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Bedford School District v. State

Supreme Court of New Hampshire, Cheshire

August 17, 2018


          Argued: April 17, 2018

          Wadleigh, Starr & Peters, P.L.L.C., of Manchester (Michael J. Tierney on the brief and orally), for the plaintiffs.

          Gordon J. MacDonald, attorney general (Anne M. Edwards, associate attorney general, on the brief and orally), for the defendants.

          BASSETT, J.

         The State together with the other defendants (the New Hampshire Department of Education; Margaret Wood Hassan, individually; Christopher T. Sununu, as Governor; Virginia M. Barry, individually; and Frank Edelblut, as Commissioner of the New Hampshire Department of Education) (collectively, the "defendants") appeal an order of the Superior Court (Ruoff, J.) granting the plaintiffs, Bedford School District and William Foote (collectively, "Bedford"), attorney's fees in a case that Bedford had filed to recover adequate education funding that the State withheld in fiscal year 2016 because of a statutory limit on state funding imposed under RSA 198:41, III(b) (Supp. 2015) (repealed 2015, repeal effective July 1, 2017). On appeal, the State argues that because the trial court specifically declined to find that the State had acted in bad faith in this litigation, the trial court unsustainably exercised its discretion in awarding attorney's fees. The State also argues that Bedford waived its right to attorney's fees when it accepted education funds appropriated by a bill that contained a waiver provision. We reverse.

         RSA 198:40-a (Supp. 2017) sets forth the formula that the New Hampshire Department of Education uses to determine "the cost of an adequate education for each municipality based on the . . . pupils who reside in that municipality." RSA 198:40-a, III. Before it was repealed, RSA 198:41, III(b) limited the total education grant a municipality could receive to a percentage of the previous year's grant. See RSA 198:41, III(b).

         In 2015, the City of Dover brought a case against the State challenging the constitutionality of the limit that RSA 198:41, III(b) imposed on adequate education funding. See Dover v. State, Strafford County Superior Court, No. 219-2015-CR-00312 (Tucker, J.). In the Dover case, the parties reached an agreement (the "Dover Stipulation") in August 2015, which stated:

In the event that the City is successful in obtaining a preliminary or permanent injunction against the cap required by R.S.A. 198:41 III(b) . . . the State will make a supplemental payment equal to the sum total of all funds withheld in any education adequacy payments made on or after September 1, 2015, because of the application of the cap, within ten (10) business days [of the time the order becomes a final judgment].
Further, in the interests of judicial economy and based on the fact that this is a constitutional challenge to a systematic statewide payment, the State agrees that it will be bound by any rulings issued in this matter regarding the constitutionality of the cap contained in R.S.A. 198:41, III(b) as it applies to all other school districts in the state and that other school districts shall not be required to intervene or join this action, or file separate actions to benefit from any injunctive or declaratory order issued herein.

         In June 2016, while the Dover case was still pending, Bedford sought to "enjoin[] the application of the adequacy funding cap imposed by RSA 198:41, III(b)." The trial court denied the motion, reasoning that the plaintiffs had "failed to sustain their burden of demonstrating irreparable harm" because "any short fall [Bedford] experienced in FY 2016 will likely be remedied by the ruling on the similar issue presented in Dover v. State." In September 2016, the trial court in Dover granted a permanent injunction, ruling "that the percentage cap is unconstitutional when it operates to reduce the full amount of the statutory grant." The State did not appeal that decision. Nor, notably, did the State distribute the funds withheld from Bedford within ten business days after the order became a final judgment.

         In November 2016, Bedford moved for summary judgment, seeking a court order that the State pay Bedford $4, 287, 533 - the amount that had been withheld in fiscal year 2016 due to the cap. Bedford also requested "reasonable attorneys' fees for needing to bring this action and motion." In its objection, filed in January 2017, the State asserted that the Dover Stipulation did not, in fact, require the State to pay the withheld funds to Bedford within 10 days of the time the Dover order became a final judgment. The State also argued that it should not be required to pay Bedford's attorney's fees.

         In January 2017, House Bill (HB) 354-A was introduced in the legislature to appropriate "additional adequate education grants to certain municipalities as calculated in RSA 198:40-a and 198:41." The requested appropriation included the amount withheld from Bedford. As of early April 2017, the bill had not passed. Nonetheless, on April 6, the trial court "order[ed] the State to pay Bedford School District the withheld funds for FY 2016 within 30 days of April 1, 2017." The court also ordered the State to pay Bedford's attorney's fees, citing Harkeem v. Adams, 117 N.H. 687, 691 (1977), for the proposition that an exception to the general rule that parties are responsible for their own attorney's fees is warranted "[w]here an individual is forced to seek judicial assistance to secure a clearly defined and established right, which should have been freely enjoyed without such intervention." (Quotation omitted.) Although the trial court observed that it "stop[ped] short of finding bad faith," it ruled that:

an award of attorney's fees in this matter is appropriate because the State has always promised to pay, yet never has. . . . This lawsuit was necessary to enforce compliance with the statute and to compel the State to comply with promises and representations it made to both the Court . . . and Plaintiffs . . . .

         The court gave Bedford thirty days "to file an affidavit outlining its request for reasonable ...

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