Bar News - December 16, 2015
Supreme Court At-a-Glance
Steven J. Cohen v. John Raymond et al
Nov. 17, 2015
Vacated and Remanded
- Whether the trial court correctly found that a transfer of funds by a father to an investment account in the name of his then son-in-law was an unconditional gift, as the result of applying the “gift” presumption applicable to transfers between close family members
The plaintiff, Steven Cohen, deposited $250,000 into an investment account at Merrill Lynch on behalf of his then son-in-law, John Raymond. At the time, Cohen and Raymond frequently discussed business and investment opportunities. After Cohen’s daughter and Raymond decided to divorce, Raymond withdrew $50,000 from the investment account for “personal purposes.” When Cohen learned of the divorce and withdrawal, he demanded that Raymond repay the $250,000 claiming that the funds were a loan or that Raymond was unjustly enriched.
At the first bench trial, Cohen claimed that the transfer of funds was a gift conditioned on the use of the funds for a joint business venture with Cohen. After that trial, the trial court ruled that the $250,000 was a conditional gift and ordered restitution. Raymond asked the court to reconsider because the “conditional gift” theory was new at trial; the court granted the motion and set aside the first order.
At the second bench trial, Cohen testified that the transfer of funds was a loan and that he had never made a gift with strings attached. The trial court issued an order finding that the parties did not enter into a loan agreement and that the transfer of funds into the investment account was an unconditional gift. In reaching this outcome, the trial court applied a “weak” presumption that the transfer of funds between family members is a gift.
The NH Supreme Court held that the gift presumption does not apply to transfers of property solely for the benefit of in-laws. A “weak” gift presumption would still apply in a situation where the gift was made between parent and child with an in-law involved, but not if the in-law was the sole grantee.
The Court explained that the gift presumption that arises from a transfer of property between close family members is strongest when the payee is the wife or minor child of the payor. The presumption is rebuttable, and the burden of proof is on the grantee to show that a gift was made. This presumption is less strong when the gift is made to an adult child together with his or her spouse.
The Court explained that limiting the gift presumption to close family members is consistent with common practice, enabling parties to treat routine transfers between parents and their natural children as gifts unless the presumption is rebutted. Further, the rule will be easier to apply if limited to close family members. Finally, the majority of courts in other jurisdictions have also limited the gift presumption to close family members and have not extended the presumption to transfers to an in-law.
The Court held that the gift presumption does not apply at all when the sole grantee is an in-law of the grantor. The holding of the trial court was remanded for trial of the remaining issues without the application of the presumption.
Steven M. Gordon and Benjamin T. Siracusa Hillman, of Shaheen and Gordon, Concord (Mr. Siracusa Hillman orally), for the plaintiff. Robert S. Carey, of Orr & Reno, Concord, for the defendant.
State v. Marianne King
Nov. 10, 2015
- Whether the trial court erred by giving a model jury instruction on direct and circumstantial evidence because the standard jury instruction did not require the resolution of conflicting testimony, and the existence of conflicting direct evidence could create a reasonable doubt
The defendant was convicted of theft by unauthorized taking in her role as executive director of a nonprofit organization. The defendant appealed the conviction, arguing that the trial court’s instructing the jury in the language of the model jury instruction announced by the Court in State v. Germain (2013) improperly constrained the jury’s factual findings and credibility determinations.
On appeal, the defendant argued that the instruction was improper because, if there was conflicting direct evidence from the testimony of two witnesses, the jury could not find that there was “some truth” to the testimony of each witness.
The instruction read (in pertinent part): “…if there is a conflict between witnesses who offer direct evidence concerning certain facts, you must decide which witness to believe… In this situation, you, the jury, must decide which witness to believe, and whether – based upon all of the evidence – the State has proven the defendant’s guilt beyond a reasonable doubt.”
The defendant argued below that in the event of a conflict in the testimony of two witnesses providing direct evidence, the jury could not decide which witness is telling the truth sufficiently to reach a verdict beyond a reasonable doubt. The trial court overruled that objection and also gave an instruction on assessing the credibility of witnesses.
Reviewing the instruction for abuse of discretion, the NH Supreme Court found that the decision to give the instruction required by the Germain decision was a sustainable exercise of discretion.
The Court further found that the testimony that the defendant highlighted on appeal was a conflict between direct and circumstantial evidence (and did not raise the potential problem the defendant identified). Therefore, the Germain instruction did not prejudice the defendant’s case, so the Court upheld the trial court’s ruling.
Nevertheless, the Court revised the Germain instruction as follows: “…if there is a conflict between witnesses who offer direct evidence concerning certain facts, you should resolve the conflict… In this situation, you, the jury, should resolve the conflict, and must decide whether – based upon all of the evidence – the State has proven the defendant’s guilt beyond a reasonable doubt.
The conviction was affirmed.
Joseph A. Foster, attorney general (Patrick J. Queenan, assistant attorney general), for the State. Stephanie Hausman, deputy chief appellate defender, Concord, for the defendant.
State v. Lisa A. Tagalakis Fedor
Nov. 10, 2015
- Whether the trial court correctly denied a motion for judgment notwithstanding the verdict (JNOV), where the jury convicted the defendant of knowingly maintaining a common nuisance when a tenant of her property sold heroin on the street outside her home
The defendant, Lisa Tagalakis Fedor, lived in Manchester with her boyfriend and two children. At her boyfriend’s suggestion, they allowed Robert Doane to move in with them. The defendant agreed that he could move into a spare bedroom in exchange for $100 a week. Viewed in the light most favorable to the state, the evidence showed that the defendant knew that Doane sold drugs and allowed him to continue doing so once he moved in, provided he did not sell the drugs inside the home.
Once Doane moved in, he began selling heroin on the street outside the defendant’s home. Inside the home, Doane installed a padlock on his door, and the defendant had reportedly seen him packaging heroin into baggies.
The defendant was charged with conspiracy to commit the sale of a controlled drug and knowingly maintaining and keeping a common nuisance. After a four-day trial, the jury convicted her of only knowingly maintaining and keeping a common nuisance. The trial court denied her requests for a judgement notwithstanding the verdict, or to set aside the verdict.
On appeal, the defendant argued that the evidence did not support the verdict, because her residence was not used to sell heroin and no drugs were sold inside the residence. She further argued that the evidence did not support a finding that she “maintained” a common nuisance, because she did not control or maintain Doane’s padlocked room.
Engaging in statutory interpretation (of RSA 318-B), the NH Supreme Court found that the statute prohibits more than just the physical exchange of a drug for money, such that the sale of the drugs did not have to take place inside the dwelling for the dwelling to have been “used” for the sale of the drugs. If the dwelling is “used” to accomplish the sale of the drug, then it is a common nuisance.
Although the defendant later denied knowledge, there was evidence that she knew Doane sold heroin when he moved in, and that she agreed he would keep selling heroin after he moved in to her house. There was also evidence that she witnessed Doane packaging heroin into individual baggies. Under these circumstances, the jury could reasonably have concluded that the residence was “used” for the selling of a controlled drug.
The Court rejected the defendant’s argument that she did not “maintain” a common nuisance, because she did not possess or exercise control over the drugs. The Court held that the statute does not require actual or constructive possession of controlled drugs. The common nuisance can be any place used for the illegal conduct, which in this case included the defendant’s home, even if the room where the drugs were stored was padlocked.
The verdict was not against the weight of the evidence, where there was direct evidence that the defendant had knowledge that Doane would use the residence to sell heroin. Further, the conviction for maintaining a common nuisance was not inconsistent with the finding that she was not guilty of conspiracy to commit a sale of a controlled drug, because the state of mind showing required for the conspiracy count (“purposely”) was higher than that required for the common nuisance count (“knowingly”).
The Court affirmed the trial court’s denial of the motions for JNOV or to set aside the verdict.
Joseph A. Foster, attorney general (Jason A. Casey, attorney, on the brief and orally,) for the state. Richard E. Samdperil, Samdperil & Welsh, Exeter, for the defendant.
Qualified Immunity (§1983 Claims)
Jeffrey Frost et al v. Michael Delaney et al
Nov. 17, 2015
- Whether the trial court correctly granted summary judgment on a §1983 claim against Kathleen Sheehan, bank examiner for the New Hampshire Banking Department, finding that she was entitled to qualified immunity for providing information in support of a search warrant later found to be without probable cause
Plaintiffs Jeffrey Frost, Frost Family LLC and Chretien/Tillinghast LLC (hereafter “the plaintiffs”) were investigated by the New Hampshire Banking Department for unlicensed mortgage banking in 2010.
The private mortgage loans at issue were issued in March 2009; similar transactions were made illegal by amendments to RSA 397-A, effective July 2009. When the New Hampshire Banking Department initiated proceedings against the plaintiffs, they sought a declaratory judgment and injunction against the proceedings. The trial court entered the injunction, which was affirmed in Frost v. Comm’r, N.H. Banking Dep’t (2012). The plaintiffs then brought this §1983 action against the New Hampshire Banking Department, as well as the individuals at the Department and in the attorney general’s office involved in the investigation.
This appeal concerns the trial court’s grant of summary judgment on behalf of Kathleen Sheehan, who was sued individually and as bank examiner for the New Hampshire Banking Department, finding that she was entitled to qualified immunity.
The conduct of Sheehan at issue was that she provided information to the district court that supported a search warrant. Specifically, she told the district court that a mortgage registered with the registry of deeds listed the plaintiffs as the mortgage banker. In fact, the mortgage listed plaintiffs as a mortgage lender, and at the time of the mortgage, a mortgage lender was distinguishable under the statute from a mortgage banker (a distinction that no longer existed at the time of the investigation).
The Court reviewed the judgment de novo and held that the trial court did not err when it found that Sheehan was entitled to qualified immunity. The qualified immunity analysis requires examination of 1) whether the facts, taken in the light most favorable to the injured party, show that the officials’ conduct violated a federal right and 2) whether the right in question was clearly established at the time of the violation.
In other words, the official is entitled to immunity unless the officials’ actions violated legal norms clearly established at the time of the challenged action. Reasonable but mistaken judgments by officials are entitled to immunity, while plainly incompetent or knowing violations of the law by officials are subject to redress under §1983.
Here, the only issue was whether a reasonable person in Sheehan’s position would have understood that her conduct violated the plaintiffs’ constitutional rights. The NH Supreme Court could not find that the law was clearly established at the time of the alleged violation where Sheehan made her statements at a time when “mortgage lender” and “mortgage banker” were synonymous.
Further, Sheehan was applying a policy of the Banking Department at the time of the investigation, and a similarly situated official would not have believed that the representation that plaintiffs were acting as a “mortgage banker” violated the plaintiffs’ constitutional rights. The Court further agreed with the trial court that Sheehan’s conduct involved “deliberation, judgment and decision making.” This finding entitled Sheehan to official immunity under state law, as well as supporting the trial court’s qualified immunity analysis.
The Court also affirmed the dismissal of claims against Banking Department representatives who initiated the investigation under the theory of prosecutorial immunity, and agreed that Sheehan’s conduct that was not entitled to prosecutorial immunity did not strip others at the department of their immunity.
Richard J. Lehmann and Charles G. Douglass III, Douglas, Leonard & Garvey, Concord, (Mr. Douglas orally), for the plaintiffs. Joseph A. Foster, attorney general (Brian W. Buonamano, assistant attorney general, on the brief and orally) for defendants New Hampshire Banking Department, Kathleen Sheehan, and the State of New Hampshire.