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Bar News - January 21, 2015

Supreme Court At-a-Glance

December 2014
Administrative Law

Robert Gunderson v. Commissioner, New Hampshire Department of Safety
No. 2014-189
Dec. 19, 2014

  • Whether an “export buyer’s agent” of motor vehicles is a “retail vehicle dealer” when said agent buys specific motor vehicles from retail dealers across the country and exports them to buyers in foreign countries

Petitioner Robert Gunderson appeals an order of the Merrimack Superior Court finding that he is a “retail vehicle dealer” as defined by RSA 259:89-a (2014) and that he must obtain a license to engage in his motor vehicle business.

The Court found the following facts to be undisputed: Petitioner is a resident of New Hampshire working as an “export buyer’s agent.” He buys cars from retail dealers across the country and exports them to buyers in foreign countries. Gunderson obtains title to the vehicles in New Hampshire and holds himself out as the owner prior to exporting the vehicles. He is paid to transfer ownership of the vehicles to the foreign buyers and does not own a retail sales location or operate a lot to display vehicles. He performs his services from his residence. Vehicles are never listed online or in any publications or classified advertising.

In 2012, Gunderson purchased a 2012 Porsche Cayenne and a 2012 BMW X5 from out-of-state retail dealers for the purpose of selling them in China and Russia. When he applied for titles for the vehicle, the New Hampshire Bureau of Title and Anti-Theft denied his request. The Department of Safety determined that Gunderson needed to obtain a state-issued motor vehicle dealer’s license to export motor vehicles.

Upon Gunderson’s declaratory judgment action, the trial court ruled that he is engaged in the motor vehicle business and must obtain a dealer’s license in accordance with RSA 261:103-a. This appeal followed.

Applying the rules of statutory construction, the Court determined that to meet the statutory definition of a retail vehicle dealer, a person must be engaged in the motor vehicle business, sell vehicles or demonstrate for sale vehicles on consignment, and make the sales or demonstrations to the general public.

Petitioner essentially conceded that he is engaged in the motor vehicle business and thus the Court concluded the same. The Court looked to the Uniform Commercial Code as adopted in New Hampshire to conclude that a “sale” consists in the passing of title from the seller to the buyer for a price and that this is precisely what is occurring here.

The Court did not agree with Gunderson’s argument that because he only receives a commission to export the vehicles, and does not receive money for their sale, he is not engaged in the direct sale of the vehicles. The Court concluded that he had legal ownership of the vehicles he bought and that he then transferred that ownership in exchange for money.

Petitioner then argues that even if he is engaged in the motor vehicle business, he does not sell vehicles to the general public and therefore cannot be considered a motor vehicle dealer under RSA 259:89-a.

The statute does not define the term “general public” so the Court interpreted the term according to its plain and ordinary meaning. While Gunderson contended that because the vehicles were exported to specific buyers – obtained as clients before he purchased the vehicles – that the vehicles were not offered for sale to the whole community.

There was no evidence, however, that Gunderson limited his service to a select few nor did he argue that he sells vehicles to only a certain group of people. The Court determined that the plain meaning of “general public” does not require that every member of the larger community have access to the Petitioner’s service, that the vehicles must be targeted toward every member of the community, or that the community must be within the United States.

The Court held that the trial court did not err in determining that the petitioner is a “retail vehicle dealer” as defined by RSA 259:89-a.

Seufert, Davis & Hunt, Franklin (Brad Davis on the brief and orally), for the petitioner. Joseph Foster, attorney general (John Conforti, assistant attorney general, on the memorandum of law and orally), for the state.

Contract Law

Professional Fire Fighters of New Hampshire & a. v. State of New Hampshire
No. 2013-669
Dec. 10, 2014
Reversed and remanded

  • Whether legislative changes increasing the contribution rates paid by members of the New Hampshire Retirement System violate the contract clauses of the New Hampshire and United States constitutions

The state appealed a Merrimack Superior Court ruling that legislative changes increasing the contribution rates paid by members of the NH Retirement System violate the contract clauses of both the New Hampshire and United States constitutions.

In 2011, the Legislature amended RSA 100-A:16, I(a) by increasing contribution rates for New Hampshire Retirement System (NHRS) members. In June 2011, the Professional Fire Fighters of New Hampshire, the New Hampshire Police Association, the National Education Association - New Hampshire, and the State Employees Association of New Hampshire - SEIU Local 194 (collectively, the plaintiffs) filed a petition for declaratory and injunctive relief challenging the constitutionality of the changes to the statute.

The petition alleged that members become vested in their NHRS benefits upon commencement of permanent employee status and that their contribution rates may not be increased without a commensurate benefit. Plaintiffs argue that the legislative change to the statute substantially impairs the members’ rights and that impairment is neither reasonable nor necessary to serve an important public interest, thereby violating the contract clauses of the NH Constitution pt. I, art. 23 and the United States Constitution art. 1, §10.

The state moved to dismiss arguing that there is no contract clause violation because RSA Chapter 100-A does not constitute a contract between the parties; there is no contractual right to a permanent fixed contribution rate; and no contract is formed until the employee vests as defined in RSA 100-A:10 (2013).

The trial court ruled that NHRS members have a contractual right to a fixed contribution rate. The state appealed. The court reversed and remanded, holding that the Legislature did not unmistakably intend to establish NHRS member contribution rates as a contractual right that cannot be modified.

The Court applied the unmistakability doctrine, the threshold requirement for the recognition of public contracts. This doctrine serves to limit contractual incursion on a state’s sovereign power and to avoid difficult constitutional questions about the extent of the state’s authority to limit the subsequent exercise of legislative power.

The doctrine mandates that the Court determine whether the challenged statute evinces the clear intent of the state to be bound to particular contractual obligations. After review of decisions of the Michigan Supreme Court and the Florida Supreme Court, the NH Supreme Court held that there is no indication that the NH Legislature unmistakably intended to bind itself from prospectively changing the rate of NHRS member contributions to the NHRS. The Court reached the same conclusion under both the state and federal Constitutions.

Andru Volinsky, Bernstein, Shur, Sawyer & Nelson, Manchester, with Christopher Aslin, and Talesha Caynon (on the brief); Glenn Milner, Molan, Milner & Krupski, Concord (on the brief), William Payne and Stephen Pincus (on the brief), Stember Fienstein Doyle Payne & Kravec, Pittsburgh, and David Gottesman, Gottesman & Hollis, Nashua (on the brief, for the plaintiffs and intervenors. Joseph Foster, attorney general, with Richard Head, associate attorney general (on the brief and orally), for the state.

Joseph W. Turner, Individually and as Trustee v. Shared Towers VA, LLC & a.
No. 2013-612
Dec. 19, 2014
Affirmed in part; Reversed in part; Vacated in part; and Remanded

  • Whether respondents would be unjustly enriched when the court ordered petitioner to pay certain amounts owed under a promissory note; whether the petitioners lump sum payment should be applied to the principal; whether the court properly excluded evidence of the petitioner’s experience with similar loans; whether the promissory note failed to contain a clear statement in writing of the charges owed; whether respondents were entitled to attorney’s fees and costs; and whether respondents’ actions violated the Consumer Protection Act

On appeal by Shared Towers, et al., (collectively, respondent) and cross-appeal of petitioner Joseph Turner, of orders of the Superior Court of Belknap County, following a bench trial on the petitioner’s petition for a preliminary injunction enjoining a foreclosure sale and for damages and reasonable attorney’s fees.

In April 2009, petitioner procured a construction loan for $450,000 from Mark Butler, through Financial Resources Mortgage (FRM). Petitioner and Butler executed a commercial construction loan agreement, a promissory note, a mortgage security agreement and assignment, and a collateral assignment of rents and leases.

The loan was a bridge loan to facilitate the completion of construction of the home on which petitioner was to pay interest only in monthly installments for one year, with the loan to be repaid in full in one year by May 1, 2010.

The mortgage and note were assigned three times. Petitioner made payments from April 2009 to October 2009. In December 2009, petitioner received a letter from the trustee appointed in the involuntary bankruptcy of FRM. In April 2011, respondent took ownership of the petitioner’s loan, mortgage, and note. Respondent notified petitioner on April 27, 2011, that petitioner was in default of his obligations and owed $450,000 principal, $92,625 interest, and $24,206 in delinquency charges, including a $22,500 charge for late payment of the lump sum principal amount.

In July 2011, petitioner requested a preliminary injunction to enjoin the foreclosure sale. While conceding that he owed $450,000 principal, he disputed interest charges, late fees and attorney fees, which added about $100,000 to the debt. The trial court ordered petitioner to pay the principal amount and ordered respondent not to foreclose on the property until further court order.

Following a bench trial, the court decided that respondent was not entitled to a delinquency charge on the petitioner’s late payment of principal because the note failed to contain a “clear statement in writing” that the charge would so apply, citing RSA 399-B:2. The trial court also concluded that respondent was not entitled to any payments from November 2009 until April 2011 because, during that time, ownership of the loan and note was in flux and so payments should have been tolled. Respondent would be unjustly enriched if petitioner were now ordered to pay the respondent the payments that were due from November 2009 through April 2011.

The trial court further found that the $450,000 remitted by the petitioner to respondent pursuant to the preliminary injunction order satisfied the principal amount owed. Next, the trial court determined that the respondent did not violate the Consumer Protection Act (CPA) and so the petitioner was not entitled to damages. Finally, the trial court denied the respondents’ claim for attorney’s fees and costs.

With respect to the unjust enrichment claim, the Court held that the dispute over the ownership of the loan agreement and promissory note did not eliminate the petitioner’s obligations under them as the dispute was never about the petitioner’s obligation to make those payments, but rather about to whom the payments should be made.

Because the loan and note remained viable, it was an error for the trial court to have afforded the petitioner a remedy under an unjust enrichment theory. The Court dismissed petitioner’s argument that this case fits within an exception to the general rule that one may not recover under an unjust enrichment theory when the benefit received is outside the scope of the contract.

The Court found that the benefit the petitioner received, i.e., use of the money loaned to him under the loan, was the very subject of the loan agreement. The benefit the respondent was entitled to receive, i.e., the petitioner’s interest-only payments – is the very subject of the note. The fact that the loan agreement and note were silent with respect to the course the petitioner should take if a dispute arose about the ownership of its obligations does not allow for a quasi-contract remedy.

Because the trial court reached its finding regarding the payment of the $450,000 in connection with its conclusion that the petitioner was entitled to a remedy under an unjust enrichment theory, the Court vacated this part of its order. The Court remanded the order for further proceedings after which the trial court shall consider the merits of the respondent’s assertion that the note required that the payment be applied first to charges and/or fees or accrued interest before being applied to the principal.

With respect to respondent’s argument that the trial court erroneously precluded them from recovering a delinquency charge on the petitioner’s late lump sum payment of principal because the charge was not properly disclosed pursuant to RSA 399-B:2, the Court agreed with the trial court that the delinquency charge is a finance charge because it is associated with respondent’s extension of credit to petitioner, and that it was made clear to the petitioner that the delinquency charge would apply to his interest-only payments. The Court held that it was not clear that the charge would also apply to a lump sum payment of principal and held that the trial court did not err when it allowed the respondent to recover a penalty on delinquent interest payments, but that they were precluded from recovering a penalty on the delinquent lump sum payment of principal.

The trial court ruled that the respondent was not entitled to recover any of their fees and costs, but the Court reversed, holding that the fees and costs, including attorney’s fees, that the respondent incurred in bringing their foreclosure action are expressly encompassed in the loan agreement, finding that they are incidental to or relating to the loan and its collection.

Lastly, petitioner cross-appealed the trial court’s determination that the respondent’s conduct did not violate the Consumer Protection Act. The Court affirmed the finding that the respondent’s actions to enforce their rights under the loan agreement and promissory note do not “raise an eyebrow of someone inured to the rough and tumble of the world of commerce.”

Cook, Little, Rosenblatt & Manson, Manchester (Arnold Rosenblatt and Kathleen Mahan on the brief and Mahon, orally), for the petitioner. Bernstein, Shur, Sawyer & Nelson, Manchester (Christopher Aslin and Gregory Michael on the brief, and Michael orally), for the respondents.

Criminal Law

State of New Hampshire v. Charles Glenn Jr.
No. 2012-701
Dec. 10, 2014
Affirmed in part; vacated in part

  • Whether a good cause exception to the common law rule of mandatory joinder exists because a subsequent trial would have occurred regardless of any new charges brought

Defendant Charles Glenn Jr. appealed an order of the Superior Court of Hillsborough – North denying his pretrial motion to dismiss the charges of attempted robbery, criminal threatening, and unlawful possession on a statute of limitations charges; instructing the jury that if it found him guilty of attempted armed robbery, it could presume the requisite mens rea for the second-degree murder charge and sentence him separately for second-degree murder and attempted armed robbery.

Glenn also argued that the trial court committed plain error when it did not dismiss the attempted armed robbery indictment on collateral estoppels grounds and that the doctrine of common law joinder that the Court applied in State v. Locke requires that all of his non-homicide convictions be vacated because they arose out of the same criminal episode as the second-degree murder charge.

In August 2005, Glenn was involved in drug-dealing activity in Manchester. He first pointed his gun at Chad Diaz, brother of Glenn’s girlfriend, with whom he had arranged to sell drugs to Joe Salvatore, and demanded money, stating that he had no pills.

When they heard Salvatore’s vehicle outside, Glenn motioned with his gun, indicating that Diaz was to move toward the door. Diaz refused to go and Glenn walked past him. Diaz ran back inside and then across the street to a nearby drug store where he received a call from Salvatore asking where he was. Diaz heard the voice of Lenny Gosselin in the background before the phone went dead. Salvatore called Diaz back and said Glenn just shot Gosselin. Gosselin was pronounced dead shortly after arriving at the hospital. Glenn fled to Colorado, where he was arrested about a month later.

In January 2006, a grand jury indicted Glenn on alternative counts of first-degree felony murder and second-degree murder. Following a jury trial, he was acquitted of first-degree murder, but the jury deadlocked on the second-degree murder charge. The trial court granted a subsequent motion for mistrial on that charge.

In October 2006, the grand jury returned indictments on two alternative charges of second-degree murder. One charge was identical to the reckless second-degree murder charge on which the first jury had deadlocked. The other indictment alleged knowing second-degree murder. On an interlocutory appeal, the NH Supreme Court held that double jeopardy did not bar the defendant’s retrial on the second-degree murder charges and that collateral estoppels did not bar the robbery evidence.

In December 2011, the state obtained the current indictments for second-degree murder, attempted armed robbery, unlawful possession of a deadly weapon, falsifying physical evidence and criminal threatening, against the defendant, all of which concern the day on which he shot and killed Gosselin.

During a chambers conference on the fourth day of the jury trial, the court and parties discussed jury instructions. The state proposed that the trial court instruct the jury that it could “presume the reckless and extreme indifference required for the crime of second-degree murder if the jury found that the defendant used a deadly weapon while attempting to commit the crime of robbery.”

The trial court agreed to give such an instruction over the defendant’s objection. The jury convicted defendant on all charges. The trial court sentenced defendant to 30 years to life on the second-degree murder charge, 10-20 years on the attempted armed robbery charge, 10-20 years on the criminal threatening charge and 5-10 years on the unlawful possession charge. The armed robbery sentence ran consecutively to the second-degree murder sentence, and the remaining charges ran concurrently with the armed robbery sentence. Defendant appealed.

While the defendant’s instant appeal was pending, the Court decided State v. Locke, adopting a same criminal episode test for the purposes of a common law rule of compulsory joinder of criminal offenses.

The Court incorporated the principles set forth in Model Penal Code Section 1.07(2), which states that “a defendant shall not be subject to separate trials for multiple offense based on the same conduct or arising from the same criminal episode, if such offenses are known to the appropriate prosecuting officers at the time of the commencement of the first trial and are within the jurisdiction of a single court.” The Court held that this new rule of compulsory joinder applied to the defendant and allowed him to add compulsory joinder as an issue to his appeal.

In its supplemental memorandum, the state agreed that the defendant’s convictions for criminal threatening, falsifying physical evidence and unlawful possession of a firearm must be vacated under Locke, conceding that those charges either were based on the same conduct or arose from the same criminal episode as the second-degree murder charge on which a mistrial had been declared in the defendant’s initial trial. The State could have brought those non-homicide charges prior to the initial trial.

The state argued that the Court should not vacate the attempted armed robbery conviction and asked it to recognize a limited “good cause” exception to the mandatory joinder rule, arguing that good cause exists in this case because a subsequent trial would have occurred regardless of any new charges brought, because Glenn would have been retried on the second-degree murder charge.

The Court rejected the State’s argument because the rationale would not be limited to the attempted armed robbery charge but would also extend to the defendant’s other convictions. The Court vacated the defendant’s conviction of attempted armed robbery as well in light of the State’s failure to dispute that the attempted armed robbery charge was based upon the same conduct or arose from the same criminal episode as the second-degree murder charge.

The Court affirmed the defendant’s conviction of second-degree murder, concluding that the first jury could have based its acquittal of first-degree felony murder charge on an issue other than the alleged attempted robbery. Accordingly, the collateral estoppel doctrine, as encompassed in the state double jeopardy clause, did not bar the trial court’s presumption instruction to the jury that it could presume the reckless and extreme indifference required for the crime of second-degree murder, if it found that Glenn used a deadly weapon while attempting to commit the crime of robbery.

Joseph Foster, attorney general (Nicholas Cort, assistant attorney general, on the brief and orally, and Peter Hinckley, assistant attorney general, on the supplemental memorandum of law and orally), for the state. Lothstein Guerriero, Concord (Theodore Lothstein on the brief and memorandum of law and orally), for the defendant.

State of New Hampshire v. Robert Breest
No. 2013-813
Dec. 19, 2014
Vacated and remanded

  • Whether a DNA test conducted with the consent of the state rather than by court order forecloses defendant from seeking relief under RSA 651-D, Post-Conviction DNA Testing

Defendant Robert Breest appealed an order of the Superior Court of Merrimack denying his motion for a new trial based on the results of DNA testing conducted with the consent of the state.

In 1973, Breest was convicted of murdering Susan Randall. At the time of the murder, police obtained fingernail clippings from Randall. Between 2000 and 2008, by various motions to the trial court, defendant obtained multiple rounds of DNA testing on the fingernail clippings, but none of those tests excluded defendant as the DNA contributor.

In 2012, with the state’s consent, but not by court order, Breest obtained another DNA test on the remaining clippings, which showed that the clippings contained DNA material from two different males. Breest could not be excluded as a contributor of one of the male DNA profiles, but he was excluded as a contributor of the second.

Based on the 2012 results, Breest moved for a new trial under RSA 651-D. The state moved to dismiss, arguing that the remedial provisions of the statute were not available to the defendant, because he did not petition the court for DNA testing.

Initially, the trial court denied the state’s motion, but upon reconsideration, determined that defendant had not satisfied the statutory prerequisites necessary to obtain testing, because the DNA at issue was tested with the state’s consent, rather than pursuant to an order issued by the court under the statute. The trial court vacated its original order and granted the state’s motion to dismiss the defendant’s motion for a new trial.

Defendant appealed, arguing that the trial court erred by determining that RSA 651-D:2, VI(b) does not apply to DNA testing obtained with the state’s consent and that, while the statute itself is silent regarding testing done by consent, it is implied within the statute when considered as a whole. To isolate the phrase “petition the court” as the only mechanism for relief under the statute would defeat the statute’s remedial purpose and lead to an absurd result.

The state argues that the statutory phrase “the results of DNA testing conducted under this section” is unambiguous and thus the remedial provisions of the statute do not apply when testing is obtained by consent rather than by petition to the court.

Applying the rules of statutory construction, the Court held that to interpret the statute to deny relief to defendants who obtained DNA results by consent would lead to an absurd result in that two defendants, who both had obtained favorable post-conviction DNA test results – one by petition to the court, the other with the state’s consent – would be treated differently under the statute. The defendant who petitioned the court for testing would be entitled to relief but the defendant who proceeded with the state’s consent would not.

It is not presumed that the Legislature would pass an act leading to an absurd result and nullifying the purpose of the statute, which in this case the Court noted is to protect the rights of the wrongfully convicted.

The Court thus held that DNA tests obtained by consent trigger the remedial provisions of the statute. The Court remanded the case to the trial court for a determination of whether the DNA results in this case are favorable under RSA 651-D:2, VI(b), thus entitling the defendant to a hearing and perhaps other relief under the statute.

Joseph Foster, attorney general (Elizabeth Woodcock, assistant attorney general, on the brief and orally), for the state. Albert Scherr, Concord (by brief) and Boies, Schiller & Flexner, Armonk, NY (Ian Dumain on the brief and orally), for the defendant.


K.L.N. Construction Company, Inc. & a. v. Town of Pelham
No. 2013-374
Dec. 10, 2014

  • Whether the Town was within its authority to enact an ordinance directing that any refund of impact fees be paid to the current property owner

Petitioners KLN Construction Company Inc., et alia, appealed a ruling by the Superior Court of Hillsborough – South dismissing their petition for declaratory judgment and writ of mandamus seeking the return of impact fees paid to the Town of Pelham. The court had also ruled that it was within the town’s statutory authority to adopt an ordinance that allows current property owners to seek a refund of unencumbered impact fees and that petitions had no standing to seek the return of the impact fees.

In 1999, the town adopted an impact fee ordinance pursuant to RSA 674:16 and RSA 674:21, V, which allowed the town to assess fees on new development to pay for capital improvements necessitated by the development. The ordinance also provided that if the town had not encumbered the impact fees within six years, the current owners of property on which impact fees have been paid may apply for a full or partial refund of such fees, with interest.

The town required the petitioners, real estate developers, to pay impact fees to the town. After paying the fees, petitioners sold the properties to individual homeowners. The fees were intended to partially fund the construction of a new fire station, with the town to bear the balance of the construction costs. Between 2002 and 2010, the town spent some of the impact fees on feasibility studies, architectural drawings, and construction estimates relating to the fire station, but between 2008 and 2010, voters turned down proposals to appropriate the additional funds needed to construct the fire station. In March 2012, the voters approved a warrant article for the construction of the fire station.

Also in March 2012, petitioners sought the refund of impact fees that they had paid more than six year earlier by filing for declaratory judgment and a writ of mandamus in Superior Court. Petitioners sought a declaration that the town’s expenditure of the funds for pre-construction activity violated both the impact fee statute and the town ordinance. Petitioners also alleged that they were entitled to a refund because the town had failed to lawfully use the impact fees within six years.

The town argues that only a current property owner is entitled to a refund of impact fees and, because the petitioners no longer own the properties, they lacked standing to seek a refund. The trial court agreed with the town, holding that RSA 674:21 did not prevent municipalities from choosing to direct refunds to the current property owners and that the ordinance was not ultra vires, reasoning that the term “refund” did not require that the fees be returned to the entity that paid them. Accordingly, the trial court ruled that petitioners did not have standing to seek a refund and granted the town’s motion to dismiss. Petitioners appealed.

The Court applied the rules of statutory construction to determine the intent of the Legislature in enacting the impact fee statute. The specific statutory provision at issue states that a municipal impact fee ordinance “shall establish reasonable times after which any portion of an impact fee which has not become encumbered… shall be refunded, with any accrued interest… The maximum time which shall be considered reasonable hereunder shall be 6 years” (emphasis added). The term “refund” is not defined in the statute, nor does the statute address to whom the unencumbered impact fees must be returned, i.e., the entity that paid them or the current property owner. Petitioners argue that this refund language should be imported into the impact fee statute. The Court declined, stating that to do so would add language that the Legislature did not see fit to include.

Finding the term “refund” to be unambiguous when read in the context of the entire statue, the Court did not consider legislative history and agreed with the trial court’s interpretation of “refund” as it is used in RSA 674:21, V(e), and concluded that the town was within its authority to enact an ordinance directing that any refund of impact fees be paid to the current property owner. There being no dispute that petitioners no longer owned any of the properties for which they paid the impact fees at issue, the Court held that petitioners had no standing to seek a refund.

Cronin, Bisson & Zalinsky, Manchester (John Cronin and Daniel Muller Jr. on the joint brief, and Cronin, orally), for the petitioners. Beaumont & Campbell, Salem (Bernard Campbell on the joint brief), for the intervenor Gerald Gagnon Sr. Donahue, Tucker & Caindella, Exeter (Katherine Miller on the brief and orally), for the respondent.

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