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Bar Journal - March 1, 2002

Lex Loci: A Survey of New Hampshire Supreme Court Decisions

By:

The Supreme Court has been working very hard to reduce the backlog of cases pending before it and it has made good progress. The backlog of cases is at its lowest level in ten years. Furthermore, the time between oral argument and decision is now close to six months.

The Court has handed down a record number of decisions in the last three months, many of them consequential ones. This has made it difficult for the author to choose for this short column to highlight a few among the many decisions of import.

MacMillan v. Sheffy, decided December 24, 2001, is a significant legal malpractice decision interpreting the Court's own earlier and leading case of Simpson v. Calivas,1  [where the Court had imposed, on behalf of a beneficiary of the will, liability upon an attorney for negligently drafting a will]. The instant case was an action against an attorney for alleged malpractice for not including a restrictive covenant in a deed which he, the seller's attorney, prepared for the buyers [the plaintiff in this action succeeded to the buyer's interest]. In response to the plaintiffs' legal malpractice claim, the seller's attorney raised the issue of privity or, phrased another way, the scope of his duty to the plaintiffs, pointing out he did not represent the plaintiffs. The plaintiff relied on the Calivas Case which had extended lawyer liability to third parties not in privity with the lawyer. A unanimous Court, in an opinion by Justice Nadeau, declined to extend the Calivas Case as far as the buyer argued. The Court first "observed that a duty generally arises out of a relationship between the parties and that a contract may supply such a relationship, but that 'in general the scope of such a duty is limited to those in privity of contract with each other'....We [have] recognized an exception to the privity rule under the circumstances presented [in the Calivas Case], however, and held that 'an attorney who drafts a testator's will owes a duty of reasonable care to intended beneficiaries.'" In the case on appeal, the Court pointed out that there was no evidence that the primary purpose of employing the attorney was to benefit the purchasers, stressing that a purchase and sale of real property was often an adversarial transaction and in light of that, the Court "decline[d] to impose on an attorney a duty of care to a non-client whose interests are adverse to those of the client."

Another decision involving alleged legal malpractice, Coyle v. Battles, decided October 12, 2001, turned on the issue of at what point in time an attorney was considered to have ceased representing the plaintiffs, his former clients. In the winter and spring of 1995, the plaintiffs, then represented by the defendants in a bankruptcy claim, complained about the work being performed by the defendants on their behalf and questioning their billing practices. The plaintiffs soon retained new counsel who immediately wrote the defendants threatening to sue them unless the plaintiffs received a credit for prior fees paid. This threat was ignored by the defendants. On May 12, 1995, the plaintiffs' new attorneys stated they had completed the remaining paperwork associated with the settlement of the bankruptcy claim and instructed the defendants to "do no further work" on the matter. In June of 1995, the defendant attorneys billed the plaintiffs for additional work in the spring of 1995 but the last bill the plaintiffs paid was in 1995 for services rendered through January 1995, before the plaintiffs had hired their new counsel.

Inexplicably, the plaintiffs did not file their threatened lawsuit against the defendants until more than three years later, on June 12, 1998 to be exact. The defendants raised the statute of limitations as a defense, saying that they were ordered to stop work on May 12, 1995 and, thus, their representation of the plaintiffs ceased at that point. However, the plaintiffs urged that the Court adopt the so-called "continuing representation rule" and apply it to their breach of contract claim:

Under this rule, a client's cause of action against his attorney does not accrue until the attorney ceases representing the client. The rule 'recognizes that a person seeking professional assistance has a right to repose confidence in the professional's ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered.'

The Supreme Court was unimpressed, stating that although they had not previously addressed the "continuing representation" rule, they declined to adopt it in this particular case because by May 12, 1995, the "plaintiffs not only 'question[ed] and assess[ed]' the defendants' billing practices, but found them lacking. They clearly demonstrated their lack of confidence in the defendants when they retained separate counsel and threatened to sue the defendants to recover the excessive fees." Therefore, having failed to sue the defendant attorneys within the three year statute of limitation applying to contract actions, the plaintiffs lawsuit was barred by the statute of limitations.

Hawkins v. New Hampshire Department of Health and Human Services, decided December 31, 2001, is a big case concerning the rights of New Hampshire citizens under the Right-to-Know Law, RSA ch. 91-A. The Supreme Court, speaking unanimously through Chief Justice Brock, stoutly defended the Right-to-Know Law in a case which involved a claim by the government agency involved, in response to a citizens request for information, that the data requested by the citizen plaintiff (represented by New Hampshire Legal Assistance) was not required to be provided because the cost of creating a new document to meet the plaintiff's request would exceed $10,000 [by the agency's estimate]. The Court rejected the agency's argument that "the information does not constitute a public record because the unlinked electronic information is not already part of an existing document," stating that, here, the requested "claim form does not lose its status as a public record simply because it is stored within a computer system." The Court acknowledged that the Right-to-Know Law does not require the agency to create new records but held that it did require the agency to maintain computer records "in a manner which makes them available to the public."

The Court next turned to whether the cost of producing the record is a factor that may be considered in determining whether the information is a public record under the Right-to-Know Law and ruled that "cost is not a factor in determining whether the information is a public record." This is a victory for our citizens under the Right-to-Know Law and reinforces that felicitous New Hampshire Constitution provision found in Part 1, Article 8 where it is provided that government "should be open, assessable, accountable and responsive. To that end, the public right of access to governmental proceedings and records shall not be unreasonably restricted."

The often troublesome issue of a property owner's right to conduct mining operations [in New Hampshire, this means sand and gravel removal, not gold, silver or copper mining] on his land was before the Court in NBAC Corp. v. Town of Weare, decided December 21, 2001. The town was more prepared than many municipalities, having enacted, pursuant to RSA 155-E, an earth products ordinance governing the conduct of such operations. Following the ordinance provisions, the property owner obtained a contested special exception from the Zoning Board of Adjustment to conduct the proposed gravel operations on his property. That special exception request became final when no party objected. However, under the earth products ordinance of the town, the plaintiff had to file an excavation permit request, after ZBA approval, with the selectmen, which they timely did. However, the selectmen unanimously voted to deny the application and the land owner appealed to the superior court. The superior court upheld the decision of the Board of Selectmen. On appeal to the Supreme Court, the real issue became whether or not the selectmen were bound by the decision of the zoning board of adjustment granting a special exception to the landowner. Turning to the provisions of the state law concerning earth removal and gravel operations, RSA 155-E, the Supreme Court found that the zoning board of adjustment's approval was not determinative since

there was sufficient evidence in the record for the superior court to uphold the selectmen's denial of [the land owner's] application on other grounds. In its determination to deny the excavation permit, the selectmen considered several issues distinct from the ZBA. For example, the selectmen considered topographical and pollution concerns resulting from the excavation. Additionally, the selectmen considered whether the excavation pit would be injurious to the town's public welfare due to its adverse effects on aesthetics, health and safety and spiritual well being. As these issues were not specifically addressed by the ZBA, the application of collateral estoppel would not change the outcome of this case.

This case bears out, to the dismay of the property owner, the old saying that "It ain't over until the fat lady sings."

Lower Village Hydroelectric Associates v. City of Claremont, decided October 9, 2001, involved the issue of whether "a legally enforceable payment in lieu of taxes (PILOT) agreement" between the city and the taxpayer, a small power producer, was abrogated by Public Laws of 1997, chapter 274, which retroactively repealed the authority of municipalities to enter into PILOT agreements with small power producers in the circumstances here involved. The superior court found that there was a legally binding contract between the parties (the PILOT agreement) and ruled that the legislature's enactment of Public Laws of 1997 chapter 274 violated the prohibition against retrospective laws found in both the New Hampshire and the United States Constitutions. A unanimous Supreme Court affirmed the lower court's holding, relying solely on the New Hampshire constitutional provision found in Part I, Article 23, which provides in pertinent part that "[R]etrospective laws are highly injurious, oppressive and unjust. No such laws, therefore, should be made...for the decision of civil causes...." The Court first reiterated its well established, bedrock, holding that any statute which takes away or impairs vested rights, acquired under existing laws will be found to be a retrospective law within the meaning of the New Hampshire constitutional provision. The Court then turned to consider whether or not the 1997 law "operated as a substantial impairment of a contractual relationship" and found that there it was clear that the PILOT agreement was substantially impaired by the 1977 repeal of RSA 362-A:6 (authorizing municipalities to enter into contracts with small power producers).

The Court "next conduct[ed] a balancing test to determine whether the power exercised by the State's enactment of chapter 274 is reasonable and necessary to serve an important public purpose." The Court observed that normally it generally defers "to the judgment of the legislature in determining whether a particular act is reasonable and necessary to serve an important public purpose." However, here that deference was not necessary because the State's [municipalities are really but a branch of the State] own "self-interest is at stake." The Court went on to rule that the "[a]pplication of stricter judicial review reflects the principle that those who lawfully contract amongst themselves must have reasonable assurances that their rights and obligations will not be disturbed." The Court concluded that the essential justification for the enactment of this statute was the promotion of public good through the raising of revenue. The Court found that even in this highly sensitive revenue raising area, the "legislature has policy alternatives for raising revenue other than the breaching of its contractual responsibilities. Although these options may be less attractive, our constitution places a burden upon the legislature to pursue them."

In another important case, the Court established a very important products liability principle in Vautour v. Body Masters Sports Industries, Inc., decided November 5, 2001. Justice Duggan's opinion for a unanimous Supreme Court is one of the few decisions that the author can recall where the New Hampshire Court has expressly determined not to adopt a Restatement of Law position. The facts should make a reader's heart "pump":3  the plaintiff, attempting to "pump iron,"4  was cruelly injured [although his "pump"5  escaped harm] when using a leg press machine manufactured by the defendant. The weightlifter plaintiff sued on various theories, including the theory of strict liability for a defectively designed product. The plaintiff did not offer any evidence of a proposed alternative design for the machine which would have prevented the type of injuries suffered by him. Finding that this was a requirement to prove his case, the trial court directed a verdict in favor of the defendant and the plaintiff appealed. The Supreme Court carefully reviewed the existing New Hampshire law on strict liability based on a defective design claim. The Court pointed out that New Hampshire law was well settled that "whether a product is unreasonably dangerous to an extent beyond that which would be contemplated by the ordinary consumer is determined by the jury using a risk-utility balancing test." [emphasis supplied]. The "pumped up"6  Supreme Court then went on to fully de scribe it's established risk-utility approach by holding that

In order to determine whether the risks outweigh the benefits of the product design, a jury must evaluate many possible factors including the usefulness and desirability of the product to the public as a whole, whether the risk of danger could have been reduced without significantly affecting either the product's effectiveness or manufacturing cost, and the presence and efficacy of a warning to avoid an unreasonable risk of harm from hidden dangers or from foreseeable uses.

In response, the manufacturer further "pumped"7  its argument by arguing that the Restatement (Third) of Torts  2(b) required a plaintiff in a design defect case to affirmatively offer evidence of a reasonable alternative design." The Court greeted that argument skeptically and carefully reviewed what it called "the considerable controversy surrounding the adoption" of this particular section of the Restatement (Third) of Torts. Ultimately, the Court declined to make evidence of an alternate design a requirement in a design product liability case in New Hampshire, stating tersely that in such cases under New Hampshire law "[T]he plaintiffs' burden was to present evidence regarding the risk-utility factors; they did not have the duty of proving a safer, alternative design." After reading this decision, did the defendant manufacturer feel "pumped and dumped?"8 

It has been the author's long held opinion that weightlifting machines are nefarious instruments of risk and, as such, the author has always avoided them just as he had avoided hand grenade practice while in basic combat training for the U.S. Army in 1962. Weight lifting machines and grenades are subject to the same universal rule: if something can go wrong, it will go wrong, all to the detriment of the user.

ENDNOTES

1. 139 N.H. 1 (1994).
2. In opera mythology, this refers to the third opera of Wagner's Ring Cycle, Siegfried, where the tenor for whom the opera is named sings for several hours before finding and awaking the hefty Valkyrie, Brunnhilda, at the very end of this five hour opera.
3. Chapman, American Slang (2nd Ed. 1998), p. 406.
4. Id.
5. Id.
6. Id.
7. Id.
8. Id.

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