaw.  As an
initial matter, the evidence falls short of preponderant to prove that Sentry
should have noticed the tow attachment and its connection to the Toyota
forklift, let alone that Sentry should have anticipated the risk of forklifts
and forklift attachments not extant at the time of the inspection. 
Testimony that the Toyota forklift was probably operating during the
inspection, and that the tow attachment would be in use unless the forklift was
unloading a delivery, was insufficient as a matter of law absent any evidence
of unloading activity to prove it more likely than not that the tow attachment
was in play for the inspector to see.  Even if the Toyota forklift had
been noticed, there was no evidence that Sentry would or should have expected
Pete’s to apply the same kind of attachment to different and lighter forklifts
acquired after the inspection at issue.  
¶
32.        
Similarly, assuming Sentry should have recognized and warned Pete’s that
the Toyota attachment was prohibited, it just does not follow that Sentry made
it more likely that Pete’s would later acquire and use less stable forklifts.
 Sentry did not cause or sanction Pete’s use of tow attachments on its
forklifts to tow RVs.  Indeed, the record fails to show that Sentry knew
that a forklift attachment existed at Pete’s at any time prior to the accident.
 Assuming that the risk of physical harm associated with the use of
unapproved forklift attachments was present at the time of Sentry’s inspection,
nothing Sentry did increased the risk of physical harm to decedent from
such attachments.  We agree with the trial court that Sentry’s liability
cannot be premised on § 324A(a).  
B.
¶
33.        
Plaintiff next argues that the jury reasonably could conclude that, through
its inspection, Sentry assumed a portion of Pete’s duty to provide a safe
workplace to its employees.  Likening this case to Derosia,
plaintiff maintains that Sentry obligated itself to fill a safety gap in Pete’s
expertise and to address the safety of all users of Pete’s, and that Sentry’s
liability disclaimers are ineffective.  Citing a test set forth in Blessing,
447 F. Supp. at 1189, plaintiff also asserts that Sentry undertook to inspect
the entire premises, which included the forklift, thereby giving rise to a duty
to inspect and warn against the unlawful forklift attachment.  
¶
34.        
These arguments are unpersuasive.  In assessing a party’s liability
under § 324A(b), one must examine the nature and
extent of a party’s undertaking.  See, e.g., Blessing, 447 F. Supp.
at 1189 (explaining that for liability to be imposed under § 324A, party must
specifically undertake to perform task that he is charged with having performed
negligently, and that extent of undertaking determines scope of act upon which
liability may be premised).  In this case, Sentry conducted a “safety
survey” in its role as Pete’s general liability insurer.  There is no
evidence to show that, by conducting this survey, Sentry undertook to perform a
duty that Pete’s owed to the decedent.  
¶
35.        
This case is not like Derosia, as
plaintiff asserts.  In Derosia, the
plaintiff was injured while operating a table saw without a safety blade guard
mechanism.  He sued his employer’s workers’ compensation insurer, alleging
that the insurer had negligently conducted safety inspections at the
plant.  Cf. 21 V.S.A. § 624(h) (providing that injured employees are now
prohibited from suing workers’ compensation insurance carriers for conducting
workplace inspections except in the case of gross negligence or willful
misconduct).  Appealing from a jury verdict in the plaintiff’s favor, the
insurer argued that there was no evidence to show that it had undertaken or
promised to provide safety inspection services for either the employer or the
plaintiff.  We rejected this argument, finding sufficient evidence to
support the jury’s verdict.  Derosia, 155
Vt. at 186-88, 583 A.2d at 885-87.
¶
36.        
In support of our decision, we cited evidence that the insurer had engaged
in substantial loss-prevention activities with the employer and that it had
considerable expertise in the field of workplace safety.  We explained
that the insurer’s loss-prevention manager had regularly inspected the plant,
and provided detailed reports to the employer that included a list of loss
sources within the plant and “plans of actions” to address these issues.  Id.
at 183-84, 583 A.2d at 884.  Although the insurer
concluded that machines were a major source of injury, it made no recommendations
to reduce or eliminate those injuries or risks.  The insurer acknowledged
that the employer had no particular expertise in safety or loss prevention and
that the insurer would provide such expertise.  The employer’s personnel
director confirmed that the employer relied on the insurer for particular
expertise in safety maters.  Id. at 184-85, 583
A.2d at 884-85.  
¶
37.        
In reaching our decision, we considered the insurer’s argument that its
contract did not contain any promise to assume the employer’s duty to inspect,
and that it in fact provided that the insurer had the right to conduct
inspections without reliance by the employer on the results or recommendations
following inspections.  We agreed that the contract, standing alone, did not
subject the insurer to liability for conducting inspections and advising the
employer of the results of those inspections.  Id. at 185-86, 583 A.2d at 885.  But, for the reasons identified
above, we rejected the notion that there was no evidence from which the jury
could reasonably have concluded that the defendant undertook an obligation to
provide a safe workplace, notwithstanding the statements in the written
contract to the contrary.  Id. at 186, 583 A.2d
at 884-85.  In sum, we found sufficient evidence of an undertaking
to perform the duty owed by the employer, within the meaning of § 324A(b) of the Restatement, to support the jury
verdict.  
¶
38.        
It is a much different situation here.  First, Sentry was acting as
a general liability insurer, not a workers’ compensation insurer.  Thus,
as the trial court emphasized, the policy at issue addressed claims against
Pete’s by third parties—it was never designed to reduce claims related to
employee safety.  The fact that some of Sentry’s recommendations may have
promoted employee safety as well as the safety of third parties was merely
incidental; it does not change the focus or purpose of Sentry’s visit. 
Additionally, Sentry representatives did not regularly inspect Pete’s premises
while acting as Pete’s general liability insurer.  Plaintiff relies on
Sentry’s single walkthrough of the premises with one of Pete’s owners. 
Unlike the workers’ compensation insurer in Derosia,
moreover, Sentry did not regularly provide detailed reports to Pete’s outlining
“plans of action” to protect employee safety.  The Sentry representative
simply made note of several readily observable hazards on the premises during
his single walkthrough, and made recommendations for reducing or eliminating
those hazards.  Finally, there is no evidence that Sentry acknowledged
that the employer lacked any particular safety expertise or that Sentry would
provide such expertise.  Any suggestion that Pete’s relied on Sentry for
particular expertise in safety matters is unreasonable as a matter of law under
these circumstances.  
¶
39.        
Notwithstanding plaintiff’s assertion to the contrary, therefore,
Sentry’s role in this case was nothing like that of the workers’ compensation
insurer in Derosia, and no reasonable jury
could find that Sentry offered or intended to assume any part of Pete’s duty to
conduct workplace inspections and provide a safe workplace.  Having never
undertaken a duty to ensure, through inspection, a safe workplace for employer,
Sentry cannot be held liable for allegedly breaching such duty.
¶
40.        
None of plaintiff’s arguments compel a contrary conclusion.  The
evidence cited by plaintiff does not establish that Sentry undertook Pete’s
duty in this case to assure a safe workplace.  Plaintiff cites testimony,
for example, that “[t]he personal safety of all users of the premises is a top
priority” for an insurance loss prevention inspector.  As the trial court
observed, this testimony was simply general background testimony about the
inspector’s job and it did not show what Sentry undertook to do in this
particular case.  Even if the “purpose” of Smith’s visits was to promote
employee safety, it does not follow that Sentry thereby undertook employer’s
duty to provide a safe workplace.  Plaintiff also cites testimony from
Smith that, had he known of the unapproved forklift attachment, he would have
recommended that Pete’s discontinue using it.  We fail to see how this
statement supports the conclusion that Sentry undertook, through its 2002
safety inspection, to perform Pete’s duty to ensure a safe workplace.  
¶
41.        
Moreover, the trial court did not hold, as plaintiff asserts, that
Sentry was “insulated from its own negligence by its contractual
disclaimers.”  It observed only that, consistent with all of the other
facts presented in this case, the general liability policy stated that Sentry’s
inspections related only to insurability and that Sentry did not make safety
inspections nor did it undertake to perform the employer’s duty to provide for
its employees’ safety.  The terms of the contract may not be dispositive,
but they are certainly relevant, and they are properly considered with all of
the other evidence in this case.  Obviously, if Sentry’s activities had
been like those of the workers’ compensation insurer in Derosia,
the court might have found any contractual disclaimers unavailing.  But
this case is not like Derosia, as explained
above.  
¶
42.        
In support of her argument, plaintiff also cites a test set forth in Blessing,
which provides a more specific formulation of the basic tort rule that “duty is
measured by undertaking.”  447 F. Supp. at 1189. 
The Blessing court held that “an employee can recover for a negligently
performed inspection only where the inspector has physically undertaken to
inspect (1) the specific instrumentality causing the injury, or (2) the entire
physical plant of which the specific instrumentality is a part.”  Id. 
Assuming this standard applies, plaintiff’s proof failed to meet it.  
¶
43.        
There was no evidence to show that the inspector undertook to inspect
the forklift or the forklift attachment, mindful that this was not even the
same forklift or attachment as that involved in the decedent’s accident. 
Indeed, there was insufficient evidence to prove that Smith actually saw the
tow attachment.  Plaintiff cites testimony in which Pete’s owners
theorized that on a “typical day,” “[t]here would probably be somebody on the
forklift almost all the time all day,” and that if the forklift was not being
used to unload a truck, “then the attachment would be on it.”  Plaintiff
also cites testimony that the forklift was parked in a designated spot if it
was not being used, and that the attachment was not kept in a particular
place.  A Pete’s employee testified that “[u]nder
normal conditions,” the attachment remained on the forklift, and that when the
attachment was removed, it was “stored on the ground outside the
building.”  This generalized testimony does not prove it more likely than
not that, on the particular day and time in question, Smith saw the
attachment.  See, e.g., Winter v. Unaitis,
124 Vt. 249, 252, 204 A.2d 115, 117 (1964) (“Evidence which merely makes it
possible for the fact in issue to be as alleged, or which raises a mere
conjecture, surmise or suspicion, is an insufficient foundation for a
verdict.”); Burke v. N.P. Clough, Inc., 116 Vt. 448, 450, 78 A.2d 483,
485 (1951) (“[C]onjecture is no proof in him who is
bound to make proof.”).  
¶
44.        
There was similarly no evidence to show that the inspector undertook to
inspect the entire physical premises to discover any safety hazards that might
exist, including any hazards associated with the Toyota forklift.  Any
suggestion to the contrary is, as the trial court found, an exaggeration of what
actually occurred.  As stated above, the Sentry inspector walked through
the premises with one of the owners of Pete’s, and took note of several obvious
hazards.  Given the nature of his safety survey, we reject plaintiff’s
contention that Smith had a “duty to inquire” about the forklift.  We
agree with the trial court that the jury here could not reasonably have
concluded from the evidence that in conducting its 2002 inspection as Pete’s
general liability insurer, Sentry thereby assumed any portion of Pete’s obligation
to provide a safe workplace for the decedent.  
C.
¶
45.        
Finally, plaintiff argues that Pete’s relied on Sentry’s safety
inspection, and was thereby induced to forego correcting the danger created by
the forklift attachment.  In support of this contention, plaintiff points
to evidence that: Pete’s personnel believed Sentry’s inspections were for
safety purposes; Pete’s viewed Sentry as having superior safety expertise;
Pete’s promptly read and reacted to safety issues identified in Sentry’s safety
report; and, unaware of any danger, Pete’s co-owners permitted family members
to use the forklifts.  According to plaintiff, the jury could reasonably
have found that Pete’s owners believed that Smith saw the tow attachment during
his safety survey, and that Smith had decided that it was not a safety
issue.  They then “relied” on this and continued their practice of using
forklifts with unapproved attachments.  
¶
46.        
These arguments are unavailing.  Any reliance on the safety survey
for the purposes cited by plaintiff would be unreasonable as a matter of
law.  No reasonable employer could believe under the circumstances here
that Smith had identified all existing hazards on the premises or that he had
implicitly approved the use of unauthorized towing attachments.  As
previously discussed, there was no evidence to show that Smith even saw the
towing attachment.  And indeed, a different forklift and a different
towing attachment were involved in the decedent’s accident.  As Sentry
points out, moreover, there was undisputed evidence presented at trial that
Pete’s had its own designated safety director and its own safety program. 
Part of Pete’s safety program was specifically tailored to forklift operation
and materials handling practices.  Even if plaintiff could show that
Pete’s neglected or reduced its own safety program in reliance on Sentry’s
inspection, which she cannot, any such reliance would be unjustified. 
Thus, for all of the reasons discussed above, we find no error in the trial
court’s decision to grant judgment to Sentry as a matter of law.  
II.
¶
47.        
We turn next to plaintiff’s assertion that the trial court erred in
awarding Sentry $17,490.74 in costs.  Plaintiff argued below that Sentry,
or any other defendant, must recover something on a counterclaim before it
could be awarded costs under Vermont Rule of Civil Procedure 54.  The
court rejected this argument, characterizing plaintiff’s interpretation of case
law and the rules as tortured.  The court found that costs were
routinely awarded to a defendant when there was a defense verdict.  As to
the actual amount of costs requested, the court noted that plaintiff did not
argue until her third memorandum on the motion for costs that any of the
specific items of costs sought by Sentry were inappropriate.  The court
agreed with plaintiff that Sentry was not entitled to certain deposition costs,
but found that plaintiff offered no support for her proposed deduction of other
itemized costs.  The court explained that filing fees and service fees
were routinely awarded to the successful party in a lawsuit, and it found no
reason to treat the mediator’s fee differently.  
¶
48.        
As she did below, plaintiff challenges Sentry’s status as a “prevailing
party” and its general entitlement to costs under Rule 54.  As part of
this argument, plaintiff asserts that, because Sentry is not a “prevailing
party,” the court could award Sentry only its reasonable deposition expenses
under Rule 54(g).  We review the court’s ruling for abuse of
discretion.  Peterson v. Chichester,
157 Vt. 548, 553, 600 A.2d 1326, 1329 (1991).  There was no abuse
of discretion here. 
¶
49.        
Rule 54(d)(1) provides that “[c]osts other than attorneys’ fees shall be allowed as of
course to the prevailing party, as provided by statute and by these rules,
unless the court otherwise specifically directs.”  Vermont Rule 54(d) is
based both on Maine Rule of Civil Procedure 54 and Federal Rule of Civil
Procedure 54.  See Reporter’s Notes, V.R.C.P. 54; see also F.R.C.P. 54(d)(1) (“Unless a federal statute, these rules, or a court
order provides otherwise, costs—other than attorney’s fees—should be allowed to
the prevailing party.”); M.R.C.P. 54(d) (“Costs shall be allowed as of course
to the prevailing party, as provided by statute and by these rules, unless the
court otherwise specifically directs.”); see also Me. Rev. Stat. tit. 14 § 1501
(providing in part that “[i]n all actions, the party
prevailing recovers costs unless otherwise specially provided”).  The rule
does not define what it means to “prevail” in litigation.  
¶
50.        
Plaintiff reads the rule as a limitation.  Plaintiff argues that
the rule’s phrase “prevailing party, as provided by statute and these rules”
means a party can recover costs only if “provided by statute and these
rules.”  She argues that there is only one relevant statute and one
relevant rule, and that neither authorizes recovery of costs by defendant in
the circumstances of this case.  The statute, 32 V.S.A. § 1471(a), provides:
“There shall be taxed in the bill of costs to the recovering party . . . a fee
equal to the entry fees, the cost of service fees incurred, and the total
amount of the certificate of witness fees paid.”  Plaintiff argues that
the statute does not apply because defendant is not a “recovering party.” 
The rule, Vermont Rule of Civil Procedure 68, applies when there is an offer of
judgment and provides that “[i]f the judgment finally
obtained by the offeree is not more favorable than
the offer [of judgment], the offeree must pay the
costs incurred after the making of the offer.”[1]  There is no offer of judgment in
this case.
¶
51.        
To analyze plaintiff’s argument, we must start with the state of the law
before we adopted Rule 54.  At common law, as adopted in this state, costs
were available to the prevailing party at the discretion of the court. 
See 1 V.S.A. § 271 (adopting the common law); Comstock’s Adm’r
v. Jacobs, 89 Vt. 510, 512, 96 A. 4, 5 (1915); see also Buckhannon Bd.
& Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S.
598, 606 n.8 (2001).  Thus, for remedies recognized at common law, the
availability of costs did not rely upon statutory recognition.  See Comstock’s
Adm’r, 89 Vt. at 512-13, 96 A. at 5-6; see also
Kelley v. Hoosac Lumber Co., 96 Vt. 153, 159, 118
A. 520, 521 (1922) (reiterating that appellate costs can be recovered at common
law under “the well recognized general rule, that
costs are to be taxed for the prevailing party”), overruled on other grounds,
Grenier v. Alta Crest Farms, 115 Vt.
324, 58 A.2d 884 (1948).  The common law in this respect could be
supplemented by statute.  Comstock’s Adm’r,
89 Vt. at 512, 96 A. at 5.  The same rules prevailed in
equity.  Doty v. Vill.
of Johnson, 84 Vt. 15, 23-24, 77 A. 866, 869
(1910).
¶
52.        
As stated above, Rule 54(d) was originally based upon the identically
worded Maine rule.  Unlike Vermont, however, Maine had enacted a statute
that codified the common law and awarded costs to the prevailing party unless
otherwise provided by statute.  See Me. Rev. Stat.
tit. 14 § 1501.  Thus, the wording of the
Maine rule did not have to reflect the governance of the common law.  In
adopting the Maine language, there is no indication of an
intent to supersede the common law, assuming that it was possible for a
judicial rule to supersede the common-law remedy.  The rule allows costs
to the “prevailing party” with no suggestion that a successful defendant cannot
be a prevailing party,[2]
and the Reporter’s Notes state: “The provision confirms that costs are awarded
as of course.”  In any event, language of a statute or rule will not
“change common law by doubtful implication, it is only overturned by clear and
unambiguous language.”  State v. Brown, 147 Vt.
324, 327, 515 A.2d 1059, 1061 (1986).  We do not find in Rule 54(d)(1) the unambiguous language to overturn the common-law
rule on costs.  That construction is supported by the absence of any
evidence of an intent to overturn the common law rule
allowing costs to prevailing defendants.
¶
53.        
Sentry plainly obtained a judgment in its favor in this common-law
negligence action, and there can be no question that Sentry was the prevailing
party.  Cf. Seacoast Hangar Condo. II Ass’n v. Martel, 2001 ME 112, ¶ 31, 775 A.2d 1166
(explaining that in determining which party has “prevailed” for purposes of
recovering costs, trial court “must look at the lawsuit as a whole to determine
which party was the ‘winner’ and which the ‘loser’ ” (quotation
omitted)).  As the prevailing party, the court had discretion to award
Sentry its costs.  See Chichester, 157
Vt. at 553, 600 A.2d at 1329 (citing V.R.C.P. 54(d) (costs allowed, “unless the
court otherwise specifically directs”)); see also Greenlaw
v. Rodney Stinson Post No. 102, 567 A.2d 75, 76 (Me. 1989) (recognizing,
under identical rule, that trial court has wide discretion in determining type
and amount of costs recoverable by prevailing party in civil action); Teel
v. Young, 389 A.2d 322, 324 (Me. 1978) (finding Maine rule “greatly
similar” to federal rule, and concluding that rule and relevant statute
“clearly contemplate that the allowance of costs to a prevailing party is
almost automatic” while “disallowance of costs is something in the nature of a
penalty,” and citing federal cases so holding).  
¶
54.        
Plaintiff’s challenge to the cost award rests solely on her mistaken
premise that Sentry is not a “prevailing party.”  Based on this assertion,
she maintains that the trial court lacked authority to award anything but
reasonable deposition costs under Rule 54(g).  For the reasons set forth
above, this argument fails.  Plaintiff has not shown that the court abused
its discretion in awarding costs here.  
Affirmed.

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 







[1] 
Plaintiff also asserts that “Vermont follows the ‘American Rule,’ under which
parties must generally bear their own costs and attorney’s fees,” which
requires a strict construction of Rule 54(d)(1), Rule
68, and 32 V.S.A. § 1471.  It is true that Vermont follows the
American Rule, In re Gadhue, 149 Vt. 322, 327,
544 A.2d 1151, 1154 (1987), but costs and attorney’s fees are distinct, and
Rule 54(d)(1) authorizes costs, not attorney’s fees.  Id. at 327,
544 A.2d at 1153-54 (“While our courts have relatively broad discretion in awarding costs
in litigation, attorney’s fees are considered litigation
expenses—not costs—and are not as freely taxed to
the opposing party by one who prevails in a particular matter.”); see V.R.C.P.
54(d)(1) (“Costs other than attorneys’ fees
shall be allowed as of course to the prevailing party.” (emphasis
added)).


[2]
 We have in the past affirmed the award of costs to a prevailing defendant
under Rule 54(d).  See Ianelli v.
Standish, 156 Vt. 386, 592 A.2d 901 (1991). 
The plaintiff did not, however, challenge in that case the defendant’s right to
any award of costs on the argument made by plaintiff here.



