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Appeal of Town of Salem v. Local Government Center, Inc.

Supreme Court of New Hampshire

February 18, 2016

APPEAL OF TOWN OF SALEM & a. New Hampshire Bureau of Securities Regulation
v.
LOCAL GOVERNMENT CENTER, INC. & a.

Argued: September 10, 2015.

Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester, filed no brief, for petitioner New Hampshire Bureau of Securities Regulation.

McLane, Graf, Raulerson & Middleton, P.A., of Manchester, filed no brief, for respondents Local Government Center Property-Liability Trust, LLC and New Hampshire Municipal Association Property-Liability Trust, Inc.

Ramsdell Law Firm, PLLC, of Concord (Michael D. Ramsdell on the brief and orally), for respondents Health Trust, Inc.; Local Government Center Health Trust, LLC; and LGC-HT, LLC.

Douglas, Leonard & Garvey, P.C., of Concord (Richard J. Lehmann on the brief and orally), for the Towns of Salem, Temple, Auburn, Bennington, Meredith, Northfield, Peterborough, and Plainfield.

City Solicitor's Office, of Concord (James W. Kennedy, city solicitor, and Danielle L. Pacik, deputy city solicitor, on the brief), for plaintiff City of Concord.

Ramsdell Law Firm, PLLC, of Concord (Michael D. Ramsdell on the brief and orally), for the defendants.

HICKS, J.

In the first of these consolidated appeals, the Towns of Salem, Temple, Auburn, Bennington, Meredith, Northfield, Peterborough, and Plainfield (the Towns) appeal an order of the presiding officer of the New Hampshire Bureau of Securities Regulation (Bureau) denying their motion to share in the distribution of approximately $17.1 million in excess earnings and surplus by one of the respondents, Health Trust, Inc. (Health Trust), in an administrative action brought by the Bureau against: Health Trust; Local Government Center, Inc.; Local Government Center Real Estate, Inc.; Local Government Center Health Trust, LLC; Local Government Center Property-Liability Trust, LLC; New Hampshire Municipal Association Property-Liability Trust, Inc. (Property Liability Trust); LGC-HT, LLC; and Local Government Center Workers' Compensation Trust, LLC (collectively, the administrative respondents). See RSA 5-B:5, I(c) (2013).

In the second appeal, the Towns and the City of Concord (collectively, the plaintiffs) appeal an order of the Superior Court (McNamara, J.) granting the motion to dismiss filed by, among others, [*] defendants Local Government Center, Inc.; New Hampshire Municipal Association Property-Liability Trust, Inc.; New Hampshire Municipal Association, LLC; Health Trust, Inc.; LGC-HT, LLC; LGC-PLT, LLC; Local Government Center Healthtrust, Inc.; Local Government Center Property-Liability Trust, LLC; and Local Government Center Real Estate, Inc. (collectively, the civil action defendants). We consolidated these related civil and administrative cases on appeal. For ease of reference, we will, where applicable, collectively refer to the administrative respondents and the civil action defendants as LGC. We affirm in part, vacate in part, and remand.

The following facts were found by the trial court or the presiding officer, were recited by us in the related case of Appeal of Local Government Center, 165 N.H. 790 (2014), or appear in the record before us. The first appeal, challenging the administrative order, involves subsequent proceedings in the matter before us in Appeal of Local Government Center. The identities of, and the relationships between and among, the respondents in that appeal, as well as the factual and procedural background of the administrative action against them, are described in Appeal of Local Government Center and repeated here only as necessary. Generally, those respondents are or have been involved in the operation of pooled risk management programs pursuant to RSA chapter 5-B. See Appeal of Local Gov't Ctr., 165 N.H. at 794-96; RSA ch. 5-B (2013 & Supp. 2015). The superior court action from which the second appeal arises named three additional defendants - New Hampshire Municipal Association, LLC; LGC-PLT, LLC; and Local Government Center Healthtrust, Inc. - alleging that they, along with the other defendants, "are companies and corporations offering products and services governed by RSA 5-B." The plaintiffs are municipalities that were members of pooled risk management programs run by several of the defendants.

In 2011, the secretary of state commenced an adjudicative proceeding prompted by a staff petition filed by the Bureau alleging that the administrative respondents had violated RSA chapters 5-B and 421-B. See Appeal of Local Gov't Ctr., 165 N.H. at 797. The presiding officer issued an order on August 16, 2012 (the August 16 Order) ruling that the administrative respondents had violated several provisions of RSA chapter 5-B, including RSA 5-B:5, I(c), which provides, in pertinent part:

I. Each pooled risk management program . ...

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