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Bar News - August 11, 2006


Supreme Court At-A-Glance – July 2006

By:


Family Law

 

Personal Injury Settlements as Includable in “Gross Income”

In the Matter of State of New Hampshire and Mark A. Taylor

No. 2005-273

Hillsborough County Superior Court – Southern District

July 19, 2006: Vacated and Remanded

 

In this case, Mark Taylor appeals the recommendation of a marital master, modifying his child support payments following his receipt of a lump sum personal injury settlement. Taylor argues on appeal that the trial court erred by (1) treating the settlement as “gross income” within the meaning of R.S.A. 458-C; (2) dividing the settlement over his expected life span to impute income for the purpose of calculating child support; and (3) not providing a dollar for dollar child support credit for SSDI payments received by the child.

 

  On the first issue, the court held that not only did prior rulings support treating lump sum payments in personal injury actions as gross income, but there was an important public policy consideration, as concluding otherwise might encourage litigants to structure personal injury settlements as lump sum settlements rather than annuities to avoid child support payments.

  With regard to Mr. Taylor’s second contention, the court held that while “income averaging,” as alleged by Mr. Taylor, was impermissible in certain circumstances, the court was actually utilizing an “allocation of proceeds” approach to prorate proceeds over a period of time, and this approach has been held to be permissible.

  Finally, the court held that the failure to give Taylor a dollar-for-dollar credit for the SSDI payments to the child was in error, under the per se rule adopted in In the Matter of Angley-Cook & Cook, 151 N.H. 257 (2004).  Thus, the court found that the trial court engaged in an unsustainable exercise of discretion, and vacated the trial court order and remanded the matter for further proceedings consistent with the opinion of the Supreme Court.

 

Criminal

 

Provocation Manslaughter Instruction:

The State of New Hampshire v. Anthony C. Leary

No. 2005-485

Strafford County Superior Court

July 19, 2006:  Affirmed

 

The Defendant appeals his conviction of first degree murder, arguing that the trial court erred in instructing the jury that it could consider provocation manslaughter only if it acquitted him of first and second degree murder (an “acquittal first” instruction). The Supreme Court held that, in State v. Taylor, 141 N.H. 89 (1996), they addressed a similar issue of an acquittal first instruction. However, that instruction required that a jury consider the defendant’s provocation defense regardless of the outcome on the murder charge, whereas this instruction did not allow a jury to consider the defense until the defendant had been acquitted of first and second degree murder. As such, the court held that the instruction was in error.

 

  The court the turned to the question of whether the error was harmless.  The court noted that the State has the burden of proving that, beyond a reasonable doubt, the error did not affect the verdict.  The court agreed with the State, holding that based upon the brutal nature of the crime despite pleas by the victim for the defendant to cease, along with the fact that the defendant took the time to pause and tell the victim that it was “too late” before inflicting fatal stab wounds, supported the conclusion that no reasonable jury could have found the defendant guilty of provocation manslaughter even if the trial court instructed the jury as the defendant requested.

 

Criminal/Administrative

 

Scope of the Administrative Procedure Act:

John J. Gosselin v. New Hampshire Department of Corrections

No. 2005-176

Merrimack County Superior Court

July 19, 2006: Affirmed

 

John J. Gosselin appeals the decision of the Superior Court denying his Petition for Writ of Certiorari, based upon his appeal of convictions for disciplinary infractions which were handled pursuant to the Department of Corrections’ Policy and Procedure Manual, specifically section 5.25 (“PPD 5.25”).  In his appeal, Gosselin alleged that PPD 5.25 should have been promulgated under the Administrative Procedures Act (“APA”), and that hearings conducted pursuant to PPD 5.25 were subject to the requirement of a full adjudicative hearing.

 

  The Supreme Court held that one of the exemptions (in fact, what would be the only applicable exemption in this case) to the APA deals with rules “relative to credit for good conduct of prisoners.”  The court stated that while they recognized that Gosselin did not lose any good time credits, the rules governing his actions could have produced such a result.

  As such, the court concluded that PPPD 5.25 falls under the APA (RSA 541-A:21, I(j)), and is therefore exempt from the rulemaking and adjudicative hearing structures of the APA.

 

Property: Zoning

 

G2003B, LLC et al. v. Town of Weare

No. 2005-408

Hillsborough County Superior Court:  Northern District

July 20, 2006: Affirmed

 

Residents of the Town of Weare, as intervenors, appeal an order of the Superior Court granting a motion to enter a consent decree filed by the Plaintiffs. The Plaintiffs are both owners and successors in interest in a large parcel of land in the town. In June of 2001, one of the Plaintiffs acquired the parcel and applied for subdivision approval. In December, town citizens passed an article amending the zoning ordinance, and creating a historic overlay district, including the parcel at issue.  The Plaintiffs filed a declaratory judgment action against the town, seeking damages for inverse condemnation, and argued that the zoning amendment was (1) unconstitutional on its face; and (2) unconstitutional as applied.

 

  The court bifurcated the issues and denied the Plaintiffs’ Motion for Declaratory Judgment on the issue of facial constitutionality. The court deferred the remaining issue of as-applied constitutionality.  After the court’s decision, the Plaintiffs and the Town filed a Motion to Enter a Consent Decree, permitting the Plaintiffs to subdivide and develop the property in exchange for withdrawing all other causes of action against the Town, and waiving damages. The Intervenors appeal argued that the decree was based on erroneous facts and conclusions of law and was determined without an adequate hearing.

  The Supreme Court noted that the Intervenors were allowed to present their case against the consent decree at the hearing, and that there was nothing in the record to suggest that they could not have presented evidence. The trial court was provided with substantive documentation including the complete certified record from a related case. Additionally, the court took a view, allowed the parties to submit memoranda of law and requests for findings of fact, and heard oral arguments.  Thus, the Supreme Court held that the trial court’s ruling did not constitute an unsustainable exercise of discretion because the record supports a finding that the trial court had sufficient knowledge of the facts and applicable law so as to constitute a reasonable basis for the court’s approval of the consent decree.

 

Property: Zoning

 

Joseph Thomas et al. v. Town of Hooksett

No. 2005-312

Merrimack County Superior Court

July 20, 2006: Affirmed in Part, Vacated in Part, and Remanded

 

Intervenor Richard Boisvert appeals an order of the Superior Court, reversing decisions of the Hooksett Zoning Board of Adjustment (“ZBA”). That litigation arose out of the Town of Hooksett’s decision to amend its zoning ordinance to create a Groundwater Conservation District, and to restrict the location of new gas stations in the town. Boisvert owns property that falls within both the district, and the restricted area, and had planned to construct a gas station on the property.

 

When he inquired as to the status of site plan approval for his property, he was informed by the Hooksett Code Enforcement Officer and a member of the Hooksett Planning Board that if he obtained a building permit within a year of January 23, 2003, and began construction six months after that, the approval would not be rescinded. Boisvert was issued a building permit on January 5, 2004, and began construction on June 30, 2004.

 

  Boisvert’s building permit was revoked by the Town on May 27, 2004 in a writing which stated that “RSA 674:39 clearly set guidelines for ‘active and substantial development’ within one year in order to secure protection from zoning changes.” Boisvert appealed to the ZBA, which overturned the revocation of the permit. The petitioners, and local gas station owners Joseph and Cindy Thomas, appealed to the Superior Court, which reversed the ZBA decisions.

  The Supreme Court upheld the trial court’s finding that Boisvert’s reliance upon the town’ s representations was not reasonable. The court pointed out that reliance is unreasonable when the party asserting estoppel, at the time of his or her reliance or at the time of the representation or concealment, knew or should have known that the conduct or representation was improper, materially incorrect, or misleading. The Supreme Court then agreed with the trial court that since a statute squarely addresses the issue, Boisvert was on notice than any representations to the contrary were materially incorrect, and his reliance on them was not reasonable.

Boisvert also argued that the trial court erred in determining that the requirements for his requested variance were not met, as the ZBA failed to make any findings with regard to its decision, and failed to discuss the factors for granting a variance, pursuant to Simplex Technologies v. Town of Newington, 145 N.H. 727 (2001). The Supreme Court noted that an absence of findings is not, in itself, an error, and held that while the ZBA was not required to set forth specific findings, the minutes reflect that the ZBA gave only cursory consideration to the variance issue. As such, the court vacated the rulings on the variance and remanded to the ZBA for further proceedings consistent with that error.

 

Corporate: Franchise Law

 

Dana Vandemark v. McDonald’s Corp.

No. 2005-412

Merrimack County Superior Court

July 21, 2006: Affirmed

 

The Defendant and Colley/McCoy Management Company, LLC (“CMM”) entered into a series of agreements whereby CMM would become a franchisee for a McDonald’s in Concord, NH. The license agreement specifically provided that the licensee was not an agent of the licensor, and the lease also provided that no agency was created. CMM thus operated as a separate entity, independent of McDonald’s Corporation. The franchisor/defendant, however, did publish an operations and training manual addressing safety and security provisions, but which provided that independent owners should consider adopting similar policies. The Defendant eventually hired a field consultant in 2001, and published a manual for use in their evaluation of restaurants in 2002. In June of 2002, CMM was advised by the consultant that deficiencies existed in shift management, food safety and production. CMM was asked to provide an action plan to rectify these deficiencies. Deficiencies were also noted in CMM’s Safety and Security system, but no action plan was requested with regard to that finding.

 

In 2003, the Plaintiff (an employee of CMM) was brutally attacked in the restaurant at 3:00a.m., and beaten nearly unconscious with a bat. The defendant alleges that he hit the panic button, but it was broken, and he was not found until 4:45 a.m., when another employee reported to work. The Plaintiff brought suit against the defendant, alleging negligence and vicarious liability, and the Superior Court granted summary judgment for the defendant, finding that (1) there were no genuine issues of material fact; (2) the defendant assumed no duty to ensure that CMM followed its security measures; and (3) the defendant did not retain sufficient control over CMM’s security policy.

 

  On appeal, the plaintiff argued that the defendant voluntarily assumed a duty when it published the handbook for the field operatives. The Supreme Court likened a franchiser’s voluntary assumption of a duty to landlord-tenant law, holding that, in the absence of evidence to the contrary, the trial court did not err in concluding that the defendant made no affirmative attempt to provide security to CMM employees, and consequently assumed no duty to the plaintiff. 

  The Court also stated that they have specifically rejected liability for criminal attacks “based solely on the landlord-tenant relationship or on  doctrine of overriding forseeability,” but have recognized such actions when there was a known defective condition. The court held, however, that the plaintiff provided no evidence that the defendant knew, or should have known, of the alleged safety issues. Finally, the court, relying on the language in the operations and training manual, held that no vicarious liability existed, because while the defendant maintained authority to ensure uniformity and standardization of products and services offered by CMM, such authority did not extend to control of security operations.

 

Corporate:  Trade Secrets

 

Mortgage Specialists, Inc. v. Joseph C. Davey, IV et al.

No. 2005-067

Rockingham County Superior Court

July 26, 2006:  Affirmed in Part, Vacated in Part, and Remanded

 

In July of 2002, two employees left Mortgage Specialists to work for a competitor  brokerage, Mortgage Partners. They took with them customer information, including current interest rates paid by those customers. They subsequently started their own mortgage businesses. The trial court dismissed all claims except for the plaintiff’s claim that the defendants misappropriated trade secrets.  A trial was held, and the jury returned a verdict for the defendants. The trial court subsequently imposed sanctions on the defendants for their conduct prior to and during trial. The plaintiff appealed the verdict, and the defendants appealed the sanctions.

 

  The Supreme Court noted that a jury’s verdict may only be set aside if it is conclusively against the weight of the evidence or if it is the result of mistake, partiality or corruption, and pointed out that for information to be a trade secret, the information must, among other things, be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  The court held that since evidence was presented that the documents were never marked confidential, were kept in an attic for many years, and that employees were not given consistent instructions as to the proper treatment of the documents as either confidential or proprietary, the jury was reasonable in reaching its decision.

The plaintiff also alleges that its claims are not preempted by the New Hampshire Uniform Trade Secrets Act on the basis that common law no longer protects confidential information from mere misuse unless it is a statutory trade secret. 

 

  The Supreme Court found in this instance that, to the extent the claims were supported by more than misuse of customer information, they were not preempted, and vacated the trial court’s dismissal of the plaintiff’s claims for tortuous interference and violation of the CPA, and remanded the matter to the trial court.

Finally, with regard to the sanctions, the defendants argue that the imposition of fines and attorneys fees for the destruction of documents and for the violation of the preliminary injunction order constituted findings of criminal, rather than civil, contempt, without the substantive and procedural requirements of a criminal contempt finding.

 

  The Supreme Court held that because the sanctions were for indirect criminal contempt, the trial court was required to adhere to the procedural formalities attendant thereto, that it was unclear whether the defendants received the requisite notice because they were never told that the charges were for criminal contempt, and that even if the notice was adequate, the trial court erred in failing to refer the matter for prosecution and in permitting the plaintiff to present evidence and argument regarding the criminal contempt charges against the defendants.

  Accordingly, the Supreme Court vacated the trial court’s order of sanctions for violation of the preliminary injunction, and remanded this portion of the case for further proceedings.

 

Malicious Prosecution

 

Ric Paul v. Franklin C. Sherburne

No. 2005-326

Milford District Court

July 21, 2006: Reversed and Remanded

 

This case arises out of a stalking petition filed by the defendant, against the plaintiff, which ultimately gave rise to an action for malicious prosecution brought by the plaintiff. The plaintiff appealed a decision of the Milford District Court, dismissing his small claim action for malicious prosecution against the defendant, alleging that the trial court (1) misinterpreted and misapplied two elements of the tort of malicious prosecution; and (2) erred by reconsidering and reversing its prior order denying the defendant’s motion to dismiss the malicious prosecution claim.

 

To prevail in a malicious prosecution claim, the plaintiff must prove: (1) that he was subjected to a civil proceeding instituted by the defendant; (2) without probable cause; (3) with malice; and (4) that the proceedings terminated in the plaintiff’s favor. The defendant argued that the ex parte stalking order issued by the court was conclusive evidence of probable cause.

 

  The Supreme Court disagreed, holding that, because the order was issued without notice to or hearing evidence from the other party, it constitutes prima facie evidence of probable cause, rather than conclusive evidence. The Supreme Court also held that, since the stalking petition was dismissed for the defendant’s failure to show for the hearing, it did indeed terminate in the plaintiff’s favor.

  The Supreme Court thus found that the trial court erred, as a matter of law, in ruling that the plaintiff’s malicious prosecution claim failed to meet two of the four required elements, and remanded the case.

 

Attorney Professional Conduct

 

Richmond’s Case

No. LD-2003-008

Original Jurisdiction

July 21, 2006: Referee’s Findings Adopted, and Respondent Disbarred

 

In 2003, the New Hampshire Supreme Court’s Committee on Professional Conduct filed a petition to suspend William M. Richmond from the practice of law for two concurrent one year periods. The petition was referred to a referee, who found by clear and convincing evidence that the respondent violated New Hampshire Rules of Professional Conduct 1.4(a), 1.8(a), 1.15(a)(1), & (c), 1.16(d), and 8.4(a), and recommended disbarment.

 

The charges stemmed from Richmond’s representation of a client.  During the course of that representation, Richmond set up several offshore accounts to facilitate the sale of restricted stock for the client.  Richmond established a series of corporations as liability protection for the client, and established various brokerage accounts as well.  When the client fell behind in his payment of legal fees, Richmond prepared a letter, which the client signed, and which, inter alia, gave Richmond complete discretion over the securities, allowing him to liquidate them and apply the proceeds on a two-thirds/one-third basis to the arrearage. Despite termination of Richmond’s legal services in June of 2001, Richmond continued to rely on the May, 2001 letter, selling stock to generate proceeds for legal bills, and ultimately refusing to turn over requested records.

 

  The Supreme Court, after considering the referee’s findings, held that Richmond violated Rule 1.4(a) by retaining documents reasonably requested by his client, effectively preventing the client from blocking the sale of securities, and violated Rule 1.6(d) for failure to promptly turn over documents.  The court held that Richmond violated Rule 1.8(a) by pressuring his client into signing the May, 2001 letter without properly explaining its risks and consequences, thereby violating Richmond’s duty to avoid conflicts of interest. The court also held that Richmond violated Rules 1.15(a)(1) and (c) by cashing in securities after the client has expressly prohibited it, violating Richmond’s duty to protect his client’s property.

  The court considered the referee’s finding of the following aggravating factors: prior disciplinary offenses, multiple offenses in this case, a selfish motive, a lack of remorse, and Richmond’s intentional failure to comply with court rules and orders on multiple occasions relative to the proceeding. As such, the respondent was disbarred.

 

Apportionment of Damages

 

Janet Debenedetto, Administratrix of the Estate of David Debenedetto v. CLD Consulting Engineers, Inc.

No. 2005-262

Rockingham County Superior Court

July 27, 2006: Affirmed

 

On May 31, 1999, David Debenedetto was fatally injured in a motor vehicle accident when a vehicle driven by Doris Christous collided with the decedent’s vehicle, causing it to flip over.  Christous ran a red light after waiting for nearly five minutes, and assuming the light was broken. The light was actually triggered by a sensor system which had not been installed in the center lane. The plaintiff subsequently settled with Ms. Christous’ insurance company, and brought a wrongful death action against seven entities, alleging that each named defendant was involved in the design, selection, installation, or authorization of the traffic control system.

 

Prior to trial, the plaintiff settled with all parties except CLD and the NH Department of Transportation (“NHDOT”).  The trial court granted NHDOT’s motion to dismiss on grounds of immunity.  At the conclusion of trial, the trial court did not give a requested jury instruction on apportionment of fault, but rather instructed the jury to determine the percentage of fault, if any, of only the remaining named defendant, CLD, as well as Christous, ECS and NHDOT. The instruction omitted 4 parties. The jury returned a verdict of $5.3 million (later reduced to $3.8 million by the trial court judge), which was apportioned 49% to CLD, 49% to Christous, and 2% to NHDOT.

 

On appeal, the plaintiff argues that the trial court erred in (1) instructing the jury to consider Christous and NHDOT when assigning fault percentages; (2) their unconstitutional interpretation of RSA 507:7-e (governing the apportionment of damages); and (3) in granting remittitur. CLD cross appealed, claiming that (4) the trial court erred in failing to instruct the jury that it could apportion fault to two other parties; (5) the jury verdict apportioning no fault to ECS and only two percent to NHDOT was against the weight of the evidence; and (6) the trial court erred in denying CLD’s motion for directed verdict.

 

  On the first issue, the New Hampshire Supreme Court held that for apportionment purposes under RSA 507:7-e, the word “party” refers not only to “parties to an action . . . including settling parties,” as outlined in Nilsson, but also to “all parties contributing to the occurrence giving rise to an action, including those immune from liability or otherwise not before the court.”

  On the issue of the constitutionality of the statute as applied, the court held that Part I, Article 14 of the New Hampshire Constitution does not guarantee that all injured persons will receive full compensation for their injuries, only that they are entitled to a certain remedy, which the statute in question does not infringe upon.

  Additionally, the court held that although RSA 507:7-e I (b) allows for the disparate treatment of similarly situated persons, it bears a rational relationship to the furtherance of a legitimate government purpose, and thus does not violate the Equal Protection provisions of the Constitution.

  On the issue of remittitur, the court noted that direct review of a damages award is the responsibility of the trial judge, and it will not be reversed absent an unsustainable exercise of discretion. Here, the court held that “[h]aving reviewed the record, we conclude that the trial court could reasonably have determined that the jury’s damages award was punitive, rather than compensatory, in nature, and therefore both manifestly exorbitant and conclusively against the weight of the evidence.” On the fourth issue (the defendant’s first issue), the defendant argues that 4 other parties should have been considered in apportioning fault.  The Supreme Court agreed, but noted that the trial court had noted that CLD agreed there was not enough evidence to show that those defendants were negligent to any degree.  The Supreme Court then held that of CLD felt that this was a misrepresentation, the proper place to raise it would have been in a Motion to Reconsider.

           On the issue of whether the apportionment of fault was against the weight of the evidence, the Supreme Court held that since the issue was not raised in any of the post trial motions of memoranda of law, it could not be reviewed upon appeal.  Finally, with regard to the defendant’s Motion for Directed Verdict, the court noted that a party is entitled to a directed verdict only when the sole reasonable inference that may be drawn from the evidence, which must be viewed in the light most favorable to the nonmoving party, is so overwhelmingly in favor of the moving party that no contrary verdict could stand. The court then held that the proffered testimony, rather than support the defendant’s request for a directed verdict, undermined it, and that the record supported the trial court’s determination.

 

Kelleigh L. Domaingue is an Attorney with Devine & Nyquist in Manchester, NH, and has been practicing since 2004. A graduate of Vermont Law School, Domaingue is a member of the Manchester School Board, and Arts Commissioner for the City of Manchester, and the co-founder and Vice President of the Southern NH Women’s Business Network. She was also named one of the 40 Most Influential People Under Forty in 2006.

 

Family Law

 

Personal Injury Settlements as Includable in “Gross Income”

In the Matter of State of New Hampshire and Mark A. Taylor

No. 2005-273

Hillsborough County Superior Court – Southern District

July 19, 2006: Vacated and Remanded

 

In this case, Mark Taylor appeals the recommendation of a marital master, modifying his child support payments following his receipt of a lump sum personal injury settlement. Taylor argues on appeal that the trial court erred by (1) treating the settlement as “gross income” within the meaning of R.S.A. 458-C; (2) dividing the settlement over his expected life span to impute income for the purpose of calculating child support; and (3) not providing a dollar for dollar child support credit for SSDI payments received by the child.

 

  On the first issue, the court held that not only did prior rulings support treating lump sum payments in personal injury actions as gross income, but there was an important public policy consideration, as concluding otherwise might encourage litigants to structure personal injury settlements as lump sum settlements rather than annuities to avoid child support payments.

  With regard to Mr. Taylor’s second contention, the court held that while “income averaging,” as alleged by Mr. Taylor, was impermissible in certain circumstances, the court was actually utilizing an “allocation of proceeds” approach to prorate proceeds over a period of time, and this approach has been held to be permissible.

  Finally, the court held that the failure to give Taylor a dollar-for-dollar credit for the SSDI payments to the child was in error, under the per se rule adopted in In the Matter of Angley-Cook & Cook, 151 N.H. 257 (2004).  Thus, the court found that the trial court engaged in an unsustainable exercise of discretion, and vacated the trial court order and remanded the matter for further proceedings consistent with the opinion of the Supreme Court.

 

Criminal

 

Provocation Manslaughter Instruction:

The State of New Hampshire v. Anthony C. Leary

No. 2005-485

Strafford County Superior Court

July 19, 2006:  Affirmed

 

The Defendant appeals his conviction of first degree murder, arguing that the trial court erred in instructing the jury that it could consider provocation manslaughter only if it acquitted him of first and second degree murder (an “acquittal first” instruction). The Supreme Court held that, in State v. Taylor, 141 N.H. 89 (1996), they addressed a similar issue of an acquittal first instruction. However, that instruction required that a jury consider the defendant’s provocation defense regardless of the outcome on the murder charge, whereas this instruction did not allow a jury to consider the defense until the defendant had been acquitted of first and second degree murder. As such, the court held that the instruction was in error.

 

  The court the turned to the question of whether the error was harmless.  The court noted that the State has the burden of proving that, beyond a reasonable doubt, the error did not affect the verdict.  The court agreed with the State, holding that based upon the brutal nature of the crime despite pleas by the victim for the defendant to cease, along with the fact that the defendant took the time to pause and tell the victim that it was “too late” before inflicting fatal stab wounds, supported the conclusion that no reasonable jury could have found the defendant guilty of provocation manslaughter even if the trial court instructed the jury as the defendant requested.

 

Criminal/Administrative

 

Scope of the Administrative Procedure Act:

John J. Gosselin v. New Hampshire Department of Corrections

No. 2005-176

Merrimack County Superior Court

July 19, 2006: Affirmed

 

John J. Gosselin appeals the decision of the Superior Court denying his Petition for Writ of Certiorari, based upon his appeal of convictions for disciplinary infractions which were handled pursuant to the Department of Corrections’ Policy and Procedure Manual, specifically section 5.25 (“PPD 5.25”).  In his appeal, Gosselin alleged that PPD 5.25 should have been promulgated under the Administrative Procedures Act (“APA”), and that hearings conducted pursuant to PPD 5.25 were subject to the requirement of a full adjudicative hearing.

 

  The Supreme Court held that one of the exemptions (in fact, what would be the only applicable exemption in this case) to the APA deals with rules “relative to credit for good conduct of prisoners.”  The court stated that while they recognized that Gosselin did not lose any good time credits, the rules governing his actions could have produced such a result.

  As such, the court concluded that PPPD 5.25 falls under the APA (RSA 541-A:21, I(j)), and is therefore exempt from the rulemaking and adjudicative hearing structures of the APA.

 

Property: Zoning

 

G2003B, LLC et al. v. Town of Weare

No. 2005-408

Hillsborough County Superior Court:  Northern District

July 20, 2006: Affirmed

 

Residents of the Town of Weare, as intervenors, appeal an order of the Superior Court granting a motion to enter a consent decree filed by the Plaintiffs. The Plaintiffs are both owners and successors in interest in a large parcel of land in the town. In June of 2001, one of the Plaintiffs acquired the parcel and applied for subdivision approval. In December, town citizens passed an article amending the zoning ordinance, and creating a historic overlay district, including the parcel at issue.  The Plaintiffs filed a declaratory judgment action against the town, seeking damages for inverse condemnation, and argued that the zoning amendment was (1) unconstitutional on its face; and (2) unconstitutional as applied.

 

  The court bifurcated the issues and denied the Plaintiffs’ Motion for Declaratory Judgment on the issue of facial constitutionality. The court deferred the remaining issue of as-applied constitutionality.  After the court’s decision, the Plaintiffs and the Town filed a Motion to Enter a Consent Decree, permitting the Plaintiffs to subdivide and develop the property in exchange for withdrawing all other causes of action against the Town, and waiving damages. The Intervenors appeal argued that the decree was based on erroneous facts and conclusions of law and was determined without an adequate hearing.

  The Supreme Court noted that the Intervenors were allowed to present their case against the consent decree at the hearing, and that there was nothing in the record to suggest that they could not have presented evidence. The trial court was provided with substantive documentation including the complete certified record from a related case. Additionally, the court took a view, allowed the parties to submit memoranda of law and requests for findings of fact, and heard oral arguments.  Thus, the Supreme Court held that the trial court’s ruling did not constitute an unsustainable exercise of discretion because the record supports a finding that the trial court had sufficient knowledge of the facts and applicable law so as to constitute a reasonable basis for the court’s approval of the consent decree.

 

Property: Zoning

 

Joseph Thomas et al. v. Town of Hooksett

No. 2005-312

Merrimack County Superior Court

July 20, 2006: Affirmed in Part, Vacated in Part, and Remanded

 

Intervenor Richard Boisvert appeals an order of the Superior Court, reversing decisions of the Hooksett Zoning Board of Adjustment (“ZBA”). That litigation arose out of the Town of Hooksett’s decision to amend its zoning ordinance to create a Groundwater Conservation District, and to restrict the location of new gas stations in the town. Boisvert owns property that falls within both the district, and the restricted area, and had planned to construct a gas station on the property.

 

When he inquired as to the status of site plan approval for his property, he was informed by the Hooksett Code Enforcement Officer and a member of the Hooksett Planning Board that if he obtained a building permit within a year of January 23, 2003, and began construction six months after that, the approval would not be rescinded. Boisvert was issued a building permit on January 5, 2004, and began construction on June 30, 2004.

 

  Boisvert’s building permit was revoked by the Town on May 27, 2004 in a writing which stated that “RSA 674:39 clearly set guidelines for ‘active and substantial development’ within one year in order to secure protection from zoning changes.” Boisvert appealed to the ZBA, which overturned the revocation of the permit. The petitioners, and local gas station owners Joseph and Cindy Thomas, appealed to the Superior Court, which reversed the ZBA decisions.

  The Supreme Court upheld the trial court’s finding that Boisvert’s reliance upon the town’ s representations was not reasonable. The court pointed out that reliance is unreasonable when the party asserting estoppel, at the time of his or her reliance or at the time of the representation or concealment, knew or should have known that the conduct or representation was improper, materially incorrect, or misleading. The Supreme Court then agreed with the trial court that since a statute squarely addresses the issue, Boisvert was on notice than any representations to the contrary were materially incorrect, and his reliance on them was not reasonable.

Boisvert also argued that the trial court erred in determining that the requirements for his requested variance were not met, as the ZBA failed to make any findings with regard to its decision, and failed to discuss the factors for granting a variance, pursuant to Simplex Technologies v. Town of Newington, 145 N.H. 727 (2001). The Supreme Court noted that an absence of findings is not, in itself, an error, and held that while the ZBA was not required to set forth specific findings, the minutes reflect that the ZBA gave only cursory consideration to the variance issue. As such, the court vacated the rulings on the variance and remanded to the ZBA for further proceedings consistent with that error.

 

Corporate: Franchise Law

 

Dana Vandemark v. McDonald’s Corp.

No. 2005-412

Merrimack County Superior Court

July 21, 2006: Affirmed

 

The Defendant and Colley/McCoy Management Company, LLC (“CMM”) entered into a series of agreements whereby CMM would become a franchisee for a McDonald’s in Concord, NH. The license agreement specifically provided that the licensee was not an agent of the licensor, and the lease also provided that no agency was created. CMM thus operated as a separate entity, independent of McDonald’s Corporation. The franchisor/defendant, however, did publish an operations and training manual addressing safety and security provisions, but which provided that independent owners should consider adopting similar policies. The Defendant eventually hired a field consultant in 2001, and published a manual for use in their evaluation of restaurants in 2002. In June of 2002, CMM was advised by the consultant that deficiencies existed in shift management, food safety and production. CMM was asked to provide an action plan to rectify these deficiencies. Deficiencies were also noted in CMM’s Safety and Security system, but no action plan was requested with regard to that finding.

 

In 2003, the Plaintiff (an employee of CMM) was brutally attacked in the restaurant at 3:00a.m., and beaten nearly unconscious with a bat. The defendant alleges that he hit the panic button, but it was broken, and he was not found until 4:45 a.m., when another employee reported to work. The Plaintiff brought suit against the defendant, alleging negligence and vicarious liability, and the Superior Court granted summary judgment for the defendant, finding that (1) there were no genuine issues of material fact; (2) the defendant assumed no duty to ensure that CMM followed its security measures; and (3) the defendant did not retain sufficient control over CMM’s security policy.

 

  On appeal, the plaintiff argued that the defendant voluntarily assumed a duty when it published the handbook for the field operatives. The Supreme Court likened a franchiser’s voluntary assumption of a duty to landlord-tenant law, holding that, in the absence of evidence to the contrary, the trial court did not err in concluding that the defendant made no affirmative attempt to provide security to CMM employees, and consequently assumed no duty to the plaintiff. 

  The Court also stated that they have specifically rejected liability for criminal attacks “based solely on the landlord-tenant relationship or on  doctrine of overriding forseeability,” but have recognized such actions when there was a known defective condition. The court held, however, that the plaintiff provided no evidence that the defendant knew, or should have known, of the alleged safety issues. Finally, the court, relying on the language in the operations and training manual, held that no vicarious liability existed, because while the defendant maintained authority to ensure uniformity and standardization of products and services offered by CMM, such authority did not extend to control of security operations.

 

Corporate:  Trade Secrets

 

Mortgage Specialists, Inc. v. Joseph C. Davey, IV et al.

No. 2005-067

Rockingham County Superior Court

July 26, 2006:  Affirmed in Part, Vacated in Part, and Remanded

 

In July of 2002, two employees left Mortgage Specialists to work for a competitor  brokerage, Mortgage Partners. They took with them customer information, including current interest rates paid by those customers. They subsequently started their own mortgage businesses. The trial court dismissed all claims except for the plaintiff’s claim that the defendants misappropriated trade secrets.  A trial was held, and the jury returned a verdict for the defendants. The trial court subsequently imposed sanctions on the defendants for their conduct prior to and during trial. The plaintiff appealed the verdict, and the defendants appealed the sanctions.

 

  The Supreme Court noted that a jury’s verdict may only be set aside if it is conclusively against the weight of the evidence or if it is the result of mistake, partiality or corruption, and pointed out that for information to be a trade secret, the information must, among other things, be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  The court held that since evidence was presented that the documents were never marked confidential, were kept in an attic for many years, and that employees were not given consistent instructions as to the proper treatment of the documents as either confidential or proprietary, the jury was reasonable in reaching its decision.

The plaintiff also alleges that its claims are not preempted by the New Hampshire Uniform Trade Secrets Act on the basis that common law no longer protects confidential information from mere misuse unless it is a statutory trade secret. 

 

  The Supreme Court found in this instance that, to the extent the claims were supported by more than misuse of customer information, they were not preempted, and vacated the trial court’s dismissal of the plaintiff’s claims for tortuous interference and violation of the CPA, and remanded the matter to the trial court.

Finally, with regard to the sanctions, the defendants argue that the imposition of fines and attorneys fees for the destruction of documents and for the violation of the preliminary injunction order constituted findings of criminal, rather than civil, contempt, without the substantive and procedural requirements of a criminal contempt finding.

 

  The Supreme Court held that because the sanctions were for indirect criminal contempt, the trial court was required to adhere to the procedural formalities attendant thereto, that it was unclear whether the defendants received the requisite notice because they were never told that the charges were for criminal contempt, and that even if the notice was adequate, the trial court erred in failing to refer the matter for prosecution and in permitting the plaintiff to present evidence and argument regarding the criminal contempt charges against the defendants.

  Accordingly, the Supreme Court vacated the trial court’s order of sanctions for violation of the preliminary injunction, and remanded this portion of the case for further proceedings.

 

Malicious Prosecution

 

Ric Paul v. Franklin C. Sherburne

No. 2005-326

Milford District Court

July 21, 2006: Reversed and Remanded

 

This case arises out of a stalking petition filed by the defendant, against the plaintiff, which ultimately gave rise to an action for malicious prosecution brought by the plaintiff. The plaintiff appealed a decision of the Milford District Court, dismissing his small claim action for malicious prosecution against the defendant, alleging that the trial court (1) misinterpreted and misapplied two elements of the tort of malicious prosecution; and (2) erred by reconsidering and reversing its prior order denying the defendant’s motion to dismiss the malicious prosecution claim.

 

To prevail in a malicious prosecution claim, the plaintiff must prove: (1) that he was subjected to a civil proceeding instituted by the defendant; (2) without probable cause; (3) with malice; and (4) that the proceedings terminated in the plaintiff’s favor. The defendant argued that the ex parte stalking order issued by the court was conclusive evidence of probable cause.

 

  The Supreme Court disagreed, holding that, because the order was issued without notice to or hearing evidence from the other party, it constitutes prima facie evidence of probable cause, rather than conclusive evidence. The Supreme Court also held that, since the stalking petition was dismissed for the defendant’s failure to show for the hearing, it did indeed terminate in the plaintiff’s favor.

  The Supreme Court thus found that the trial court erred, as a matter of law, in ruling that the plaintiff’s malicious prosecution claim failed to meet two of the four required elements, and remanded the case.

 

Attorney Professional Conduct

 

Richmond’s Case

No. LD-2003-008

Original Jurisdiction

July 21, 2006: Referee’s Findings Adopted, and Respondent Disbarred

 

In 2003, the New Hampshire Supreme Court’s Committee on Professional Conduct filed a petition to suspend William M. Richmond from the practice of law for two concurrent one year periods. The petition was referred to a referee, who found by clear and convincing evidence that the respondent violated New Hampshire Rules of Professional Conduct 1.4(a), 1.8(a), 1.15(a)(1), & (c), 1.16(d), and 8.4(a), and recommended disbarment.

 

The charges stemmed from Richmond’s representation of a client.  During the course of that representation, Richmond set up several offshore accounts to facilitate the sale of restricted stock for the client.  Richmond established a series of corporations as liability protection for the client, and established various brokerage accounts as well.  When the client fell behind in his payment of legal fees, Richmond prepared a letter, which the client signed, and which, inter alia, gave Richmond complete discretion over the securities, allowing him to liquidate them and apply the proceeds on a two-thirds/one-third basis to the arrearage. Despite termination of Richmond’s legal services in June of 2001, Richmond continued to rely on the May, 2001 letter, selling stock to generate proceeds for legal bills, and ultimately refusing to turn over requested records.

 

  The Supreme Court, after considering the referee’s findings, held that Richmond violated Rule 1.4(a) by retaining documents reasonably requested by his client, effectively preventing the client from blocking the sale of securities, and violated Rule 1.6(d) for failure to promptly turn over documents.  The court held that Richmond violated Rule 1.8(a) by pressuring his client into signing the May, 2001 letter without properly explaining its risks and consequences, thereby violating Richmond’s duty to avoid conflicts of interest. The court also held that Richmond violated Rules 1.15(a)(1) and (c) by cashing in securities after the client has expressly prohibited it, violating Richmond’s duty to protect his client’s property.

  The court considered the referee’s finding of the following aggravating factors: prior disciplinary offenses, multiple offenses in this case, a selfish motive, a lack of remorse, and Richmond’s intentional failure to comply with court rules and orders on multiple occasions relative to the proceeding. As such, the respondent was disbarred.

 

Apportionment of Damages

 

Janet Debenedetto, Administratrix of the Estate of David Debenedetto v. CLD Consulting Engineers, Inc.

No. 2005-262

Rockingham County Superior Court

July 27, 2006: Affirmed

 

On May 31, 1999, David Debenedetto was fatally injured in a motor vehicle accident when a vehicle driven by Doris Christous collided with the decedent’s vehicle, causing it to flip over.  Christous ran a red light after waiting for nearly five minutes, and assuming the light was broken. The light was actually triggered by a sensor system which had not been installed in the center lane. The plaintiff subsequently settled with Ms. Christous’ insurance company, and brought a wrongful death action against seven entities, alleging that each named defendant was involved in the design, selection, installation, or authorization of the traffic control system.

 

Prior to trial, the plaintiff settled with all parties except CLD and the NH Department of Transportation (“NHDOT”).  The trial court granted NHDOT’s motion to dismiss on grounds of immunity.  At the conclusion of trial, the trial court did not give a requested jury instruction on apportionment of fault, but rather instructed the jury to determine the percentage of fault, if any, of only the remaining named defendant, CLD, as well as Christous, ECS and NHDOT. The instruction omitted 4 parties. The jury returned a verdict of $5.3 million (later reduced to $3.8 million by the trial court judge), which was apportioned 49% to CLD, 49% to Christous, and 2% to NHDOT.

 

On appeal, the plaintiff argues that the trial court erred in (1) instructing the jury to consider Christous and NHDOT when assigning fault percentages; (2) their unconstitutional interpretation of RSA 507:7-e (governing the apportionment of damages); and (3) in granting remittitur. CLD cross appealed, claiming that (4) the trial court erred in failing to instruct the jury that it could apportion fault to two other parties; (5) the jury verdict apportioning no fault to ECS and only two percent to NHDOT was against the weight of the evidence; and (6) the trial court erred in denying CLD’s motion for directed verdict.

 

  On the first issue, the New Hampshire Supreme Court held that for apportionment purposes under RSA 507:7-e, the word “party” refers not only to “parties to an action . . . including settling parties,” as outlined in Nilsson, but also to “all parties contributing to the occurrence giving rise to an action, including those immune from liability or otherwise not before the court.”

  On the issue of the constitutionality of the statute as applied, the court held that Part I, Article 14 of the New Hampshire Constitution does not guarantee that all injured persons will receive full compensation for their injuries, only that they are entitled to a certain remedy, which the statute in question does not infringe upon.

  Additionally, the court held that although RSA 507:7-e I (b) allows for the disparate treatment of similarly situated persons, it bears a rational relationship to the furtherance of a legitimate government purpose, and thus does not violate the Equal Protection provisions of the Constitution.

  On the issue of remittitur, the court noted that direct review of a damages award is the responsibility of the trial judge, and it will not be reversed absent an unsustainable exercise of discretion. Here, the court held that “[h]aving reviewed the record, we conclude that the trial court could reasonably have determined that the jury’s damages award was punitive, rather than compensatory, in nature, and therefore both manifestly exorbitant and conclusively against the weight of the evidence.” On the fourth issue (the defendant’s first issue), the defendant argues that 4 other parties should have been considered in apportioning fault.  The Supreme Court agreed, but noted that the trial court had noted that CLD agreed there was not enough evidence to show that those defendants were negligent to any degree.  The Supreme Court then held that of CLD felt that this was a misrepresentation, the proper place to raise it would have been in a Motion to Reconsider.

           On the issue of whether the apportionment of fault was against the weight of the evidence, the Supreme Court held that since the issue was not raised in any of the post trial motions of memoranda of law, it could not be reviewed upon appeal.  Finally, with regard to the defendant’s Motion for Directed Verdict, the court noted that a party is entitled to a directed verdict only when the sole reasonable inference that may be drawn from the evidence, which must be viewed in the light most favorable to the nonmoving party, is so overwhelmingly in favor of the moving party that no contrary verdict could stand. The court then held that the proffered testimony, rather than support the defendant’s request for a directed verdict, undermined it, and that the record supported the trial court’s determination.


Kelleigh L. Domaingue
 
Kelleigh L. Domaingue

Kelleigh L. Domaingue is an Attorney with Devine & Nyquist in Manchester, NH, and has been practicing since 2004. A graduate of Vermont Law School, Domaingue is a member of the Manchester School Board, and Arts Commissioner for the City of Manchester, and the co-founder and Vice President of the Southern NH Women’s Business Network. She was also named one of the 40 Most Influential People Under Forty in 2006.

 

 

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