Antony Sutton et al. v. Vermont Regional Center et al.

Summary

The Vermont Supreme Court reviews the dismissal of claims brought by foreign investors arising from the operation of Vermont’s EB-5 regional center and the Jay Peak Projects. The court reverses dismissal of negligence claims against the Vermont Agency of Commerce and Community Development, gross-negligence claims against two individual defendants, and contract and implied-covenant claims against the agency, while affirming dismissal of the remaining claims. The opinion addresses negligent undertaking, the economic-loss rule, sovereign immunity, and statutory limits on claims against state employees.

Holdings

1. Plaintiffs adequately stated a negligence claim against ACCD by alleging that ACCD induced them to invest by promising unusually extensive oversight and then failed to provide that oversight. The economic-loss rule did not bar the claim at the pleading stage because the alleged undertaking and individualized solicitation supported a special relationship giving rise to a duty of care.
2. The Vermont Tort Claims Act waived the State's sovereign immunity for plaintiffs' negligent-undertaking claim against ACCD, and the discretionary-function exception did not apply to the alleged failure to conduct oversight that ACCD had specifically undertaken and represented it would perform.
3. Plaintiffs adequately stated gross-negligence claims against Brent Raymond and James Candido, but not against John Kessler. Eugene Fullam was protected by qualified immunity, and Lawrence Miller and Patricia Moulton were protected by absolute immunity.
4. Plaintiffs adequately stated claims against ACCD for breach of contract and breach of the implied covenant of good faith and fair dealing based on a unilateral contract formed when ACCD offered oversight in exchange for investment and plaintiffs accepted by investing.
5. Plaintiffs were not entitled to enforce the MOUs between ACCD and the Jay Peak Projects as third-party beneficiaries because the unambiguous MOU language did not show an intent to create enforceable obligations running from ACCD to the investors.
6. The trial court properly dismissed the securities-fraud claims. The claim against ACCD was barred by the sovereign-immunity exception for misrepresentation, deceit, and fraud, and the claims against the individual defendants failed to satisfy Rule 9(b)'s particularity requirement.

Questions Presented

1. Whether plaintiffs stated a negligence claim against ACCD based on ACCD's alleged undertaking to provide oversight and monitoring of the Jay Peak Projects.
2. Whether the Vermont Tort Claims Act waived sovereign immunity for the negligence claim and whether the discretionary-function exception applied.
3. Whether plaintiffs stated gross-negligence claims against individual state employees and whether those employees were protected by absolute or qualified immunity.
4. Whether plaintiffs stated claims against ACCD for breach of contract and breach of the implied covenant of good faith and fair dealing based on ACCD's promises of oversight in exchange for plaintiffs' investments.
5. Whether plaintiffs were intended third-party beneficiaries of the memoranda of understanding between ACCD and the Jay Peak Projects.
6. Whether plaintiffs' securities-fraud claims were barred by sovereign immunity or inadequately pleaded under Vermont Rule of Civil Procedure 9(b).
7. Whether the court should address breach-of-fiduciary-duty, aiding-and-abetting, and implied-contract claims that were inadequately briefed on appeal.

Disposition

reversed_and_remanded