Bar Journal - March 1, 1999
Lex Loci: A Survey of Recent NH Supreme Court Decisions
By: Attorney Charles A. DeGrandpre
"Unfortunately, that has not proven to be the case." By this quiet understatement, a unanimous New Hampshire Supreme Court, speaking through Justice Thayer, recognized that the landmark 1989 Rate Agreement involving the State of New Hampshire, Public Service Company of New Hampshire, and Northeast Utilities had not achieved its expected goal, as expressed by the PUC, to bring the Public Service Company's electric rates down to the "approximate regional average." Unfortunately, as the Court went on to point out, PSNH's rates were currently "one of the highest average rates in the country." In Re Public Utilities Commission (Statewide Electric Utility Restructuring Plan), decided December 23, 1998.
This was hardly a good beginning for Public Service Company's argument that the 1989 Rate Agreement entered into between the State of New Hampshire, Public Service Company of New Hampshire, and Northeast Utilities (accompanied by a legislative enabling statute RSA 362-C), gave it the right to recover its full stranded costs under electric utility deregulation, despite the legislature's 1996 enactment of the Electrical Utility Restructuring Statute, RSA 374-F, which is designed to bring market competition to the electric utility industry in our state.
The Court stepped gingerly into this issue, pointing to a pending federal case in the 1st Circuit in which the necessary factual determinations were to be made and deciding that it would limit itself solely to the issues of law raised by the questions transferred to it by the PUC. Despite the importance of the Agreement, the Supreme Court in its present decision found that "[t]he language, of the  rate agreement before us is arguably ambiguous." That's amazing in light of its importance. The 1989 Agreement represented the last gasp effort of a series of Republican administrations to deal with the self-inflicted implosion which had befallen Public Service Company of New Hampshire and, consequently, the citizens of New Hampshire. The Court, because of the absence of a factual evidentiary basis before it, declined to offer any opinion as to "whether the rate agreement constitutes a binding contract," but rather it turned its attention to the issue whether the Restructuring Statute, RSA 374-F, supersedes any rights that the Public Service Company has under the 1989 Rate Agreement and ruled against the arguments of the Public Service Company. Since the Court was asked to interpret two statutes which dealt with a similar matter, the Court first turned to its traditional rule of construction that the Court would "construe the statutes as consistent with each other '[w]here reasonably possible'." The Court then ruled that under RSA 374-F:4, the PUC could award Public Service Company less than its full stranded costs since RSA 374-F provides that a utility's recovery of stranded costs under that statute are limited to those stranded costs which are found to be "equitable, appropriate and balanced,... in the public interest, and... substantially consistent with these interdependent principles." RSA 374-F:4, V, VI.
It will be interesting to see what course the 1st Circuit will now take in light of this decision which must have the officials of Northeast in Hartford, Connecticut gnashing their teeth. The 1996 Restructuring Statute marks the end of the domination of public energy policy in New Hampshire by the Public Service Company of New Hampshire. In the opening section of the Restructuring Statute, the legislature found that "New Hampshire has the highest electric rates in the nation and such rates are unreasonably high." RSA 374-F:1, I. It's astounding that it took until 1996 for our legislature and the various gubernatorial administrations of that earlier era to recognize this fact and do something about it. This case probably represents the end of the long political love affair between the Republican Party and the Public Service Company which began during the administration of Governor Meldrim Thomson, who initiated the policy of favoring for the citizens of New Hampshire the energy policy espoused by a single private company. Unfortunately, a generation later, while reason seems to have returned to our discussion of energy public policy in our state, we continue to have the highest electric rates in the country.
Taylor-Boren v. Isaac, decided December 30, 1998, is a significant case to consider when attorneys seek to enforce an attorney's liens for legal services under RSA 311:13. This statute grants an attorney a lien for her/his reasonable fees and expenses upon the client's cause of action and grants the trial court bench "complete authority" to "determine and enforce the lien." In the present case, the plaintiff client was denied her right to litigate by jury trial her properly pleaded issues claiming attorney malpractice and other related issues. The Supreme Court held, in a unanimous decision by Justice Johnson, that once a lien has been found by the trial court judge to have been perfected under RSA 311:13, the statute has no further applicability and "any fee dispute should be resolved in the same manner as any other contract or tort dispute." The Court went on to rule that the plaintiff's claims were properly subject to jury trial proceedings and reversed the trial court which had held otherwise.
The Taylor-Boren Case had another interesting aspect which involved the plaintiff's claim that the trial judge should have recused herself from hearing the action. The plaintiff alleged that the defendant attorney had, on several occasions, denigrated her claim claiming that he knew the judge on a first name basis, had lunched with her on several occasions and had dined with his wife in the judge's home. This, asserted the plaintiff, gave her the distinct impression that the judge would favor the defendant attorney and would rule against her. The trial judge denied the motion to recuse because, despite a limited relationship with the defendant attorney when they worked together in the A.G.'s office some ten years earlier, she believed that she could be "a fair and impartial judge." The Supreme Court upheld the denial of the recusal motion and, in very aptly chosen language, drew some guidelines for judges in situations where they may have had some social contact with counsel appearing before them:
It is inevitable that judges will have had contact with attorneys before appointment to the bench, and will continue to have some contact after they are appointed. Judges are members of society and are not expected to live isolated and sheltered lives....Some relationships are per se bases for recusal....Other relationships and contacts with parties and attorneys become disqualifying when those connections affect a reasonable observer's perception of fairness.
Turning to another recent decision, In Re Estate of Cass, decided October 5, 1998, involved the exploding area of litigation questioning actions taken by members of our growing body of elderly citizens as they grow older. In the author's experience, the increasing longevity of our senior citizen population is inevitably leading to issues about an individual senior citizen's mental capacity or ability to take certain actions where the senior citizen has grown old and gradually, and perhaps imperceptibly, has lost some but not all of her/his faculties. With the exponential growth in the use of lifetime revocable trusts and durable powers of attorney, the author expects that the Cass Case will simply be the tip of an iceberg. The factual background involved a 1983 inter vivos trust established by a husband and wife, who were the lifetime income beneficiaries while the defendant and his sister, the plaintiff, were the remaindermen. In 1990, the surviving spouse suffered a stroke and entered a nursing facility after which she granted the defendant's son a written power of attorney as to her personal business and healthcare affairs. The son had already begun acting as a successor co-trustee to the trust.
A key piece of property of the trust was lakefront property which the surviving spouse had often said that she wanted to be left to both of her children to be used by all of the family members as it might be available. In 1991, the surviving spouse executed a quitclaim deed transferring the lakefront property to the defendant's son but the deed was never recorded and eventually the attorney representing the surviving spouse in this matter withdrew for the reason that he believed that he could not carry out her wishes "while she was subject to the competing influences of her family members." In 1992, a different attorney began representing the surviving spouse and this new attorney assisted her in executing a warranty deed to the lakefront property from the trust to herself individually, and then the new attorney drew a codicil to the surviving spouse's will and assisted her in executing the codicil which left the lakefront property solely to the defendant's son. The surviving spouse died in June of 1993 and the defendant became the sole trustee of the trust. His sister, learning of these facts, moved to impose a constructive trust on the property and to remove her brother as trustee. The probate court agreed and the defendant son appealed. The Supreme Court, speaking unanimously through Chief Justice Brock, upheld the imposition of the constructive trust. The Court found that a confidential relationship existed between the defendant and his mother which the defendant did not dispute. However, the defendant claimed that the facts did not support the finding that during the existence of the confidential relationship he had exerted undue influence over his mother to facilitate the transfer of the lakefront property to him. The Court found that argument "unpersuasive" and ruled that under all of the facts and circumstances, it would uphold the trial court's determination, ruling that:
[n]o rigid requirements exist for imposing a constructive trust.....A constructive trust may be imposed when clear and convincing evidence shows that a confidential relationship existed between two people, that one of them transferred property to the other, and that the person receiving the property would be unjustly enriched by retaining the property, regardless of whether the person obtained the property honestly....A confidential relationship exists if there is evidence of a family relationship in which one person justifiably believes that the other will act in his or her interest....A person may be unjustly enriched if he or she obtains title to property by fraud, duress, or undue influence, or violates a duty that arises out of a fiduciary relationship to another.
Petition of Mone, decided November 4, 1998, was the conclusion of a controversy exploited by the Union Leader to attack the Supreme Court. The case concerned the enactment of proposed legislation, over the stated concerns of Chief Justice Brock before enactment, about its constitutionality. The proposed legislation altered the system of providing court security in the courts of New Hampshire from the present system provided by security officers chosen by the judicial branch to a system provided by the legislature which proposed to delegate court security to the respective county sheriffs. Despite the view expressed by the Chief Justice that the proposed legislation violated the principle of separation of powers, the legislature enacted the law anyway. The legislature included some self-serving language in the statute which expressed the intent of the legislature that it did not mean by the enactment of the statute to step over the separation of powers' line provided for in our New Hampshire constitution. The inevitable appeal by the court security officers who would be without employment under the legislation (RSA 297) followed and, in a bold opinion by Justice Johnson (the Chief Justice and two of the members of the present Court did not sit but retired Supreme Court Justice Bois sat with the remaining members of the Court), a three judge court struck down the legislation, singing a hymn of praise to the separation of powers magic of our constitutional government:
Separation of the three co-equal branches of government is essential to protect against a seizure of control by one branch that would threaten the ability of our citizens to remain a free and sovereign people.... Thus, each branch is prohibited by the Separation of Powers Clause from encroaching on the powers and functions of another branch....The drafters of Part I, Article 37 recognized, however, that a complete separation of powers would disrupt the efficient operation of government...., and thus, '[I] the nature of things there must be some overlapping' of powers.... '[P]art I, Article 37 of the New Hampshire Constitution does not require the erection of impenetrable barriers between the branches of our government. On the contrary, the three departments must move in concert without improper encroachments by one branch upon the functions of another'.... The doctrine is thus violated when one branch usurps an essential power of another.... Accordingly, we must consider whether chapter 297 prevents the judiciary from performing an essential judicial function.... (legislative branch prohibited from seizing any of the judiciary's 'essential attributes').
Getting down to the particulars of the case, the Court held that the separation of powers clause is violated by the court security legislation because it was the
"court's responsibility 'to oversee the operations of the judicial branch for the purposes of maintaining public confidence in the administration of justice'.... Furthermore, Part I, Article 35 mandates that there be an independent judiciary so that the adjudication of individual controversies is fair and remains uninfluenced by outside forces.... In this instance, we are concerned about the effect that executive branch control of court security would have on the ability of the judicial branch to ensure impartiality in the adjudicatory process. For example, it is vital that bailiffs, who guard juries and relay their messages to the presiding judge, be under the direct supervision of the presiding judge to ensure the impartiality of the process....If judges are unable to effectuate the Part I, Article 35 guarantee that every citizen will receive an impartial hearing both in theory and in practice, faith in the judicial system is diminished....Accordingly, because chapter 297 mandates that the executive branch shall be responsible for security during the adjudicatory process, the law impedes on the court's constitutional responsibility to ensure the fair adjudication of controversies."
The Court ended its decision by reminding the legislature that it was mindful of the respective responsibilities of the other branches of government under the constitution and, in a neat twist, stated that "[t]he constitution compels us to protect the essential functions of all three co-equal branches from improper encroachment....Indeed, it would be our constitutional duty, for example, to invalidate an executive order of the Governor replacing the Sergeant-at-Arms and other security staff of the General Court with the county sheriff." In the author's opinion, this is a gutsy decision and one that should be applauded by all strict constitutionalists.
The seamless and timely substitution of retired Supreme Court Justice Maurice Bois into the Court panel hearing the Mone Case reminds the author how grateful he and other citizens of New Hampshire should be about the uncommon court system we enjoy. Unlike states where judicial elections prevail, our judges are appointed by the Governor but must receive approval from the five member Executive Council, often after a public hearing. However, no electioneering is required of the judges for election or re-election nor is there a pandering for votes from special interests, financial supporters or voters in general. In still other jurisdictions, judges are often appointed for limited terms causing them to be susceptible to pressure from political or private interest groups if they seek reappointment. Our judges are appointed until age 70 and, as a consequence, are free from expectable political pressure from the other branches of government or from partisan interest groups. For example, recent New Hampshire history contains many instances where judges appointed by a particular governor have subsequently ruled against a position espoused by the appointing governor. Furthermore, because of the mandatory retirement limitation at age 70, we do not have the embarrassing anachronisms of a 96 year old, red- topped, doddering United States Senator Strom Thurmond swearing in the U.S. Chief Justice to preside over an impeachment trial of a President or even that of a legal giant like Oliver Wendell Holmes dozing away on the U.S. Supreme Court bench at the age of 91. We should be truly thankful for the remarkable judicial system that we enjoy. If it's not the best judicial system there is, the author doesn't know a better one.
Thompson v. New Hampshire Board of Medicine, decided October 14, 1998, is an unusual case where the defendant physician obtained a temporary and permanent injunction from the superior court against the New Hampshire Board of Medicine because the superior court found that the board had violated the plaintiff doctor's procedural due process rights in the pending disciplinary proceedings against him. On appeal, the board contended that the superior court should have refrained from exercising its equitable jurisdiction to review the board's conduct but the Supreme Court unanimously affirmed the lower court's grant of injunctive relief. The facts show that the board had initiated disciplinary proceedings against the plaintiff doctor as a result of allegations that he had engaged in professional misconduct and the plaintiff doctor admitted to the allegations. The board then commenced a hearing to determine the appropriate sanction. After the proceedings were adjourned without a final decision, the plaintiff doctor filed a petition for temporary and permanent injunctive relief in the superior court, claiming that the board had violated his right of due process under both the state and federal constitutions, alleging various misconduct essentially involving (1) the roll of a staff member of the Attorney General's office in advising the board and also acting as prosecutor and (2) allowing two individuals with conflicts of interest to sit as public members of the board. The Court recognized that generally parties appearing before the board should not be able to "circumvent the statutory appeals process under the guise of a petition for injunctive relief" where the issues directly related to the merits of the case. However, the Court ruled that the superior court may "intervene prior to entry of a final judgment in exceptional circumstances where, as here, a party raises a due process violation that fundamentally impedes the fairness of an underlying proceeding resulting in immediate and irreparable harm to that party."
In Re Baby K., decided December 18, 1998, discusses issues surrounding the proceedings involving the termination of the parental rights of a father who is incarcerated in prison and who is unable to attend the hearing in person. The Court first held "that due process does not absolutely require an incarcerated parent's physical presence at a parental rights termination hearing, provided the parent is otherwise afforded procedural due process at the hearing." The Court then went on to review the factual circumstances of the hearing in the case before it. In the probate court proceeding, the incarcerated father was required to communicate telephonically directly into an earphone of his attorney during trial who had the dual responsibility of being a conduit for the father's communication while at the same time representing his client's interest in the proceeding going on before him. The Court concluded that due process requirements were not met by this procedure. However, the Court ruled that it would "not mandate particular procedures that must be employed" in such proceedings, because each situation might be different, depending upon the facts. To satisfy due process, the Court held "an incarcerated parent must have an opportunity for meaningful participation in the termination process" and that "such participation can occur in various ways."
Can there be anything more terrifying then to be subject to a public allegation that one has sexually abused one's own daughter? That was the fearsome situation confronted by the plaintiff father in Hungerford v. Jones, decided December 18, 1998. In answer to questions transferred from the United States District Court for the District of New Hampshire, the New Hampshire Supreme Court affirmatively answered the question whether a professional therapist owes a duty of care to third party nonpatients injured by the professional's negligence. Consider the horrifying facts. The defendant social worker, without professional training in treating patients allegedly afflicted with repressed memories of sexual assault, began to treat the plaintiff's daughter. The defendant represented to the daughter that she was a qualified and experienced mental health therapist, particularly in the problems associated with incest and sexual abuse. She did not inform the daughter of her limited experience and training in memory retrieval nor did she explain to her patient the continuing controversy in the mental health community regarding the reliability and validity of the phenomenon of memory retrieval or its potential for "implanting false memories."
When the therapy began the daughter had no knowledge or memory of being sexually abused by her father, but during the course of treatment the defendant therapist led the daughter by repressed memory therapy to reach the conclusion that she had been sexually abused by her father, not once but on several occasions including just before her wedding. Upon learning of his daughter's accusations against him, the plaintiff father authorized his own therapist to communicate with the defendant in an effort to help his daughter realize that her memories were false. Ignoring this new evidence, the defendant therapist remained stubbornly firm in her diagnosis and the daughter, at the defendant therapist's suggestion, ceased all contact with her father. To make matters worse (could possibly get worse?), with the defendant therapist's help, the daughter filed a complaint against her father for aggravated felonious sexual assault. The defendant therapist, ever the intermeddler, next proceeded to assist the county prosecutor with the aggravated felonious sexual assault prosecution of the plaintiff. Indictments were filed by the county prosecutor against the plaintiff father, but the superior court ruled that the daughter's memories were not admissible at trial because they were not scientifically reliable. The New Hampshire Supreme Court affirmed that decision (142 N.H. 110) and the plaintiff father then brought suit against the defendant therapist in the federal District Court of New Hampshire to recover in tort for his damages.
The questions transferred to it by the District Court essentially asked the New Hampshire Supreme Court whether a therapist owed a duty to exercise reasonable care in treating a child to prevent harm to the father of the child. The Court, speaking unanimously through Justice Broderick, walked carefully between the competing social interests of protecting children from child abuse and promoting healing for abused survivors, on the one hand, and protecting parents, families and society from false accusations of sexual abuse, on the other. "Though not a simple task, such a delicate balance must be achieved in light of the potentially devastating consequences from misdiagnosis." After a thorough review of the particularly egregious facts, the Court joined those other jurisdictions which have considered the question, holding
that a therapist owes an accused parent a duty of care in the diagnosis and treatment of an adult patient for sexual abuse where the therapist or the patient, acting on the encouragement, recommendation, or instruction of the therapist, takes public action concerning the accusation. In such instances, the social utility of detecting and punishing sexual abusers and maintaining the breadth of treatment choices for patients is outweighed by the substantial risk of severe harm to falsely accused parents, the family unit, and society....The duty of care to the accused parent is breached by the therapist when the publicized misdiagnosis results from (1) use of psychological phenomena or techniques not generally accepted in the mental health community, or (2) lack of professional qualification.
The Petition of Preisendorfer, decided October 5, 1998, discusses the difficult issue of the standard of the burden of proof required by the New Hampshire Division for Children, Youth and Families (DCYF) before listing an alleged child sexual abuser on the central registry of sexual perpetrators established by The Child Protection Act, RSA 169-C. That statute provides that the DCYF must show "probable cause that an individual child is abused in order to file a founded report of abuse in the central registry." RSA 169-C:3, VIII-a, :35. Probable cause is defined by the Act as information "that would justify a reasonable person to believe that a child" was abused. RSA 169-C:3, XXIII (1994). At the time of the listing of his name in the central registry, the plaintiff was employed as a teacher in the Epsom School District and upon his listing, he was immediately terminated from his employment. He appealed, raising the issue whether the use of the low probable cause standard of proof for listing satisfied the procedural due process requirements of Part I, Article 15, of the New Hampshire Constitution.
The Court first found that the plaintiff had a protected interest at stake as required by his appeal, i.e., the Court held that since the DCYF's decision to enter the petitioner's name into the registry essentially barred him from working with children and caused him to become unemployable in his profession, the plaintiff had the requisite protected interest. The Court then turned to the issue of the required standard of proof. A unanimous Supreme Court held that although probable cause was an appropriate burden of proof under the Child Protection Act in order to file a founded report of abuse, a higher standard was required in order to list an alleged perpetrator's name in the central registry. The Court chose a preponderance of the evidence standard, balancing the risk of harm to children against the rights of an individual accused of abuse:
Although the risk of harm to children may be greater with a higher standard of proof, the safety of children must be balanced against the rights of an individual accused of abuse....Where the protected liberty interest is the interest of a parent in preserving a parent-child relation ship, we have acknowledged that the State has a compelling interest in protecting the safety of children and have held that no constitutional error occurred when the legislature balanced these competing interests and adopted a preponderance of the evidence standard for abuse and neglect cases....We conclude that due process requires the same standard of proof for hearings of registry appeals when registration would deprive individuals of their protected liberty interests.
It must have taken the plaintiff much courage to bring this appeal.
Finally, continuing the author's occasional reminiscences of moments from his practice which may prove interesting to the readers of this column, the author well remembers the time when he approached his senior partner, Miss Harriet Mansfield, with a request for advice and assistance in taking certain actions which a client of the author wanted him to take. Miss Mansfield repeatedly urged the author not to take the requested actions, giving various reasons, but the author persisted in wanting to do it, explaining that the client wanted to do it and the author thought it was legal to do. Miss Mansfield ended the discussion by saying "Charlie, don't do it. It would be wrong." The author, although slow at times to learn, realized the wisdom of her injunction to him and ceased his proposed course of conduct. The moral is that even if a lawyer's intended action may pass strict legal muster, meeting the test of "wrongness" is probably a good rule of thumb to follow. It was just another lesson the author learned by listening to the common sense wisdom of his elders, in this case, that of a woman who had never attended law school, who had learned the law as a secretary in the law firm, who had taken a correspondence course to complete her legal education, and, yet, had become a noted authority throughout New Hampshire in her field of practice.
Attorney Charles A. DeGrandpre is a director and treasurer in the firm of McLane, Graf, Raulerson & Middleton, P.A., Portsmouth, NH.