Summary
The Vermont Supreme Court affirmed a jury verdict for sellers in a dispute over a deposit under a purchase-and-sale contract. The court held that the trial court properly allowed withdrawal of an implied admission, correctly instructed the jury regarding apparent impossibility or repudiation, and did not prejudice defendants by allowing the plaintiffs' attorney to testify. The court also concluded that defendants prematurely canceled the contract because the evidence did not establish that curing the title defect was apparently impossible.
Topics
Practice areas
Questions Presented
- Whether the superior court properly permitted plaintiffs to withdraw an implied admission concerning their ability to cure the title defect and properly denied defendants' motion for partial summary judgment.
- Whether the jury instruction requiring defendants to show that it would have been impossible, in the practical or impracticable sense, for plaintiffs to cure the title defect within the agreed period accurately stated the law.
- Whether defendants were entitled to a less stringent standard requiring only that cure was highly unlikely.
- Whether the evidence supported the jury's finding that defendants prematurely canceled the contract because plaintiffs' performance was not apparently impossible.
- Whether the superior court erred by allowing plaintiffs' attorney to serve as both advocate and witness.
- Whether defendants were prejudiced by the attorney-witness ruling or by the challenged evidentiary rulings.
Holdings
- The superior court acted within its discretion in permitting plaintiffs to withdraw the deemed admission because withdrawal would promote adjudication of the merits and defendants failed to show prejudice; after withdrawal, the resulting factual dispute also defeated summary judgment.
- The jury instruction was legally correct because defendants' asserted futility theory was actually an implicit-repudiation or apparent-impossibility theory, and defendants had to prove that a reasonable person with the available information would have believed plaintiffs' performance was impossible in the practical or impracticable sense.
- Defendants were not entitled to an instruction that they could cancel merely because plaintiffs' cure was highly unlikely; highly unlikely is materially less demanding than the required showing of apparent impossibility or impracticability.
- The evidence supported the jury's conclusion that defendants failed to prove apparent impossibility and canceled the contract prematurely.
- Even assuming the superior court abused its discretion by denying defendants' motion to disqualify plaintiffs' attorney under Vermont Rule of Professional Conduct 3.7, defendants failed to show prejudice, so the ruling did not warrant reversal.
Key quotations
“A party repudiates a contract when that party explicitly or implicitly represents that he cannot or will not perform his obligations under the contract.” (¶ 15)
“There is no basis in case law or logic to apply a less stringent standard of impossibility (that performance is "highly unlikely") in the latter case.” (¶ 18)
“While impracticability embraces situations short of absolute impossibility, mere increase in difficulty is not enough.” (¶ 20)
Factual background
The Kempes contracted to purchase the Records' home and deposited $21,600. Three days before closing, the Kempes' attorney discovered a cloud on title, and the contract gave the Records at least thirty days after notice to cure the defect. Although the Kempes' attorney requested a sixty-day extension and the Records allegedly agreed orally, the Kempes canceled sixteen days into the cure period, asserting that the title defect could not be cured in time and that they did not want to incur additional bridge-loan interest. The Records were working to cure the defect when the Kempes canceled.
Procedural history
Plaintiffs sued to retain defendants' $21,600 deposit after defendants canceled a purchase-and-sale contract because of a title defect. Defendants counterclaimed for return of the deposit, moved for partial summary judgment based on an implied admission, sought to exclude evidence of an oral extension of the title-cure period, and moved to disqualify plaintiffs' attorney as both advocate and witness. The Windham Superior Court allowed withdrawal of the deemed admission, denied summary judgment and the evidentiary and disqualification motions, submitted the relevant issues to the jury, and entered judgment for plaintiffs with attorney fees. The Vermont Supreme Court affirmed.