VT: Underlying Real Estate Subdivision; Environmental Law
Facts: Client, a real estate developer, consulted lawyers about a statute’s permit requirements concerning the subdivision of land into ten or more lots. The language pertinent to client stated that developers subdividing land into lots of any size needed to acquire a permit if they “owned or controlled” the land being subdivided. Lawyers advised client that land sales could still occur legally without a permit if the original owner prepared the subdivision first and then conveyed the lots to client so that client would not “control” the lots during subdivision. This way, the client would cover the costs and handle the preparation of the subdivision plan. At this juncture, the definition of “control” was legally ambiguous. Lawyers did not advise client of the potential illegality of this method of operating (“method”) because they believed they had no duty to advise client of the potential risk because it was too remote and tenuous. Client proceeded to complete over 100 transactions employing the lawyers’ suggested method. Thereafter, the Vermont Environmental Board issued declaratory rulings in cases involving circumstances similar to the method suggested by the lawyers and held that a permit was required because a buyer who manipulated the property before a sale fell within the statute’s definition of “control.” Upon learning of this decision, lawyers advised client that there were serious doubts now raised about the legality of the method. Nevertheless, client proceeded to make another transaction using the method after receiving this information. Thereafter, the State prosecuted client for making illegal subdivisions. Client then sued lawyers for malpractice alleging that they breached the standard of care of a Vermont attorney by failing to research and advise client of the ambiguous meaning of “control” within the statute. After the trial court held for lawyers, client appealed.
Issue: Are lawyers liable for malpractice for speculating in regards to ambiguous language in a statute?
Ruling: No. The court agreed with the trial court, which held that lawyers “could not be held negligent for their participation in the [method] because the definition of ‘control’ was a professional opinion regarding the interpretation of an unsettled area of the law, and they were thus shielded by the ‘judgmental immunity’ doctrine, which protects attorneys from liability for their opinions in areas of unsettled area of law.” Further, once the lawyers found out about the Vermont Environmental Board’s ruling, they advised client about the possible illegality of the method. Although client tried to make the additional argument that lawyers should have advised client about the risky nature of the method due to the unsettled definition of “control,” their argument fails because even after lawyers notified client about the Vermont Environmental Board’s ruling, client proceeded to continue with the unlawful development method.
Lesson: Lawyers are shielded from liability for professional services and opinions unsettled areas of law. Nonetheless, it is prudent to advise the client of the uncertainty of the law and that if client proceeds they may be subject to legal risks.