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Blanchard Pointe Condominium Owners Association v. Bowers Landing of Merrimack Development Group, LLC

Superior Court of New Hampshire

March 11, 2011

Blanchard Pointe Condominium Owners Association
v.
Bowers Landing of Merrimack Development Group, LLC a/k/a BLOM Developing Group, LLC, and VMY Vitols Architects, Inc.

ORDER

Richard B. McNamara Presiding Justice.

This is a subrogation action brought by Philadelphia Indemnity Insurance Company ("Philadelphia") on behalf of its insured, Blanchard Pointe Condominium Owners Association ("Blanchard Pointe"), to recover approximately $160, 000 it paid to condominium unit owners under its policy for exterior and interior water damage allegedly caused by ice dams on unit roofs. Bowers Landing of Merrimack Development Group, LLC a/k/a BLOM Developing Group, LLC ("BLOM"). BLOM served as the developer of the Blanchard Pointe complex and general contractor for the damaged units. Eckman Construction built the damaged units, and VMY Vitols Architects, Inc. designed them. BLOM now moves for summary judgment. Blanchard Pointe objects. For the reasons explained below, BLOM's motion for summary judgment is GRANTED in part and DENIED in part.

I.

To prevail on a motion for summary judgment, the moving party must "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." RSA 491:8-a, III (2005). A fact is "material" if it affects the outcome of the litigation under the applicable substantive law. Palmer v. Nan King Rest., Inc., 147 N.H. 681, 683 (2002). In considering a party's motion for summary judgment, the Court examines the evidence submitted and makes all necessary inferences from the evidence in the light most favorable to the non-moving party. Sintros v. Hamon, 148 N.H. 478, 480 (2002). When a motion for summary judgment is properly made and supported, "the adverse party may not rest upon mere allegations or denials of his pleadings, but his response, by affidavits or by reference to depositions, answers to interrogatories, or admissions, must set forth specific facts showing that there is a genuine issue for trial." RSA 491:8-a, IV. "To the extent that the non-moving party either ignores or does not dispute facts set forth in the moving party's affidavits, they are deemed to be admitted for purposes of this motion." N.H. Div. of Human Servs. v. Allard, 141 N.H. 672, 674 (1997).

II.

BLOM argues that Blanchard Pointe lacks standing to maintain this action. In making this argument, BLOM cites RSA 356-B:41 and Section 4.1(C) of Blanchard Pointe's By-Laws. Section 4.1(C) of Blanchard Pointe's By-Laws states in relevant part: "[T]he Board of Directors shall not institute litigation or arbitration proceedings . . . unless first approved by a majority of the Beneficial Interests of Unit Owners at an Annual or Special Meeting at which a quorum has been established." (PL's Opposition to Def. BLOM's Mot. for Summ. J., Ex. N.) BLOM asserts that Blanchard Pointe's Amended Complaint "makes no allegation that a 'majority of the Beneficial Interests of Unit Owners' has approved suit against BLOM for the property damage in issue, " (Def. BLOM's Mot. for Summ. J., at 4.), and therefore Blanchard Pointe lacks standing. The Court disagrees.

Under New Hampshire law, "[t]he doctrine of subrogation presupposes the payment of a debt by a party secondarily liable therefore, who thereby acquires an equitable right to be reimbursed by the principal debtor and for the purpose of making this right effective is invested with all the rights which the creditor had against him (the principal debtor)." McCullough v. John B. Varick Co., 90 N.H. 409, 411 (1939) superseded on other grounds by Gagne v. Garrison Hill Greenhouses, 99 N.H. 292, 293 (1954). "While an insured's consent to the insurer's assertion of the insured's rights against a third person may be shown by an express assignment, subrogation is not in any way dependent upon the insured's consent and exists without the consent of the insured." Couch ON Insurance § 222:13 (2000). Accordingly, Blanchard Pointe has standing to bring this subrogation action on behalf of Philadelphia.

III.

BLOM also argues that it is entitled to summary judgment on Blanchard Pointe's RSA chapter 358-A Consumer Protection Act ("CPA") claim.

Under RSA chapter 358-A, it is "unlawful for any person to use any unfair method of competition or any unfair or deceptive act or practice in the conduct of any trade or commerce" within New Hampshire. RSA 358-A:2. In determining whether an act or practice under RSA 358-A:2 is unfair or deceptive, the Court considers the following three factors: (1) "whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—whether, in other words, it is within at least the penumbra of some common-law statutory or other established concept of unfairness"; (2) "whether it is immoral, unethical, oppressive, or unscrupulous"; (3) "whether it causes substantial injury to consumers." Milford Lumber Co. v. RCB Realty, 147 N.H. 15, 19 (2001) (quoting FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244-45 n. 5 (1972)).

If the act or practice is unfair or deceptive, the Court ascertains whether the act or practice falls within one of the specifically delineated categories of proscribed commercial conduct. See RSA 385-A:2; State v. Moran, 151 N.H. 450, 452 (2004). Here the claim that the Defendants misrepresented the condition of a condominium complex does not fall within the precise terms of the act because a condominium is generally not considered a "good" or service. See, e.g. RSA 382-A 2-105(1). Therefore the Court applies the so called "rascality" test. See Moran, 151 N.H. at 452 ("Because of the difficulty often associated with determining which commercial actions, not specifically delineated, are covered by the act, we employ[] the rascality test."). Under the rascality test, the "objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce." Id. (internal quotations omitted). In the present case, where the conduct alleged does not include one of the specific types of conduct listed in the CPA, the New Hampshire Supreme Court has applied the so-called "rascality test, " which was first articulated by Massachusetts courts. See Barrows v. Boles, 141 N.H. 382, 390 (1996). For conduct not specifically enumerated in the statute to violate the CPA, "the offending conduct must obtain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce." Milford Lumber Co. v. RCB Realty. 147 N.H. 15, 17 (2001) (quoting Barrows, 141 N.H. at 390). Moreover, an ordinary breach of contract does not present the occasion for remedies under the CPA. Barrows, 141 N.H. at 390.

In an unbroken line of cases since Barrows, the New Hampshire Supreme Court has continued to follow the rascality test, even though the Massachusetts Supreme Judicial Court, which had created the test, noted that it found phrases such as "level of rascality" to be uninstructive. Mass Employer's Ass'n v. Propac-Mass, Inc., 648 N.E.2d 435, 438 (Mass. 1995). Mass decision "the law in Massachusetts is not clearly settled. The rascality test in New Hampshire has been fleshed out by precedent.

In New Hampshire, the rascality test requires a degree of knowledge or intent. See Kelton v. Hollis Ranch. LLC. 155 N.H. 666, 668 (2007). For example, in Kelton. where the defendant sold a horse as a gelding and had no reason to know that the horse had an undescended testicle, the Court held that no CPA violation existed. 155 N.H. at 668-69.

While BLOM's argument on this point is styled as a motion for summary judgment, it is substantively a motion to dismiss because it seeks judgment based solely on the pleadings. See Jenks v. Menard, 145 N.H. 236, 239 (2000). In ruling on a motion to dismiss, the Court must determine whether the plaintiffs allegations are "reasonably susceptible of a construction that would permit recovery." Bohan v. Ritzo. 141 N.H. 210, 212 (1996). This determination requires the court to test the facts contained in the complaint against the applicable law. Jay Edwards, Inc. v. Baker. 130 N.H. 41, 44 (1987). In rendering such a determination, the Court assumes the truth of all well-pleaded facts alleged by the plaintiff and construes all inferences in the light most favorable to the plaintiff. Bohan, 141 N.H. ...


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