Dagney Trevor v. Icon Legacy Custom Modular Homes, LLC
217 A.3d 496
Vt.2019Background
- Trevor purchased a modular home from Icon Legacy; the home suffered water and structural damage after delivery and assembly by Osborne Construction and subcontractor Merusi.
- Extensive discovery disputes arose: Icon produced limited documents, certified discovery responses improperly, then belatedly produced large batches of documents months before trial and again during trial.
- The trial court found Icon violated its Rule 26(e) supplemental duty and repeatedly withheld documents, prejudicing Trevor’s ability to prepare (including expert work and depositions).
- The court imposed escalating sanctions: exclusion of late-produced documents, default judgment on liability (while initially permitting contest of damages), striking Icon’s affirmative defenses, and mid-trial expansion of default to require Icon to return the full consideration paid ($173,137.41).
- Trevor elected recovery under the Vermont Consumer Protection Act (CPA) for return of consideration and sought attorney’s fees; the court awarded Trevor attorney’s fees and expenses but reduced the lodestar then increased it 30% for Icon’s litigation misconduct.
- On appeal, this Court affirmed most sanctions and the CPA judgment but reversed the 30% upward adjustment to the lodestar (striking $104,668) as an improper double-recovery and remanded to reduce the fee award accordingly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether litig.-ending sanctions (default) were permissible for Rule 26(e) failure to supplement | Trevor: Icon repeatedly failed to supplement; sanctions necessary after prejudice shown | Icon: Rule 26(e) only corrects written responses; default requires violation of a court order and special findings based on evidence | Court: Rule 37(c)(1) authorizes default for failure to supplement; sanctions upheld where bad faith/gross indifference and prejudice are found |
| Whether separate Icon entities could be sanctioned jointly | Trevor: Icon presented itself as a single entity; both participated in discovery | Icon: Icon Legacy and Icon Transport are distinct and Icon Transport should not be sanctioned | Court: Argument not preserved; record shows parties treated entities jointly; sanctioning both was not an abuse of discretion |
| Whether dismissal of Icon’s indemnity crossclaims was proper after default on CPA liability | Trevor: Default established Icon’s direct CPA violations; indemnity unavailable if indemnitor was actively at fault | Icon: Indemnity should survive because other contractors caused harms that drew Icon into suit | Court: Default treated allegations as true; indemnity shifts from those without active fault—Icon had active fault, so indemnity claims properly dismissed |
| Whether trial court erred in awarding/adjusting attorney’s fees for CPA recovery and sanctions | Trevor: Fees reasonable; Icon’s misconduct justified lodestar adjustments and alternative sanction-based fee award | Icon: Upward adjustment penalizes misconduct and double-counts fees incurred responding to discovery abuses; alternative award unsupported | Court: Trial court properly computed lodestar and allowed a downward reduction, but abused discretion by applying a 30% upward adjustment (stricken); remaining fee award affirmed |
Key Cases Cited
- John v. Med. Ctr. Hosp. of Vt., LLC, 394 A.2d 1134 (Vt. 1978) (litigation-ending sanctions require findings of bad faith or willful disregard plus prejudice)
- White v. Quechee Lakes Landowners’ Ass’n, 742 A.2d 734 (Vt. 1999) (indemnity unavailable to a party with active fault)
- Chapman v. Sparta, 702 A.2d 132 (Vt. 1997) (complaint allegations must be assessed as evidence when defaulted)
- DeYoung v. Ruggiero, 971 A.2d 627 (Vt. 2009) (default treats factual allegations as true)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method for calculating attorney’s fees)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (upward adjustments to lodestar must be justified and not double-count time already billed)
- Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (S. Ct. 2017) (sanctions-based fee awards must compensate fees caused solely by the misconduct)