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Hayes v. Connolly

Supreme Court of New Hampshire

March 29, 2019


          Argued: November 27, 2018


          Cleveland, Waters and Bass, P.A., of Concord (David W. Rayment and Mark S. Derby on the brief, and Mr. Rayment orally), for the petitioner.

          Gallagher, Callahan & Gartrell, P.C., of Concord (Samantha D. Elliott and Robert J. Dietel on the brief, and Ms. Elliott orally), for the respondent.

          BASSETT, J.

         The petitioner, Edward F. Hayes, Jr., as trustee of the Survivor's Trust A, certified under the Hayes Family Trust dated January 20, 2000 (Hayes Trust), appeals the order of the Superior Court (Kissinger, J.), in an action to partition real property. The property at issue is owned in equal shares by the respondent, James J. Connolly, co-trustee of the Ann D. Connolly Living Trust (Connolly Trust), and the Hayes Trust. The Hayes Trust argues that the trial court erred by specifically enforcing the terms of a contract the parties had abandoned. It further asserts that the trial court erred in ordering a private sale based on appraisals because the Hayes family needed to maximize the liquidation value of the property. Therefore, it argues that the only "reasonable and fair remedy . . . was [a] private auction." The Hayes Trust further contends that the court erred in impermissibly penalizing it for seeking partition, and by excluding certain testimony regarding a witness's interest in purchasing the property. We affirm.

         The property, a seasonal residence on Lake Sunapee, has been owned by the parties' families since 1953. In 1992, owners from the two families entered into an agreement addressing how the liabilities and expenses of the property would be shared, and what would occur "[u]pon the dissolution, or the death of either of the [owners]." The Hayes family conveyed its one-half interest in the property to the Hayes Trust in 2000 and the Connolly family conveyed its one-half interest to the Connolly Trust in 2004.

         In 2015, Edward Hayes, the successor trustee of the Hayes Trust, sought to liquidate the trust's interest in the property because the trust beneficiaries no longer had the financial ability to maintain the property. The Hayes family asked Edward's son, Michael Hayes, to represent the family's interest in negotiations with the Connolly family, which appointed James Connolly as their representative. Michael stated that the Hayes Trust did not wish to continue "joint ownership or usage," and that he, acting as an individual, wished to purchase the entire property. The Connolly family did not wish to sell their interest, preferring that the property continue to be shared in accordance with the status quo. After negotiations reached an impasse, the Hayes Trust petitioned the court to partition the property, asking that the court "(1) Order the sale of the Property either to Mike personally at a market value to be determined by a third party appraiser to be appointed by the Court; or (2) . . . order the Property to be placed on the market and sold at the highest and best price obtainable . . . ."

         During the course of litigation, the Connolly Trust argued that the agreement from 1992 is an enforceable contract that gives it "an express right to purchase the Property and an equitable procedure to determine the purchase price." The 1992 Agreement provides that:

Upon the dissolution, or the death of either of the [owners], the other or the surviving [owner] shall have the right to purchase the interest of the deceased [owner] at a price agreed upon by the [owners] . . . provided the decedent's lawful heirs . . . do not desire to continue the decedent's ownership of the subject property. This Agreement shall be binding on the decedent's heirs under the aforementioned provisions. If the [owners] cannot agree on the purchase price, then the [owners] shall each select one appraiser or the legal representative of the deceased [owner] shall select one appraiser, and these two shall agree, if possible, in good conscience, on the value of the interest of the dissolving and/or the deceased [owner], and such agreed value shall be binding and conclusive on all parties hereto or claiming hereunder. But if these two are unable to agree, they shall select a third appraiser and then the decision of any two of the appraisers shall be binding and conclusive on all Parties hereto or claiming hereunder.

         The court observed that "no member of either the Connolly or Hayes families raised the 1992 Agreement until well after the initiation of this case" and concluded that, because the original signatories demonstrated a mutual lack of a commitment to be bound by its terms, the 1992 Agreement was not an enforceable contract.

         Following a bench trial and a view, the trial court concluded that the property was not suited for physical partition. Then, "taking into account both families' strong emotional ties to the Property and The Hayes Family Trust's need to liquidate its assets," the trial court awarded the Hayes Trust's interest in the property to the Connolly Trust in exchange for half of the property's fair market value. The trial court ordered that fair market value be determined following "a process similar with that set out in the 1992 Agreement." The court reasoned that "[a]lthough the 1992 Agreement does not constitute an enforceable contract, it still suggests that at one time the Hayes and Connolly families believed its process for ascertaining the value of the Property was fair and equitable." Accordingly, the trial court ruled that the property be partitioned and held that, if the parties could not agree on a price, each would select an appraiser to determine the fair market value. If the two appraisers disagreed, a third appraiser would be selected by the two appraisers, and agreement between any two of the three appraisers would establish the fair market value. This appeal followed.

         Partition actions are governed by RSA chapter 547-C, which vests the trial court with broad power to determine the rights of those with an interest in real property. See RSA 547-C:30 (Supp. 2018). Partition proceedings are "remedial in nature" and provisions of RSA chapter 547-C "are to be liberally construed in favor of the exercise of broad equitable jurisdiction." Id. "In entering its decree [on a petition to partition] the court may, in its discretion, award or assign the property or its proceeds on sale as a whole or in such portions as may be fair and equitable." RSA 547-C:29 (2007). The statute sets forth a list of factors the court "may consider" including the parties' actions relative to the property, "any contractual agreements entered into between the parties in relation to sale or other disposition of the property," and "any other factors the court deems relevant." Id.

         "An action for partition calls upon the court to exercise its equity powers and consider the special circumstances of the case, in order to achieve complete justice." DeLucca v. DeLucca,152 N.H. 100, 102 (2005). "The court has broad and flexible equitable powers which allow it to shape and adjust the precise relief to the requirements of the particular situation." Brooks v. Allen, 168 N.H. 707, 711 (2016) (quotation omitted). "A court of equity will order to be done that which in fairness and good conscience ought to be or should have been done. It is the practice of courts of equity . . . to administer all relief which the nature of the case and facts demand." Id. (quotation omitted). "[T]he jurisdiction of ...

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