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Toy v. City of Rochester

Supreme Court of New Hampshire, Strafford

July 30, 2019


          Argued: March 28, 2019

          Donald F. Whittum Law Office PLLC, of Rochester (Donald F. Whittum on the memorandum of law), and Carl W. Potvin, of Rochester, orally, for the plaintiffs.

          Andrea K. Mitrushi, deputy city attorney, of Rochester, by brief and orally, for the defendants.

          BASSETT, J.

         The defendants, the City of Rochester (City) and Michael G. and Stacey A. Philbrook, appeal orders of the Superior Court (Howard, J.): (1) requiring the City to reacquire title to a parcel of land it previously conveyed to the Philbrooks and transfer title to the plaintiffs, Donald and Bonnie Toy; and (2) awarding attorney's fees to the Toys. We affirm in part, reverse in part, vacate in part, and remand.

         The material facts are largely undisputed. The following facts were found by the trial court or are supported by the record. In May 2015, the City took title to a 1.8-acre parcel of land located in Rochester (Lot 54), which contains a house and garage in poor condition. The Philbrooks own a lot that shares a boundary with Lot 54. The Toys own a manufactured housing park known as "Addison Estates" and an additional, smaller lot, which are located nearby. On August 15, 2015, the Toys purchased an additional lot, which shares boundaries with Addison Estates and Lot 54. Lot 54 is located in a zoning district in which the development or expansion of manufactured housing parks is prohibited.

         In August 2015, the Rochester City Council voted to sell Lot 54 through an advertised sealed bid process. Shortly thereafter, the City posted a bid package, which included a Notice of Sale and Conditions of Sale. The Notice of Sale included information on Lot 54 and a bidding deadline of August 27, 2015, and set forth the bidding procedure. The Notice of Sale required "[e]ach bidder . . . to note on the Bid Form their intended use of the property, i.e. owner occupied single family residence, absorption into an adjacent lot, etc." It also stated that "[t]he City reserves the right to reject any and all bids and waive any minor or nonmaterial informalities, if deemed to be in the best interests of the City."

         The Conditions of Sale set a minimum bid of $30, 000, and expanded upon information set forth in the Notice of Sale. It provided that "[a]butters . . . who bid on the parcel will have the right of first refusal at the highest bid price." Additionally, the Conditions of Sale stated that the property was being sold in "'As Is' condition" and "without warranty as to . . . the ability to gain any desired regulatory approval from the City (i.e. zoning compliance)," and that the City would convey title to the successful bidder by quitclaim deed.

         The City received five bids for Lot 54. The Toys submitted the highest bid of $45, 500, and represented that they intended to "annex the property" to their adjacent property. A non-abutter who intended to "rehab" the existing single house and garage submitted the next highest bid of $36, 200. Another abutter, who intended to absorb Lot 54 into his adjacent property, submitted the third highest bid of $35, 800. The fourth highest bid in the amount of $31, 500 was submitted by a non-abutter who intended to utilize Lot 54 for a single family residence. The Philbrooks submitted the lowest bid of $31, 000, stating that they intended to "[a]dd this abutting land to [their] land."

         On September 8, 2015, the city finance committee held a non-public session to discuss the bids. The City's mayor directed the deputy city manager to solicit additional details about the intended use of the property from the abutters who submitted bids.

         The deputy city manager contacted the Toys' attorney and Michael Philbrook. The Toys' attorney informed him that "Mr. Toy had not decided exactly what he wanted to do with the property," and stated that Mr. Toy might place a single family home on the lot, use it as an entrance to make Addison Estates more attractive, or combine it with the adjacent lot he recently purchased "in order to expand Addison Estates." Mr. Philbrook informed the deputy city manager that he wanted to build a single family home on the property, adding that he could not afford to match the highest bid, but could probably match the second-highest bid of $36, 200.

         The deputy city manager presented this information at a non-public city council meeting on September 15, 2015. During this session, the city council reached a "'consensus'" that the City would sell Lot 54 to the Toys, provided that they agreed to a restrictive covenant in the deed prohibiting the owner of Lot 54 from ever using the property for manufactured housing park development or to expand Addison Estates. The city council also agreed that, if the Toys did not accept the restrictive covenant, it would sell the lot to the Philbrooks.

         The next day, the city attorney told the Toys' attorney that the City "would sell [the Toys] the property as long as [they were] agreeable to a deed restriction" which would prevent the development or expansion of a manufactured home park on the property. He also informed the Toys' attorney that "the zoning ordinance had changed and that manufactured home parks are no longer a permitted use." The city attorney inquired as to whether the Toys would accept the property with the restrictive covenant, and the Toys' attorney declined. In light of this response, the city council directed the city attorney to sell Lot 54 to the Philbrooks for $36, 200. On October 13, the City conveyed the property to the Philbrooks by a warranty deed that did not contain any restrictive covenants.

         After Donald Toy learned that the City sold Lot 54 to another bidder, the Toys' attorney demanded that the City sell the property to the Toys because they were the highest bidder. The city attorney responded that, after the Toys' ...

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