EDUCATION LAW—SCHOOL FUNDING AND ATTORNEYS FEES

At-a-Glance Contributor James Allmendinger, A sole practitioner in Durham, NH

Cheshire No. 2017-0422

August 17, 2018

Reversed

  • Whether the school district is entitled to attorney’s fees following a successful school funding lawsuit.

In 2016, Bedford sued the State—and the governor and the commissioner of education, among others — seeking to recover school funding that the State withheld in fiscal  year 2016 because of a statutory limit on state funding imposed under RSA 198:41, III(b), a law passed in 2015 but repealed later that year; however the legislature delayed the effect of the repeal until July 1, 2017. If those legislative gymnastics are not confusing enough, in 2015 Dover sued the State on the same claim.

In the earlier Dover case, the State agreed to be bound by any court rulings, and in September 2016, the trial court in Dover granted a permanent injunction, ruling “that the percentage cap is unconstitutional when it operates to reduce the full amount of the statutory [school adequacy] grant.” The State did not appeal that decision. But neither did the State fund the payments to the school districts until late April 2017. As a result, the Bedford trial court presumably saw no reason to deny the district’s request for payment of attorney’s fees to the school district, and so it issued its order on April 1, 2017.

On April 27, 2017, the legislature passed HB 354-A, which appropriated $4,287,533 to Bedford. That bill also provided that:

Acceptance of a disbursement by a municipality under this act shall constitute a waiver and full release of any and all claims it may have against the state of New Hampshire . . . arising out of the state’s adequate education payments between September 1, 2008 and June 30, 2016.

On May 1, the State wired the $4,287,533 to Bedford. That amount did not include any attorney’s fees.

On appeal, the State argued that because the trial court specifically  declined to find that the State had acted in bad faith in this litigation, the trial court unsustainably exercised its discretion in awarding attorney’s fees. The State also argued that Bedford waived its right to attorney’s fees when it accepted education funds appropriated by a bill that contained a waiver provision.

Bedford argued, among other things, that, because the funds were “provided by wire transfer,” Bedford did not “accept” them within the meaning of the statute, hence the waiver in the statute did not apply to Bedford. The State countered that Bedford “fails to explain how receiving those funds by wire transfer (without protest or reservation as far as the record indicates) differs from an ‘acceptance’ of them.”

The Court agreed with the State, saying “we conclude that, by accepting funds appropriated by HB 354-A, Bedford waived its right to an award of attorney’s fees, [and] we need not decide whether the trial court’s award of those fees was a sustainable exercise of discretion.”

 

Wadleigh, Starr & Peters, of Manchester, Michael J. Tierney on the brief and orally, for the plaintiffs. Gordon J. MacDonald, attorney general and Anne M. Edwards, associate attorney general, on the brief and orally, for the defendants.