Enforcement of Settlement Agreement Non-Interference Clauses: Circumstantial Evidence and Attorney’s Fees

Introduction

In Kevin Barrup v. Barrup Farms Inc., the Vermont Supreme Court addressed whether a minority shareholder’s alleged interference with the sale of a family business constituted a breach of a prior settlement agreement and, if so, whether contractual attorney’s fees were properly awarded. Kevin Barrup, once an officer and minority shareholder of Barrup Farms Inc., sued to enjoin the sale of the company after his father, the majority shareholder, fired him and attempted to sell the business. The parties settled, with Barrup agreeing not to obstruct the sale in exchange for a deferred payment. When the payment was never made, the father resumed transaction efforts; an anonymous environmental complaint then delayed and diminished the sale, prompting Barrup’s suit to reopen. At trial, evidence—largely circumstantial—tied Barrup to the complaint, and a jury found he breached the agreement. The court granted the father’s motion for contractual attorney’s fees. Barrup appealed the jury verdict form, the sufficiency of evidence, and the fee award. The Supreme Court affirmed in full.

Summary of the Judgment

The Vermont Supreme Court unanimously affirmed the trial court’s rulings:

1. Jury Verdict Form: Barrup failed to preserve his objection to the jury’s omission of an answer on the verdict form, so no new trial was warranted.
2. Directed Verdict Motion: Viewing the evidence in the light most favorable to defendants, the circumstantial evidence (timing, content similarities, access to a computer) supported a finding that Barrup filed the anonymous ANR complaint, thereby breaching the non-interference clause.
3. Attorney’s Fees Award: Under the settlement agreement’s fee-shifting clause, the court properly found a breach and conducted a thorough lodestar and reasonableness analysis. The award—though greater than Barrup’s own fees—was within the trial court’s discretion and did not require parity with the plaintiff’s costs.

Analysis

Precedents Cited

1. Puppolo v. Donovan & O’Connor, LLC (2011 VT 119) – Preservation of issues for appeal requires a party to present objections with specificity below, ensuring the trial court has an opportunity to correct perceived errors.

2. Marzec-Gerrior v. D.C.P. Indus., Inc. (164 Vt. 569 (1995)) – Denial of a directed verdict is upheld if any evidence, viewed in the light most favorable to the non-moving party, fairly supports a lawful theory.

3. Nadeau v. Imtec, Inc. (164 Vt. 471 (1995)) – Reiterated the standard for directed verdict review, emphasizing deference to the jury where reasonable support exists for either party’s theory.

4. Walsh v. Cluba (2015 VT 2) – Lodestar method and discretionary adjustments govern contractual attorney’s fee awards in Vermont.

Legal Reasoning

The Supreme Court’s reasoning unfolded along three main lines:

• Issue Preservation: Barrup did not object below to the verdict form’s inconsistency, so Rule 49(b) did not require a new trial. The court applied Puppolo to hold that absent a timely objection, the party cannot claim a verdict inconsistency on appeal.
• Evidence Sufficiency: Despite being circumstantial, the evidence—comprising timing of the June 2019 complaint, similarity to a prior known complaint, Barrup’s opportunity and motive, and the resulting delay—was sufficient to preclude a directed verdict. The Court applied the settled Vermont standard that any reasonable support defeats a directed verdict.
• Attorney’s Fees: The settlement agreement’s explicit fee-shifting provision authorized recovery of “reasonable attorney’s fees and costs” upon any breach. The trial court conducted a two-step lodestar analysis (reasonable hours × reasonable rate) and adjusted for factors such as attorney experience and litigation complexity. The Court emphasized that fee parity with the opposing party is not a controlling factor.

Impact

This decision reinforces three key principles in Vermont contract and civil procedure law:

• Non-Interference Clauses: Settlement agreements can validly prohibit actions that impair business value and sales, and breaches may be proven with circumstantial evidence when motive, timing, and content align.
• Preservation of Jury-Verdict Objections: Parties must timely object to jury forms and verdict inconsistencies; failure to do so waives appellate review under V.R.C.P. 49(b).
• Reasonable Fee Awards: Vermont’s lodestar framework remains the lodestar for contractual fee provisions, and fee awards will stand so long as the trial court’s reasonableness analysis is thorough and within discretion.

Complex Concepts Simplified

• Directed Verdict: A judgment entered by the judge when no reasonable jury could find for the opposing party. Here, because any view of the evidence could support the breach theory, the directed-verdict motion failed.
• Lodestar Method: The primary calculation for attorney’s fees: multiply the number of reasonable hours by a reasonable hourly rate, then adjust for outcomes and complexity.
• Issue Preservation: To appeal an alleged trial error, the party must have made a clear objection during trial so the judge could address it immediately.

Conclusion

Kevin Barrup v. Barrup Farms Inc. establishes that non-interference covenants in settlement agreements are enforceable by contract and may be upheld on circumstantial proof of interference. The case underscores the importance of preserving objections to jury procedures and affirms Vermont’s robust lodestar approach to fee awards. Practitioners should draft clear fee-shifting clauses, collect direct and circumstantial evidence of covenant breaches, and vigilantly preserve all trial objections to protect appellate rights.