Bar News - February 22, 2013
NH Supreme Court At-a-Glance - January 2013
By: Summarized by Shenanne Tucker
In the Matter of Muller, No. 2011-736
January 11, 2013
Affirm in part; vacate in part; and remand
Gabrielle and William Muller were married in October 2006 and then purchased a home with funds from William’s parents and from a bank mortgage loan. The parties’ only minor child was born in July 2007. In September 2009, Gabrielle filed for divorce on fault grounds under RSA 458:7, V (2004) (treatment so as to seriously injure health or endanger reason). Though the parties had purchased the home in defendant’s name in November 2006, defendant did not execute a promissory note for the funds from his parents until Aug. 18, 2009. The mortgage deed, signed only by him, was not recorded until Oct. 14, 2009. Just under a year before the final hearing, the defendant was terminated from his employment for alleged unsatisfactory work performance and remained unemployed thereafter.
- Whether the family division court erred in finding that a down payment for the marital home was a gift, not a loan, from his parents and thereby ordering the amount to be disregarded and ordering the martial home to be sold with profits over the bank mortgage split equally?
- Whether only the superior court possessed the subject matter jurisdiction necessary to essentially extinguish defendant’s parents’ mortgage, and whether even if the family court had jurisdiction over the matter, whether it could extinguish the mortgage when the parents, though necessary parties, were not parties before the court?
- Whether the family division court abused its discretion by failing to award the defendant the down payment for the marital home after finding it was a gift from his parents?
- Whether the family division court erred in imputing $68,000 of annual income to the defendant when calculating his child support award after finding the defendant to be voluntarily unemployed?
After hearing, the family division court found that the mortgage to the defendant’s parents was made to defraud the plaintiff from her interest in the marital home, and that the home was to be sold, and the profits over the bank mortgage split equally between the parties. The family division further found that the defendant was involuntarily unemployed and imputed $68,000 annually to him for the basis of calculating his child support obligation.
On appeal, the defendant argued that the family division lacked the jurisdiction necessary to invalidate his parents’ mortgage, that allowing the home to be sold without regard to the mortgage filed with the registry of deeds violated the defendant’s parents’ right to due process and fundamental rights, and that the home could not be sold without satisfying this mortgage because, otherwise, clear title could not be conveyed.
The Supreme Court reiterated that a third party’s equitable interest in a property in the name of only one spouse is not superseded by the rights of the non-owner spouse during the parties’ divorce. Therefore, the Court examined whether the family division had the requisite subject matter jurisdiction to extinguish the defendant’s parents’ record mortgage.
Employing the customary rules of statutory construction, the Court examined RSA 490-D:1 (2010), the statute creating the powers of the family division, and its jurisdiction over "‘petitions for divorce, nullity of marriage, alimony, custody of children, support, and to establish paternity.’" (internal references omitted). The Court further noted that "the overall scheme of the relevant divorce statutes governs issues of, among other things, the division of property and orders of support," including the valuation and division of marital property. Further, the Court acknowledged the portion of RSA 490-D:1 that states "‘the judicial branch family division shall have the powers of a court of equity in cases where subject matter jurisdiction lies with [it]."’
But, because RSA 458:16-a pertaining to the division of assets only allows the division of the parties’ assets and distribution only to the parties themselves, the Court concluded that the family division "lacked the jurisdiction to invalidate" the parents’ mortgage. As a result, the Supreme Court remanded the case and did not reach the defendant’s other arguments regarding the family division’s orders related to the marital home.
The Court found that the family division properly imputed annual income to the defendant for calculation of his child support obligation. Though a party is no longer imputed income, merely because a termination from employment results from his or her work performance related issues, the Court found support for the family court’s findings that the defendant had the ability to seek new employment, and that his mere searching of Internet job listings was not sufficient effort to avoid imputing income to him in the amount of his most recently earned income level.
Primmer Piper Eggleston & Cramer of Manchester (Doreen F. Connor on the brief and orally), for the respondent and Bossie & Wilson of Manchester (Andrew K. Wilson on the brief and orally), for the petitioner.
Land Use Town of Carroll v. Rines, No. 2011-776
January 30, 2013
Affirm in part; vacate in part, and remand
Interpreting the Town of Carroll Zoning Ordinance Art. III, sec 301, 303 as a matter of law, the Court held that "[e]xcavation is not a use permitted as a right in any [zoning] district." The Court read the ordinance at issue as a permissive zoning ordinance, or one ‘"intended to prevent uses except those expressly permitted or incidental to uses so permitted.’" Accordingly, the Court rejected respondent’s argument that a variance was not required because the ordinance did not specify that a variance was required.
- Whether the Coos County Superior Court erred in construing the Town of Carroll’s zoning ordinance to require a variance for excavation in the R-B district?
- Whether the superior court erred in holding that the Town’s ordinance was not preempted by RSA 155-E?
- Whether excavation under RSA 155-E includes removal of stockpiled materials?
- Whether there was sufficient evidence to support a finding that respondent had excavated on his lots between the time periods in question?
- Whether the superior court properly awarded attorney’s fees as mandatory based on respondent’s failure to procure a variance before engaging in excavation on his lots?
Excavation in district R-B was not permitted, and did not fall into an identified special exception. Therefore, the Court held that a variance would be required. Such requirement was also not limited to gravel pits, as the respondent argued. However, the Court did find that if the excavation on respondent’s lots was incidental to the construction he was undergoing on those lots, and such construction was "of an otherwise permitted building," a variance would not have been required.
The record did not reflect whether the respondent had obtained appropriate permits for the construction, and to what extent the excavation was the incident of such construction. Therefore, the award of attorney’s fee was vacated in order to remand these inquiries to the superior court for findings and determinations, along with a calculation of the attorney-fee award that would not include the imposition of fees on any portion of construction-incidental excavation.
The Court did not decide whether removal of stockpiled materials constituted "excavation," because regardless of the characterization assigned to the activity, it was an activity that required a variance in the R-B district.
Because the Court found the ordinance at issue to be unambiguous, it did not consider the respondent’s assertions of the town’s previous contrary interpretations and applications of the ordinance. The Court explained that the doctrine of "administrative gloss," or the consistent prior interpretation of an ordinance by those responsible for implementing it, is only applicable in cases where the ordinance is ambiguous.
On the issue of preemption being a question of law, the Court found that RSA 155-E did not preempt the Town of Carroll’s variance requirement under the concept of implied conflict as argued by the respondent. The Court acknowledged that implied preemption can arise "when the comprehensiveness and detail of the State statutory scheme evinces legislative intent to supersede local regulation," or when there "is an actual conflict," such as when the statute would permit what the ordinance conversely prohibited, or vice versa, or when an ordinance "frustrates the statute’s purpose."
Though RSA 155-E "regulated local excavations," the superior court had found that the excavation by the respondent constituted "permit-exempt" activities under RSA 155-E:2, IV, a finding unchallenged by the respondent. Under the portion pertaining to permit exempt excavations, RSA 155-E stated that "[s]uch excavation[s] shall not be exempt from local zoning or other applicable ordinances." Moreover, the Court found that in this case, RSA 155-E established the "minimum" standards for excavation.
Accordingly, application of the Town of Carroll’s ordinances to the respondent’s excavation activities did not frustrate the purposes of RSA 155-E, and further, the statute specifically indicated that at least with respect to permit-exempt excavations, the Legislature did not intend to preempt local ordinances.
The respondent also challenged the imposition of attorney’s fees. The Court held that fees could be properly ordered as a mandatory penalty under RSA 676:17, I, for any excavation activity constituting a violation of the variance requirement. While the respondent argued that RSA 155-E:10, II was the basis of the superior court’s attorney’s fee award, and that the court erred in finding such fees were mandatory, the Court found the superior court imposed the attorney’s fee under RSA 676:17, II and did not reach a discussion under RSA 155-E:10, II.
Gardner Fulton and Waugh of Lebanon (H. Bernard Waugh, Jr. on the brief and orally), for the petitioner and D’Amante Couser Pellerin & Associates of Concord (Bruce J. Marshall on the brief and orally), for the respondent.
Landlord Tenant Law Randall v. Abounaja, No. 2011-456
January 11, 2013
Affirm in part; vacated in part, and remand
The tenant brought a petition under RSA 540-A:4, following a no-heat situation in her apartment that lasted for several weeks in early spring 2011. The record reflected that the tenant complained to the town in March 2011 that there was no heat in her apartment. An inspector from the town visited the apartment on March 23, 2011, at which time there was no heat in the master bedroom. The landlord did not respond to attempts by the inspector to reach the landlord to address the no-heat situation.
- Whether there was sufficient evidence in the record to support Rochester District Court’s finding that the landlord was aware of the deficiencies in the tenant’s unit and willfully failed to repair them?
- Whether the trial court erred in its assessment of damages?
On April 12, 2011, the tenant filed her petition in the Rochester District Court seeking a temporary order. Such order was issued that same day and required the landlord to "immediately restore and maintain all utility services." The inspector returned to the apartment on April 14, 2011, and noted that the bedroom still did not have heat. When the assistant director of code enforcement came to inspect the apartment on April 18, 2011, heat had been restored. Heat to the bedroom was also present during a further visit to the property by a town official on April 20, 2011.
The Court found that RSA 540-A;3, I, provided that a landlord shall not "willfully" cause an interruption or termination of heat to a rental premises, and interpreted "willfully" to be equivalent to a "voluntary and intentional act." The landlord conceded at oral argument that at some point, willful failure to correct a condition "‘rises to willful interruption.’" But, the landlord argued that she did not willfully fail to correct the situation, but instead that the tenant had never notified the landlord of the problem, and the heat was working at times.
The Court assumed, without specifically determining, that a willful failure to repair is a "willful interruption" within the meaning of RSA 540-A:3, I, and found sufficient evidence that the landlord was aware of the concern through the communications of the town , including the March 28, 2011, letter, but did not call an electrician until April 8, 2011, 11 days later, and the repair was not performed until April 18, 2011.
Though the Court found support for an award of damages under RSA 540-A:3, I, the Court held that, because the district court applied the proper measure of damages under RSA 540-A:4, IX(a), in effect, the total amount of the damage award constituted plain error, permitting it to exercise its discretion to correct it. The statute permitted the court to award $1,000 for the initial violation, but an award for each day a violation continues could only begin after the temporary order was issued. The temporary order was not issued until the tenant petitioned on April 12, 2011, but the court’s award of damages beyond the initial violation included days before April 12, 2011, which was in error and required remand.
Emmanuel Krasner, of Farmington, by brief and orally, for the petitioner.
Law Office of Joshua L. Gordon, of Concord (Joshua L. Gordon on the brief and orally), for the respondent.
Trust Law Shelton v. Tamposi, No. 2010-634
January 11, 2013
Affirm in part; and remand
The late Samuel Tamposi Sr. set up two trusts in 1992 and 1994, respectfully, to benefit each of his six children and their children. In addition to the naming of trustees for the trust, the settlor designated two of his children as "investment directors." The trusts were amended in part.
- Whether the Hillsborough County Probate Court erred in construing the trust agreement to limit the trustee’s powers to distributions from the trust, leaving all decisions regarding management and distributions into the trust to "investment directors"?
- Whether the trustee could be held to have violated an in terrorem clause by bringing a complaint?
- Whether the probate court could properly order a trustee to pay attorneys fees to the respondents in her personal capacity?
- Whether the probate court could properly order the payment of attorney fees to parties who voluntarily intervened?
- Whether the probate court erred in removing the trustee upon the facts presented in this case?
Following the settlor’s death in 1995, the trusts became the subject of a series of petitions for declaratory judgment, settlement agreements, and a consolidation. Among the terms of a settlement agreement, the investment directors resigned with regard to two beneficiary’s trusts, except as to 10 assets therein, and these beneficiaries appointed a separate trustee over their trusts as permitted by the court-approved agreement.
Thereafter, one of the beneficiaries, Betty Tamposi, and her appointed trustee, Julie Shelton, filed a "complaint" against the investment directors and trustee who retained control of the select assets. This complaint sought a "decoupling" of these assets of Betty’s trust from the other siblings’ subtrusts and from the control of the respondents. The complaint further sought removal of the investment directors, surcharge of the respondents for alleged losses to Betty’s trusts (a claim based on alleged breach of fiduciary duties), attorneys fees, and a declaration that Shelton, as the new trustee of Betty’s trust assets that had been separated by the terms of the earlier settlement agreement, had authority to "‘determine what amounts need[ed] to be made available to [Betty’s] Trusts.’"
The trial on the petitioner’s complaint lasted longer than five weeks. Following trial, the probate court dismissed the complaint, finding also that the in terrorem clause of the trust had been violated. Such violation resulted in Betty forfeiting her trust interests. The probate court also indicated that it intended to award attorney fees to the respondents and voluntary intervenors. Betty voluntarily dismissed her appeal, which was permitted by the Court with prejudice, prior to the Court issuing its opinion.
Reiterating that the settlor’s intent controls the construction of trust agreements, and that the determination of settlor’s intent is a question of fact, the Court looked first to the express language of the trust document. The Court examined several articles of the trust.
Shelton relied on articles of the trust that "authorize[d] the trustee to ‘pay to or for the benefit of the [beneficiary]… such amounts… and in such proportions among them as the trustee considers necessary…" However, the Court found other sections important to the analysis, such as language that read, "[t]he trustee shall entrust to the investment directors the management, control, handling, financing, refinancing and structuring of any and all real estate interests and other operating entities… In no event shall the trustee assume any responsibility in connection with the management, control and handling of such real estate interests or other operating entities." Additionally, "[t]he investment directors shall have full power and authority to direct the retention or sale of all other assets from time to time included in the trust property and to direct the purchase of property with any principal cash included in the trust property…"
Based on the trusts’ language, the Court upheld the probate court’s finding that the trust "‘conferred on [the investment directors] unequivocal authority to make investment decisions and rendered their decisions neither reviewable nor reversible by the trustee.’" The trustee, in the second of two classes of fiduciaries established by the trust, "‘is tasked with determining the needs of the beneficiaries and distributing appropriate funds to them in accordance with the applicable ascertainable [health, maintenance, and welfare] standard.’"
The two classes of fiduciaries established were "excluded fiduciaries," as defined by RSA 564-B:7-711, with respect to each other. Under the language of the trust, the trustee only had authority to make dispositions of the trust property at the written direction of the investment directors. The provisions were not to be read in isolation of each other.
The Court found that the articles relied on by Shelton only controlled "distributions to be made from the trust; they do not address distributions to the trust." In order to give the trust language effect, the provisions had to be interpreted to give "the investment directors discretion in determining whether distributions should be made to the sub-trusts and the timing and source of the distributions."
Shelton also objected to the introduction of extrinsic evidence in determining the settlor’s intent. Without deciding whether extrinsic evidence was admissible, the Court found any such error nevertheless would have been harmless, given the express language of the trust.
As an issue of first impression, the Court held that a trustee does not have "standing to contest a trial court’s ruling that litigation brought both by her in her official capacity and by a beneficiary violates an in terrorem clause of the trust instrument." The Court based its holding on RSA 567-A:1’s allowance of appeals to the Supreme Court only by "persons who [have been] aggrieved" by a probate court order. The predecessor to RSA 567-A:1 had "limited appeals to questions of law." Unlike an executor of a will, who has an "interest in his representative capacity sufficient to maintain an appeal from a decree disallowing a will," a trustee does has not suffered "from an infringement or denial of legal rights" as a result of an in terrorem clause being enforced against one of a number of beneficiaries. Therefore, the trustee does not have standing to challenge the enforcement because a trustee’s "fiduciary duty to each beneficiary precludes her from favoring one beneficiary over another" and the beneficiary in this case had an avenue and the capability to have appealed on her own behalf.
Because the probate court had explained that the attorney-fee award against Shelton was not based on the in terrorem clause, she also did not directly "suffer the loss of any legal right" required to provide her with standing. Because the probate court had not yet ruled on a motion seeking imposition of a surcharge on Shelton under the in terrorem clause, the matter was not ripe for appellate review.
The probate court had found that Shelton had acted in bad faith in relation to initiating and prosecuting the complaint, and therefore ordered her to pay the attorney fees of the respondents and voluntary intervenors. The Court upheld the probate court’s imposition of attorney’s fees as a sustainable exercise of discretion, and finding that she had acted in bad faith.
RSA 564-B:10-1004 permits an award of attorney’s fees in an action regarding a trust’s administration "to any party, to be paid by another party or from the trust…" Noting that "when acting in the proper exercise of her official duties, a trustee should not generally be held personally liable under the Uniform Trust Code for attorneys fees incurred by any party," but that justice and equity may require such an award in the appropriate case. Thus, the Court found that the probate court had the authority to order the payment of fees "as justice and equity may require," and this language establishes a "broad standard," one that does not necessarily require a finding of bad faith or wrongful conduct.
Further, statute permits the probate court to order payment by any party of any other party’s fees. Therefore, the statute permits awards of fees personally against a trustee. Likewise, the Court held that RSA 564-B:10-1004 also permitted the award of payment of fees of the intervenors. In part, the Court found that such "voluntary" intervenors were necessary parties and any decree issued in the controversy may have or would have resulted in a benefit or prejudice to them. Further, it was within the probate court’s discretion to order the payment of fees to protect innocent beneficiaries from such costs. However, because the probate court had not made findings of the specific amounts, that determination was remanded.
Applying an abuse of discretion standard to the probate court’s removal of Shelton as trustee, the Court upheld the probate court’s authority to remove Shelton as trustee under RSA 564-B-7-706 (b) and the probate court’s finding that the grounds for removal under the statute were present. These facts included that the lawsuit resulted in millions of dollars in fees and expenses, which left Betty’s trusts with insufficient assets, and for which Shelton had not done a cost-benefit analysis. Other grounds for removal included a finding by the probate court that Shelton had "colluded" with Betty to create the underlying controversy and went with Betty in interviewing counsel, and other factors evidencing a breach of Shelton’s duties of impartiality in administration, loyalty, and reasonable care.
Choate, Hall & Stewart of Boston, Massachusetts (Robert S. Frank, Jr. and Robert M. Buchanan, Jr. on the brief, and Mr. Frank orally), for petitioner and Robert A. Stein, of Concord, on the brief, Ransmeier & Spellman of Concord (Frank E. Kenison on the brief and orally), McDermott Will and Emery of Boston, Massachusetts (Michael Kendall on the brief and orally), and Barradale, O’Connell, Newkirk & Dwyer, of Bedford (Pamela J. Newkirk on the brief) for the respondents.
Shenanne Tucker practices with the law firm of Bouchard, Kleinman & Wright, P.A., focusing her practice on civil litigation, business and employment law, landlord tenant law, and estate planning.