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Bar News - February 23, 2007


NH Supreme Court At-a-Glance: December 2006

By:

  

Compiled by Foreclosure/Right to Self-Help Eviction

 

James M. Greelish v. Diane Wood

No. 2005-865

December 7, 2006

Affirmed in part; vacated in part; and remanded.

 

  • Whether the trial court incorrectly calculated the plaintiff’s damages for defendant’s failure to vacate the premises.
  • Whether the trial court erred in awarding damages to the defendant for plaintiff’s conduct. 

 

The plaintiff purchased property at foreclosure sale and served the defendant, a life tenant, with notice to quit the premises. The defendant did not leave, and the plaintiff brought a landlord-tenant action seeking damages for rent while defendant was in possession. Defendant sought damages for harassment and for loss of personal property. The trial court found that plaintiff had engaged in conduct to force the defendant to leave, and removed her personal property before she retrieved it.  On appeal the New Hampshire Supreme Court remanded for further proceedings. On remand the trial court awarded plaintiff $4,876.71 for the lost rent, and awarded the defendant $5,390.09 for the plaintiff’s improper conduct and lost property. Plaintiff appealed.

           

The Court held that the trial court erred in calculating the lost rent. The trial court awarded damages for lost rent starting on the date that the plaintiff had found a new tenant. The Court held that damages begin to accrue on the date that a tenant begins holding over—not when a new tenant is found. The Court vacated the plaintiff’s damages and remanded for recalculation.

           

The plaintiff argued that the trial court improperly awarded the defendant damages for his conduct. The plaintiff, relying on RSA 540:26, contended that he was entitled to use self-help. The Court rejected the plaintiff’s argument. The Court found that RSA 540:12 should be read narrowly, and does not preserve the right to self-help eviction. The Court, holding that self-help was unavailable to the plaintiff, affirmed the defendant’s damages awarded.

 

Insurance Law/Liquidation

 

In the Matter of the Liquidation of the Home Insurance Company

No. 2005-740

December 5, 2006

Affirmed

 

  • Whether the superior court erred in upholding the New Hampshire Commissioner of Insurance’s proposed agreement with the insured and reinsured of Home Insurance Company

 

The New Hampshire Commissioner of Insurance (commissioner) as liquidator of Home Insurance Company (Home) approved an agreement for payments to certain insured and reinsured of Home, in exchange for the filling of claims against Home. The intervenors challenged the proposed agreement, and the superior court upheld the agreement. The intervenors appealed. 

           

Home, as a member of the American Foreign Insurance Association (AFIA), entered insurance and reinsurance agreements with entities in the United Kingdom (the AFIA Cedents). Home was subsequently declared insolvent and the commissioner was appointed as liquidator. RSA 402-C:44 (2006) governs the order of claim distribution and the AFIA Cedents’ reinsurance contracts fell into Class V, which made it unlikely their claims would be paid—and would deter them from filling. The commissioner proposed an agreement where the AFIA Cedents would receive a payment, characterized as an administrative cost, for filling their claims.

           

The Court held that the trial court did not err in upholding the commissioner’s proposed agreement. The Court, citing RSA 402-C:25, noted that the commissioner has broad authority to take all necessary and appropriate actions in collecting the assets of an insolvent insurer. The Court found that the AFIA Cedents’ claims would provide Home’s estate with a large asset to liquidate. Furthermore, there was sufficient evidence that the AFIA Cedents would not file their claims without a financial incentive. The Court held that the commissioner had authority to enter into the proposed agreement, and make administrative payments to lower priority creditors—the AFIA Cedents—because the action was necessary and appropriate in collecting assets.

           

The intervenors argued that the trial court failed to apply a multi-factor test in determining if the agreement was fair and reasonable. The Court found that the trial court did not precisely apply the multi-factor test outlined in In re Estate of Indiana Motorcycle Mfg., Inc., 299 B.R. 8  (D. Mass. 2003), but they considered relevant factors. The Court held that the trial court did not err in ruling that the proposed agreement was fair and reasonable.

 

Insurance Law/Medicaid

 

Petition of Maxi Drug, Inc. & a.

No. 2005-473

December 28, 2006

Petition granted

 

  • Whether the commissioner of the Department of Health and Human Services (DHHS) erred in ruling that the DHHS Medicaid recovery system was lawful.

 

Petitioners, a group of pharmacy providers and a pharmacy trade association (pharmacy providers) sought declaratory judgment from the commissioner of Department of Health and Human Services. The commissioner failed to render a judgment, and the petitioners filed a request to certiorari. The commissioner was ordered to render a judgment. After the rendering of judgment, the petitioners renewed their writ of certiorari and argued that it was ripe for adjudication. The Court agreed and granted their request.

 

The Court found that the commissioner erred in concluding that the DHHS Medicaid recovery system was lawful. DHHS issued notices to pharmacy providers that other claim payment sources, such as Medicare, must be exhausted before Medicaid is utilized. After conducting audits, DHHS sought repayment for improperly paid claims and refused to pay valid claims until repayment was made. The Court, citing federal Medicaid regulations, found that there are two options available to DHHS when a third-party is liable for a claim: 1) if third party liability is established prior to payment, DHHS must practice “cost avoidance” by rejecting and returning the claim to the provider to determine third party liability; and 2) if third party liability is found after payment, DHHS must practice “pay and recover later” by seeking reimbursement from the third party providers.

           

The Court noted that federal regulations allow a reduction of future payments to providers when overpayments have been made, but the Court distinguished overpayment from third party liability. The Court found that the overpayment recoupment process is not available in third party liability situations, and held that the commissioner erred in finding DHHS could recoup by reducing future payments.

 

Insurance Law/NHIGA

 

OB/GYN Associates of Southern New Hampshire v. New Hampshire Insurance Guaranty Association

No. 2006-024

December 19, 2006

Affirm

 

  • Whether NHIGA was time-barred from arguing that the Covenant policy’s coverage relieved it of any reimbursement obligation.
  • Whether the trial court erred in ruling that insurance policy coverage had to be exhausted before NHIGA’s had an obligation to pay.
  • Whether the trial court erred in ruling that there was coverage available to OB/GYN under its insurance policy.

Dr. Leonard Wasserman, M.D. (Wasserman) was insured by PHICO Insurance. Wasserman was an employee of OB/GYN, which was insured by Covenant Health Systems Insurance, Ltd. (Covenant). An action was filed against Wasserman and OB/GYN—under a theory of vicarious liability. PHICO was declared insolvent and New Hampshire Insurance Guaranty Association (NHIGA) assumed Wasserman’s defense pursuant to RSA 404-B:8. OB/GYN settled the claims against itself and Wasserman. Wasserman assigned his rights under his insurance policy to OB/GYN. OB/GYN brought an action for declaratory judgment against NHIGA to recover the settlement portion paid on Wasserman’s behalf. NHIGA moved for summary judgment, which was granted. OB/GYN appealed.

 

The Court found that the trial court correctly ruled that NHIGA was not time-barred from litigating the Covenant policy’s construction. RSA 491:22, III, provides a limitations period for filing declaratory judgments. OB/GYN argued that NHIGA had, in effect, filed a de facto declaratory judgment when it sought to determine insurance coverage under the Covenant policy. The Court rejected this argument because NHIGA never filed a petition for declaratory judgment. Therefore, RSA 491:22, III, was not applicable, and did not time-bar NHIGA from asserting a defense that relied on interpretation of the Covenant Policy.

           

The Court found that the Covenant policy must be exhausted before NHIGA has a duty to pay. The Court cited RSA 404-B12, I, which states “[a]ny person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim…shall be required to exhaust first his right under such policy.” RSA 404-B12, I. The Court found that the claim against Wasserman is a covered claim, and OB/GYN must exhaust its insurance if it is also a covered claim. It held that the claim against OB/GYN is a covered claim, because it is based on a theory of vicarious liability—the claims against Wasserman and OB/GYN involved the same factual allegations and legal assertions. Therefore, the trial court did not err in ruling that the Covenant policy must be exhausted before NHIGA is obligated to pay.

           

The Court held that the trial court did not err in finding that there was coverage available to OB/GYN under the Covenant policy. OB/GYN argued that the policy did not cover negligence of physicians providing direct care. It found that Wasserman was an employee of OB/GYN and was acting “by or for” OB/GYN when providing care. Therefore, the trial court did not err in finding coverage was available.

 

Insurance Law/NHIGA

 

New Hampshire Insurance Guaranty Association v. Elliot Hospital

No. 2005-834

December 20, 2006

Affirmed

 

  • Whether the trial court erred in ruling that the exhaustion and offsetting requirements of RSA 404-B:12, I, are limited to first party claims against an insurer.
  • Whether the claim against Hitchcock is a covered claim under RSA 404-B:12, I, which would require exhaustion of Hitchcock’s available insurance.
  • Whether finding that Hitchcock is fifty-one percent liable, under rules of joint and several liability, would make the claim against Elliot a claim against Hitchcock that is subject to the exhaustion requirements of RSA 404-B:12, I.

A mother and father brought malpractice suits against Elliot Hospital (Elliot,) and Dartmouth-Hitchcock Clinic and Hitchcock Clinic (collectively, Hitchcock). The action was based on brain damage their child suffered during delivery. The child was delivered at Elliot, while Hitchcock managed the mother’s pregnancy, labor and delivery. Elliot’s insurer, PHICO Insurance Company, was declared insolvent, and the New Hampshire Insurance Guaranty Association (NHIGA) undertook its duties pursuant to RSA Chapter 404-B. Hitchcock was insured by Lexington Insurance Company (Lexington). Prior to trial NHIGA petitioned the court for a declaration that the Lexington policy must be exhausted before NHIGA is obligated to pay. Elliot and NHIGA filed cross motions for summary judgment and the superior court granted Elliot’s motion. 

           

The Court agreed with NHIGA’s assertion that, under RSA 404-B12, I, the malpractice claim against Hitchcock is a claim against an insurer. However, the Court disagreed with NHIGA’s contention that this was a “covered claim” and subject to the exhaustion requirements of 404-B:12, I. The Court found that the claims against Hitchcock and Elliot are not the same claim. The Court noted that Hitchcock alone was charged with negligent prenatal care, and there was no evidence that Hitchcock bore legal responsibility for the actions of Elliot’s employees. The Court distinguished this case from OB/GYN Associates of Southern New Hampshire v. New Hampshire Insurance Guaranty Association, 154 N.H. __ (2006), where the court found a claim based on a theory of vicarious liability was a covered claim.

           

The court rejected NHIGA’s argument that the rules of joint and several liability could trigger the exhaustion requirements of RSA 404-B:12, I. The Court found that, while the rules of joint and several liability can provide another avenue of recovery, the rules do not transform a claim against Elliot into a claim against Hitchcock. Accordingly, the Court upheld the trial court’s order requiring NHIGA to undertake its statutory obligations.

 

Insurance/NHIGA

 

New Hampshire Motor Transportation Association Employee Benefit Trust v. New Hampshire Insurance Guaranty Association & a.

No. 2006-003

December 21, 2006

Affirmed

 

  • Whether the trial court erred in granting NHIGA’s motion for summary judgment, because the Legion Insurance policy was not direct insurance covered under the Guaranty Act, and the claims against Trust’s were not “covered claims” under RSA 404-B:5, IV.
  • Whether the trial court erred in granting NHLHIGA’a motion for summary judgment, because Trust’s claims arose from a reinsurance policy.

 

The New Hampshire Motor Transport Association Employee Benefit Trust (Trust) is a non-profit multiple-employer welfare arrangement organized under RSA chapter 415-E (2006). The Trust provides a health care benefit program to members of the New Hampshire Motor Transport Association. Trust purchased specific loss insurance from Legion Insurance Company (Legion), which was subsequently liquidated leaving unpaid claims. Trust requested that the New Hampshire Insurance Guaranty Association (NHIGA) and/or the New Hampshire Life and Health Insurance Guaranty Association (NHLHIGA) assume responsibility for the unpaid claims, but both refused. Trust filed a petition for declaratory judgment and all parties moved for summary judgment. The trial court granted the NHIGA and NHLHIGA motions for summary judgment and Trust appealed.

 

The Court noted that if Trust is an “insurer” it is not entitled to coverage under the Guaranty Act and has no claim against NHIGA. The Court analyzed the meaning of insurer and determined that the Trust is an “insurer.” The Court rejected Trust’s contention that it cannot be an insurer, because it is not subject to various regulations that pertain to insurance companies. The Court rejected Trust’s argument that the Guaranty Act must apply because arrangements created pursuant to RSA 415-E are required to obtain excess insurance. The Court found that the Guaranty Act was not written to include arrangements created under RSA chapter 415-E, and the Court will not read additional language into the statute. The trial court correctly granted NHIGA’s motion for summary judgment.

           

The Court agreed with the trial court’s ruling that Trust was not entitled to coverage under the Life and Health Guaranty Act. NHLHIGA contended that excess loss insurance, like Trust’s claim against Legion, is not covered under RSA 405-B:5, II(a). The Court agreed. It noted that NHLHIGA only provides coverage for direct health insurance policies. The Court found that the insurance policy between Trust and Legion was not a direct policy, because Trust itself was insured—not Trust’s member employees. The Court held that the trial court did not err in granting NHLHIGA’s motion for summary judgment.

 

Personal Jurisdiction/Minimum Contacts

 

Vermont Wholesalers Building Products, Inc v. J.W. Jones Lumber Company, Inc.

No. 2006-144

December 21, 2006       

Vacated and remanded

 

  • Whether a manufacturer’s awareness that a product will reach New Hampshire in its stream of commerce is sufficient to establish “minimum contacts” in New Hampshire.

 

Jones Lumber (Jones), a North Carolina corporation, manufactures and sells lumber products. Jones Lumber sells its products to Vermont Wholesalers Building Products (Vermont Wholesalers), which distributes to four states—one of which is New Hampshire. Jones was aware that Vermont Wholesalers distributed its products to New Hampshire retailers. New Hampshire residents filed a suit alleging defective flooring, manufactured by Jones Lumber, was installed in their home. A third party action was brought against Jones, and Jones moved to dismiss for lack of personal jurisdiction. The trial court denied the motion and Jones appealed.

 

The Court’s decision began with an in-depth analysis of the legal requirements for the exercise of personal jurisdiction. The issue before the Court was whether placing a product in a stream of commerce with knowledge it would arrive in the forum state was sufficient to find minimum contact. The Court considered World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), and found forseeability that a product might reach the forum state. The Court analyzed the various opinions in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), where the court considered whether placing a product into the stream of commerce is sufficient to assert personal jurisdiction. The Court found Justice O’Connor’s “stream of commerce plus” theory to be the most consistent with the United State Supreme Court’s holding in World-Wide Volkswagen. The Court, found that the trial court did not apply the “stream of commerce plus” theory when it found personal jurisdiction over Jones. The Court vacated and remanded to the trial court to apply the proper standard.

 

Planning Board Decision

 

Property Portfolio Group, LLC v. Town of Derry & a.

No. 2005-867

December 21, 2006

Affirmed

 

  • Whether the trial court erred in granting the Town of Derry’s motion to dismiss Property Portfolio Group’s (PPG) petition for declaratory judgment, because PPG’s petition was untimely filed.

 

Hall Business Restoration (Hall) sought a site plan determination from the Town of Derry (Town) to convert a former fire station into a diner. Property Portfolio Group (PPG) was an abutter with notice of the proceedings. The Town approved Hall’s application for site plan determination. Five months after the Town’s approval, PPG filed a petition in the superior court for restraining orders and declaratory judgment. Town filed a motion to dismiss asserting that PPG’s petition was untimely filed. The superior court granted the Town’s motion, and PPG appeals.

 

The Court found that PPG’s petition for declaratory judgment was untimely filed under RSA 677:15, I (Supp. 2006). Pursuant to RSA 677:15, I, a person “aggrieved by any decision of the planning board” must present a petition to the superior court “within 30 days after the date upon which the board voted to approve or disprove the application.” PPG contended that the planning board did not render a decision, because there was no application before it, and a condition precedent was attached to the decision. The Court found a proper application was before the planning board, and disagreed that a condition precedent was attached to approval—finding it was a condition subsequent. The Court disagreed with PPG’s contention that RSA 676:4, IV, provided the trial court with jurisdiction to review procedural aspects of the planning board’s decision outside of the 30 day appeal period. Lastly, the Court found PPG reliance on zoning case law, to support its contention that the petition should have been heard outside the appeal period, was misplaced. The Court held that PPG’s appeal of the Town planning board decision was untimely and the trial court properly dismissed PPG’s petition for declaratory judgment.

 

Right-to-Know Law/Freedom of Information Act

 

Frederick J. Murray v. New Hampshire Division or State Police, Special Investigation Unit & a.

No. 2006-113

December 20, 2006

Vacated and remanded

 

  • Whether the trial court erred in ruling that the documents requested by the petitioner were investigatory in nature and not subject to disclosure under the New Hampshire Right-to-Know Law and the Federal Freedom of Information Act.

 

Petitioner requested records and information relating to the investigation of his missing daughter. The attorney general’s office denied all requests, and petitioner filed a petition in the superior court for a declaration that the denial violated the New Hampshire Right-to-Know Law and the Federal Freedom of Information.  The superior court denied petitioner’s requests, and the petitioner appealed.

 

The Court disagreed with the trial court’s ruling that the requested records were not subject to disclosure because they were investigatory in nature. The Court analyzed the New Hampshire Right-to-Know Law, RSA ch. 91-A (2001 & Supp. 2006) and found that its provisions should be interpreted broadly in favor of disclosing information. The Court—noting that the Right-to-Know Law does not address requests for police investigation files—adopted the Federal Freedom of Information Act’s six-prong test for evaluating requests for investigation files. The Court focused on the disclosure exemption, which the trial court relied on when it ruled that disclosure would interfere with an investigation. The Court found that the State failed to meet its burden of establishing that disclosure would actually interfere. The mere fact that the documents relate to an investigation is not enough to establish interference. The Court vacated and remanded so the State may present evidence that disclosure will interfere with an investigation.

 

Standing/Restrictive Covenants

 

Margaret A. Shaff v. Edith W. Leyland

No. 2005-848

December 6, 2006

Affirmed

 

  • Whether the Superior Court erred in granting summary judgment in favor of petitioner, finding that the respondent lacks standing to enforce a restrictive covenant.

 

Respondent owned approximately seventy-five acres in Amherst. The respondent began selling portions of the property, and conveyed twenty-three acres to the petitioner with a restrictive covenant—providing that only a colonial-type residence with a market value of one-hundred thousand dollars may be built on the property. The respondent currently owns no property in Amherst, the petitioners want to build more homes on the property, and the respondent seeks to enforce the restrictive covenant. The trial court granted petitioner’s motion for summary judgment on the basis that respondent lacks standing to enforce the covenant. 

 

The Court found that the trial court did not err in granting the motion for summary judgment for lack of standing. The Court identified the majority rule for standing to challenge a covenant, which provides that a person must own property benefited by the covenant to suffer an injury. The respondent urged the Court to adopt the Restatement (Third) of Property, which does not require ownership to have standing—instead the holder need only “establish a legitimate interest in enforcing” the covenant. Restatement (Third) of Property: Servitudes, §8.1.  The Court analyzed and distinguished covenants “appurtenant” and “in gross,” and noted that the common law has not always recognized covenants in gross. It noted that the general rule of deed interpretation favors appurtenant covenants. Therefore, the Court will construe servitudes as appurtenant unless the deed expresses a contrary intent. It found that here the covenant is appurtenant, and the respondent lacked standing to enforce the easement. Furthermore, the Court noted that it has not decided to adopt the Restatement (Third) of Property: Servitudes, §8.1, because, even if it did adopt the rule, the holding would not change. It rejected respondent’s argument that she has standing under theories of contract law.

 

Zoning/Conditions Attached to a Variance

 

Michelle J. Robinson v. Town of Hudson

No. 2005-687

December 20, 2006

Affirmed

 

  • Whether the superior court erred in affirming the cost condition attached to the petitioner’s variance.
  • Whether the cost condition attached to the variance is arbitrary and unreasonable.

 

The petitioner owns an undeveloped lot in a six-lot subdivision. The subdivision plan called for the extension and paving of Mark Street (the Mark Street extension), but the street was never paved. The petitioner’s lot has approximately fifty feet of frontage on a paved street, Wason Road. The petitioner decided to develop the lot in 2001 and sought a variance, because the lot lacked 150 feet of frontage on Wason Road. The Town of Hudson Zoning Board of Adjustment (ZBA) denied the variance, and the superior court dismissed the petitioner’s appeal. The Supreme Court reversed the superior court’s dismissal and remanded. The superior court vacated the ZBA’s decision and remanded for a de novo hearing. The ZBA granted the variance with four conditions. The petitioner filed a motion for rehearing, to challenge the first and fourth conditions, which the ZBA denied. On appeal, the superior court affirmed the ZBA decision, and petitioner appealed.

 

The Court found that the petitioner failed to assert that the cost condition was vague, in her motion for rehearing before the ZBA, and the matter is not preserved for appeal. The petitioner argued that using the word “unspecified” when addressing the cost condition was sufficient to preserve the issue. The Court noted that RSA 677:3, I (1996), requires that a motion “shall set forth fully every ground upon which it is claimed that the decision or order complained of is unlawful or unreasonable.” The Court held that the petitioner’s motion for rehearing failed to set forth a claim that the cost condition was vague.

           

The Court rejected the petitioner’s argument that the cost condition is arbitrary and unreasonable. It noted that the petitioner is only required to pay a pro rata share of the cost, not the entire cost of the road. The Court also rejected the petitioner’s argument that the cost condition imposes an unknown financial obligation and no reasonable person would purchase the lot. It reasoned that granting a variance, which made the lot buildable, presumably increased its value. Finally, the Court did not accept the petitioner’s argument that the condition is unlawful because it regulates the owner, not the land. The Court noted that the condition applies to the land, not a specific person, because it applies to owner at the time of road construction. Therefore, the Court held that the cost condition is not arbitrary or unreasonable.

           

The Court found that the liability condition, which releases the town of liability for maintenance and repair of the Mark Street Extension, is reasonable. The Court recognized the Town’s concern that other lot owners may use the petitioner’s driveway to access the Mark Street Extension, and the condition protects the town from liability. However, the Court noted that circumstances may change if/when the Mark Street Extension is completed, but offered no opinion on that issue now.

 

 

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