San-Ken Homes, Inc. v. New Hampshire Attorney General

          Argued: January 25, 2018

         Hillsborough-southern judicial district

          Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester (Michael A. Klass on the brief, and Gregory E. Michael orally), for the plaintiff.

          Gordon J. MacDonald, attorney general (John W. Garrigan, assistant attorney general, on the brief and orally), for the defendant.

          HANTZ MARCONI, J.

         The plaintiff, San-Ken Homes, Inc. (San-Ken), appeals a decision of the Superior Court (Ignatius, J.) requiring it to apply for registration or exemption with the defendant, New Hampshire Attorney General, Consumer Protection and Antitrust Bureau (Bureau), under the Land Sales Full Disclosure Act (Act), and to make certain improvements to Old Beaver Road in the Oakwood Common subdivision in New Ipswich. See RSA ch. 356-A (2009 & Supp. 2017). We reverse.

         For context, we provide a brief overview of the provisions of the Act. The purpose of the Act is to "prevent fraud in the sale of house lots in the State." N.H.S. Jour. 373 (1970). In furtherance of that purpose, a subdivider of subdivided land of more than 15 lots may not offer or dispose of any lot before the subdivided lands are registered with the Bureau. See RSA 356-A:3, I(a), :4, I (2009). A "subdivider" is "a person who is an owner of subdivided land or one who offers it for disposition. Any successor of [a subdivider] who comes to stand in the same relation to the subdivided lands as his predecessor did shall also come within this definition . . . ." RSA 356-A:1, V (2009).

         A subdivider must register subdivided land by submitting an application to the Bureau. See RSA 356-A:5 (Supp. 2017). Upon receipt of an application for registration, the attorney general must initiate an examination to determine whether, inter alia, "there is reasonable assurance that all proposed improvements will be completed as represented," including "evidence of adequate funds to complete any infrastructure, such as roads." RSA 356-A:7, I(b) (Supp. 2017). The attorney general must also determine whether the "general promotional plan is not false or misleading . . . and affords full and fair disclosure." RSA 356-A:7, I(c) (2009).

         The Act allows for exemptions from registration under certain circumstances. The Act "shall not apply" to an offer or disposition of subdivided land of not more than 15 lots. RSA 356-A:3, I(a). In addition, a subdivider of subdivided land of no more than 50 lots may apply for an exemption from the registration and annual reporting requirements. RSA 356-A:3, I-a(a) (Supp. 2017). Such a subdivider "shall be entitled to an exemption" if certain conditions are met. RSA 356-A:3, I-a(b) (Supp. 2017). Further, the attorney general may exempt from any of the provisions of the Act any lots in a subdivision "if it finds that the enforcement of all of the provisions of [the Act] with respect to such . . . lots . . . is not necessary in the public interest and for the protection of purchasers" because of the "small amount involved or the limited character of the offering, or because such property, in the discretion of the attorney general, is otherwise adequately regulated" by town ordinances or state or federal statutes. RSA 356-A:3, II (2009).

         "If, subsequent to the issuance of an exemption from registration . . . the bureau has reasonable grounds to believe that exemption in the particular case is not in the public interest, the bureau shall . . . revoke the exemption." N.H. Admin. R., Jus 1305.03(a). Grounds for revocation shall include the insolvency of the subdivider. N.H. Admin. R., Jus 1304.03(b)(3).

         The attorney general may bring an action in superior court "[i]f it appears that a person has engaged in or is about to engage in an act or practice constituting a violation of" the Act. RSA 356-A:10, III (2009). The attorney general may issue a cease and desist order, RSA 356-A:12, I (2009), or revoke a registration, RSA 356-A:13, I (2009).

         In addition, any time the attorney general has "reasonable cause" to believe that the subdivider may be unable to complete the development, it may require the subdivider to "provide evidence of financial security" to assure the completion of the development, and any person aggrieved by the subdivider's failure to complete the development "may proceed on such bond . . . to recover damages." RSA 356-A:5, VI (Supp. 2009). Furthermore, "[a]ny subdivider who disposes of any lot . . . in subdivided lands in violation of [the Act] or who in disposing of any lot . . . makes an untrue statement of a material fact, . . . or omits a material fact . . ., is liable to the purchaser of such lot," RSA 356-A:16, I (2009), and "[a]ny purchaser, who is eligible for relief" may bring an action for injunction and other specified damages, see RSA 356-A:16, II (2009). The attorney general may intervene in any suit alleging a violation of the Act. RSA 356-A:10, IV.

         II

         The record supports the following facts. Oakwood Common is a 16-lot subdivision originally developed by 112 Chestnut Street, LLC (112 Chestnut). In June 2006, the New Ipswich Planning Board (Board) approved the subdivision, conditioned on 112 Chestnut paving to Town standards Old Beaver Road - the ...