Novation Requires Proof the Creditor Clearly Agreed to Release a Co-Obligor (and Unpreserved Equitable Claims Stay Waived)

Case: Bourdeau Bros., Inc. v. Melissa St. Pierre and Jason St. Pierre, 2026 VT 38
Court: Supreme Court of Vermont
Date: August 21, 2026

1. Introduction

This appeal arose from a common commercial scenario complicated by a marital separation and an unfinished divorce: an agricultural-supply company, Bourdeau Bros., Inc. (BBI), delivered cattle feed to a dairy farm and sought payment on a running account. The farm had been owned and operated by Melissa and Jason St. Pierre. After their separation, Jason continued farm operations and continued ordering feed. When Jason died before a final divorce decree, Melissa became sole owner and shut down the operation.

BBI sued Melissa to recover the unpaid balance for feed deliveries, pleading (1) breach of a sales agreement under Vermont’s Uniform Commercial Code (UCC), and in the alternative (2) unjust enrichment and (3) “detrimental reliance.” The central legal issue became whether BBI’s post-separation dealings with Jason constituted a novation that released Melissa from any contractual obligation. A secondary appellate issue concerned whether BBI preserved any right to pursue unjust enrichment after it failed to oppose summary judgment on that count.

2. Summary of the Opinion

The Vermont Supreme Court reversed the trial court’s conclusion that a novation released Melissa. The Court held that the trial record contained no evidence that BBI agreed to extinguish Melissa’s obligations; merely expecting Jason to pay, even exclusively, is not enough to prove novation. The Court therefore remanded for further proceedings on BBI’s breach-of-contract claim (Count One), leaving open whether a contract existed with Melissa and what defenses may apply.

As to unjust enrichment, the Court did not reach the merits. It held BBI failed to preserve its appellate arguments because it did not oppose summary judgment on the equitable counts and did not correct the trial court’s understanding that those counts had already been resolved.

3. Analysis

3.1 Precedents Cited

A. Novation doctrine: what must be proven

  • Manley Bros. Co. v. Somers, 100 Vt. 292 (1927) — Provided the canonical Vermont definition: a novation requires an existing contract and a new contract substituted for it, with mutual consideration being discharge of the old contract. The Court emphasized Manley Bros. for the “three-party” requirement when substituting a new debtor: creditor, original debtor, and intended new debtor must mutually agree, with a clear intent to discharge the original debtor.
  • Peters v. Poro's Est., 96 Vt. 95 (1922) — Reinforced that novation is “an agreement, like any other contract,” not presumed, and requires proof of intention (which may be inferred from circumstances, but must be supported by evidence).
  • Frank W. Whitcomb Constr. Corp. v. Cedar Constr. Co., 142 Vt. 541 (1983) — Supplied the “critical requirement” language: proof of mutual understanding and consent “among all concerned” to transfer the obligation; “knowing acceptance” by all parties is crucial.
  • Sweet v. St. Pierre, 2018 VT 122 — Used for basic contract formation principles: a “meeting of the minds” requires acceptance that matches the offer in all respects; subsequent acts cannot create a contract absent proper acceptance. The Court applied this to novation because novation itself is a contract.
  • Bacon v. Bates, 53 Vt. 30 (1880) — Illustrative example where novation existed because “the minds of the three parties met” for substitution.
  • Hard v. Burton, 62 Vt. 314 (1890) — Key limiting principle applied here: an unperformed “like promise” by one co-debtor (or a new promise by one already bound) does not discharge another debtor absent proof that discharge was intended/stipulated.

B. Standard of review and evidentiary support

  • Lofts Essex, LLC v. Strategis Floor & Décor Inc., 2019 VT 82 — Supplied both the bench-trial deference framework and the procedural point that a post-trial judgment supersedes earlier summary-judgment proceedings.
  • Bourdeau Bros., Inc. v. Boissonneault Fam. Farm, Inc., 2020 VT 35 — Reinforced that findings stand if supported by “credible evidence,” even amid contradictory evidence; here, the Court found the key novation finding lacked any supporting evidence.
  • Hirchak v. Hirchak, 2024 VT 81 — Cited for the distinction between deference on facts/credibility and nondeferential review of pure questions of law, while still upholding legal conclusions reasonably supported by findings.

C. Summary judgment, admissions, and preservation

  • Gallipo v. City of Rutland, 2005 VT 83 — Noted that unanswered requests to admit can support summary judgment (context for BBI’s initial summary-judgment strategy).
  • Doe v. Camacho, 2024 VT 72 — Controlled the preservation ruling: an issue must be raised below with “specificity and clarity” to give the trial court a fair chance to rule; BBI did not do so as to unjust enrichment.

D. Law of the case and revisiting interlocutory rulings

  • Morrisseau v. Fayette, 164 Vt. 358 (1995), quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988) — Provided the general law-of-the-case rationale: once a court decides a rule of law, it should govern later stages to promote finality and efficiency.
  • Kneebinding, Inc. v. Howell, 2018 VT 101 — Emphasized law of the case is a “rule of practice” that may be departed from; also highlighted V.R.C.P. 54(b) flexibility to revise interlocutory orders before final judgment.
  • Myers v. LaCasse, 2003 VT 86A — Cited for the proposition that justice may be better served by allowing a second trial judge to reconsider a prior erroneous grant of summary judgment.
  • State v. Bruno, 157 Vt. 6 (1990) — Used by analogy: a party cannot rely on pretrial error it asked the trial judge to reconsider without assessing the effect of reconsideration.
  • Stratton Corp. v. Engelberth Constr., Inc, 2015 VT 69 — Quoted within Lofts Essex for the “trial supersedes summary judgment proceedings” concept.

E. Footnote authorities on “detrimental reliance”

  • Pettersen v. Monaghan Safar Ducham PLLC, 2021 VT 16, and In re Griffin, 2006 VT 75 — Cited to explain that “detrimental reliance” is typically an element of promissory estoppel/equitable estoppel, not necessarily a standalone cause of action.
  • The Opinion also referenced out-of-state federal cases (e.g., Minor v. Tyson Foods, Inc.; Erickson's Flooring & Supply Co. v. Tembec, Inc.; Paxi, LLC v. Shiseido Ams. Corp.) to illustrate that some jurisdictions reject “detrimental reliance” as an independent claim.

3.2 Legal Reasoning

A. The Court’s core holding: no evidence of creditor assent to release Melissa

The Court’s analysis turned on a strict, contract-based view of novation. Under Vermont law, novation is not a loose equitable inference drawn from changed circumstances; it is a new contract that replaces an old one. That means the creditor’s intent matters in a specific way: the creditor must agree—expressly or by supported inference—to accept the new debtor in discharge of the old debtor.

Here, the record showed that BBI:

  • knew of the separation by December 2019;
  • reached an accommodation with Jason during the pending divorce (continued supply, deferred full payoff until divorce completion); and
  • expected Jason to pay.

But the Court held those facts do not establish novation without evidence that BBI agreed to release Melissa. The Court relied heavily on Hard v. Burton to underscore the distinction between “who the creditor expects will pay” and “who remains legally obligated.” Expectation—even exclusive expectation—does not extinguish an existing co-obligor’s liability absent proof that discharge was part of the bargain.

The Court then did something decisive: it examined the trial evidence and found affirmatively that no witness testimony or exhibit supported the finding that BBI agreed Melissa was removed as a debtor. Multiple BBI witnesses testified no one asked to release Melissa and no agreement was made; even Melissa did not recall being told she was released. On that record, the key trial finding—that Jason “alone” assumed the obligation and BBI accepted that substitution—was “clearly erroneous” because it lacked any evidentiary support.

B. The procedural backdrop: an erroneous “novation” premise distorted the litigation

The Opinion is also an institutional critique of how a case can be misframed by an early ruling. The first summary-judgment order introduced “novation” sua sponte and was internally inconsistent (denying proof of an original contract while concluding a novation removed Melissa). A later judge treated that novation determination as law of the case, and the parties shaped trial strategy around it—Melissa explicitly declined to present evidence of novation because she believed it was already decided.

The Supreme Court acknowledged the virtues of law of the case (finality/efficiency) but emphasized its flexibility: it is a practice rule, and Vermont procedure (including V.R.C.P. 54(b)) allows revision of interlocutory orders before final judgment. The Court’s reasoning implies that when an interlocutory ruling is both underexplained and foundationally erroneous, a trial court should not allow law-of-the-case inertia to prevent a full and fair adjudication of the actual elements.

C. Unjust enrichment: forfeiture by non-opposition and failure to correct the trial court

On unjust enrichment, the Court did not decide whether BBI might otherwise have stated a viable claim. It focused on preservation: BBI did not oppose summary judgment on the equitable counts and, when the trial court later stated those counts had been resolved, BBI did not object despite being invited to add “anything else.” Under Doe v. Camacho, that was insufficient to preserve appellate review.

3.3 Impact

A. Substantive impact: stricter proof demands for “novation by conduct” arguments

The Opinion reinforces a demanding evidentiary standard for novation where a creditor continues doing business with one spouse or partner after a separation. Future litigants should expect Vermont courts to require:

  • evidence of a clear and definite intention to discharge the original debtor, and
  • proof of mutual assent involving the creditor (not merely arrangements between co-debtors, such as a separation agreement).

Practically, creditors who want to release one obligor should document the release (and likely address security/credit underwriting), while debtors who claim release must marshal affirmative evidence of the creditor’s assent—not simply changed billing patterns, deferred collection, or reliance on “understandings” tied to divorce timing.

B. Procedural impact: caution against overreliance on law-of-the-case when the premise is unstable

Trial courts and litigants are reminded that law of the case is not a substitute for element-by-element proof when the earlier ruling is flawed or incomplete. Where a summary-judgment ruling effectively decides an issue without clear findings or proper framing, the later court retains discretion to revisit it to prevent unfairness and to ensure the correct legal standard is applied.

C. Preservation impact: equitable alternatives must be actively litigated

The preservation holding has a blunt practice lesson: if a party pleads alternative equitable theories (like unjust enrichment), it must oppose dispositive motions on those theories and must correct the trial court when the court misstates their status. Silence can be treated as abandonment for appellate purposes.

4. Complex Concepts Simplified

  • Novation: A “contract replacing a contract.” If A and B owe C, a novation that releases A requires C to agree that B (or someone else) is now the debtor instead of A. It is not enough that C believes B will pay; C must accept the substitution as a discharge of A.
  • Meeting of the minds: Mutual assent to the same deal. For novation, the creditor must assent to releasing the original debtor; otherwise, there is no substituted contract.
  • Law of the case: A practice of adhering to earlier rulings in the same case to promote efficiency. It is not absolute; courts may revisit earlier interlocutory rulings to avoid perpetuating error.
  • Preservation: To argue an issue on appeal, you generally must raise it clearly in the trial court so the judge can rule on it. Failing to oppose summary judgment on a claim—and then failing to correct the court’s understanding—can forfeit appellate review.
  • Unjust enrichment: An equitable remedy aimed at preventing one party from unfairly retaining a benefit. It is often pleaded when a contract claim may fail.
  • Unclean hands: An equitable defense that can bar equitable relief if the claimant acted inequitably related to the subject of the claim. (The Supreme Court did not reach whether it applied here because the unjust enrichment issues were unpreserved.)
  • Requests to admit (V.R.C.P. 36): A discovery tool; unanswered requests can be deemed admitted and may support summary judgment, but the moving party must still properly present undisputed facts and show entitlement to judgment as a matter of law.

5. Conclusion

Key takeaways: (1) Novation in Vermont is not presumed and cannot be established merely by a creditor’s expectation that one co-obligor will pay; it requires evidence that the creditor agreed to discharge the other obligor. (2) Law of the case promotes efficiency but does not compel adherence to an erroneous, underdeveloped interlocutory ruling that prevents fair litigation of the elements. (3) Alternative equitable claims must be actively preserved; failing to oppose summary judgment and failing to clarify the record can foreclose appellate review.

The decision’s broader significance lies in its insistence on disciplined, contract-based proof for novation and its procedural reminder that both trial courts and litigants must ensure the operative issues are correctly framed and actually tried.