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Bar News - February 19, 2014

Supreme Court At-a-Glance: January 2014


Appeal from the Board of Securities Regulation

Appeal of the Local Government Center Inc., & a.
No. 2012-729
Jan. 10, 2014
Affirmed in part; vacated in part; and remanded.
  • Multiple questions on appeal from an administrative proceeding before the Bureau of Securities Regulation regarding regulation and administration of pooled risk management programs pursuant to RSA 5-B
On appeal from the Bureau of Securities Regulation, the respondents sought to overturn the presiding officer’s ruling with regard to a number of issues pursuant to RSA 5-B, particularly with regards to the improper retention of funds.

The Court explained the relevant facts as follows. HealthTrust, P-L Trust, and Workers’ Compensation Trust are pooled risk management programs. Prior to 2003, each organization acted independently, had its own corporate bylaws and its own board of directors. In 2003, Local Government Center (LGC) took control of the assets of HealthTrust, P-L Trust, and Workers’ Compensation Trust. Thereafter, LGC eliminated the separate boards, leaving a single board of directors to govern LGC, HealthTrust, P-L Trust, and Workers’ Compensation Trust.

Between 2003 and 2010, LGC transferred approximately $18.3 million from HealthTrust to the Workers’ Compensation Trust, which historically had insufficient premiums to cover its costs. In 2010, LGC elected to stop purchasing reinsurance and instead self-insure by amassing assets sufficient to cover catastrophic events. The matter was resolved during a 10-day evidentiary hearing before an officer presiding for the Bureau of Securities Regulation.

The Court first upheld the presiding officer’s finding that LGC improperly retained funds by building up a reserve in excess of the cost of claims and fund administration. The Court explained that RSA 5-B:5, I(c) sets forth a formula that risk pool management programs must use: “Earnings + Surplus – (costs of administration + costs of claims + reserves + cost of reinsurance) = Amount returned to member political subdivisions.” Thus, pursuant to the plain meaning of the statute, the respondents were only permitted to retain those amounts “required for administration, claims, reserves, and purchase of excess insurance.” LGC was not permitted to self-insure against catastrophic loss.

The Court next upheld the presiding officer’s finding that LGC improperly transferred funds from HealthTrust and P-L Trust to Workers’ Compensation Trust. The Court explained that the express language of RSA 5-B does not permit pooled risk programs to share boards of directors or to subsidize other risk management pools. The funds transferred to Workers’ Compensation Trust were funds that, pursuant to the statute, should have been returned to political subdivision members. The Court also rejected the respondents’ argument that RSA 5-B permitted the respondents to return surplus funds over multiple years by way of a rate reduction.

The Court next reversed the presiding officer’s ruling that HealthTrust must, in the future, maintain a particular level of risk-based capital. The Court explained that the officer impermissibly imposed a requirement not contained in the express language of the statute. The Court further held that the presiding officer did not err when it ordered HealthTrust to return $33.2 million in reserves, even where he included “invested capital assets” in the calculated amount. Additionally, there was no statutory requirement that the respondents purchase reinsurance.

The Court also ruled that the presiding officer’s order that P-L Trust (of which Workers’ Compensation Trust is now a part) repay HealthTrust $17.1 million was not an unconstitutional retroactive exercise of power. Although the Bureau of Securities lacked enforcement authority pursuant to RSA 5-B prior to 2010, the enactment of an enforcement provision did not alter previously existing statutory obligations for risk management pools.

Finally, the Court held that recusal of the presiding officer was not warranted, as the respondents did not raise the issue of potential conflict until the final day of the evidentiary hearing, which occurred eight months after the Bureau initiated proceedings. The presiding officer’s award of attorney’s fees was reduced to include only those claims on which the Bureau prevailed.

Andru H. Volinsky, Bernstein, Shur, Sawyer, & Nelson, Manchester, with Ann M. Rice, deputy attorney general (Suzanne M. Gorman, senior assistant attorney general) (on the brief), for the petitioner. William C. Saturley, Preti Flaherty, Concord, with David I. Frydman, Concord (on the brief), and Michael D. Ramsdell, Ramsdell Law Firm, Concord (on the brief), for the respondents. Mark E. Howard, Howard & Ruoff, Manchester (on the brief), as amicus curiae.

Criminal Law

State v. Kurt Cupertino
No. 2012-632
Jan. 14, 2014
  • Whether the savings statute, RSA 21:38, permits giving retroactive effect to an amendment that reduces the penalty for a crime, before the amendment takes effect
The Court held that the defendant was not entitled to the benefit of an amendment to RSA 632-A:4, which took effect after he committed the offense but before his conviction became final.

In 2003, the defendant was convicted of aggravated felonious sexual assault pursuant to RSA 632-A:4 and sentenced to serve 3.5-20 years in prison. The defendant was convicted of engaging in “sexual penetration” with a teenager between the ages of 13 and 16, who was not his legal spouse, multiple times over the course of a year. During the relevant period of time, the defendant was 17 or 18 years old, and the alleged victim was 14 or 15 years old. The age difference between the defendant and the victim was less than three years.

In 2003, the NH Legislature amended RSA 632-A:4 to make sexual penetration with someone between 13 and 16, not the individual’s legal spouse, a class A misdemeanor “where the age difference between the actor and the other person is 3 years or less.” Pursuant to the 2003 amendment, the offense was punishable by no more than one year of incarceration. The amendment went into effect on Jan. 1, 2004.

The defendant’s conviction became final on May 5, 2004, when the Supreme Court confirmed it by order. On appeal, the defendant argued that he should get the benefit of the amendment, as it went into effect before his conviction was final, or, in the alternative, that the imposition of a 3.5-to-20-year sentence violated provisions of the state and federal constitutions.

The Court stated that, as a general rule, newly amended criminal statutes will apply to offenses committed after its enactment, but the prior statute will apply to all offenses committed prior to the amendment’s effective date. The defendant could not demonstrate that the Legislature intended the ameliorative effect of the amendment to apply retroactively. Further, New Hampshire has adopted a savings clause, RSA 21:38, for the purpose of saving “pending or future prosecutions of crimes committed under a repealed or amended statute from being abated.”

Because there was no evidence that the Legislature intended the amendment to apply retroactively, the general savings rule of RSA 21:38 applied here. The defendant was not entitled to retroactive application of the amendment. The Court also noted that the statutory amendment effectively eliminated the offense that the defendant was actually convicted of, as the statute no longer referred to a pattern of behavior.

The Court next addressed the defendant’s argument that both the federal and state constitutions required the retroactive application of the 2003 amendment. The defendant argued that imposition of a sentence of 3.5-20 years for conduct that is now punishable by no more than a one-year sentence violated various constitutional protections, including: (1) the Eighth Amendment’s prohibition on cruel and unusual punishment, (2) due process under both federal and state constitutions, and (3) the proportionality clause of the New Hampshire constitution.

The Court rejected all of the defendant’s arguments, explaining that adopting such a rationale would require the Court to hold that “when the legislature reduces the penalty for certain criminal conduct, at least all sentences imposed pursuant to the original statute which have not yet become final and which exceed what is authorized by the amendment are per se unconstitutional.” The trial court’s ruling was affirmed.

George H. Ostler, Desmeules, Olmstead & Ostler, Norwich, Vt., for the defendant. Michael A. Delaney, attorney general (Elizabeth C. Woodcock, assistant attorney general), for the state.

State v. Richard Gness
No. 2012-481
Jan. 14, 2014
  • Whether warrantless search of an office desk drawer of a convenience store satisfied the administrative search exception to the Fourth Amendment warrant requirement
The defendant owned and operated a convenience store in Danbury licensed by the New Hampshire Liquor Commission to sell beer and wine for consumption off-premises. He maintained an office area in the store and lived in an apartment above the store. After receiving an anonymous tip that the defendant was selling liquor at the convenience store, in violation of his license, three Liquor Commission investigators visited the store to investigate and to conduct an annual premises inspection.

The investigators requested and received the defendant’s permission to enter the store’s back storage area to inspect the beer and wine inventory. While the investigators were present, a customer came in to request a particular brand of vodka. While inspecting the rear area of the store, one of the inspectors subsequently found a paper bag with a receipt for six bottles of vodka, dated a few weeks earlier.

When questioned regarding the vodka, the defendant gave conflicting explanations. This prompted one of the investigators to go into the defendant’s office and, without asking permission, open a drawer that looked large enough to hold multiple bottles of vodka. When he opened the drawer, the investigator discovered multiple plastic bags containing what appeared to be marijuana. The investigators then applied for and received a search warrant. Upon searching the defendant’s store and upstairs apartment, they discovered marijuana, cocaine, psilocybin mushrooms, and bottles of vodka.

The defendant was indicted on various drug possession and distribution charges. Prior to trial, the defendant unsuccessfully moved to suppress all evidence derived from the search of his office desk. The defendant was subsequently convicted of possession of psilocybin mushrooms with intent to distribute, possession of cocaine, and possession of marijuana.

On appeal, the defendant argued that the warrantless search of his office desk drawer violated the Fourth Amendment. The Court found that, pursuant to the administrative search exception, the search did not violate the defendant’s Fourth Amendment right to be free from unreasonable search and seizure.

The State established that (1) there was “a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made,” (2) the search was “necessary to further the regulatory scheme,” and (3) there was “a constitutionally adequate substitute for a warrant.”

Because New Hampshire has a substantial government interest in regulating all aspects of the alcohol industry, the first criterion of the test was satisfied. As to the second criterion, the Court held that requiring inspectors to obtain a warrant before inspecting a licensee’s premises would impede the inspector’s ability to detect violation of liquor laws and effectively investigate wrongdoing.

Finally, the Court held that the search was sufficiently limited in time, scope, and manner, as Title XIII provides “concrete guidance” to inspectors during their searches and puts licensees on notice of their obligations under Commission rules. Further, the desk was located on the commercial premises of a licensee. The search did not violate the Fourth Amendment.

Andrew Schulman, of Getman, Schultess & Steere, Manchester, for the defendant. Michael A. Delaney, attorney general (Nicholas Cort, assistant attorney general), for the State.

State v. Barion Perry
No. 2012-802
Jan. 14, 2014
  • Whether imposition of a suspended sentence for behavior that occurred after defendant was released from prison, but before he was released from house arrest, violated the defendant’s due process rights
On Feb. 18, 2010, the defendant pleaded guilty to receiving stolen property and stalking. In exchange for the plea, the state gave the defendant a suspended sentence of 3-5 years. At the time of the plea, the defendant was serving a 3-10-year sentence on unrelated burglary and theft charges. During the colloquy, the trial judge stated that the sentence for receiving stolen property and stalking would be “suspended for a period of five years from the date of your release on the current [sentence] that you’re serving.” The defendant indicated that he understood the implications of the suspended sentence.

The defendant was then convicted of burglary and theft by jury trial on July 19, 2012, for events occurring Nov. 14, 2011. At the time of the 2011 burglary and theft, the defendant was serving the sentence on the prior burglary and theft charges on administrative home confinement.

After the 2012 conviction, the state moved to impose the suspended sentence. The defendant objected, arguing that the suspended sentence could not begin until he was released from custody for his previous convictions. The defendant reasoned that, because he had been on administrative home confinement at the time of 2011 burglary, he was not yet “released” from custody for his previous convictions. The trial court disagreed.

On appeal, the Court upheld the trial court’s ruling, explaining that, even if the defendant had not yet been ‘released’ from custody when the trial court imposed the suspended sentence, the trial court had liberty to do so. Pursuant to New Hampshire law, a suspended sentence may be imposed after the sentence is announced but before the commencement of the suspended sentence term. The Court found no ambiguity constituting a violation of the defendant’s due process rights. Accordingly, the trial court’s ruling was affirmed.

David M. Rothstein, deputy chief appellate defender, Concord, for the defendant. Michael A. Delaney, attorney general (Elizabeth C. Woodcock, assistant attorney general), for the state.

State v. William Ramsey
No. 2012-323
Jan. 28, 2014
  • Multiple issues relating to defendant’s conviction for second-degree assault, reckless conduct with a deadly weapon, kidnapping, and criminal threatening
On appeal, the defendant argued that the trial court erred by (1) denying his request to cross-examine the victim regarding an allegedly false statement made on a driver’s license application, (2) allowing the state to introduce evidence that he treated the victim’s dog well, and (3) imposing consecutive sentences for the second-degree assault and reckless conduct with a deadly weapon convictions. The Court affirmed on all counts.

First, the Court held that the defendant was able to and did impeach the victim’s credibility by highlighting inconsistencies between her testimony and statements to medical examiners. Any error in the exclusion of further impeachment evidence was harmless.

Second, while evidence of the defendant’s relationship with the victim’s dog was of questionable relevance, the defendant did not demonstrate that its admission prejudiced his case.

Finally, the Court rejected the defendant’s argument that the trial court violated the common law doctrine of merger by imposing consecutive sentences. The Court expressed concern regarding the analysis of Young v. State, apparently the only previous New Hampshire case addressing the doctrine of merger. The Court explained that it would “apply double jeopardy principles to analyze whether the two offenses at issue were the ‘same’ for the purposes of the common law merger doctrine.” Although based on the same conduct, the second-degree assault and reckless conduct with a deadly weapon charges required proof by different evidence. Accordingly, the two charges did not merge.

Thomas Barnard, assistant appellate defender, Concord, for the defendant. Joseph A. Foster, attorney general (Nicholas Cort, assistant attorney general), for the State.

State v. John A. Smith
No. 2012-313
Jan. 28, 2014
  • Whether the trial court erred by imposing a felony-level sentence rather than a misdemeanor-level sentence following conviction for receipt of stolen property, where the trial court failed to instruct the jury as to making a finding that the stolen property was a firearm
In summer 2010, the defendant bought two handguns from an acquaintance for $400. Sometime thereafter, the defendant asked a friend if he was interested in purchasing the two guns. The friend immediately contacted the police and offered to act as a criminal informant. The police arranged for the friend to wear a wire and buy the two guns. When the guns were retrieved, the police determined that the serial numbers matched those of two handguns that were previously reported stolen. The defendant was charged with receipt of stolen property pursuant to RSA 637:11.

At the conclusion of the defendant’s jury trial, the judge instructed the jury with regards to the elements of receipt of stolen property. He did not instruct the jury that they should make a specific finding as to whether or not the stolen property consisted of “firearms.” The jury returned a guilty verdict and the defendant was sentenced. The defendant did not object contemporaneously to either the judge’s jury instructions or the judge’s sentencing.

The defendant’s sole argument on appeal was that the trial court erred by imposing a felony-level sentence. He argued that, pursuant to RSA 637:11, a felony-level sentence could only be imposed if the jury made a finding that “the property is a stolen firearm.”

The defendant claimed that the trial court erred by failing to instruct the jury that it must find unanimously and beyond a reasonable doubt that the stolen property consisted of firearms.

The Court applied the plain error test: “(1) there must be error; (2) the error must be plain; and (3) the error must affect substantial rights.” Even assuming all three criteria were met, the Court found that any error by the court did not “seriously affect[ed] the fairness, integrity, or public reputation of judicial proceedings.” The defendant and other witnesses referred to the stolen property as “firearms” consistently throughout trial, and the evidence that the stolen property consisted of firearms was overwhelming. The Court relied on the analysis in State v. Russell to find the defendant’s argument unavailing. The defendant provided no compelling reason to overrule Russell. The trial court’s ruling was affirmed.

Stephanie Hausman, senior assistant appellate defender, Concord, for the defendant. Joseph A. Foster, attorney general (Nicholas Cort, assistant attorney general), for the State.

State v. Joshua Sprague
No. 2011-500
Jan. 17, 2014
Affirmed in part, vacated in part
  • Multiple questions concerning the defendant’s conviction of first-degree murder during a burglary, including: jury instruction with regard to defendant’s misperception that victim possessed a gun, admission of a rebuttal witness, denial of the defendant’s motion for a mistrial, and violation of the double jeopardy clause
Sprague was convicted of first-degree murder committed knowingly during a burglary, and conspiracy to commit burglary. The murder occurred when Sprague went to the victim’s apartment building with the intent of stealing from the victim’s roommate. Upon arrival at the apartment building, he chased and subsequently shot the victim, after she raised her hands.

The defendant testified at trial that, at the time of the shooting, he was under the influence of a number of illicit substances and believed that, when the victim began raising her hands, she was reaching for a gun. The defendant admitted firing a gun at the victim, leaving the defendant’s mental state when he shot the victim as the sole contested issue at trial.

The Court first rejected the defendant’s argument that his due process rights were violated when the trial court instructed the jury that it could not use the defendant’s misperception that the victim had a gun as evidence of self-defense. The defendant argued that the instruction unfairly prejudiced him, because the jury did not know that they could use the evidence when evaluating his mental state at the time of the shooting.

The Court found that a reasonable jury would have understood that it could consider the defendant’s misperception for all purposes except self-defense. Further, the trial court accurately instructed the jury with regard to the elements of first-degree murder, second-degree murder, and manslaughter. Accordingly, the instructions were appropriate.

The Court next affirmed the trial court’s denial of the defendant’s request for a mistrial based on a single profane outburst in the courtroom by a family member of the victim. The judge did not hear the outburst, and it lasted for about 10 seconds. The trial court subsequently instructed the jury to ignore the outburst. The Court found that the outburst was not so prejudicial “as to constitute an irreparable injustice” and particularly noted that the outburst did not address the character of the defendant or the defendant’s state of mind when he shot the victim. The trial court’s ruling was affirmed.

The Court also considered admission of a state rebuttal witness to impeach the defendant’s assertion that he did not learn the victim died until days later. The evidence was cumulative, and any error in its admission was harmless beyond a reasonable doubt.

Finally, the Court addressed the defendant’s argument that the imposition of sentences for both first-degree murder in the course of a burglary and burglary violated the double jeopardy clauses of the state and federal constitutions. The Court vacated the defendant’s burglary conviction.

David M. Rothstein, deputy chief appellate defender, Concord, for the defendant. Michael A. Delaney, attorney general (Susan G. Morrell, senior assistant attorney general), for the state.

Iris J. Lowery

Iris Lowery is an associate at Wadleigh, Starr, & Peters in Manchester.

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