VERMONT CONSTRUCTION CLAIMS RESOURCES
1 Construction Claims
- 1.1 Limitations & Repose Periods
- 1.2 Right to Repair Laws and/or Pre-Suit Statutory Procedures
- 1.3 Indemnity and Contribution
- 1.4 Certificate of Merit – Experts
- 1.5 Economic Loss Rule
- 1.6 Contractor Licensing Requirements
- 2 Construction Damages
- 3 Coverage Trigger of Coverage
Limitations & Repose Periods
Statute of Repose
Vermont does not have a statue of repose specific to construction. In general, civil actions must be commenced within six (6) years after the cause of action accrues. 12 Vt. Stat. § 511.
Statutes of Limitations
Breach of Contract: Vermont imposes a six (6) year limitations period on actions for breach of contract. 12 Vt. Stat. § 511.
Tort: Vermont imposes a three (3) year limitations period on tort actions. 12 Vt. Stat. § 512.
Negligence in Construction: Vermont imposes a three (3) year limitations period on negligence claims arising out of construction defects. 12 Vt. Stat. § 512(5).
Consumer Protection/Fraud Statute: Consumer protection/ fraud actions must be brought within six (6) years of accrual. 12 Vt. Stat. § 511.
8 Vt. Stat. § 4723: 8 Vt. Stat. § 4723 provides that “[n]o person shall engage in any trade practice which is determined under this chapter to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.”
8 Vt. Stat. § 4724: 8 Vt. Stat. § 4724 provides an extensive list of unfair methods of competition and/or deceptive acts and practices in the insurance industry.
Right to Repair Laws and/or Pre-Suit Statutory Procedures
There is no right to repair in Vermont.
Indemnity and Contribution
Generally speaking, indemnity agreements are valid under Vermont law. However, public policy concerns may render an otherwise enforceable indemnity agreement null and void.
Indemnity is allowed if: (1) there is an express agreement by one party to indemnify the other, or (2) the circumstances are such that the law will imply such an undertaking." Peters v. Mindell, 620 A.2d 1268, 1270 (Vt. 1992).
Vermont does not afford joint tortfeasors a right to contribution. Murray v. J & B Int’l Trucks, Inc., 508 A.2d 1351 (Vt. 1986).
Certificate of Merit – Experts
Vermont law does not require the filing of a certificate of merit for a claim against a construction or design professional.
Economic Loss Rule
Purely economic losses are unrecoverable in tort and strict liability actions in the absence of physical injury. See Springfield Hydroelectric Co. v. Copp., 172 Vt. 311, 779 A.2d 67 (Vt. 2001).
Exception: Even where courts have permitted recovery for economic loss, they have required a special relationship between the alleged tortfeasor and the individual who sustains purely economic damages sufficient to compel the conclusion that the tortfeasor had a duty to the particular plaintiff and that the injury complained of was clearly foreseeable to the tortfeasor. The underlying analysis turns on whether there is a duty of care independent of any contractual obligations. See Aikens v. Debow, [208 W. Va. 486, ]541 S.E.2d 576, 589 (W.Va. 2000).
Contractor Licensing Requirements
General or home improvement contractors do not require a license from the state of Vermont. Vermont requires electricians and plumbers (and some specialty trades) to be licensed and Asbestos and Lead abatement must be Certified.
Cost of Repair
When diminution or market value is unavailable or unsatisfactory as a measure of damages, cost of repair is proper where “the evidence does not demonstrate a cost of repair so inordinate and excessive as to be unreasonable and wasteful.” Nutter v. Fenoff, 2013 Vt. Unpub. LEXIS 112 *, 194 Vt. 653, 69 A.3d 291, 2013 WL 2922877 (Vt. 2013).
Diminution in Value
In Vermont, the general rule for determining property damage is diminution in market price of the property when loss of value cannot be calculated with sufficient certainty. Winey v. William E. Dailey, Inc., 161 Vt. 129 *, 636 A.2d 744, 1993 Vt. LEXIS 106 (Vt. 1993)
Vermont has long required a plaintiff to demonstrate that a defendant acted with malice in order to recover punitive damages. See Brueckner v. Norwich Univ., 169 Vt. 118, 730 A.2d 1086 (Vt. 1999).
Vermont follows the “American Rule,” whereby the litigant bears his/her own expenses. Attorney’s fees are not ordinarily recoverable. However, costs 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. See, V.R.C.P. 54(d)(1).
Joint and Several Liability (specific to construction)
Pure Joint and Several Liability: Vermont recognizes several liability where plaintiff is also at fault in some manner. See 12 Vt. Stat. Ann. § 1036.
Special or consequential damages must pass the tests of causation, certainty and foreseeability, and, in addition, be reasonably supposed to have been in the contemplation of both parties at the time they made the contract. See EBWS, LLC v. Britly Corp., 2007 VT 37 *, 181 Vt. 513, 928 A.2d 497, 2007 Vt. LEXIS 69 (Vt. 2007).
Coverage Trigger of Coverage
Definition of an Occurrence
An "occurrence" is defined as "an accident, including repeated exposures to similar conditions, that results in ‘bodily injury' or ‘property damage' during the policy period." The plain meaning of “accident” is "an event that is undesigned and unforeseen" or an "unexpected happening." See Serecky v. Nat'l Grange Mut. Ins., 2004 VT 63, 17, 177 Vt. 58, 857 A.2d 775.
A construction defect will not be considered an “occurrence” under a CGL policy. Hotel Roanoke Conf. Center Comm’n v. Cincinnati Ins. Co., 303 F. Supp.2d 784 (W.D. Va. 2004).
Duty to Defend
Indemnity is an exception to Vermont's longstanding rule barring contribution among joint tortfeasors. Indemnity is imputed only when equitable considerations concerning the nature of the parties' obligations to one another or the significant difference in the kind or quality of their conduct demonstrate that it is fair to shift the entire loss occasioned by the injury from one party to another.
The Vermont Supreme Court has acknowledged the difficulty of articulating a general rule on implied indemnity, but has explained that usually it will apply only when the party seeking indemnity is vicariously or secondarily liable to the third person because of a legal relationship with the third person or because of the party's failure to discover a dangerous condition caused by the indemnifying party, who is primarily responsible for the condition. See Hemond v. Frontier Communs. of Am., 2015 VT 66, P1, 199 Vt. 259, 260, 122 A.3d 1205, 1207, 2015 Vt. LEXIS 46, *1 (Vt. 2015).
There is no anti-indemnity statute in Vermont.
1. Coverage for AI’s own negligence vs. vicarious liability for Named Insured
Research did not reveal Vermont cases discussing AIs own negligence.
2. Determining Primary and Non-Contributory vs. Excess Position
Under Vermont law, where mutual repugnance of other insurance clauses is found in cases involving multiple insurers all claiming to provide either excess or primary coverage, the insurers share the coverage responsibility on a pro rata basis. See Fireman's Fund Ins. Co. v. CNA Ins. Co., 2004 VT 93 *, 177 Vt. 215, 862 A.2d 251, 2004 Vt. LEXIS 274 (Vt. 2004).
Court will focus on the language of the excess policy to determine the point at which the excess insurer has an obligation to “drop down” and provide coverage in place of a primary insurer. Atkinson Dredging Co. v. St. Paul Fire & Marine Ins. Co., 836 F. Supp. 341, 347 (E.D. Va. 1993).
3. AI carrier’s rights to reimbursement for defense expenses from other, co-primary carriers a. Research did not reveal any Vermont cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.
4. Insureds Right to Independent Counsel and Consequences of Rejecting a Defense
When an insurer and its insured have conflicting interests in a matter arising from a liability insurance agreement, and the insurer is required to provide special counsel for the insured, the arrangement should assure the special counsel’s professional independence.” Vt. Rules of Prof‟l Conduct R. 1.7 cmt.
When there is a failure on the part of an insurer to seek assent from the insured regarding its reservation of rights, a conflict of interest may exist. See Northern Security Ins. Co. v. Pratt, No. 838-11-10 Wncv, 2011 Vt. Super. LEXIS 36 (Vt. Super. May 19, 2011).
The insured is not entitled to appoint its own independent counsel so long as the insurer appoints truly independent representation. Id. at 21 (“So long as control over the defense is released, the conflict is remedied once [insurer] appoints a truly independent counsel. If there was any question beforehand, the law of Vermont has been settled since 1933 that a lawyer appointed to represent an insured owes all allegiances to the insured.”).
The insurer bears the burden of showing that the claims are excluded by the policy. See City of Burlington v. Association of Gas & Elec. Ins. Servs., Ltd., 11 Vt. L. W. 64, 66 (2000).
Late Notice: Under Vermont law, an insurer may not disclaim coverage for lack of notice unless it can establish that (1) the insured breached the notice provision and (2) that the insurer suffered substantial prejudice from the delay in notice. Cooperative Fire Ins. Ass’n. of Vt. v. White Caps, Inc., 166 Vt. 355, 362 (1997).
Choice of Law (Forum Selection Clauses)
Although forum selection clauses are “prima facie enforceable in Vermont,” enforcement of such clauses is not automatic and may be disregarded if enforcement would be unreasonable.” Chase Commercial Corp. v. Barton, 153 Vt. 457, 459 (1990).
Research did not reveal Vermont cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.