Vermont Court Sides With Propane Retailer in Collection Case

In a perfect world, every propane customer would pay their bill on time. In the real world, this does not always happen. When a customer is delinquent, the retail distributor will turn to various collection efforts. Fortunately, most problems are resolved without the need for a lawsuit. But when litigation is necessary, the retailer’s best friend is a solid customer agreement. A recent example arose early last year in a Vermont propane collection lawsuit. The case is Bourne’s Inc. v. Lemelson.

Vermont Propane Collection Lawsuit

In July 2016, the Rev. Emmanuel Lemelson, an ordained Orthodox priest, contracted with Bourne’s Energy, a retail propane distributor with six locations in northern Vermont, to provide heating oil to one of the buildings on Lemelson’s property in Stowe, Vermont. Propane was also to be provided to a swimming pool heater located on the same property. Lemelson was billed by Bourne’s under two separate accounts, one for the heating oil and the other for the propane for the pool.

Lemelson had signed an “Application for Fuel Delivery and Service,” which stated he was to pay all invoices within 30 days, with a 1.5% finance charge to be added to unpaid balances. In addition, Bourne’s was entitled to all reasonable collection costs, including attorney fees.

Unpaid Balances

In February 2017, Lemelson added a third account to supply propane for a chapel he had constructed on his property. Bourne’s did not require a new application for this account, instead merely noting on the original application that it was adding a third account for the chapel.

For the next three years, Bourne’s regularly supplied heating oil and propane to the Lemelson property. Lemelson carried an unpaid balance on each of the accounts for nearly every month they were active. Bourne’s applied a 1.5% finance charge every month on the outstanding unpaid balance on each account. Lemelson never objected that the finance charges were outside the scope of the parties’ agreement.

Termination of Accounts

In June 2019, Bourne’s became concerned with the large balances Lemelson was carrying and decided to end his credit and put future deliveries on a cash-in-advance and call-for status. Lemelson found this unacceptable and terminated his accounts with Bourne’s as of January 2020. At that time, he owed $825.94 on the pool propane account, $4,935.42 on the home heating-oil account and $933.61 on the chapel propane account.

Bourne’s owned the propane tanks used by Lemelson. Ordinarily, when a customer terminates a contract with a supplier, the supplier will remove the tanks. However, when the tanks are underground, as they were in this case, it is a common industry practice for suppliers to trade tanks with the customer’s new supplier. Bourne’s attempted to learn the name of Lemelson’s new propane provider, but he refused to disclose it.

Removing the Tanks

In February 2020, Lemelson formally requested that Bourne’s remove the propane tanks from his property. Bourne’s advised that it would be unable to do so until April 2020, when the weather would allow for excavation. Lemelson agreed to this date, but he also told Bourne’s that its personnel were not allowed to enter his property until further notice.

The COVID-19 pandemic caused unexpected delays, and by June 2020, the tanks were still on the Lemelson property. (Bourne’s had promised to remove them in April 2020.) When Bourne’s was unable to comply with a June 17 demand that it remove the tanks by the following day, Lemelson had one of the tanks excavated and placed at the front of his property where Bourne’s later collected it. The parties continued to disagree about the second and third tanks, and in October 2020, Lemelson had those excavated as well.

Lawsuit & Counterclaim

Bourne’s then sued Lemelson, who claimed he was not subject to the terms of the 2016 agreement because he did not fill out separate applications for each of his accounts. After a hearing, the court rejected this defense and concluded that Lemelson owed a total of $9,450.82 for the three accounts as of June 2023. It did, however, find that Lemelson was entitled to an offset of the finance charges accrued from April to November 2020, when the tanks remained on the Lemelson property after Bourne’s promised to remove them. This reduced the judgment to $8,747.85.

Lemelson had filed a counterclaim, asserting that Bourne’s had violated the Vermont Consumer Fraud Rule and the Vermont Consumer Protection Act, and that he was entitled to substantial damages under these statutes because Bourne’s allegedly failed to promptly remove the tanks and to provide a refund for the unused propane. The court rejected these claims. It found that the Consumer Fraud Rule requiring removal of a propane tank within 20 to 30 days did not apply when the tank could not be removed due to weather or issues of access. It also found that Lemelson had been credited for the unused propane as part of the court’s judgment.

Attorney’s Fees

Finally, unfortunately for Lemelson, the court concluded that, in addition to the $8,747.85 judgment, Bourne’s was entitled to attorney’s fees under the terms of the agreement. Following a hearing in May 2024, the court awarded Bourne’s $39,056 in attorney fees and $6,694 in costs.

Lemelson appealed to the Vermont Supreme Court. He challenged the trial court’s findings that (1) the agreement he signed in 2016 applied to all three accounts; (2) he did not object to the finance charges prior to 2020; (3) unused propane credits or credit for the tanks were applied to the account; and (4) Bourne’s did not act in bad faith in failing to promptly remove the tanks. However, the court found there was substantial evidence to support each of these findings, and it rejected these challenges.

Weather & Access Issues

Lemelson invoked a Vermont regulation requiring removal of a propane tank from customer property within 30 days of the termination of service. However, the court found that this regulation was not violated by Bourne’s:

“Although plaintiff did not remove the tanks within 30 days of defendant’s February 2020 request, plaintiff provided evidence that weather and access issues prevented it from doing so until June and October, respectively. We therefore affirm the court’s conclusion.”

Finally, Lemelson challenged the trial court’s award of attorney fees and costs. The Supreme Court found the trial court’s analysis on this point to be reasonable, and it affirmed the award.