Supreme Court Finds Former CAO Not Personally Liable for Burlington Telecom Cost Overruns

In Fred Osier and Eugene H. Shaver v. Burlington Telecom, City of Burlington and Jonathan Leopold, 2016 VT 34 (March 11, 2016), the Vermont Supreme Court found that Jonathan Leopold, Burlington’s former Chief Administrative Officer (CAO), was not personally liable for $16.9 million in City funds used for Burlington Telecom (BT).

Issue: Plaintiffs sued BT, the City, and Leopold to recover $16.9 million in cost overruns incurred by the City in conjunction with the operation of BT. Plaintiffs requested an accounting from the City and sought to hold Leopold personally liable for the City funds. The trial court denied plaintiffs’ request for an accounting and determined that Leopold should not be personally liable. Plaintiffs appealed, and Leopold cross-appealed, offering other reasons why he should not be held liable.

Holding: The Supreme Court found that the trial court acted within its discretion in denying the accounting and, using a bad faith standard, found that Leopold was not personally liable for the $16.9 million in cost overruns. With regard to the accounting, the Court found that there was no abuse of discretion, as equitable accountings are usually invoked when there is a need for discovery, and the City was very forthcoming with information to plaintiffs in the discovery period. With regard to Leopold’s liability, the Court found that the lower court’s pretrial ruling that the cause of action had to include an element of bad faith was the proper standard for evaluating Leopold’s actions. Since he did not act in bad faith, he was not held personally liable for the $16.9 million.