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Bar Journal - Winter 2007

Lex Loci: A Survey of New Hampshire Supreme Court Decisions

By:

Starr v. Governor, opinion issued September 26, 2006, is an engrossing case, raising a very ingenious argument that the defendant’s conviction in 1987 for second degree murder, with an accompanying sentence of a term of 28 years to life imprisonment in accordance with the “truth in sentencing” law, RSA 651:2, II-e, should be set aside.  The defendant claimed that that statute had been illegally adopted and, as a consequence, his sentencing was improper and he sought a declaratory judgment to that effect.  The respondent, Governor, through the Attorney General’s office, responded with a motion to dismiss which was granted, and the present appealed followed.

The petitioner, apparently now a well-versed “sea lawyer” of his own, made the argument through his creative counsel, that RSA 651:2, II-e, which is known as the “truth in sentencing” law, improperly increased minimum mandatory sentences which had adversely affected the petitioner’s sentencing.  The law was enacted in a special session of the legislature in 1981, which the then Governor called to address “certain enumerated matters requir[ing] legislative action.”  The enumerated matters did not include a change in the sentencing law.  The Attorney General countered that this appeal raised “a nonjudiciable political question,” upon which the court should decline to adjudicate the matter because it encroached upon the powers and functions of a coordinate political branch.  The Court agreed.  The Court first examined Part II, Article 3, of the State Constitution, which empowers the Governor to call the legislature into session when adjourned “if and when the welfare of the State so requires.”  The Court pointed out, however, the Constitution does not mandate that the Governor set forth with particularity the business to be taken up by the legislature during such special sessions, nor does it limit the scope of the legislature’s power upon being called together by the Governor.

The Court then endorsed a broad definition of the powers of the legislature as it turned to Part II, Article 5, of the Constitution which grants to the legislature the “full power and authority” to make, “from time to time” laws and statutes, “for the benefit and welfare of this State”:

Because we believe that the State Constitution empowers the legislature to enact any laws and statutes for the benefit of the State whenever it sits in session, general or special, we disagree with the petitioner’s contention that the State Constitution is silent on the issue before us.  However, even if we were to agree with the petitioner, we would nonetheless be compelled to conclude that this issue raises a nonjusticiable political question.

Next, addressing the defendant’s due process argument that the citizens of New Hampshire must be given particular notice of the particular laws that could be changed or enacted in a special session, the Court rejected that argument also.  The Court opined that it was enough that the public proceedings of the legislature were open to the public and that all persons were permitted to attend any meetings of the legislative bodies.  The Court noted that the House of Representatives had indeed held a public hearing on the proposed legislation that became the “truth in sentencing” law and rejected the defendant’s final argument.  Kudos to the petitioner and his counsel for an imaginative argument which, even though not successful, to the author raises very interesting issues.

A very important environmental protection case was decided by the Court in an opinion issued November 2, 2006, Appeal of Town of Bethlehem.  It was particularly important to the Town of Bethlehem which sought to overturn the New Hampshire Department of Environmental Services’ (DES) granting of the respondent’s, North Country Environmental Services (NCES) [a for-profit corporation] application for several tax exemptions under the pollution control property tax exemptions provided for in RSA 72:12-a.  The appeal raised several issues about the application of RSA 72:12-a, which provides for an exemption from real estate property taxes of any treatment facility, device, etc., used for the purpose of reducing, controlling or eliminating any source of air or water pollution, even if such facilities are owned by private entities.  The issue before the Town was whether a solid waste landfill facility operated by NCES in Bethlehem was entitled to the tax exemptions claimed by NCES for twelve components of the landfill system and granted, in large part, by the DES.

In a unanimous opinion authored by Justice Duggan, the Court upheld the tax exemptions under Part II, Article 5 of the New Hampshire Constitution which required that “all taxes be proportional and reasonable, equal in valuation and uniform in rate, and just.”  The Court found that it had previously ruled that tax exemptions are not unconstitutional simply because they are granted to a for-profit entity and held that the encouraging of pollution control through tax incentives was a sufficient reason for the granting of the tax exemptions.

The town made the interesting argument that the tax exemptions violated the equality principle found in Part I, Article 10 of the New Hampshire Constitution, [often referred to as the “Right of Revolution” clause] and the Supreme Court stated that this unusual provision of our constitution has commonly been regarded as setting forth a citizen’s right to reform an ineffectual or manifestly corrupt form of government….We have also recognized that this provision is imbued with the principle of equality that pervades the entire constitution, thereby providing support for the maxim that the law cannot discriminate in favor of one citizen to the detriment of another….Thus, Part I, Article 10, among other protections, forms a basis for a citizen’s right to equal protection.

The Court ruled, however, that the granting of the tax exemptions did not contravene this provision, holding that “tax exemptions always create certain imbalances and nothing in the record demonstrates that DES’ decision in any way functioned unlike other tax exemptions in its effects either locally or statewide.  Moreover, we have not found DES’ application of RSA 72:12-a to the facts of this case to be unjust, unreasonable or unlawful.”  The Court went on to affirm the decision over several other claimed violations of administrative procedures.

State v. Brown, opinion issued November 3, 2006, is an interesting claim of juror  misconduct in a criminal trial.  It reinforces the rule that the author learned as a young lawyer while working under Stanley Brown: that the lawyers, parties and witnesses in a case are constantly being observed by the jury, whether in court or in the halls of the courtroom or outside the courtroom and care should be taken that the lawyers, witnesses and parties should act in a manner that would not prove prejudicial to observing eyes.  In the present case, a juror took her lunch in her own car in the courthouse parking lot [an argument against the current practice of building courthouses in out of the way places far from the usual amenities?] and would observe witnesses and parties exiting and entering the courthouse.  She relayed her observations to several other members of the jury panel, indicating that it was “interesting to see people out of [the courtroom], how they interact outside” and that people she saw in the parking lot “just looked like anybody else, like normal people.”  The trial court found that this was juror misconduct but ruled, after polling members of the jury, “that any prejudice presumed from [the juror’s] observations and communications was harmless beyond a reasonable doubt.”  The Supreme Court affirmed, but the case is a lesson to all trial lawyers and their clients.

Another instance of the recent trend of more proactive jurors is State v. Goupil, opinion issued September 28, 2006.  Here the defendant was convicted of five counts of aggravated felonious sexual assault and one count of theft by unauthorized taking.  The jury trial lasted six days and the defendant was convicted on all sexual assault counts, but acquitted of the count of burglary.  The trial court learned that prior to jury selection, the jury foreman had posted comments on a web log or “blog” that referenced his upcoming jury duty.  The defendant argued that the juror’s blog statements expressed bias against criminal defendants and that the juror did not understand the presumption of innocence on the burden or proof.  For example, one of his postings was as follows:  “Lucky me, I have Jury Duty!  Like my life doesn’t already have enough civic participation in it, now I get to listen to the local riff-raff try and convince me of their innocence.”  [emphasis supplied].

The court learned of the juror’s blog after the jury returned its verdict and was released from its duty.  The trial judge conducted a chamber’s conference and individual voir dire of each of the jurors, including alternates and the juror involved.  After an extensive voir dire by the court, including voir dire questions requested by defense counsel, the trial court concluded that the jury foreman was credible and that he and the remaining jurors understood the law regarding the presumption of innocence and the State’s burden of guilt beyond a reasonable doubt.  The Supreme Court, in a unanimous and detailed opinion by Justice Galway, affirmed, pointing out that unlike cases cited by the defendant, none of the jury foreman’s comments were made in connection with the case against the defendant.  Also, it dismissed evidence that there was some discussion by the jury panel of the reason why the defendant had not taken the stand in his defense.  The Court found that it had “previously recognized that intra-jury communication is generally regarded as less serious than extrinsic contact.”

In Petition of Maxi Drug, Inc., opinion issued December 28, 2006, a unanimous Supreme Court, upon an infrequent petition for certiorari review, claiming that the New Hampshire Department of Health and Human Services (DHHS) had improperly interpreted federal Medicaid regulations in its favor.  The Court granted the petitioner’s extraordinary writ of certiorari, declaring the action of DHHS withholding payments from Medicaid providers as a method of recouping Medicaid reimbursements was improper.

Only a very small percentage of New Hampshire Supreme Court opinions deal with corporate law.  Bendetson v. Killarney, Inc., opinion issued December 28, 2006, is an uncommon exception.  These are the types of cases involving, small closely held corporations with which New Hampshire corporate lawyers, in real life, mostly deal.  The Court was called upon to interpret RSA 293-A:14.30(b) and RSA 293-A:14.34(a), both provisions of the New Hampshire Model Business Corporation Act, which deal with the situation where a corporation is deadlocked.  Under the Act, once a shareholder seeks judicial dissolution of a corporation, the corporation or its other shareholders may elect to purchase all the shares of the petitioning shareholder.  Such an election is stated in the law to be irrevocable.1  The petitioner shareholder filed a petition for dissolution and the sole remaining shareholder filed an election to purchase the shares of the petitioning shareholder, as provided by the statute.2  The trial court conducted an evidentiary hearing at the conclusion of which the petitioner shareholder withdrew its request for the dissolution of the corporation.  The trial court accepted the withdrawal but the remaining shareholder argued that the election process was irrevocable and the court had no discretion to set aside or modify it as it had done.  In a unanimous opinion by Chief Justice Broderick, the Court, citing to the comments to the Model Business Corporation Act, upon which our statute is modeled, ruled that while the election is irrevocable and may not be set aside or modified, the statute goes on to soften this language with the phrase “unless the court determines it is equitable to do so.”  The Supreme Court ruled that “the legislature expressly incorporated the trial court’s authority to consider the equities at play in a particular case,” and upheld the trial court’s actions in so exercising its discretion.

The Court decided a very important personal jurisdiction case in Vermont Wholesale Building Products, Inc. v. J.W. Jones Lumber Company, Inc., opinion issued December 21, 2006,   In a very important opinion of first impression, a unanimous Supreme Court, speaking through Justice Duggan, had to determine whether the New Hampshire’s long arm statute met the federal Due Process Clause requirements: “a court may exercise personal jurisdiction over a nonresident defendant if the defendant has minimum contacts with the forum, ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.’”3 

The precise issue presented was “whether awareness by a nonresident  manufacturer that its product was sold to a distributor in Vermont and would reach New Hampshire in the stream of commerce constitutes ‘minimum contacts’ such that the exercise of jurisdiction ‘does not offend traditional notions of fair play and substantial justice.’”  The circumstances of the case were striking since it was clear that the defendant lumber company’s contact with New Hampshire was quite slight.  Here, the North Carolina corporation had manufactured lumber products and sold its product to Vermont Wholesale Building Products, which distributed lumber is four states, including New Hampshire.  Jones Lumber’s sole place of business is in North Carolina and it is not registered to do business in New Hampshire, does not have an agent registered in New Hampshire, does not maintain any offices in New Hampshire, and does not own any assets in New Hampshire.  It neither employs agents in New Hampshire nor deals directly with any distributors located in New Hampshire, nor advertises or in any way solicits business in New Hampshire.  However, “at the time Jones Lumber sold the flooring to Vermont Wholesale, it was aware that Vermont Wholesale sold flooring to businesses in the four state region which included New Hampshire.”

The lower court had adopted the stream of commerce theory which would hold that it was sufficient that the defendant was aware of its product’s entry into the state through the stream of commerce and was sufficient for the state to exercise jurisdiction over the defendant.  Vermont Wholesale said that this was not enough and argued that “something more than merely placing a product into the stream of commerce” was necessary.  This was known as the “stream of commerce plus” theory.  The New Hampshire Supreme Court, in an impressive opinion by Justice Duggan, speaking for the unanimous Court, waded through a confusing and sometime contradictory opinions of the United States Supreme Court on the issue.  Carefully dissecting the United States Supreme Court’s opinions, the Court concluded that the issue of whether the stream of commerce plus theory was correct had not been decided in the federal courts, but our Court opted for the stream of commerce plus theory and concluded that “when the stream of commerce plus theory is applied, the defendant’s awareness that its product may or will reach the forum state is not sufficient to establish that the defendant purposefully availed itself of the protection of that state’s laws.”  Since the trial court had applied the stream of commerce rationale alone and did not required additional conduct on the part of Jones Lumber, the New Hampshire Supreme Court vacated the trial court’s finding and remanded the case for further proceedings and findings.  Upon remand, the trial court was directed that it “should apply the stream of commerce plus analysis to determine in the first instance whether Jones Lumber purposefully availed itself of the protection of New Hampshire laws.  This is a very important decision and will be the New Hampshire rule, at least until the United States Supreme Court makes clear its choice between the stream of commerce theory and the stream of commerce plus theory.

In a case that harkens back to the Property I class in law school, Schaff v. Leyland, opinion issued December 6, 2006, involved a question of first impression in New Hampshire, whether a covenant running with the land was an appurtenant restriction or a restriction in gross.  The issue in the case was whether the respondent grantor had standing to enforce a restriction in a deed from the respondent restricting the use of the grantor’s property, but which did not reserve a right of enforcement in the deed to the grantor respondent.  At the time of the suit by the respondent seeking to enforce the restrictions, she no longer owned any land in the town or near the land in question.

Justice Hicks’ opinion makes for stimulating reading, distinguishing between covenants which are appurtenant (meaning that the rights and obligations of a servitude are tied to ownership or occupancy of a particular unit or parcel of land) or in gross (meaning that the benefit or burden of a servitude is not tied to ownership or occupancy of the particular unit or parcel of land).  The petitioner argued that the Supreme Court should uphold the trial court’s adoption of the common law rule, which requires that a person own land that benefits from the restriction in order to have standing to enforce it.  The Court agreed and concluded by holding that “the restrictive covenant at issue is appurtenant and that the respondent held the benefit personally.  Accordingly, the respondent does not have standing to enforce the covenant because she no longer owns land that benefits from it.”

An example of a Don Quixote-ish figure tilting at windmills can be see in the case of Goldstein v. Town of Bedford, opinion issued November 22, 2006.  The plaintiff was a resident and taxpayer of the Town of Bedford.  He notified town officials that the defendant landowner had allegedly violated the zoning ordinance governing the merger of two non-conforming lots.  The town investigated and decided against pursuing an enforcement action.  Subsequently, the plaintiff filed an appeal with the Bedford Zoning Board challenging the decision of the zoning administrator.  At that hearing, the plaintiff acknowledged that he had no interest in the zoning enforcement matter different from any other citizen in the town and he acknowledged that he was “just a Bedford resident who would like to see the zoning ordinance enforced.”  The zoning board of adjustment denied the plaintiff’s administrative appeal on the grounds that he lacked standing because he was not an aggrieved party and the superior court agreed.  This appeal to the New Hampshire Supreme Court followed.  The Court looked to the statute as to the authority to challenge local administrative decisions concerning the enforcement of the zoning ordinances, specifically RSA 676:5, I, which limits the appeal to the ZBA to “any person aggrieved.”  The Supreme Court, citing to its earlier decision of Nautilus of Exeter v. Town of Exeter4 that “[S]tanding will not be extended to all persons in the community who might feel that they are hurt by” a local administrator’s decision and objected to the  plaintiff’s claim standing simply as a town resident and a taxpayer.

Appeal of Huff, opinion issued November 28, 2006, is a very significant decision involving the area of elder law, and in particular, whether the petitioner, a disabled young woman who is the beneficiary of a special needs trust, must report the trust distributions as income for purposes of Medicaid eligibility.  The New Hampshire Department of Health and Human Services Administrative Appeal Unit (AAU) had so ruled.

In a very important decision upholding the validity of special needs trusts, a unanimous Supreme Court, speaking through Justice Duggan, vacated the ruling of the AAU mainly for the reason that the state could not produce its approved Medicaid plan dated January 1, 1972.  Can you imagine that the State of New Hampshire could not produce in court such a plan?  What a bureaucratic snafu the state was confronted with since interpretation of the New Hampshire legislation in issue depended upon whether the state had a Medicaid plan in place on January 1, 1972, and whether that plan was approved under provisions of Title XIX of the Social Security Act.  The petitioner argued that no valid approved plan from 1972 existed and that she could not find such a plan.  She argued that, as a consequence, the New Hampshire Medicaid plan did not require the inclusion of the special needs assets of the petitioner.  What must be the state of record keeping that the Department of Health and Human Services could not produce the plan it claimed was in effect in New Hampshire on January 1, 1972?  Since it could not, the Court remanded the case so that the Department of Health and Human Services could make the plan a part of the record, but pointedly stated that “[t]o the extent that the AAU determines that such a plan cannot here be produced, further proceedings may also be necessary.

This column attempts to sift through the many opinions of the Supreme Court but the author cannot read them all with the diligence that should be expected.  The author chooses to comment on cases of unique interest to his readers, an esoteric lot for sure.  Most columns are done in the haste of meeting a publisher’s deadline, for which the author apologizes.

By way of a mea culpa, the author apparently misread the Court’s opinion in Mortgage Specialists, Inc. v. Davey, opinion issued July 26, 2006, about which the author opined in his previous column.  The twenty-six page opinion is confusing.  Upon a new reading, it now appears that the Supreme Court upheld the trial court’s finding that there had been no trade secret misappropriation by the defendant.  However, the Supreme Court did overrule the trial court and allowed the plaintiff’s common law claims and claims under the Consumer Protection Act to go forward, rejecting the trial court’s dismissal of those claims.  On the issue of sanctions, the author was overly broad in stating that the defendants and their counsel were sanctioned since, upon closer reading of the decision, it appears that the trial court sanctioned the defendants, but not their counsel.

ENDNOTES

1.   RSA 293-A:14.34(a).

2.   RSA 293-A:14.30(b).

3.   Alacron v. Swanson, 145 N.H. 628 (2000).

4.   139 N.H. 450 (1995).


Author
Attorney Charles A. DeGrandpre is a director and treasurer in the firm of McLane, Graf, Raulerson & Middleton, P.A., Portsmouth, New Hampshire.

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