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Flex-A-Seal, Inc. v. Safford

Supreme Court of Vermont

February 27, 2015

Flex-A-Seal, Inc.
Deborah Safford

On Appeal from Superior Court, Chittenden Unit, Civil Division Geoffrey W. Crawford, J.

Chad V. Bonanni of Bergeron, Paradis & Fitzpatrick, LLP, Essex Junction, for Plaintiff-Appellant.

Deborah Safford, Pro Se, Isle La Motte, Defendant-Appellee.

PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson, JJ., and Tomasi, Supr. J., Specially Assigned


¶ 1. Plaintiff Flex-A-Seal, Inc. appeals from the dismissal of its complaint to renew a judgment against defendant Deborah Safford. The trial court found the complaint barred by the statute of limitations, 12 V.S.A. § 506. On appeal, Flex-A-Seal argues that: (1) the controlling judgment for statute-of-limitation purposes was issued in 2004, not 2002; (2) the statute of limitations was tolled by the terms of a 2002 settlement agreement between the parties and by Safford’s acknowledgment and partial payment of her debt; and (3) Safford should be equitably estopped from asserting the statute of limitations as a defense. We reverse the trial court’s decision.

¶ 2. The record indicates the following. In 2001, Flex-A-Seal sued Safford, its former employee, based on her alleged embezzlement of funds. The parties entered into a settlement agreement. In October 2002, the court issued a stipulated judgment order pursuant to the parties’ agreement, granting judgment to Flex-A-Seal against Safford in the amount of $230, 000. Flex-A-Seal later filed a motion for trustee process against earnings, and in November 2004, the court issued two orders: (1) a bi-monthly wage attachment of $150; and (2) a stipulated order stating the original judgment amount, the judgment amount with interest as of October 28, 2004, and providing for the suspension of post-judgment interest after October 28, 2004 as long as Safford maintained the same employment.

¶ 3. In April 2012, Flex-A-Seal filed a complaint to renew its judgment against Safford. It also filed a motion for trustee process against Safford’s earnings as Safford had changed jobs. In an entry order, the court sua sponte questioned if the action was timely filed, citing 12 V.S.A. § 506 (“Actions on judgments and actions for the renewal or revival of judgments shall be brought by filing a new and independent action on the judgment within eight years after the rendition of the judgment, and not after.”). Safford then raised the statute of limitations as a defense in her answer.

¶ 4. In a series of rulings, the court denied Flex-A-Seal’s motion for trustee process as time-barred and dismissed Flex-A-Seal’s complaint on the same grounds. The court rejected Flex-A-Seal’s argument that the relevant final judgment for purposes of 12 V.S.A. § 506 was the 2004 stipulated order rather than the 2002 judgment. It found that the plain language of § 506 required a new action to be filed within eight years of the original judgment, and that the statute did not contemplate successive limitations periods triggered by post-judgment rulings.

¶ 5. The court also cited Ayer v. Hemingway, 2013 VT 37, 193 Vt. 610, 73 A.3d 673, in support of its decision. In Ayer, the plaintiffs obtained a 2001 default judgment against the defendant. In 2006, the trial court issued a “stipulated amended order” that set forth the parties’ agreed-upon payment plan, and recited the amount of the outstanding debt. In 2011, the plaintiffs filed a complaint to foreclose on a judgment lien that they had placed on the defendant’s real property. The trial court found that the judgment lien was no longer effective because more than eight years had elapsed from the issuance of the original final judgment on which it was based. See 12 V.S.A. § 2903(a) (“A judgment lien shall be effective for eight years from the issuance of a final judgment on which it is based....”).

¶ 6. On appeal, the plaintiffs argued that the 2006 order was a new “final judgment” from which a new eight-year statute-of-limitations period began to run. We rejected this argument. Id. ¶ 18. We concluded that the “final judgment” that triggered the running of the statute of limitations was the 2001 default order because this order “ended the litigation between the parties and finally disposed of the subject matter before the court.” Id. The 2006 order “was not a new decision on the merits”; it “merely set forth an agreed-upon payment plan for the 2001 debt.” Id. Any other conclusion, we reasoned, “would create a continually moving statute of limitations” because “[t] rial courts routinely issue post-judgment orders that identify payments made and interest that has accrued.” Id. ¶ 19. We found that the statute did not contemplate such a result, and that “the need for certainty and predictability in the law” required the rejection of such an approach. Id.

¶ 7. Based on these considerations, the trial court in this case similarly concluded that Flex-A-Seal’s 2002 judgment against Safford was the controlling judgment for statute-of-limitations purposes. The court also rejected Flex-A-Seal’s assertion that the statute of limitations was tolled when Safford acknowledged her debt to Flex-A-Seal and made partial payments on the debt. Citing J. Calamari & J. Perillo, Contracts § 5-7, at 255 (3d ed. 1987), the court recognized that, in contract law, an acknowledgment of the existence of a debt was considered to be an implied promise to pay that “has the effect of starting the statute of limitations running anew.” Likewise, “the voluntary part payment of a debt... if made without protestation of further liability, is a recognition of such debt by the debtor, from which the law not only implies an admission of the existence of the balance as a subsisting debt, but also a promise to pay it which prevents the operation of the statute.” Putnam v. Swain, 102 Vt. 90, 93, 146 A. 6, 7 (1929). The court found this common law rule reflected in 12 V.S.A. § 591, which requires an acknowledgement of a debt to be written and signed, and in 12 V.S.A. § 592, which requires an indorsement or memorandum of partial payment to be in the debtor’s handwriting to be enforceable.

¶ 8. The court noted that under early Vermont law, this rule apparently applied to judgments as well as contracts. The court cited Olcott Scales, 3 Vt. 173, 178 (1831), which holds that in an action of debt on judgment, “an acknowledgement that the debt is due and unpaid, without the addition of any expression intimating that the debtor is not liable to pay it, does remove the statute bar.” In light of Ayer, however, and Nelson Russo, 2008 VT 66, 184 Vt. 550, 956 A.2d 1117 (mem.), the trial court concluded that the rule no longer applied to judgments.

¶ 9. In Nelson, the court explained, this Court clarified that under 12 S.A. § 506, a plaintiff must file a new and independent action to renew a judgment and cannot do so by motion. 2008 VT 66, ¶ 9. The Court reiterated this principle in Ayer, 2013 VT 37, ¶ 15. Given the emphasis on ensuring finality and certainty of judgments, the court rejected the argument that a defendant’s acknowledgment and partial payment of a debt tolled the statute of limitations. It found that applying the contract rule to judgments would introduce uncertainty into the judgment-renewal process, a result the Ayer court clearly sought to avoid. Additionally, the court reasoned that if a defendant’s statement of willingness to pay or partial payments toward the debt was sufficient to toll the statute, there would be no need to renew the judgment and the statute would be rendered superfluous in many cases. The court found its conclusion in accord with decisions from other ...

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