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Grand Summit Hotel Condominium Unit Owners' Association v. L.B.O. Holding, Inc.

Supreme Court of New Hampshire

September 18, 2018

GRAND SUMMIT HOTEL CONDOMINIUM UNIT OWNERS' ASSOCIATION
v.
L.B.O. HOLDING, INC. d/b/a ATTITASH MOUNTAIN RESORT

          Argued: June 27, 2018

          Ramsdell Law Firm, P.L.L.C., of Concord (Michael D. Ramsdell on the brief and orally), for the plaintiff.

          Devine, Millimet & Branch, Professional Association, of Manchester (Thomas Quarles, Jr. and Brendan P. Mitchell on the brief, and Mr. Mitchell orally), for the defendant.

          BASSETT, J.

         The plaintiff, the Grand Summit Hotel Condominium Unit Owners' Association (Association), filed claims against the defendant, L.B.O. Holding, Inc. d/b/a Attitash Mountain Resort (Attitash), arising from Attitash's alleged failure to maintain a cooling tower at the Grand Summit Hotel and Conference Center (Condominium) in Bartlett. Attitash moved to dismiss the Association's claims, arguing that they were barred by a provision, which required arbitration of certain disputes, in a management agreement (the Agreement) between the parties. The Trial Court (Ignatius, J.) denied Attitash's motion to dismiss, ruling that the Association's claims fall outside of the scope of the provision. The trial court subsequently approved this interlocutory appeal. See Sup. Ct. R. 8. We affirm and remand.

         The following facts are drawn from the interlocutory appeal statement. The Association is comprised of the residential and commercial owners of the Condominium. It is responsible for managing, or arranging for the management of, the Condominium. To fulfill that obligation, the Association hired Attitash to manage the property under the terms of the Agreement. Under the Agreement, the Association agreed to pay the "Actual Costs" of operating the Condominium, which the Agreement defines, in part, as "the total cost to [the] Manager of operating the Condominium" including "all costs, charges, and expenses of every kind and description fairly attributable to the operation, management or maintenance of the Association." As manager of the Condominium, Attitash has assumed the responsibility to arrange and supervise all repairs, replacements, and maintenance, and to "[n]egotiate and enter into on behalf of the Association such service and maintenance contracts as may be required . . . including . . . contracts for . . . equipment maintenance."

         Between 2011 and the spring of 2013, Attitash retained a commercial heating and cooling contractor to provide maintenance of the Condominium's heating and cooling system, including winterizing the cooling tower each fall. However, Attitash failed to enter into a contract with that contractor - or with any other contractor - to provide winterizing services in the fall of 2013, and the cooling tower was not properly winterized for the winter of 2013-2014. In the spring of 2014, the contractor inspecting the cooling system discovered that it had been damaged during the winter and was unfit for use.

         Shortly thereafter, Attitash informed the Association of the damage and represented that, although it had entered into a maintenance contract for the cooling tower that covered the fall of 2013, the contractor had failed to winterize the cooling tower. Attitash subsequently represented to the Association that the cooling tower had failed because it had reached the end of its useful life. During the summer of 2014, Attitash rented a temporary cooling tower. In anticipation of the summer of 2015, it arranged to have the damaged cooling tower repaired. Attitash incurred more than $200, 000 in costs, which the Association paid.

         In 2016, the Association filed this action asserting claims against Attitash for breach of contract, breach of the covenant of good faith and fair dealing, negligence, and violation of the Consumer Protection Act. Attitash moved to dismiss, arguing that the suit was barred because the Agreement contains a provision that requires arbitration for disputes over "Actual Costs." The disputes provision states:

The [Association] shall have thirty (30) days from the rendition of a statement by [Attitash] for both the Management Fee or of the Actual Cost within which to protest the nature, amount or method by which such amount was determined. If the matter cannot be resolved by the parties within thirty (30) days thereafter, it shall be rendered to an independent public accountant for a decision, which decision shall be binding on both parties.

         The trial court denied Attitash's motion, concluding that the provision does not "require[] mandatory arbitration for all matters leading to the actual costs that were incurred in this case." The trial court further ruled that review by an accountant "would not be appropriate for disputes involving contract negotiation, representations made by the contracting parties, disputes over the effective date of a contract, compliance with the terms of a contract, inadequate work performed by [Attitash], and other assertions made by [the Association]." This interlocutory appeal followed.

         Our standard of review on a motion to dismiss is "whether the allegations in the plaintiff's pleadings are reasonably susceptible of a construction that would permit recovery." Lamprey v. Britton Constr., 163 N.H. 252, 256 (2012). We "assume the plaintiff's allegations to be true and construe all reasonable inferences in the light most favorable to [the plaintiff]." Id. Our threshold inquiry involves testing the facts alleged in the pleadings against the applicable law. Id. Dismissal is appropriate "[i]f the facts pled do not constitute a basis for legal relief." Beane v. Dana S. Beane & Co., 160 N.H. 708, 711 (2010) (quotation omitted). In making our determination, we may also consider documents attached to the plaintiff's pleadings, or "documents the authenticity of which are not disputed by the parties, official public records, or documents sufficiently referred to in the [complaint]." Ojo v. Lorenzo, 164 N.H. 717, 721 (2013) (quotation and brackets omitted).

         As a threshold matter, Attitash argues that this dispute should be governed by the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16 (2012). The Association disagrees, arguing that this dispute is governed by RSA 542:1 (2007), in part, because the Agreement "expressly provides that it is governed by New Hampshire law." We note that, in pleadings filed in advance of the hearing on the motion to dismiss, Attitash did not argue that the trial court should apply federal law. To the contrary, Attitash relied exclusively on state law. The trial court, when ruling on the motion to dismiss, did not rely on federal law. Only when Attitash requested that the trial court transfer an interlocutory appeal did it argue - for the first time - that the FAA controls.

         We assume, without deciding, that this choice of law issue is properly before us. However, we need not decide whether federal or state law controls because, in regard to the issues on appeal, federal and state law are the same. Indeed, in its brief, Attitash acknowledges that the "New Hampshire [a]rbitration [s]tatute [m]irrors the FAA and [r]equires the [s]ame [r]esult." (Bolding omitted.) Under both federal and state law, a presumption of arbitrability applies to arbitration clauses. See John A. Cookson Co. v. N.H. Ball Bearings, 147 N.H. 352, 355 (2001); Granite Rock Co. v. Teamsters, 561 U.S. 287, 301-02 (2010). That presumption is, however, rebuttable. See N.H. Ball Bearings, 147 N.H. at 355-56; Granite Rock, 561 U.S. at 301. Further, under both federal and state law, the presumption of arbitrability "does not relieve a court of the responsibility of applying traditional principles of contract interpretation in an effort to ascertain the intention of the contracting parties." Appeal of Town of Bedford, 142 N.H. 637, 640 (1998) (quotation omitted); see also Granite Rock, 561 U.S. at 301-02 (observing that the Court has never held that the presumption in favor of arbitration "overrides the principle that a court may ...


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