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Bar News - July 20, 2016

Supreme Court At-a-Glance


June 2016

Administrative Law

Scott L. Bach v. New Hampshire Department of Safety
No. 2014-0721
June 2, 2016
Reversed and Remanded

  • Whether administrative rules requiring nonresidents to provide proof of a license in their resident state as part of the process to obtain a license to carry a concealed weapon in New Hampshire were ultra vires because they changed the requirements of the statute

    Petitioners, an individual from New Jersey (Scott Bach) and the Association of New Jersey Rifle and Pistol Clubs, challenged a Department of Safety rule requiring that a nonresident supply proof of a license to carry a concealed weapon from his or her state of residence when applying for a New Hampshire license to carry a concealed weapon. Bach had a nonresident license to carry a concealed weapon from 2004 until 2013. He does not have a license to carry a concealed weapon in New Jersey.

    In 2013, when the rule became effective, petitioners filed a declaratory judgment action to challenge the rule on the ground that it exceeded the Department of Safety’s authority (was ultra vires) by altering the statutory requirements and on equal protection grounds. The trial court ruled that the administrative rules were valid.

    R.S.A. 159:6 provides that a license to carry a concealed weapon shall issue “if an applicant… has good reason to fear injury to the applicant’s person or property or has any proper purpose, and that the applicant is a suitable person to be licensed.” The petitioners argued that the standard in the new rule imposed a higher standard than the “suitability” standard in the statute because the new rules required licensure in the nonresident’s home state. In effect this rule imported the requirements of the home state into the suitability analysis, effectively imposing a higher standard on licensure for nonresidents. If the home state prohibited concealed weapons altogether or had exceptionally high standards, then a nonresident otherwise satisfying the requirements of RSA 159:6 would not be able to obtain a license due to their home state’s requirements.

    The Supreme Court concluded that the new rule, by imposing the requirement of a resident state license, did “add to, detract from, or modify the statute” it was intended to implement and therefore was invalid. Accordingly, the Supreme Court reversed the trial court.

    Andrew S. Winters, of Cohen & Winters, of Concord (on the brief) and Daniel L. Schmutter, of Hartman & Winnicki, of Ridgewood, New Jersey (on the brief and orally) for the petitioners. Joseph A. Foster, Attorney General (Dianne Martin, assistant attorney general, on the brief and orally), for the respondent.


    Alice Finn v. Ballentine Partners
    No. 2015-0332
    June 14, 2016

    • Whether the trial court correctly ruled that RSA 542:8 was not preempted by the Federal Arbitration Act (“FAA”) where the trial court enforced the parties’ arbitration agreement prior to review of the award; and
    • Whether the trial court correctly ruled that a second arbitration panel made a plain mistake of law by concluding that res judicata did not bar the plaintiff’s claim

    Plaintiff served as chief executive officer of Ballentine Finn & Company (BFI), an S Corporation founded in 1997. In 2008, Ballentine and other partners forced Finn out of the corporation and terminated her employment. Pursuant to a shareholder agreement, Finn challenged the termination in arbitration, and an arbitration panel found that the termination was unlawful. The panel awarded her more than $5 million for the stock that she was forced to sell and $720,000 for lost wages.

    Subsequent to the first arbitration award, the company reorganized and sold a share in its company similar to what Finn had owned for $7 million and a $280,000 capital contribution. Finn filed a new complaint alleging that she was entitled to relief under “clawback” provisions of the shareholder agreement that allowed founding shareholders of BFI to recover a portion of any gain realized on a resale of shares by the company within eight years after the founder sold them back to the company.

    A second arbitration panel ruled that Finn could not recover the gain based on breach of contract, because it was bound by the first panel’s findings on breach of contract. The panel, however, went on to award damages based on an unjust enrichment theory, finding that BFI had wrongfully deprived Finn of her contractual remedy. Using the shareholder agreement as a guide, the panel awarded $600,000 in equitable relief. The trial court reviewed this award pursuant to RSA 542:8 and not the Federal Arbitration Act (FAA). Applying this standard of review, the trial court found that the second arbitration panel had made a plain mistake of law when it found that the claims of unjust enrichment were not barred by the principles of res judicata.

    On appeal, the NH Supreme Court affirmed the trial court’s determination that RSA 542:8 was not preempted by the FAA. Specifically, under Sections 9, 10 and 11 of the FAA, which Finn argued preempted RSA 542:8 under a “conflict preemption” theory, review of the arbitration award would have been deferential and would not have included review for a “plain mistake” of law. The Court held that while the FAA applied to require the parties to arbitrate, that did not mean that all of the provisions of the FAA were applicable, and the trial court correctly reviewed the award under RSA 542:8. The Court reasoned that Hall Street did not limit review of arbitration awards to only Sections 10 and 11 of the FAA, and that the United States Supreme Court specifically acknowledged review of arbitration awards under state law.

    The Court also rejected Finn’s “obstacle preemption” theory, because the more rigorous review of arbitrations under RSA 542:8 does not function as an “obstacle” so insurmountable as to preempt state law. The Court analogized the review at issue here to the procedural rule at issue in Volt, a United States Supreme Court case where a procedural rule that delayed arbitration but still required arbitration was not preempted by the FAA. Applying Volt and Hall Street, and the provisions of the contract choosing New Hampshire law to apply to judicial disputes, the Court affirmed the ruling that the FAA did not preempt review under state law.

    The Court then reviewed the trial court’s ruling that the second arbitration panel committed a plain mistake of law when it held that her claims arising out of the sale of stock subsequent to the first arbitration award were not res judicata. The Court reasoned that the second arbitration action was not based on a new factual occurrence but upon the continuing injury of her termination. The only additional evidence was the value of the newly discovered damage and the additional damages were only at issue because of the facts raised in the first action.

    The Court held that because the plaintiff merely sought additional damages for the same occurrence, the second arbitration panel should have applied the doctrine of res judicata to the facts. Accordingly, the Court affirmed the trial court’s judgment that the second arbitration panel made a plain mistake of law and that its award was barred by the doctrine of res judicata.

    Jamie N. Hage, of Hage Hodes, of Manchester on the brief and Robert D. Cohan, of Resnick Myerson Plaut, of Boston, Mass., on the brief and orally, for the plaintiff. Wilbur A. Glahn, III, of Mclane Middleton, of Manchester (Michael A. Delaney and Nicholas F. Casolaro also on the brief), for the defendant.

    Contract Law

    Signal Aviation Services Inc. v. City of Lebanon
    No.2014-0739 June 28, 2016

    • Whether the trial court correctly granted summary judgment for the City of Lebanon on breach of contract claims premised on a tax assessment as unequal treatment of Signal Aviation Services (“Signal”) prohibited by the contract

    The plaintiff leased 8.91 acres from the City of Lebanon and contracts with the city for the nonexclusive right to provide fixed based operator services at the Lebanon Municipal Airport. The contract provides that any other operator of aeronautical endeavors or activities will not be permitted to operate on terms or conditions more favorable than the terms between the city and Signal. The contract also requires Signal to pay property taxes.

    In 2006, the City of Lebanon increased the assessed value of that land from $77,400 to $868,300 resulting in a significant increase in Signal’s tax liability. Signal unsuccessfully appealed to the New Hampshire Board of Land and Tax appeals and did not appeal the board’s order. Signal brought a breach of contract action against the city that was the subject of a prior appeal. In that appeal, the NH Supreme Court held that to the extent that the action was for relief from “disproportionate taxation” it was in effect a claim for abatement of taxes, which may only be pursued through the statutory scheme for tax abatement. On remand, Signal could still pursue relief in breach of contract for “unequal treatment” when compared to other airport tenants.

    On remand, the city moved for summary judgment on the remaining claim for breach of contract by “unequal treatment” and the trial court granted the motion. The Court reviewed the contract and ruling below de novo and affirmed the grant of summary judgment. The Court examined the relevant Federal Aviation Administration assurances incorporated into the contract, and found that the city is a party included in the unequal treatment analysis. However, the trial court correctly ruled that the city has no power to modify the taxes assessed against Signal by contract, or to contract with Signal not to tax Signal on the land use. The claims of unequal treatment raised by Signal in its objection to the motion for summary judgment on remand were fairly excluded from the summary judgment analysis because there was no prior notice of the claims. To the extent that there was prior notice, and to the extent that unequal treatment was alleged, the claims were based upon disproportionate taxation and were unavailing as the Court previously ruled.

    The Court also rejected the argument that the city’s exemption from taxation caused Signal’s taxation to be “unequal treatment” prohibited by the contract. The Court reasoned that Signal was being treated equally to other tenants and the city when Signal was required to pay all lawfully levied taxes, as the other tenants and airport operators, including the city, were required to pay all lawfully levied taxes. The city, like other airport operators, is required to pay all lawfully levied taxes under the agreement, but the city does not owe any tax liability because it is statutorily exempt. Accordingly, although the Court’s reasoning differed from that of the trial court, the Court affirmed the grant of summary judgment.

    Stephen P. Girwood, sole practitioner, of Lebanon, for the plaintiff. Adele M. Fulton, of Gardner, Fulton & Waugh, of Lebanon, for the defendant.

    Criminal Law

    State v. Drew Fuller
    No. 2015-0650 June 14, 2016

    • Whether the trial court correctly ruled that the Superior Court lacked jurisdiction over a 17-year-old defendant and dismissed misdemeanor charges because amendments to the statute, which became effective after the charges, but before the grand jury indictment, applied retroactively to vest jurisdiction in the Family Division

    Amendments to RSA 169-B that were enacted in 2014 and that became effective July 1, 2015, raised the age of a “delinquent” from anyone under the age of 17 to include anyone under 18 years of age, vesting exclusive jurisdiction over many cases involving “delinquent” 17-year- olds in the family division. On May 26, 2015, the 17-year-old defendant was arrested for possession of heroin, changing marks on a firearm, and carrying a firearm in a vehicle without a license. The state filed “informations” on July 16, 2015, and a grand jury returned an indictment on July 17, 2015. The defendant moved to dismiss the charges, arguing that the NH Superior Court lacked jurisdiction over the defendant. The trial court ruled that the amendments applied retroactively to persons who committed offenses before the effective date but were indicted after the effective date and dismissed the charges.

    On appeal, the state argued that the trial court erred by applying the amendments retroactively, raising the savings clause of RSA 21:38. The state argued that the savings statute should apply because complaints were filed prior to the effective date of the amendments. The Supreme Court disagreed, finding that the prosecution was not pending on the effective date of the amendments because the defendant was not yet indicted.

    Because the savings clause did not apply, the Court applied its common law test for retroactive application of a statute when, as here, the statute is silent as to whether the amendments should apply retrospectively or prospectively. In such cases, the analysis depends on whether the amendment affects procedural or substantive rights. When the law affects substantive rights, the presumption is that the law will apply prospectively. When the law affects only procedural rights, then the presumption is reversed, and the statute is presumed to apply retrospectively.

    In this case, the Court concluded that the amendments were procedural because they expanded the jurisdiction of the Family Division, consistent with prior case law. Although the state argued that the law reduced the severity of the potential penalties, and therefore changed substantive rights, the Court noted that in some circumstances, RSA 169-B allows for transfer to Superior Court for felony charges. Accordingly, because the changes to the statute were procedural and not substantive, the Court affirmed the dismissal of the charges.

    Joseph A. Foster, Attorney General (Elizabeth C. Woodcock, assistant attorney general, on the brief and orally), for the state. Anthony J. Galdieri, of Nixon Peabody, of Manchester, for the defendant.

    State v. Arthur Kardonsky
    No. 2015-0383
    June 14, 2016

    • Whether the trial court erred when it ruled that there was no mens rea requirement for the violation-level offense of driving with a suspended license

    The defendant was charged with a misdemeanor and a violation-level offense for driving after his privilege to do so was suspended. The misdemeanor offense applied to his driving a vehicle after the registration for his vehicle was suspended, and the violation level-offense related to his driving after his driver’s license was suspended. At trial, the defendant argued that he should be found not guilty as to both charges because he could not recall receiving a notice of suspension. He testified that he had trouble with receiving his mail at his residence.

    The trial court entered a finding of not guilty as to the misdemeanor of driving after suspension of a motor vehicle registration, because the state had not met its burden as to the mens rea of “knowingly.” The trial court entered a finding of guilty as to the violation-level offense, because the trial court found that it does not have a mens rea of “knowingly.” The defendant appealed, arguing that there was a mens rea of “knowingly” to prove the offense of which the defendant was found guilty.

    The Supreme Court found that the mens rea for the offense was “knowingly” based on the language and legislative history of the applicable statute, which the Court had previously interpreted in Curran. Although in Curran the Court dealt with the mens rea requirement for misdemeanors under the statute, the decision was instructive for violation offenses as well. Although the Legislature could define offenses without requiring the mens rea, the state failed to demonstrate in this case that the Legislature did not intend to require a mens rea of knowingly for this offense. Accordingly, the Supreme Court reversed.

    Joseph A. Foster, Attorney General (Stephen D. Fuller, senior assistant attorney general, on the brief and orally), for the state. David M. Rothstein, deputy director public defender, of Concord, for the defendant.

    Insurance Law

    Michael Newell v. Markel Corporation et al
    No. 2015-0477
    June 28, 2016
    Affirmed in part, Reversed in part, and Remanded

    • Whether the trial court correctly granted summary judgment to the plaintiff, requiring coverage of his claim for injuries allegedly caused by conduct of a non-employee, because the policy was ambiguous as to the definition of volunteer worker and a reasonable interpretation of the policy included the individual that allegedly caused the plaintiff’s injury

    Plaintiff was injured as the result of a slip and fall on a bathroom floor during Motorcycle Week 2010. The floor had just been cleaned by an individual cleaner, Ivy Banks, who worked on a tips-only basis cleaning this and other facilities at motorcycle events. Plaintiff brought suit against Banks resulting in a default judgment after notice to the insurance company for the property owner, Essex. Essex is a subsidiary of Markel Corporation, and Markel Services is Markel Corporation’s handling branch.

    Plaintiff brought this action (for breach of contract, on behalf of the property owner) against Essex, Markel Corporation and Markel Services, claiming that they owed coverage for the claims against Banks as a volunteer worker of the property owner. The parties filed cross-motions for summary judgment. The trial court granted summary judgment to the plaintiff, ruling that the definition of volunteer worker was ambiguous as applied to Banks in this case, requiring coverage for the claim.

    On appeal, the defendants argued that the policy’s definition of volunteer worker was not ambiguous and that Markel Corporation and Markel Services were entitled to summary judgment because they did not issue the policy in dispute, and the plaintiff did not object to their motion for summary judgment. The Court ruled that Markel Corporation and Markel Services were entitled to summary judgment and reversed that part of the trial court’s ruling and remanded that portion of the Court’s ruling for entry of judgment in their favor.

    The Court then determined that the policy was ambiguous in its definition of a volunteer worker. Specifically, the policy defined a volunteer worker as a person who “isn’t an employee or a leased temporary worker; donates his or her work; and isn’t paid a fee, salary or other compensation for that work.” Under the policy, volunteer workers are insured as to work they perform at the policy owner’s direction and within the scope of their duties.

    Here, Essex argued that Banks was not a volunteer worker because he received tips, so his services were not donated and the services were not specifically directed by the property owner. However, the plaintiff was able to identify cases where similar employment was “donated” for purpose of this provision and cases and statutes in other contexts where tips and gratuities were not considered compensation for the purpose of similar provisions. Although Essex presented a reasonable construction of the policy provision, Newell countered with a competing reasonable construction, identifying an ambiguity that the Court construed in favor of coverage.

    Finally, as to the argument that the work was not specifically directed by the property owner, the Court accepted the construction proposed by the plaintiff, specifically that “at your direction” in the context of unskilled labor does not mean with direct supervision or guidance. Rather, the work had to be authorized and not a “frolic” in order to be at the direction of the policyholder. Accordingly, the Court also construed this provision in favor of coverage and affirmed the grant of summary judgment requiring coverage.

    Matthew J. Lahey, sole practitioner, of Laconia, for the plaintiff. Kevin Truland, of Morrison Mahoney, of Boston, Mass., for the defendant.

    Real Estate Law

    The Bank of New York Mellon, As Trustee v. Eugene Dowgiert
    No. 2015-0485
    June 28, 2016

    • Whether the trial court correctly dismissed the defendant’s plea of title, finding that the plea was time-barred under RSA 479:25 where the plea, filed in April 2015, concerned a foreclosure that took place more than one year and eight months earlier, in September 2013

    The Bank of New York Mellon, as trustee (the bank) filed a possessory action in circuit court to obtain possession of a property belonging to the defendant, Eugene Dowgiert. In response, Dowgiert filed a plea of title in circuit court alleging that the bank did not have authority to foreclose. The court ordered Dowgiert, pursuant to RSA 540:17, to file his plea in superior court by the first Tuesday in October 2014. When that date had passed, the bank moved for judgment and the circuit court granted the motion. More than one month after that, Dowgiert, now acting with counsel, requested that the circuit court vacate the judgment and allow him to file the plea of title in superior court. The circuit court granted the motion, and the defendant filed his plea of title in superior court on April 24, 2015.

    The plea of title alleged that the bank did not have authority to foreclose because the holder of the note ceased to exist prior to the assignment and purported negotiation of the note, among other reasons, and because the mortgagor was incarcerated when the notice of the foreclosure sale was sent to him and therefore could not have filed a petition to enjoin the foreclosure. The bank moved to dismiss the action, arguing that the matter was time barred pursuant to RSA 479:25. The trial court granted the motion.

    On de novo appeal, the Court affirmed the trial court’s dismissal of the action as time-barred. RSA 479:25 II bars any action based on the validity of the foreclosure sale after the foreclosure sale. RSA 479:25 II-a bars any action challenging the foreclosure notice as inadequate when brought more than one year and day after the recording of the foreclosure deed. Here, the action was brought more than one year and eight months after the bank recorded the foreclosure deed, and therefore the trial court correctly ruled that the action was time-barred.

    The Court rejected arguments that because the defendant raised the plea of title as a defense that it was not a claim or action barred by the statute. The Court further rejected the argument that Dowgiert’s plea of title filed in the circuit court tolled the statute because the plea of title was not filed in a court of competent jurisdiction. The court further clarified the statutory framework, which allows for the filing of a possessory action in the superior court, after a plea of title, not a plea of title action in the circuit court, as argued by the defendant.

    Accordingly, where the action was time-barred the Court affirmed the dismissal of the plea of title as time barred under RSA 479:25.

    Christopher J. Fischer, of Haughey, Philpot & Laurent, of Laconia, for the plaintiff. Stephen T. Martin, of Martin & Hipple, of Concord, for the defendant.

    Right to Know Law

    New Hampshire Right to Life et al. v. Director, New Hampshire Charitable Trusts Unit et al.
    No. 2015-0366
    June 2, 2016
    Affirmed in part, reversed in part, vacated in part and remanded

    • Whether documents withheld by the State were properly withheld under the Right to Know Law where the State (i) withheld documents arising out of litigation as work product and (ii) withheld names and identities of certain individuals working at reproductive health centers or entering and exiting such facilities pursuant to the privacy interests of those individuals

    The plaintiffs (New Hampshire Right to Life and Jackie Pelletier) requested production of documents pursuant to RSA 91-A (New Hampshire’s “Right to Know” law) from multiple government entities (Charitable Trusts Unit, the office of the New Hampshire Attorney General, the New Hampshire Board of Pharmacy, and the New Hampshire Department of Health and Human Services). The request related to 1) documents exchanged between Planned Parenthood of Northern New England (PPNNE) and the Board of Pharmacy; 2) documents relating to the “buffer zone” around certain reproductive health centers, specifically including DVD security camera footage form the exterior of one such facility; and 3) financial information concerning reproductive health clinics. The state produced some documents but withheld others pursuant to RSA 91-A:5 and R.S.A. 381:30 (I). The plaintiffs filed a complaint for injunctive relief, attorney’s fees and costs.

    In the trial court, the state produced 1,500 pages of documents and three DVDs for in camera review, including both produced documents and withheld documents with bates-stamp numbers. The state also produced a table of contents identifying the documents by bates-stamp numbers. The trial court reviewed the documents, held a hearing and ordered production of certain documents and upheld some of the state’s decisions to redact or withhold.

    In a detailed opinion, the NH Supreme Court discussed each category of document withheld by the state and discussed whether the withholding was consistent with the Right to Know law. Independent of the instant case, the plaintiffs were involved in litigation concerning the buffer zone surrounding reproductive health facilities in the United States District Court for the District of New Hampshire.

    The Court reversed the trial court on the analysis of which work product case law should apply, applying the federal work product doctrine to the documents withheld, rather than the state work product doctrine. Even so, the Supreme Court affirmed the trial court’s ruling that documents prepared by reproductive health facilities in that matter at the direction of the Attorney General were confidential pursuant to the work product doctrine. Even though the documents were generated by reproductive health facilities (at the request of the attorney general), or documents exchanged between New Hampshire Attorney General and the attorney generals of other states (in similar litigation), the withheld documents concerned mental impressions of attorneys and litigation strategy, and the state was justified in withholding those documents.

    Other documents withheld by the state were withheld out of concern that disclosure of those documents would violate individual privacy interests of individuals. These documents included security camera footage of individuals entering, exiting or passing by a reproductive health facility in Manchester. The Court vacated and remanded the issue of whether the security footage should have been withheld because it was unclear what privacy interest the individuals (or identifying numbers) shown in the video would have. For example, vendors entering and exiting the facility would not have a privacy interest but patients of the facility would have clear privacy interests in their image not being disclosed. The Court affirmed the withholding of individual identifying information in other documents, particularly in light of the history of violence toward reproductive health facility employees and the speculative nature of the interest in learning their identities.

    The Supreme Court also affirmed the trial court’s ruling that the letters from the state identifying the withholding of documents were sufficient and that no Vaughn index is required when the state withholds documents. The Court also affirmed denial of attorneys’ fees and costs for the plaintiff because court below found that the lawsuit was unnecessary to enforce the Right to Know law. The state’s withholding of some documents, although the court entered disclosure, was not sufficient to justify an award of fees or costs because any issues on which the trial court disagreed with state the state did neither knew nor should have known that its conduct violated the statute.

    Michael J. Tierney, of Wadleigh, Starr & Peters, of Manchester, for the plaintiffs. Joseph A. Foster, Attorney General (Megan A. Yaple, attorney, and Lynmarie Cusack, assistant attorney general, on the brief and Yaple orally), for the defendants.

    Workers’ Compensation

    Appeal of Carlos Marti
    No. 2015-0342
    June 28, 2016
    Vacated and Remanded

    • Whether the Workers’ Compensation Appeals Board (CAB) erred when it dismissed the petitioner’s claim for reinstatement with his former employer after an injury, because the employee was terminated for insubordination prior to his request for reinstatement

    The petitioner injured his elbow while at work and informed his employer’s president of the injury. He was given over-the-counter medication and returned to work. He proceeded to complain about the injury and told his employer he intended to go to the emergency room. He was told that he should go to the occupational health clinic pursuant to company policy. The clinic did not open for several hours. His employer told him that if he went to the emergency room, he would be fired for insubordination.

    The employee went to the emergency room anyway and returned to work four days later with a doctor’s note. He was terminated for insubordination and he did not grieve his termination under the applicable collective bargaining agreement. The workers’ compensation carrier accepted the claim and paid the petitioner’s medical bills. The petitioner requested a hearing on his claim for reinstatement and back pay. After a hearing, the petitioner’s claim was denied. He appealed to the CAB, which granted a motion to dismiss.

    On appeal, the Supreme Court reviewed de novo the issue of whether the petitioner was an employee with a limited reinstatement right pursuant to RSA 281-A:25-a or whether he was no longer an employee because he had been legitimately terminated for cause. The petitioner argued for an interpretation of the statute that included all individuals who had been injured in the course of their employment within the definition of “employee.” This definition, however, would be too broad. On the other hand, the term “employee,” as used within this statute, does not apply to only current employees. The Court ruled that the term “employee” does not include a worker who is legitimately terminated for cause.

    The Court vacated the CAB order granting the motion to dismiss and remanded for a determination of whether the petitioner was excluded from the definition of employee in RSA 281-A:25-a. The petitioner argued on appeal that he had been terminated for seeking his own physician, as he was entitled to do under the statute, while the respondent argued that the failure to grieve the termination pursuant to the collective bargaining agreement precluded further challenge of the petitioner’s termination. If the respondent’s argument were correct, then the petitioner would be a worker legitimately terminated for cause and not an employee within the statute. Accordingly, the Court remanded the case for the CAB to determine whether the petitioner was legitimately terminated for cause.

    Jared O’Connor, of Shaheen & Gordon, of Manchester for the petitioner. J. Daniel Marr, of Hamblett & Kerrigan, of Nashua, for the respondent.

    Appeal of Thomas Phillips
    No. 2015-0218
    June 28, 2016
    Vacated and Remanded

    • Whether the CAB erred in finding a request for a one-third contingency fee unreasonable because it included future medical expenses and awarding an amount representing an hourly rate for work in the appeals board appeal, but not including fees and costs for a prior Supreme Court appeal

    Thomas Phillips was injured in an accident in 2006 that rendered him quadriplegic. His initial claim for workers’ compensation was provided to the insurance company almost three years after the injury and was denied based on untimely notice and intoxication at the time of the injury. In a prior appeal, the Supreme Court vacated a CAB order upholding the denial of his claim finding that notice was sufficient and timely and remanding for proceedings concerning the intoxication.

    This appeal followed proceedings in which the CAB ruled in favor of the petitioner and awarded him ongoing weekly total disability benefits and medical benefits. The petitioner then requested payment of attorney’s fees of one-third of his total recovery pursuant to the contingency fee agreement with his counsel. The award would total more than $4 million dollars inclusive of expenses by the petitioner’s calculations. State Farm objected to the award and argued that the CAB should only award fees for reasonable time expended, at a reasonable hourly rate, and only for proceedings before the CAB.

    After a hearing, the CAB awarded an amount equal to the hourly rate the petitioner would have been charged on an hourly basis, not including the expenses incurred in the prior appeal. On appeal, the Court ruled that the CAB erred when it ruled that the contingent fee was unreasonable because it included future medical expenses. A blanket rule that future medical benefits are always speculative, the Court explained, is contrary to established case law. Accordingly, the Court vacated the CAB’s ruling and remanded for further proceedings.

    The overall standard for the fee award is a standard of reasonableness and is not governed by the agreement between the parties. The Court explained that the CAB, if it decided to award a contingent fee on remand, could adjust that fee award based on the factors in Doucet. The Court further reversed the CAB on the issue of whether the petitioner was entitled to fees for the prior appeal.

    The CAB erred when it determined that the petitioner did not prevail in the prior appeal where the outcome was a remand to the CAB.

    The Supreme Court explained that obtaining a new hearing at the CAB that ultimately resulted in an award was a dispute over the amount payable, and the award was greater than the award subject to the appeal. Accordingly, the CAB should have awarded fees for the prior appeal. The Court remanded the issue to the CAB for a determination of the amount of the attorney’s fee in the first instance.

    Michael R. Mortimer, of Wadleigh, Starr & Peters, of Manchester for petitioner. Andrew A. Merrill, of Manchester, for respondent.

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