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Hayes v. Town of Manchester Water & Sewer Boards

Supreme Court of Vermont

November 21, 2014

Jeffrey D. Hayes and Deborah Hayes-McGraw
v.
Town of Manchester Water & Sewer Boards and Mountain View Estates Homeowners Association

On Appeal from Superior Court, Bennington Unit, Civil Division Katherine A. Hayes, J.

Richard H. Coutant of Salmon & Nostrand, Bellows Falls, for Plaintiffs-Appellees.

Stephen L. Saltonstall, Manchester Center, for Defendant-Appellant Town of Manchester.

Lon T. McClintock, McClintock Law Office, P.C., Bennington, for Defendant-Appellant Mountain View Homeowners Association.

PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Crawford, JJ. [1]

ROBINSON, J.

¶ 1. This case involves the power of a court to require an estate to create a trust to satisfy feared future claims against the estate, as well as the proper application of the dead man’s statutes, 12 V.S.A. §§ 1602-1603. Developers of a residential subdivision died, triggering various claims by and against their estates relating to the estates’ responsibilities for the subdivision’s private roadway, water, and sewer infrastructure. The Town of Manchester appeals a superior court decision denying the Town’s request that the court create a trust from the assets of the estates to pay for repairs, maintenance, and improvements to the subdivision’s sewer system to protect the Town’s water supply. A group of homeowners separately appeals the trial court’s denial of their request for a ruling that the estates have a legal obligation to dedicate the infrastructure to the Town and, until that happens, to maintain the infrastructure at their expense. We affirm the superior court’s refusal to create the trust requested by the Town, but reverse the court’s denial of the homeowners’ request for a ruling on their claims, and remand for reconsideration of those claims based on the evidence, including evidence that the trial court previously excluded under the dead man’s statute, to determine whether an enforceable promise was made concerning maintenance of the infrastructure pending its dedication to the Town.

¶ 2. The parties stipulated to the basic facts. In the late 1970s and early 1980s, Richard Hayes developed a subdivision called Mountain View Estates on land jointly owned by him and his wife, Nadine Hayes, in the Town of Manchester. The subdivision grew to include forty residential homes, a school building, and a chiropractic clinic on forty-four lots. It is by now essentially built out, and no further sales of lots for additional building are likely.

¶ 3. The subdivision plan was approved by the Town and the state, and the water and sewer systems were permitted. The subdivision plan did not include any specific plans or requirements for dedication of its two privately owned roads or water and sewer systems to the Town. Richard Hayes initially supplied water to the subdivision through his water company, which he sold to the Town in 1982 along with the water and sewer lines underlying nine of the lots in the subdivision. Since then, the Town has supplied the water for the entire subdivision. The Hayeses continued to own the remaining portions of the subdivision’s water and sewer systems, as well as the roadways, until they were simultaneously killed in a car accident in 2004. The sewer system includes underground lines and manholes that convey effluent by gravity to a pump station consisting of a holding tank and two submersible pumps. From the pump station, effluent is carried through an underground force main to the municipal sewer system, ending up at the Town’s wastewater facility.

¶ 4. From the sale of the first lot in about 1981 until his death in 2004, Richard Hayes paid for maintenance and plowing of the roads that ran through the subdivision and maintained the subdivision’s sewer system and the portion of the water system that he and his wife still owned, without charge to the homeowners.

¶ 5. In 2004, the Hayeses were killed in a car accident. A probate proceeding was opened in connection with their individual estates, and the Hayeses’ adult children, Jeffrey D. Hayes and Deborah Hayes-McGraw, were appointed co-administrators. In August 2005, the Town filed a “claim, ” which the estates denied, asking that estate funds be set aside for updating and servicing the subdivision’s water and sewer systems. The probate court allowed the claim and also granted the homeowners’ [2] motion to intervene in the proceeding to protect their rights with respect to the access, operation, maintenance, inspection, repair, and improvement of the subdivision’s sewer, water, and road infrastructure. During the probate proceeding, the Town and the homeowners raised related issues concerning the subdivision’s infrastructure, but the legal issues raised by each on appeal are distinct. For simplicity, we discuss the pertinent facts, procedural background, and legal issues raised by each appellant separately.

I. The Town’s Appeal

¶ 6. The Town’s primary concern in the proceedings below was that the subdivision’s sewer system, which was owned and managed by the estates, was in disrepair and threatened the Town’s water supply. In September 2008, after a multiple-day hearing, the probate court ordered the estates to set aside $1 million to inspect the subdivision’s water and sewer systems and to make any necessary updates and repairs, and to dedicate the updated systems to the Town.

¶ 7. The estates appealed the probate court’s order to the civil division of the superior court, which considered the case in a de novo hearing. See 12 V.S.A. § 2555 (authorizing appeals of probate orders to civil division of superior court); In re J.C., 169 Vt. 139, 143, 730 A.2d 588, 590 (1999) (stating that superior court “sits as a higher court of probate, considering the case anew as if no prior proceeding had occurred in the probate court”).

¶ 8. In July 2009, the superior court denied the estates’ motion for summary judgment, in which they argued that the Town’s and the homeowners’ claims against the estates were time-barred because the claims were not presented within four months of the first publication of the estates’ notices to creditors. See 14 V.S.A. § 1203(a)(1) (“All claims against a decedent’s estate which arose before the death of the decedent... are barred... unless presented... within four months after the date of the first publication of notice to creditors if notice is given in compliance with the rules of probate procedure....”). The court ruled that (1) the estates’ motion was procedurally nonconforming because it failed to contain specific citations to the record, as required by Vermont Rule of Civil Procedure 56; and (2) even if not procedurally deficient, the motion would be denied on its merits because neither the Town nor the homeowners had set forth “claims” as contemplated under § 1203.

¶ 9. The superior court held a hearing over five days between early August and late November 2012. With respect to its request that the court require the estates to set up a trust to finance repairs and maintenance to the subdivision sewer system, the Town presented testimony that: (1) the entire subdivision is within the Town’s aquifer-protection area; (2) the pump station and some of the houses are located such that in the event of a leak, spill, or other failure, it would take a maximum of two years for pollution to migrate into and foul the Town’s aquifer; (3) the Town’s water wells and pump station are situated so that anything leaking from the subdivision sewage pump station naturally flows to the Town’s wellhead; (4) users of the subdivision sewage system sometimes flush rags into the system, thereby clogging the pumps; (5) during and following Hurricane Irene, the electric power needed to operate the pump station was out for two days; (6) the co-administrators were not performing regular preventive maintenance on the system, including flushing the sewer lines; (7) the sewage system had not been tested or certified; and (8) the system needed substantial modifications to protect the ...


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