Mongeon Bay Properties, LLC v. Mallets Bay Homeowner's Assn., Inc. and Anthony J. Sineni III , 168 A.3d 463 ( 2017 )

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made
before this opinion goes to press.
2017 VT 27
No. 2016-397
Mongeon Bay Properties, LLC Supreme Court
On Appeal from
v. Superior Court, Chittenden Unit,
Civil Division
Mallets Bay Homeowner’s Association, Inc. and April Term, 2017
Anthony J. Sineni III
Dennis R. Pearson, J.
David H. Greenberg, Burlington, for Plaintiff-Appellee.
David D. Aman of Heilmann, Ekman, Cooley & Gagnon, Inc., Burlington, for
Defendant- Appellant.
PRESENT: Reiber, C.J., Skoglund, Robinson and Eaton, JJ., and Dooley, J. (Ret.),
Specially Assigned
¶ 1. ROBINSON, J. Mallets Bay Homeowner’s Association appeals the trial court’s
partial denial of its motion to stay the issuance of a writ of possession in favor of Mongeon Bay
Properties (MBP) following the termination of the Association’s ground lease. We reverse the
trial court’s order in part, and remand for the trial court to exercise its discretion.
¶ 2. The events leading to the termination of the ground lease between the parties are
recounted in greater detail in this Court’s recent decision in Mongeon Bay Properties, LLC v.
Mallets Bay Homeowner’s Association (Mongeon Bay I), 2016 VT 64, __ Vt. __, 149 A.3d 940.
The Mongeon family owned property in Colchester on the shore of Lake Champlain. There are
over twenty-five camps on the property, ten of which are built on an embankment right next to the
lake. Over time, the camp structures built on the property became seasonal residences owned by
camp occupants, although the Mongeon family continued to own the underlying land. In 1995,
members of the Mongeon family set up a partnership to own the land under the camps, and the
partnership entered into a ground lease with the Association, a non-profit corporation, rather than
the individual owners of each residence. As amended by the parties, MBP and the Association,
the ground lease was due to expire in 2036. The lease contained a forfeiture clause, providing that
the lease would terminate “if the [Association] shall fail to perform or comply with any terms of
this Lease,” and “such failure shall continue for more than 45 days after the [Association] receives
notice or knowledge of such failure.”
¶ 3. MBP sued the Association in January 2012, seeking damages and termination of
the ground lease because the Association had failed to perform reasonable repairs and upkeep as
required by the lease. In particular, MBP showed that severe damage to the property along the
banks of the lake could have been prevented if the Association had undertaken reasonable steps to
protect against erosion. The trial court concluded that the Association’s failure to properly
maintain the property and the resulting damage amounted to “waste,” and therefore the Association
had violated the lease. However, the trial court determined that terminating the lease under the
default provision was inequitable and instead awarded MBP damages to cover the cost of repairing
the property.
¶ 4. On appeal, this Court affirmed the trial court’s determination that the Association
had breached the lease, but remanded for reconsideration of MBP’s remedy. We concluded that
the trial court did not have the authority to decline to enforce the contract’s default provision where
it concluded that the Association had substantially defaulted pursuant to the terms of the ground
lease, and MBP had timely invoked its right to terminate. Mongeon Bay I, 2016 VT 64, ¶ 64-69.
We stated that MBP was entitled to terminate the ground lease as a matter of law, and was entitled
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to a writ of possession. Id. We remanded to the trial court for determination of a remedy in light
of our decision. We issued this decision on June 10, 2016, and denied a motion for reargument on
July 11, 2016.
¶ 5. On remand, the parties spent several months litigating issues relating to post-
judgment trustee process, attorneys’ fees, and other collateral matters.
¶ 6. On September 20, 2016, the Association requested that the trial court stay the
issuance of a writ of possession pursuant to 12 V.S.A. § 4854, which states in relevant part: “A
writ of possession shall issue on the date judgment is entered, unless the court for good cause
orders a stay.” The Association argued that there was good cause for the court to stay the writ
until 2036, when the lease was set to expire. The Association argued that it should be entitled to
receive the benefit of the substantial improvements to the property, and in particular the repairs to
the embankments ordered by the trial court. The Association emphasized the hardship the writ of
possession would cause individual homeowners, and argued that staying the judgment until 2036
was reasonable because it would give the homeowners enough time to relocate their homes from
the property, avoid the hardship of removing children from their schools, and enable homeowners
to make arrangements with their lenders and terminate leases with subtenants. The Association
also argued that the lease was silent as to how much time the Association had to remove their
residences from the property upon termination of the lease. For all these reasons, the Association
argued that there was good cause to stay the writ of possession until the 2036 lease expiration.
Alternatively, the Association asked for a ten-year stay “[a]t the very least,” given what is at stake
financially. Finally, the Association requested, “[a]t a bare minimum, [MBP] should be estopped
from taking possession of the property until April 30, 2017,” because the Association had paid
rent through that day.
¶ 7. On October 31, the trial court issued an amended final judgment in response to this
Court’s decision. It ordered that judgment was entered in favor of MBP, that the ground lease was
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terminated, and that MBP was to be granted a writ of possession for the property. That same day,
the trial court also issued an order in response to the Association’s motion to stay. The court stated:
The opinion and mandate of the Vermont Supreme Court make it
very clear that this court has no ability to exercise any equitable
discretion . . . to deny [MBP] the requested writ of possession, and
not to consider the lease terminated pursuant to its express
terms . . . . This court must assume that the Vermont Supreme Court
understood, and considered most, if not all of the adverse
consequences of its holding on the individual camp owners. This
court has no authority given the mandate in this case to exercise any
further discretion on those grounds, as compelling as some of the
points made might otherwise be.
Nonetheless, the court determined that Vermont Rule of Civil Procedure 62(a)(3)(B) authorized it
to stay the writ for up to twenty days or until the time to appeal to this Court had expired, which
is thirty days under Vermont Rule of Appellate Procedure 4(a)(1). Accordingly, the court stayed
enforcement of the writ for thirty days, subject to any further stays that could be granted pursuant
to the Vermont Rules of Civil Procedure once the Association appealed the decision. The
Association appealed.
¶ 8. While the appeal was pending, the Association filed another motion requesting that
the court stay execution of the writ either until April 30, 2017 or until this Court issued a decision
on its appeal. The Association filed this motion pursuant to Rule 62(d)(3), which affords the trial
court discretion to stay issuance or execution of an order for possession during the pendency of an
appeal “upon such terms as it considers necessary to protect the interests of any party.” In its
motion, the Association noted that it had prepaid rent through April 30, 2017. By order dated
November 21, the trial court granted the motion and stayed execution of the writ of possession
until May 1, 2017.
¶ 9. On appeal from the trial court’s October 31 order partially denying its request for a
stay, the Association repeats the arguments it made below. In particular, it argues that: (1) the
Association should be entitled to receive the benefit of the substantial improvements it has
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provided or is providing to MBP by constructing seawalls, drains and erosion control, and a septic
system; (2) terminating the Association’s possession prior to 2036 would result in an unjust
windfall; (3) the ground lease leaves open the timeframe in which the Association, or its members,
must remove their residences upon termination of the lease; (4) homeowners need time to find a
new lots, obtain necessary permits, and move their homes; and (5) many individual homeowners
will suffer substantial hardship if forced to vacate by May 1. The Association continues to argue
for a stay of the issuance of a writ of possession until 2036, “or, at the very least, until a date
significantly beyond April 30, 2017.”
¶ 10. We agree with the trial court’s conclusion that it did not have the discretion to stay
the writ of possession in this case until 2036, or even for the alternate ten-year interval sought by
the Association. The Association essentially seeks to use the mechanism of a statutorily authorized
stay of execution pursuant to 12 V.S.A. § 4854 to make an end-run around its contractual
obligations as adjudicated by this Court. In Mongeon Bay I, we held that the trial court lacked the
authority to invoke the general equitable considerations relied upon by the Association in this
appeal to allow the Association to possess the property through the duration of the ground lease in
the face of a contracted-for forfeiture provision in the lease. 2016 VT 64, ¶¶ 63-69. Although the
trial court has the authority to stay execution of the judgment of possession pursuant to 12 V.S.A.
§ 4854, the court’s discretion does not extend to essentially undoing the parties’ contract and the
consequences of the Association’s forfeiture under that agreement.
¶ 11. In addition, we do not agree that the ground lease is silent as to the amount of time
afforded the Association, or the homeowners who act through the Association, to remove their
homes upon termination of the lease. At the end of the lease term, the Association is to “quit and
surrender” the property to MBP “without any building or structures thereon.” The lease clearly
requires that structures be removed by the time the lease ends, not at some unspecified time
thereafter. Likewise, in the event of repossession pursuant to a default, the lease provides that
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MBP may repossess the land or any part thereof “pursuant to Vermont law”—meaning, in this
case, upon issuance of a writ of possession. The notion that the contract contemplates some
unspecified post-termination time for the Association, and the homeowners who act through the
Association, to vacate is unsupported by the text of the contract, and makes no sense given the
concerns relating to insurance, property taxes, and other matters that such a post-termination
period-to-vacate would trigger.
¶ 12. However, to the extent that the trial court’s order can be read to suggest that the
court believed it had no discretion to stay execution of its judgment for possession for shorter
periods—weeks or months, not years or decades—in recognition of the impracticalities of moving
a home to a new lot on thirty days’ notice or to otherwise facilitate an orderly transition, the court
underestimated its authority. MBP is entitled to terminate the ground lease and repossess the
property on account of the Association’s adjudicated default. The court is not empowered to deny
a writ of possession on account of the inequitable consequences of its judgment of possession. If
a writ of possession is required to effectuate this order, the writ must ordinarily issue on the day
of the court’s judgment for possession. But this timing requirement is subject to the court’s
statutory authority to order a stay “for good cause.” 12 V.S.A. § 4854. This statutory grant of
authority is not ineffectual. See State v. Tierney, 138 Vt. 163, 165, 412 A.2d 298, 299 (1980) (“In
construing a statute, this Court considers it as a whole, and, if possible, gives effect to every word,
clause and sentence.”). The trial court had the discretion to consider the Association’s more
modest and defensible requests for a shorter term stay of execution to facilitate the homeowners’
transition.
¶ 13. For several reasons, it is not at all clear that the Association was prejudiced by the
trial court’s failure to exercise its discretion in connection with the motion for stay.
¶ 14. First, after the Association appealed, and pursuant to the Vermont Rules of Civil
Procedure rather than its statutory authority, the trial court subsequently did engage in a
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discretionary evaluation of a more modest request for stay and did stay execution of its judgment
until May 1, 2017. A stay of this duration was the alternative relief the Association requested in
the event that the court denied its request for either a ten-year stay or a stay until 2036.
¶ 15. Second, in its motion below, the Association relied on generalized descriptions of
hardship to the homeowners and did not offer specific reasonable time frames for an orderly
transition. Instead, it essentially requested a stay for as long as possible. Without more specific
information and evidence about, for example, how long it takes to contract for the removal of a
house, seasonal constraints on moving houses, if any, and the status of various homeowners’
negotiations with their lenders as well as a realistic estimate of the time required to conclude those
negotiations, the trial court had very little basis for issuing a more time-limited stay to allow for
an orderly transition on the basis of the Association’s filings.
¶ 16. And third, although the trial court’s final judgment awarding possession to MBP
did not issue until October 31, 2016, the Association was on notice that MBP was entitled to a
judgment and writ of possession as of the date of our June 10, 2016 decision, or at the latest, our
July 11, 2016 denial of its motion for reargument. Although the parties spent several months
litigating about other matters, including the request for a stay, MBP’s right to retake possession of
the property was established by July 11, 2016. The stay in effect at this time will expire nine and
a half months after that date—arguably ample time for the homeowners to sell their homes to MBP
or remove them from the premises.
¶ 17. But we cannot make assumptions about how the trial court would have exercised
its discretion if it had concluded that it had such discretion. Where the trial court declines to
exercise its discretion in the mistaken belief that it has no discretion, the proper remedy is a
remand. See, e.g., State v. Cavett, 2015 VT 91, ¶ 19, 199 Vt. 546, 126 A.3d 1287. Accordingly,
we remand for the trial court to exercise discretion in connection with the Association’s request
for a stay pursuant to 12 V.S.A. § 4854.
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¶ 18. Given the time-sensitivity of this appeal and our desire to avoid the possibility of
future appeals that would further protract this process, we offer three observations about the trial
court’s exercise of its discretion. First, in light of the considerations noted above, it is difficult for
this Court to imagine that a stay applying to any portion of the property extending more than an
additional six months, if any extension of the stay is due at all, would be within the trial court’s
discretion. Second, if the trial court were to extend the stay beyond May 1, such extension would
be supported only if accompanied by a bonding requirement or other sufficient advance security
that would secure reasonable rental payments through the duration of the stay, the payment of
property taxes, a requirement that the Association maintain insurance on the property, covering
any losses associated with waste during the period of the stay, and any other liabilities MBP would
bear as a result of the stay that the trial court identifies. Any such security must be provided before
any extension of the stay beyond May 1. Third, if either party appeals the trial court’s exercise of
discretion within the above parameters, we find it difficult to imagine circumstances in which we
would sustain an ongoing stay of execution of the judgment pending our review on appeal.
¶ 19. On remand, the question about which the trial court should exercise its discretion
is whether to grant a longer stay than reflected in the October 31 order. The trial court may exercise
that discretion on the basis of the parties’ pleadings. It need not hold any further hearings unless
it chooses to. In the meantime, pursuant to the court’s order of November 21, 2016, the stay will
expire and a writ of possession may issue on May 1 without further order of the court, unless the
court elects to extend the stay. Further, in the event a bond satisfying the conditions outlined
herein and as additionally required by the trial court is not provided by May 1, 2017, the Court
shall issue a writ of possession without further hearing.
The trial court’s October 31 order relating to the Association’s motion for stay is reversed
in part, and the matter remanded for the trial court to exercise its discretion as set forth above.
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FOR THE COURT:
Associate Justice
¶ 20. SKOGLUND, J., dissenting. In this matter, the trial court exercised its discretion
and issued a stay of execution of its judgment of possession. Not once, not twice, but three times.
However, it did so without acknowledging its authority to do so under 12 V.S.A. § 4854. Perhaps
it did not consider that section. I cannot know. I do know it allowed the Mallets Bay Homeowner’s
Association (the Association) to remain on the land of Mongeon Bay Properties (MBP) until its
prepaid rent ran out. Now, the majority elevates form over substance and remands again for the
trial court to do what I believe it already did—exercise its discretion—this time under the statute,
not under Vermont Rule of Civil Procedure 62. I dissent from this folly.
¶ 21. On June 23, 2015, the trial court issued a decision finding that the Association
breached its lease with MBP by failing to properly maintain the property. From this decision we
learn that the damage and injury to MBP was “more likely worse than it would have been but for
the years of neglect and lack of appropriate bank stabilization and protection by lakefront camp
owners and the [the Association] itself.” In September 2011, MBP sent the Association a notice
of default under the ground lease, outlining the claimed failure to maintain the property, “creating
hazard of collapse and bodily injury” and causing a “diminution in value of the property arising
from the failure of maintenance, repair and debris.” The Association was put on notice to cure all
the alleged defects within forty-five days, as provided by the ground lease.
¶ 22. Continuing with the trial court’s findings, we learn the Association denied
responsibility. At the same time, the Town of Colchester (the Town) began an action against one
homeowner on MBP’s property because—according to the Town’s notice of violation—the
structure was allegedly “ ‘unsafe and constitutes a potential hazard.’ ” No action was taken by the
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Association within forty-five days of the notice of default or by the homeowner within thirty days
of the Town’s notice of violation. MBP then commenced this action against the Association in
January 2012, asking the court to declare the ground lease void and forfeited because of the alleged
violations. MBP also sought a preliminary injunction to compel the Association to take immediate
corrective action, and/or grant it the immediate right of reentry and possession of the entire leased
premises to make necessary repairs itself. The trial court found that in February 2012, the
Association finally recognized it had a duty to undertake collective action to address the bank
erosion and ground stability issues.
¶ 23. In April 2012, the Town issued a second Notice of Violation directed specifically
at the Association. The court found that a June 2012 attempt by the Association to fix the washout
at one camp was “inadequate and failed to address or correct the issues noted by the Town in its
violation notices.” Again, from the trial court’s decision—the Association eventually hired an
engineer to develop an actual plan to stabilize the embankment. When work commenced in 2013,
it was discovered that dumping of unclean fill and/or trash had occurred over the bank. By the
summer of 2014, it was apparent that the attempted fix was still inadequate.
¶ 24. Finally the court found that
[The Association] would probably not have taken collective action
among its entire membership to address the erosion problems . . .
and more generally the bank stabilization and ground loss issues at
the lakeshore camps where there is failing seawall protection, but
for the confluence of the notices of violation from the Town, and
this lawsuit brought by . . . MBP. Those on-going erosion problems
along the affected embankment were, and are preventable by
reasonably and ordinarily required repairs and upkeep which the
[Association], and not individual camp owners, was obligated to
perform under the Ground Lease terms.
¶ 25. The court sardonically rejected the Association’s claim that MBP failed to alert the
Association that it was the latter’s obligation under the lease to protect the lake embankment from
unnatural and preventable soil loss so [the Association] was not responsible: “The court is . . . not
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aware of any legal precept that requires the lessor to constantly remind the lessee of its own
obligations under the lease.” It further held that “MBP gave [the Association] more than sufficient
time to address the deficiencies.” However, the court then found that voiding the ground lease
entirely would be inequitable and a sanction out of proportion to the lease violations involving the
failures of Association.
¶ 26. We affirmed the trial court’s determination that the Association breached the lease,
but reversed its refusal to declare termination of the lease and to issue a writ of possession to MBP.
“[W]e have never suggested that in the context of a long-term ground lease negotiated by
sophisticated parties, one party may be relieved of the contracted-for consequences of its breach
on equitable grounds.” Mongeon Bay Props., LLC v. Mallets Bay Homeowner’s Ass’n (Mongeon
Bay I), 2016 VT 64, ¶ 64, __ Vt. __, 149 A.3d 940.
¶ 27. In our decision of June 10, 2016, we held that “the Association had substantially
defaulted pursuant to the terms of the ground lease, and given that MBP timely and clearly asserted
its election under the terms of the contract to terminate the lease, on this record MBP was entitled
to terminate the ground lease as a matter of law, and is entitled to a writ of possession.” Id. ¶ 69.
The Association’s motion for reargument was denied on July 11, 2016.
¶ 28. On September 13, 2016, the Association moved in the trial court to stay issuance
of a writ of possession, arguing that the home owners needed time to relocate and that “the 10 day
statutory minimum cannot possibly contemplate the tenancy here,” apparently a reference to 12
V.S.A. § 4854 (“The writ shall direct the sheriff . . . to serve the writ upon the defendant and, no
sooner than ten days after the writ is served, to put the plaintiff into possession.”). MBP opposed
this motion, arguing that the problems facing the homeowners were brought about by the
Association’s own inaction and deliberate breach of the ground lease and noting that “[i]t has now
had since June of 2016 to make plans to vacate the property but to date has done nothing except
file motions.” Seven days later, the Association filed another motion for a stay, this time directly
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referencing 12 V.S.A. § 4854 (stating that court may stay issuance of writ of possession for “good
cause” shown), and asked the court to stay issuance of the writ of possession until the termination
of the ground lease in 2036, “in light of the significant complexities involved.” It went on to
suggest “[a]t a bare minimum, [MBP] should be estopped from taking possession of the property
until April 30, 2017 as [the Association] has paid (and [MBP] accepted without objection) the rent
from the May 1, 2016-April 30, 2017 lease year.”
¶ 29. On October 31, 2016, the court held that, because the Association had “prepaid the
lot rent in full through April 30, 2017, it is only fair and equitable that the Writ be stayed through
that date.” It issued the writ of possession on the same day. The Association filed another motion
to stay on November 9, 2016, this time relying on Vermont Rule of Civil Procedure 62(d)(3)
(stating court may stay execution of writ of possession during pendency of appeal), and asking the
court to stay the enforcement and execution of the writ to either the pendency of the appeal or
April 30, 2017, whichever occurred later. The court denied the request to stay the execution of the
writ of possession until the appeal was resolved and restated its earlier decision to stay the writ
until May 1, 2017. MBP filed a request for reconsideration. The court, on November 29, 2016,
concluded that there were “no issues raised which have not already/previously been considered by
the court in exercising its discretion to stay enforcement of the Writ of Possession herein through
the current lease term for which rent has been wholly prepaid and accepted by the [MBP].”
¶ 30. Now, on appeal, the Association claims error in the court’s October 31, 2016
decision granting a stay until April 30, 2017, interpreting the court as holding that it had no
discretion to stay any writ of possession. The Association relies on the court’s reference to this
Court’s holding that the trial court had no ability to exercise any equitable discretion to deny MBP
the requested writ of possession or to determine that the lease had not been terminated pursuant to
its express terms. The court then wrote, “The request that this court stay any writ of possession
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until the expiration of the bargained-for lease term [in 2036] would be nothing more than a back-
door effort to achieve the same result rejected by the Court.”
¶ 31. But in that same decision the court treated the motion for a stay as within its
authority to delay or stay the effectiveness of a writ of possession commensurate with the time to
take an appeal and chose to exercise its discretion to stay enforcement for a period of up to thirty
days from the date of the final judgment. It again exercised its discretion when it amended its
decision in November by extending the stay until May 1, 2017, because rent had been paid up to
that time. Finally, upon reconsideration, it continued its decision to stay enforcement until May
1, 2017, but denied a stay for the duration of the appeal process.
¶ 32. Although the majority agrees with the trial court’s conclusion that it did not have
the discretion to stay the writ of possession in this case until 2036, or even for the alternative ten-
year interval sought by the Association, it then goes on to adopt the Association’s interpretation
of the court’s declination of such a stay and faults the court for failing to recognize its authority to
exercise its discretion to order a stay “for good cause” to facilitate the homeowners’ transition.
Ante, ¶ 12. And, while it notes that “it is not at all clear at this point that the Association was
prejudiced by the trial court’s failure to exercise its discretion in connection with the motion for
stay,” it remands for the court to exercise its discretion. Id. ¶ 13.
¶ 33. I am at a loss to understand what the majority wants from the trial court. I count
three times when the court exercised its discretion to grant the requested stay. To add insult to
injury, the majority then directs the trial court on how to exercise its discretion. The majority
suggests that it would be “difficult for this Court to imagine” a stay extending more than an
additional six months and, if the stay extended beyond May 1, a bonding requirement or other
sufficient advance security is necessary. Id. ¶ 18. Finally it announces this Court’s probable denial
of any ongoing stay of execution of the judgment should either party appeal. These disingenuous
instructions setting the parameters for the court’s exercise of its discretion are unsupportable.
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¶ 34. I dissent.
Associate Justice
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