THE STATE OF NEW HAMPSHIRE SUPREME COURT Fat Bullies … · 2017-11-30 · THE STATE OF NEW HAMPSHIRE SUPREME COURT Fat Bullies Farm, LLC v. Bret and Lori Devenport Alan and Donna

THE STATE OF NEW HAMPSHIRE SUPREME COURT

Fat Bullies Farm, LLC

v.

Bret and Lori Devenport Alan and Donna Perkins

Case No. 2015-0692

BRIEF FOR FAT BULLIES FARM, LLC, DONALD GOULD AND PETER SIMMONS

APPELLANTS

Charles G. Douglas III, Esquire (NH Bar #669) DOUGLAS, LEONARD & GARVEY, P.C. 14 South Street, Suite 5 Concord, NH 03301 (603) 224-1988 ORAL ARGUMENT BY: Charles G. Douglas III, Esq.

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TABLE OF CONTENTS

QUESTIONS PRESENTED ........................................................................................................... 1

CONSTITUTIONAL PROVISIONS, STATUTES, ORDINANCES, RULES OR

REGULATIONS INVOLVED IN THE CASE .............................................................................. 1

STATEMENT OF THE CASE ....................................................................................................... 1

STATEMENT OF FACTS ............................................................................................................. 4

SUMMARY OF ARGUMENT ...................................................................................................... 6

ARGUMENT .................................................................................................................................. 7

CONCLUSION ............................................................................................................................. 48

REQUEST FOR ORAL ARGUMENT ........................................................................................ 48

CERTIFICATE OF ATTACHMENT OF APPEALED DECISIONS ......................................... 48

CERTIFICATE OF SERVICE....…….……….............................................................................49

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TABLE OF AUTHORITIES

Cases

AKWA Vista, LLC v. NRT, Inc., 160 N.H. 594 (2010) ............................................................................................ 28

Anderson v. Smith, 150 N.H. 788 (2004) ........................................................................................................................ 14

Ashland Lumber Company, Inc. v. Hayes, 119 N.H. 440 (1979) ........................................................................... 20

Audette v. Cummings, 165 N.H. 763 (2013) ................................................................................................................. 33

Axenics, Inc. v. Turner Construction Co., 164 N.H. 659 (2013) .................................................................... 26, 31

Baker v. Dennis Brown Realty, Inc., 121 N.H. 640 (1981) ........................................................................................ 9

Barrows v. Boles, 141 N.H. 382 (1996) .......................................................................................................................... 26

Bianco, P.A. v. Home Insurance Co., 147 N.H. 249 (2001) ...................................................................................... 14

Boynton v. Figueroa, 154 N.H. 592 (2006) ................................................................................................................ 24

Cabot Corp. v. AVX Corp., 863 N.E. 2d 503 (Mass. 2007) ...................................................................................... 26

Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60 (1999) ....................................................... 35

Doering Equipment Co., et al. v. John Deere Co., 61 Mass. App. Ct. 850 (2004) ............................................. 37

Druding v. Allen, et al., 122 N.H. 823 (1982) ............................................................................................................... 19

Ellis v. Candia Trailers and Snow Equipment, Inc., 164 N.H. 457 (2012) ..................................................... 21

Frost v. Commissioner, New Hampshire Banking Dep’t., 163 N.H. 365 (2012) ................................. 21, 22

G.H.E., Inc. v. Hoo, 87 Mass. App. Ct. 1127 (2015) .................................................................................................. 37

Gautschi v. Auto Body Discount Center, Inc., 139 N.H. 457 (1995) .................................................................... 20

George v. Al Hoyt & Sons, Inc., 162 N.H. 123 (2011) ...................................................................................... 22, 24

Greg Gendron Associates, LLC v. Nashua Circuits, Inc. et al., (Merrimack #226-2013-cv-233) ............... 20

Hampton Police Assn., Inc. v Town of Hampton, 162 N.H. 7 (2011)................................................................... 45

Harkeem v. Adams, 117 N.H. 687 (1977) .......................................................................................................... passim

Hughes v. N.H. Div. of Aeronautics, 152 N.H. 30 (2005) ................................................................................... 8, 21

In re Mason, 164 N.H. 391 (2012) .................................................................................................................................... 15

J & M Lumber and Construction Co., Inc. v. Smyjunas, 161 N.H. 714 (2011) ................................................. 20

iii

J & M Lumber and Construction Company, Inc. v. Smyjunas, 161 N.H. 714 (2011) ...................................... 19

Kukene v. Genualdo, 145 N.H. 1 (2000) ......................................................................................................... 12, 13, 32

LaMontagne Builders, Inc. v. Brooks, 154 N.H. 252-260 (2006) .................................................................. 14, 18

Mbahaba v. Morgan, 163 N.H. 561 (2012) .................................................................................................................... 18

McKenzie v. City of Berlin, 145 N.H. 467, 473 (2000) ............................................................................................. 15

Merrimack Valley Wood Products, Inc. v. Near, 152 N.H. 192 (2005) ............................................................... 14

Milford Lumber Co, Inc. v. RCB Realty, Inc., 147 N.H. 15 (2001) ...................................................................... 24

Nash Family Investment Properties v. Town of Hudson, 139 N.H. 595 (1995) ................................................ 12

Norwood Group, Inc., et al. v. Phillips, 149 N.H. 722 (2003) .................................................................................. 19

Panciocco v. Lawyers Title Ins. Corp., 147 N.H. 610, 613 (2002) .......................................................................... 7

Peter R. Previte, Inc. v. McAllister Florist, Inc., 113 N.H. 579 (1973) ................................................................. 20

Petition of David Eskeland, 166 N.H. 554, 561 (2014) ............................................................................................. 26

Platten v. H.G. Bermuda Exempted, Ltd., 437 F3d 118 (1st Cir. 2006) ................................................................ 20

Progressive N. Ins. Co. v. Concord Gen. Mut. Ins. Co., 151 N.H. 649 (2005)..................................................... 7

Purdie v. Attorney General, 143 N.H. 661, 663 (1999) ............................................................................................. 10

Quirk v. Town of New Boston, 140 N.H. 124, 135 (1995) ........................................................................................ 14

Simpson v. Calivas, 139 N.H. 1, 4 (1994) ...................................................................................................................... 26

Sintras v. Harmon, 148 N.H. 478, 483 (2002) ............................................................................................................... 25

State Room, Inc. v. MA-60 State Associates, L.L.C., et al., 85 Mass. App. Ct. 1106 (2014) ....................... 37

State v. Langdon, 121 N.H. 1065, 1069 (1981) .............................................................................................................. 9

State v. Moran, 151 N.H. 450 (2004) ............................................................................................................................ 24

State v. Reynolds, 136 N.H. 325, 328 (1992) ........................................................................................................... 9, 10

Tech Plus, Inc., et al. v. Ansel, et al., 59 Mass. App. Ct. 12 (2003) ...................................................................... 37

Terren v. Butler, 134 N. H. 635 (1991) ............................................................................................................................ 19

Town of Barrington v. Townsend, 164 N.H. 241 (2012) ........................................................................................... 14

Trenwick Am. Reinsurance Corp. v. IRC, Inc., 764 F. Supp. 2d 274, 307 (D. Mass. 2011) ......................... 28

iv

Trull v. Volkswagen of America, Inc., 145 N.H. 259 (2000) ................................................................................... 33

Unit Owners Assn. of Summit Vista Lot 8 Condominium v. Miller, 141 N.H. 39 (1996) ...................... 19, 24

Van Der Stok v. Van Voorhees, 151 N.H. 679 (2005) ................................................................................................ 38

Vandemark v. McDonald’s Corp., 153 N.H. 753 (2006) ........................................................................................... 10

Village Press, Inc. v. Stephen Edward Company, Inc., 120 N.H. 469 (1980) ..................................................... 19

Witte v. Desmarais, 136 N.H. 178, 182 (1992) ............................................................................................................ 33

Statutes

N.H. RSA 358-A ....................................................................................................................................................................... 1

RSA 358-A ............................................................................................................................................................................ 2, 21

RSA 358-A:2 ............................................................................................................................................................................. 21

RSA 397-A: 2 ............................................................................................................................................................................ 21

RSA 507:15 ............................................................................................................................................................................... 31

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QUESTIONS PRESENTED

1. Whether the trial court erred in granting a motion for summary judgment and dismissing

plaintiff’s tortious interference claim against the defendants Perkins (Perkins I).

2. Whether the trial court erred in finding that Perkins I and plaintiff’s petition seeking

equitable relief against the Perkins (Perkins II) were filed in bad faith, thus warranting an award

of attorney’s fees and costs.

3. Whether the trial court erred in finding that Gould and Simmons are personally liable for

the attorney’s fees and costs granted to the Devenports and Perkins.

4. Whether the trial court erred in finding that the conduct of plaintiff Fat Bullies and

Simmons violated the New Hampshire CPA.

5. Whether the trial court erred by awarding the Devenports attorney’s fees and costs as

damages under the CPA and then doubling that amount.

6. Whether the trial court erred in its determination of the amount of reasonable attorney’s

fees and costs to be awarded to the Devenports and Perkins.

7. Whether the trial court erred in quashing a deposition subpoena duces tecum to Christos

Valhouli, Esq. and, later, narrowly circumscribing the cross examination of Christos Valhouli,

Esq. at trial after he was called as a witness by the Devenports.

CONSTITUTIONAL PROVISIONS, STATUTES, ORDINANCES, RULES OR REGULATIONS INVOLVED IN THE CASE

N.H. RSA 358-A

STATEMENT OF THE CASE

This case began when Fat Bullies Farm, LLC (“Fat Bullies”) filed a breach of contract

action against Bret and Lori Devenport (“Devenports”) and a subsequent tortious interference

claim against Donna and Alan Perkins (“Perkins”) because the Devenports reneged on a written

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option agreement (“Option;” Appendix at 244; hereinafter cited as “App. at __”) to sell a parcel

of real estate, the Runnymede Farm (“Farm”) located in North Hampton, to Fat Bullies and,

instead, sold the Farm to their neighbors, the Perkins. The end result was an unprecedented

October 30, 2015, order requiring Fat Bullies, Donald Gould (“Gould”) and Peter Simmons

(“Simmons”) to pay $848,121 in legal fees and costs. This Order and others being appealed are

included in the Supplement to this brief and are cited as “Supp. at __”.

Fat Bullies filed its suit in May, 2011. After deposing the Perkins, Fat Bullies filed a

tortious interference claim against them in December, 2011 (“Perkins I”), followed in April,

2012 by an equity action (based on the same facts and cause of action) seeking an order requiring

the Perkins to convey the Farm to Fat Bullies. (“Perkins II”). Neither the Devenports nor

Perkins filed counterclaims when they responded to the original writ and to Perkins I and II.

In April, 2012, almost a year after the contract case was filed and immediately after the

filing of Perkins II, the Devenports and Perkins jointly filed their own action against Fat Bullies,

Gould and Simmons, claiming violations of RSA 358-A (New Hampshire Consumer Protection

Act — “CPA”) and fraudulent inducement to enter into the Option. All of the cases were

consolidated for trial. (App. at 20) [8/3/12 Consolidation Order].

The trial court dismissed Perkins II on October 22, 2012, and Perkins I on November 6,

2012. (App. at 33). It dismissed Perkins I on a motion for summary judgment ruling (Supp. at

4) that there was no evidence that the Perkins had improperly interfered with the Option. That

order is one of the orders being appealed. The dismissal of Perkins II is not being appealed.

Also being appealed are two orders dated December 18, 2012, which granted motions to

quash a deposition subpoena served on Attorney Christos Valhouli. The subpoena sought his

testimony and records concerning his simultaneous representation of, and sequential telephone

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conversations with, the Perkins and Devenports as both buyers and sellers at the time the

Devenports decided to terminate the Option and refused sell to Fat Bullies. A jury trial began on

June 23 and ended on July 1, 2014. During the trial, and over Fat Bullies’ objection, the trial

court permitted the Devenports to call Attorney Valhouli as their witness but massively and

erroneously curtailed Fat Bullies’ cross examination of Attorney Valhouli. (Trial Transcript

pages 1,120 – 1,133, hereinafter cited as “Tr. __:__”).

The jury found that (i) Fat Bullies had not proven the existence of a contract against the

Devenports because there was no meeting of the minds and (ii) that the Devenports had not

proven their fraudulent inducement claim against Fat Bullies, Gould and Simmons. It also

rendered an advisory verdict on the Devenports’ CPA claim, finding that Fat Bullies and

Simmons (but not Gould) had violated the CPA. (App. at 68) [7/1/14 Verdict Form]. The

Perkins had earlier dismissed their Fraud/CPA claim so that that claim was not tried.

Subsequently, the trial court issued an order dated October 9, 2014, finding that Fat

Bullies and Simmons (but not Gould) had in fact violated the CPA. (Supp. at 28). That order is

one of the orders appealed. Also being appealed is a May 5, 2015 order awarding fees and costs

to the Devenports and Perkins. (Supp. at 43). In that order, the trial court found that the

Devenports’ only CPA damages were their attorney’s fees expended in defending the contract

action and it doubled those “damages.” Id. It also found that Perkins I and II had been filed in

bad faith so that the Perkins were entitled to fees and costs award pursuant to Harkeem v.

Adams, 117 N.H, 687 (1977); and it ruled that Gould and Simmons were personally liable for

these fees and costs. Finally, by its order dated October 30, 2015 (Supp. at 62), the trial court

awarded attorney’s fees and costs to the Devenports and Perkins in the total amount of $848,121.

That order is also appealed.

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STATEMENT OF FACTS

On July 15, 2010, Simmons had a chance encounter with the Devenports at a local

restaurant. They told Simmons that they were selling the Farm and asking $800,000 for it.

(Supp. at 45) [5/5/15 Order]. Simmons then approached Gould and asked if he was interested in

purchasing the Farm. After discussion, during which Simmons said that he believed a profit

could be made, Gould said yes and they decided to form a limited liability company to effect the

purchase and name it Fat Bullies Farm, LLC. Id. The name was selected because an abutter of

the Farm, Dr. Joseph Arena, had called Simmons a “fat bully” when they both were engaged in

North Hampton politics so the name was an “inside” town political joke. (Supp. at 32) [10/14/14

Order on Motion to set Aside Verdict].

The next morning, July 16, Gould and Simmons met with Simmons’ son, Attorney John

Simmons, who drafted an option agreement (“Option”) offering a purchase price of $700,000.

They then traveled to the Devenports’ Farm and met with them. (Supp. at 45) [5/5/15 Order].

After reading the Option and insisting that the price be changed to $800,000, the

Devenports signed the Option (Supp. at 33) [10/14/14 Order], which entitled Fat Bullies to

purchase the Farm for $800,000 if it exercised the Option within 90 days. The Devenports were

paid $1,000 in cash as consideration. They signed the Option of their own free will and without

any pressure. Id. The entire meeting lasted approximately 15 minutes. Id.

On October 11, 2010, Lori Devenport delivered an undated note (“Note”) to Simmons

stating that the Devenports had “decided not to sell the farm at this time.” (App. at 246). The

next day, Fat Bullies exercised the Option by hand-delivering and mailing a letter from Attorney

Simmons to the Devenports which asked the Devenports to agree to a closing date. (App. at

247). That same day, Attorney Christos Valhouli e-mailed a reply letter to Attorney Simmons

stating that his clients would not sell the Farm. (App.at 248).

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Attorney Simmons replied on October 13, stating that Fat Bullies had no interest in

forcing the Devenports from their home and was willing to convert the Option into a right of first

refusal which would be exercisable only in the event that they decided to sell in the future. (App.

at 249). This would allow their children to finish the school year. Attorney Valhouli replied on

November 5, 2010, that there had been no “meeting of the minds” and that the Devenports were

under no obligation to sell to the Plaintiff. (App. at 250). Subsequently, the Devenports sold the

Farm to the Perkins on April 15, 2011. (App. at 253 for Purchase & Sales Agreement).

Unaware of the Perkins’ involvement, Gould and Simmons decided to let the matter rest

until spring because Simmons spent the winter in Florida and they had no desire to force the

Devenports to leave their children’s home during the school year. (Tr. 105:1-15). However, in

May 2011 Gould and Simmons discovered that the Devenports had secretly sold the Farm to the

Perkins for $650,000, or $150,000 less than the Option price. (Tr. 113:14-25; 114: 1-7).

Smelling a rat, Fat Bullies sued, claiming that the Devenports breached their contractual

obligation by refusing to honor the Option. (App. at 256) [5/17/11 Writ]. The Devenports’

responsive pleading asserted an affirmative defense of fraud in the inducement, claiming that

Simmons had falsely promised orally that he would operate the Farm as a horse farm in

perpetuity and that the Devenports discovered that Simmons had offered to sell the Farm to their

neighbor Alan Perkins. Id. Ironically, Perkins was the same person to whom the Devenports

later sold the Farm.

During depositions of the Perkins, Fat Bullies learned that they became aware of the

Option soon after it was signed, and knew that Fat Bullies had later exercised the Option in

October. (App. at 122-34) [Donna Perkins’ testimony]. They testified that they knew nothing

about operating a horse farm and had no interest in purchasing the Farm as of the spring of 2010,

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but subsequently decided that they “had to purchase” the Farm in order to protect their property

interests because they were “concerned” about someone else owning the Farm. Id. They

purchased the Farm in April with full knowledge that the Option existed and had been exercised.

Id.

After reviewing that deposition testimony, Fat Bullies decided that it had a basis for a

tortious interference claim and filed Perkins I and II which the trial court subsequently dismissed

pursuant to the Perkins’ dispositive motions.

SUMMARY OF ARGUMENT

The trial court erred in dismissing Perkins I and in finding that Fat Bullies acted in bad

faith in filing Perkins I and II because there was substantial evidence that the Perkins had

improperly interfered with Fat Bullies’ Option rights so this should have been left to the jury.

The trial court erred in finding Gould and Simmons personally liable for the Perkins’

legal fees because Simmons’ conduct was directed solely to the Devenports; and it was further

error to pierce Fat Bullies’ LLC veil in order to find that Gould was personally liable.

The trial court erred in finding a CPA violation because: the jurisdictional “engaged in

commerce” requirement was not proven; that the nine acts originally found by the trial court to

have violated the CPA do not, as a matter of law, violate that Act; and Fat Bullies could not have

engaged in bad faith litigation practices by filing its breach of contract claim because the trial

court on two earlier occasions had ruled that the Option was presumptively valid.

The trial court erred in finding that the Devenports’ injury was the legal fees they

incurred because there was no causation evidence introduced at trial and because the Devenports

were not forced to file their CPA claim due to Fat Bullies’ or Simmons’ conduct. It was also

error to award legal fees as CPA damages and double that amount because there is no case law in

New Hampshire or elsewhere that supports such an award. The trial court also erred in

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calculating the fee awards because it: awarded fees that should have been disallowed; did not

limit the recoveries to fees incurred in defending against Fat Bullies’ claims; awarded fees for

duplicative and excessive work; and the hourly rates were excessive by New Hampshire

standards.

The trial court erred in quashing a subpoena duces tecum directed to Attorney Valhouli

for a deposition and then in narrowly circumscribing his trial cross examination by Fat Bullies’

counsel. Those rulings denied Fat Bullies the opportunity to demonstrate that Attorney Valhouli

was a double agent facilitating a scheme between the Devenports and Perkins whereby the

Devenports would sell the Farm to the Perkins, rather than to Fat Bullies and that Perkins’

interference in the transaction was the real reason the Devenports backed out rather than an

alleged fraudulent oral promise to operate the Farm in perpetuity.

ARGUMENT

I. The Trial Court Erred Both in Dismissing the Interference Claim (Perkins I) and in Later Awarding Attorney’s Fees to the Perkins on the Grounds that Perkins I and II were Filed in Bad Faith.

A. The Trial Court Erred in Dismissing Perkins I (the Interference Claim)

The trial court dismissed Perkins I (Supp. at 4) [11/6/12 Order] despite Fat Bullies’

arguments raised in its objection to the summary judgment (App. at 168) [9/21/12 Objection] and

in its motion to reconsider. (App. at 188) [11/16/12 Motion to Reconsider]. To defeat summary

judgment all Fat Bullies had to do was “set forth specific facts showing that here is a genuine

issue [of material fact] for trial.” Panciocco v. Lawyers Title Ins. Corp., 147 N.H. 610, 613

(2002). The trial judge did not set forth the facts in a light most favorable to Fat Bullies and this

court reviews de novo the trial court’s application of the law to the facts. Progressive N. Ins. Co.

v. Concord Gen. Mut. Ins. Co., 151 N.H. 649 (2005).

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Fat Bullies quoted from deposition transcripts where the Perkins testified that they

became aware of the Option shortly after it was signed and knew almost immediately that the

Option had been exercised in October, 2010. (App. at 122-37). Further, they testified that they

had no interest in buying the Farm as of the spring of 2010 but changed their minds when they

learned of the Option’s exercise because they were “concerned” that a sale of the Farm to

Simmons would have an impact on their neighborhood. (App. at 130-33). They also testified

that they decided that they “had to” purchase the Farm to “protect” themselves and that they

bought the Farm despite knowledge that an exercised Option existed on it. (App. at 135-36).

These sworn admissions established that the interference claim was properly filed

because they established: (i) the existence of an economic relationship with a third party (the

Option), (ii) that the defendant(s) knew of the relationship (awareness of exercised Option), (iii)

that the defendant(s) intentionally and improperly interfered with the relationship (decision to

buy the Farm to “protect” property interests despite knowledge of Option) and (iv) that the

plaintiff was damaged thereby (loss of economic opportunity to sell Farm at a profit). Hughes v.

N.H. Div. of Aeronautics, 152 N.H. 30, 40-41 (2005).

Accordingly, the trial court erred when it found that: “There is no evidence to suggest

that the Perkins had any reason to believe that in late 2010 or early 2011 anyone else had an

interest in or right to purchase the property.” (Supp. at 9; emphasis added) [11/6/12 Order]. As

just demonstrated, there was evidence that the Perkins knew of the Option and its exercise and at

the very least this should have gone to a jury as a contested fact.

The trial court further erred when it accepted at face value the self-serving deposition

testimony of the Perkins to the effect that the reason they “had decided to purchase the Property

in late 2010 or early 2011[was] because of its historic nature…” (Supp. at 10) [11/6/12 Order].

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It also erred in accepting those portions of the Perkins’ deposition testimony where they testified

that they “did not have any concerns about the potential sale to Fat Bullies” (Supp. at 8) [11/6/12

Order] while simply ignoring other portions referred to above where they had testified that they

did have concerns. In other words, those facts were contested so the jury should have decided

credibility, not a judge. State v. Reynolds, 136 N.H. 325, 328 (1992) and State v. Langdon, 121

N.H. 1065, 1069 (1981).

Similarly, the trial court improperly relied on selected portions of the Perkins’ deposition

testimony that it was not until December, 2010, that they became aware that the Devenports had

not sold the Farm to Fat Bullies (Supp. at 8-10) [11/6/12 Order] while ignoring Donna Perkins’

unequivocal deposition testimony that she learned in “August or September” of 2010 that the

Farm had not been sold. (App. at 135) [Alan Perkins Deposition].

Again, at a minimum, the trial court should have concluded that there were material facts

in dispute. Erroneously its order said that there can be “no genuine issue as to any material fact.”

(Supp. at 8) [11/6/12 Order]. But it got there by selectively accepting portions of the Perkins’

deposition testimony while disregarding other portions that made clear that the Perkins had full

knowledge of the exercised Option when they purchased the Farm a few months later. To

conclude there was no evidence in Fat Bullies favor is reversible error that mattered in this case

because those counts were not tried to the jury as they should have been.

The trial court also erred in concluding that the Perkins had not intentionally and

improperly interfered with the Option. (Supp. at 14-15) [11/6/12 Order]. They had the burden

of establishing that their interference was privileged. Baker v. Dennis Brown Realty, Inc., 121

N.H. 640, 645 (1981). But they offered no such proof other than the self-contradictory claim that

they first learned in December, 2010 that the sale to Fat Bullies was somehow “off.” (App. at

10

88) [Perkins’ Summary Judgment Motion]. But as noted above, that claim is contradicted by

other portions of their own deposition testimony.

Unfortunately, the trial court later acknowledged that while the Perkins may have

“interfered” with the Option, somehow that interference was not “intentional” or “improper.”

(App. at 58) [6/20/14 Order]. Without the crucible of a trial how can a judge parse between

“intentional” but not “improper?” Whether an interference was intentional necessarily requires

evidence of the state of mind and a jury assessment of the credibility of the Perkins. The trial

court acknowledged this principle, ruling that the interference must be “either desired by the

[defendants] or known by [them] to be a substantially certain result of [their] conduct.” (Supp. at

8) [11/6/12 Order]. Based on the Perkins’ deposition testimony, there can be no doubt but that a

jury could find the Perkins knew that their purchase of the Farm would interfere with Fat Bullies’

Option rights.

Credibility and state of mind are for the fact finder rather than the trial court on contested

motion papers. State v. Reynolds, 136 N.H. 325, 328 (1992). “[S]ummary judgment may be

granted only where no genuine issue of material fact is present, and the moving party is entitled

to judgment as a matter of law. Purdie v. Attorney General, 143 N.H. 661, 663 (1999). See also

RSA 491:8-a, III. “An issue of fat is ‘material’ for purposes of summary judgment if it affects

the outcome of the litigation under the applicable substantive law.” Vandemark v. McDonald’s

Corp., 153 N.H. 753, 756 (2006).

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B. The Trial Court Erred in Finding that Perkins I and II Had Been Filed in Bad Faith and in Awarding Attorney’s Fees to the Perkins.

The trial court erred in concluding that Perkins I and II had been filed in bad faith (Supp.

at 43) [5/5/15 Order] because, it ignored a detailed affidavit by the drafting attorney which

explained the investigation and analysis that took place before the interference claim was filed.

1. Perkins I

The un-contradicted April 7, 2015, affidavit of Donald B. Gould Esq. (App. at 264,

hereinafter “Gould Affidavit”) filed in support of the Objection to the Perkins’ Motion for an

award of attorney’s fees demonstrated that Gould (Manager of Fat Bullies and a Massachusetts

licensed attorney who had been admitted pro hac vice to represent Fat Bullies during the pretrial

stages) made a conscious decision not to file the interference claim until he had “direct evidence”

of the Perkins’ “involvement” (App. at 266, Gould Affidavit, ¶9) even though he was aware of

other evidence that they were deeply involved in interfering with the Option. Id. at ¶¶ 7-9.

Gould concluded that he obtained that evidence of the Perkins’ direct involvement when

he took their depositions. As already noted, they testified that they: (i) became aware of the

Option shortly after it was signed; (ii) had no interest prior to that time in purchasing the Farm;

(iii) subsequently learned that the Option had been exercised and became “concerned” that their

neighborhood would be changed; (iv) were aware of only one prospective buyer (Peter

Simmons); (v) decided that they had to buy the Farm “to protect themselves;” and (vi) went

forward even though they knew that Fat Bullies held the exercised Option, because the existence

of the Option was “irrelevant.” (App. at 266, Gould Affidavit, ¶10).

That testimony satisfied Gould that there were sound grounds for filing an interference

claim. Id. But there was even more evidence in the form of the Devenports’ conflicting and

inconsistent testimony which caused Gould to believe that the Devenports had “fabricated” their

12

testimony to conceal the Perkins’ role. Id. at ¶11. Gould, an experienced attorney with an

unblemished four decade record, believed in good faith that there were sufficient grounds for

filing an interference claim and he drafted the writ which was filed in November, 2011. Id. at

¶¶1-6, 13. Subsequently, Gould’s position was buttressed even more by the affidavit testimony

of one Richard Batchelder who reported to Gould Alan Perkins volunteered statement that he

“knew nothing about horses” and “did not want to own a horse farm,” but had “decided to buy

the Farm to protect himself [from Simmons].” Id. at ¶14.

Despite Gould’s detailed affidavit the trial court ignored it in its order of July 24, 2015.

Only after a motion for reconsideration was filed did the trial court finally acknowledged the

affidavit but waived it off saying that “to the extent the Gould affidavit is inconsistent with the

court’s prior orders, this court does not credit [it]…” (App. at 76-77) [7/24/15 Order]. Nowhere

does the judge claim Gould’s affidavit was false, bad faith or not credible.

It is clear that Gould was acting cautiously and in good faith. But even if he was

incorrect and the evidence he developed was not adequate, the case law still does not support the

punitive attorney’s fees award made in this case for, at most, a considered but good faith

mistake.

A failure of proof does not amount to bad faith. In Kukene v. Genualdo, 145 N.H. 1

(2000), this Court held “That valid reasons existed to deny plaintiffs’…claim does not lead to the

conclusion that the litigation [was]…oppressive, vexatious, arbitrary, capricious, or bad faith

conduct….” Id. at 6. Even the most minimal evidence of interference is enough to defeat a bad

faith claim. In Nash Family Investment Properties v. Town of Hudson, 139 N.H. 595 (1995),

this Court held that even though most of the plaintiff’s claims were without merit, a fee award

was not justified as some “issues enjoyed some, albeit weak factual support.” Id. at 605.

13

Nevertheless, the trial court concluded that:

the claims brought against the Perkins were brought in bad faith as part of this course of conduct as that term is used in Harkeem. The course of conduct began when Fat Bullies and Simmons engaged in unfair and unscrupulous conduct to induce the Devenports to sign the Option. When the Devenports tried to back out of the Option, they were sued. Perhaps because Fat Bullies feared that the Devenports did not have sufficient money to pay any judgment it sought and perhaps as a litigation strategy, Fat Bullies also brought two lawsuits against the Perkins. The filing of these cases was a continuation of the course of bad faith. (Supp. at 47, emphasis added) [5/5/15 Order].

There are several obvious defects in the trial court’s rationale. First, the alleged bad faith

was directed solely toward the Devenports, as the quoted language above makes clear. Indeed,

the Perkins had filed their own claim alleging bad faith and then dismissed those claims at the

beginning of the trial. In effect, then, the trial court’s order grants relief to the Perkins on the

basis of claims that they voluntarily dismissed and did not go forward with at a trial.

Second, the only nexus between the conduct directed toward the Devenports and the

Perkins is the trial court’s speculation that “perhaps” the cases were filed as a litigation strategy

because, “perhaps,” Fat Bullies apprehended that the Perkins’ deep pockets would be necessary

to satisfy any judgment! The Cambridge English Dictionary defines the word “perhaps” as being

“used to show that something is possible or that you are not certain about something.”

(Emphasis added). It is the equivalent of “maybe.” A $200,000 attorney’s fees award should be

based on more than “maybe” the filing of Perkins I was based on an improper motive.

But, assuming, and only arguendo, that Fat Bullies was motivated by a “litigation

strategy,” the law is also clear that a plaintiff’s motive in filing a claim cannot furnish a basis for

an award of attorney’s fees. (Kukene, supra at 6). If Fat Bullies filed the case in good faith

believing that it had a valid basis for a claim, its motive in doing so is irrelevant.

14

The trial court’s order sets a bad precedent and is bad public policy in that it will have a

chilling effect on future litigants who are considering a lawsuit. Essentially, the trial court has

ruled that the mere filing of Perkins I justified the imposition of a fee. But this court has made

clear that “No person should be penalized for merely…prosecuting a lawsuit.” (Quirk v. Town

of New Boston, 140 N.H. 124, 135 (1995). All this law was ignored by Judge Wageling.

Our research finds but six cases decided since 2000 where this Court has approved a fee

award, and, the conduct in those cases was much more egregious than the assumption in this case

that the filing was double “perhaps” somehow improperly motivated.

LaMontagne Builders, Inc. v. Brooks, 154 N.H. 252-260 (2006): defendant did: “everything he could to delay and obstruct [plaintiff] from receiving a judgment.” “[Defendant’s] bad faith conduct persisted throughout the entire litigation.” Merrimack Valley Wood Products, Inc. v. Near, 152 N.H. 192 (2005): Upholding fee award where restrictive covenant in question was found to be unreasonable and plaintiff acted in bad faith. LaMontagne Builders, Inc. v. Bowman Brook Purchase Group, 150 N.H. 270 (2003): Affirming fee award where defenses were raised without any reasonable basis in the facts or any reasonable claim in the law. Anderson v. Smith, 150 N.H. 788 (2004): Sustaining fee award where jury found defendant had breached duty of good faith in conducting foreclosure sale. Town of Barrington v. Townsend, 164 N.H. 241 (2012): Affirming fee award mandated by RSA 676:15. Bianco, P.A. v. Home Insurance Co., 147 N.H. 249 (2001): Affirming mandated fee award pursuant to RSA 491:22-b.

While the last two cases involved a statute that mandated a fee award, the others involved

conduct much more egregious than the “presumed” improper motive in filing Perkins I. In the

two LaMontagne cases this Court relied on evidence that established a clear pattern of

obstructionism and bad faith which continued throughout the litigation and defenses which had

no basis in the facts or the law. Anderson involved a jury verdict of bad faith foreclosure sale

15

practices. None of these cases involve conduct as benign as a “presumed” questionable motive

in filing a lawsuit. The trial court erred in basing a fee award on the filing of Perkins I.

2. Perkins II

Perkins II was not a new lawsuit. It was, instead, an alternative form of relief seeking an

equitable remedy based on the same facts and cause of action as the damages count for

interference. (App. at 269, Gould Affidavit, ¶17). Accordingly, the arguments set forth above

concerning Perkins I are also applicable to Perkins II.

The trial court seems to have based its fee award for Perkins II on the fact that Fat Bullies

did not allege the existence of a “confidential relationship.” (Supp. at 46) [5/5/15 Order]. But

the Gould affidavit explained that he believed in good faith that the trial court’s “general and

broad equitable powers” were sufficient to grant the relief requested. (App. at 269, Gould

Affidavit, ¶18).

Assuming, arguendo, that Gould was wrong in his view of the law in filing Perkins II

seeking a constructive trust, it does not follow per se that his position was unreasonable,

frivolous or taken in bad faith. In re Mason, 164 N.H. 391, 399 (2012); see also McKenzie v.

City of Berlin, 145 N.H. 467, 473 (2000); reasonable albeit mistaken view of the law does not

constitute bad faith.

In summary, Attorney Gould’s mistaken belief does not amount to bad faith. More

importantly, the trial court’s sole basis for a finding of bad faith was its unsupported assumption

that Perkins II (along with Perkins I) was “perhaps” filed as a litigation strategy to bring in a

deep pockets defendant despite not one scintilla of evidence to support that presumption.

Speculation about bad faith motives cannot furnish a basis for a punitive fee award.

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II. The Trial Court Erred in Finding that Gould and Simmons were Personally Liable for the Perkins’ Legal Fees.

The trial court determined that both Gould and Simmons were personally liable for the

Perkins’ legal fees, but for different reasons. It found that Simmons had engaged in bad faith

conduct. (Supp. at 49) [5/5/15 Order] and that Gould was liable solely because it was

appropriate to “pierce” Fat Bullies’ “veil.” Id. Both findings were in error.

A. Simmons’ Personal Liability:

The trial court found (Id.) that Simmons engaged in bad faith conduct when he:

• “spoke with Attorney [John] Simmons to get the Option agreement drafted;”

• “acted unfairly to get the Devenports to sign the Option;”

• “was directly involved in the decision to bring the lawsuit against the Devenports and later against the Perkins;” and

• “acted unscrupulously and in bad faith in forming and attempting to collect on the Option.”

None of these findings supports Simmons’ personal liability. Most of the reasons cited

describe conduct directed solely toward the Devenports — the sole exception being Simmons’

role in the decision to sue the Perkins which is discussed below. It defies logic to find bad faith

conduct affecting the Perkins by relying on evidence of conduct directed to the Devenports.

Concerning the decision to sue the Perkins, that finding is erroneous because it is based

on inferences only, and is contradicted by the Gould Affidavit. (App. at 264). There was no

evidence that Simmons was involved in the decision to sue the Perkins. Indeed, the trial court

cites to none. Instead, it concluded impermissibly that because Simmons had threatened the

Devenports with litigation after he discovered that they had sold the Farm to the Perkins, it was

“therefore a reasonable inference…that Simmons was directly involved in the decision to bring

17

the lawsuit against the Devenports and later against the Perkins.” (Supp. at 49, emphasis added)

[5/5/15 Order].

But the un-contradicted Gould Affidavit made clear (at ¶¶13 and 18) that only the

attorneys made the decision to file and that Simmons played no role in those decisions.

Simmons’ personal liability for $200,000 worth of legal fees should be based on more than an

inference that he may have engaged in bad faith conduct. To uphold this ruling will be a

dramatic shift in New Hampshire law and an invitation to a flood of attorney fees claims.

B. Gould’s Personal Liability:

The court found Gould liable because “it finds the corporate veil [of the LLC] has been

pierced.” (Supp. at 49) [5/5/15 Order]. It did so solely because it improperly concluded that Fat

Bullies was undercapitalized “by at least $800,000.” Id.

But Fat Bullies was initially capitalized when its members (Gould and Simmons)

contributed $1,000 consideration paid to the Devenports for the Option. (Supp. at 49) [5/5/15

Order], and it held that Option as an asset of the LLC which could have been sold to a third

party. Additionally, both Simmons and Gould testified that they had the necessary capital

available to pay the purchase price (Tr. 159:19-25; 160:1-18; 226:7-15; 826:18-25; 827:1-14).

Fat Bullies’ motion to reconsider brought that testimony to the trial court’s attention as well as

pointing out that it made no sense to take that much money out of productive investment vehicles

elsewhere and place it in an low or no-interest checking account on the assumption that it might

be needed for a closing that had not yet been scheduled. (App. at 218-19) [5/15/15 Motion to

Reconsider]. It also defies logic that Fat Bullies would waste time asking for a closing if it had

no ability to pay at the closing!

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But the trial court rejected that argument, ruling that “taking money from personal

accounts and putting it in an account for Fat Bullies to use to satisfy its corporate obligations…is

not in keeping with respecting corporate form.” (App. at 77) [7/24/15 Order]. But the trial court

cited no New Hampshire case law for that novel proposition or for the proposition that

insufficient assets is alone sufficient to pierce an LLC veil. It merely cited to “Fletcher,

Cyclopedia of the Law of Private Corporations.” Fletcher aside, New Hampshire case law does

not support such a result.

Our seminal LLC veil piercing case is Mbahaba v. Morgan, 163 N.H. 561 (2012). In

finding veil piercing appropriate, this Court relied on the facts that the individual defendant (and

LLC owner) had formed a new LLC, transferred the old LLC’s business accounts to the new

company and continued in the same line of business with the same clients and in the same

business location — all after the plaintiff had commenced suit to recover damages for the lead

paint poisoning of her young daughter. There the Court held that those facts “adequately create

genuine issues of material fact as to whether the veil should be pierced.” Id. at 569. The test in

veil piercing cases is whether “the owners have used the company to promote an injustice or

fraud upon the plaintiff.” Id. at 568, emphasis added.

There is no evidence cited by the trial judge that Fat Bullies was used to promote an

injustice or a fraud on the Perkins. Gould merely authored the filing of interference claims

against them which were dismissed a few months later. (App. at 33 and Supp. at 4) [Orders

dated 10/22/12 and 11/6/12]. There was no history of oppressive litigation tactics. Nor was the

LLC manipulated to deceive the Perkins, divert assets or otherwise harm them. Research reveals

no New Hampshire veil piercing case with facts even remotely similar to those here. All of the

veil piercing cases involve egregious facts. For example, in LaMontagne Builders, Inc. v.

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Bowman Brook Purchase Group, et al., 150 N.H. 270 (2003), the individual defendant: (i)

breached an express promise to pay a debt, (ii) made false promises in order to deflect the filing

of a lien, (iii) had no intention of honoring his promise, (iv) made disingenuous and bad faith

statements and (v) received and pocketed the loan proceeds instead of paying plaintiff. Id. at

275.

In J & M Lumber and Construction Company, Inc. v. Smyjunas, 161 N.H. 714 (2011),

LLC members liquidated the company, took its assets and left the LLC unable to pay its debts.

Terren v. Butler, 134 N. H. 635 (1991), involved a “substantial depletion of corporate assets” and

a finding that the defendants “used the corporate entity to promote an injustice and/or a fraud on

the plaintiffs.” Id. at 640, emphasis added. Likewise, Norwood Group, Inc., et al. v. Phillips,

149 N.H. 722 (2003), involved a “structured a sale of substantially all of Norwood Realty’s

assets, ‘leaving behind an empty corporate shell…’” Id. at 723.

This Court has condoned veil piercing only where the entity was used to defraud

creditors and it has rejected the remedy in many other cases where there was no such

manipulation. In Unit Owners Assn. of Summit Vista Lot 8 Condominium v. Miller, 141 N.H.

39 (1996), the individual defendant (the trustee of trust which sold the units) was not personally

liable even though he had personally participated in the sales because there was no evidence of

fraud or injustice committed by him.

Similarly, Druding v. Allen, et al., 122 N.H. 823 (1982), held that no veil piercing was

appropriate where the plaintiffs were not misled as to the corporate assets and the “dearth of

evidence that Mr. Astles used the corporation to promote injustice or fraud….” Id. at 828,

emphasis added. Likewise, in Village Press, Inc. v. Stephen Edward Company, Inc., 120 N.H.

469 (1980), this Court held that “we will not do so [veil piercing] solely on the basis that a

20

corporation is a one-man operation if there is no proof that the defendant conveyed property

fraudulently, that he ‘suppressed the fact of his incorporation or (that he) misled the plaintiff as

to the corporate assets.’” Id. at 472. (See also: Ashland Lumber Company, Inc. v. Hayes, 119

N.H. 440 (1979); Gautschi v. Auto Body Discount Center, Inc., 139 N.H. 457 (1995); Peter R.

Previte, Inc. v. McAllister Florist, Inc., 113 N.H. 579 (1973) and J & M Lumber and

Construction Co., Inc. v. Smyjunas, 161 N.H. 714 (2011).

In summary, veil piercing was not appropriate here. In all of the successful veil piercing

cases the individual defendant was “using” the company to defraud plaintiff-creditors. This is

not the case here. Whether Fat Bullies was undercapitalized or not had no impact on the Perkins

because it owed no duty to the Perkins. The so-called undercapitalization here involved a newly

formed LLC which had never conducted any business, had no debts or anticipated debts and did

not anticipate any significant capital needs in order to carry out its operations because the

principals were prepared to fund the closing once it was scheduled. (Tr. 159:19-25; 160:1-18;

226:7-15; 826:18-25; 827:1-14.)

Research reveals no New Hampshire case where veil piercing was (as in this case) based

solely on a finding of undercapitalization. While we recognize that superior court decisions are

not binding precedent, Judge McNamara’s order in Greg Gendron Associates, LLC v. Nashua

Circuits, Inc. et al., (Merrimack #226-2013-cv-233) is instructive. There the court refused to

pierce the LLC veil where the only evidence was undercapitalization. (App. at 347). Citing

Platten v. H.G. Bermuda Exempted, Ltd., 437 F3d 118 (1st Cir. 2006), which listed 12 factors to

be considered in veil piercing cases, Judge McNamara granted a motion to dismiss, stating that

“At most the plaintiff alleges only the undercapitalization of Nashua Circuits and

misrepresentation of the corporate ability to honor its commitments.” (App at 360).

21

In the absence of any New Hampshire case law holding that undercapitalization alone is

sufficient, it was error for the trial court to pierce the LLC veil on the facts of this case.

III. The Trial Court Erred in Finding that Fat Bullies and Simmons Violated the New Hampshire Consumer Protection Act (“CPA”).

A. There is no Evidence that Fat Bullies or Simmons were Engaged in the Real

Estate Business in July 2010 at the Time of the Transaction. Before the CPA can apply, the parties charged must have used an “unfair method of

competition or any unfair or deceptive act or practice in the conduct of any trade or commerce

within this state.” (RSA 358-A:2, emphasis added). In other words, the defendant must have

been engaged in trade or commerce at the time of the transaction or event in question. If not then

the CPA does not apply.

This Court has already made clear that isolated sales of real estate do not constitute

engaging in trade or commerce. Hughes v. DiSalvo, 143 N.H. 576, 578-579 (1999). Indeed, one

time transactions do not even qualify for treatment under RSA 358-A. Ellis v. Candia Trailers

and Snow Equipment, Inc., 164 N.H. 457, 465 (2012); Frost v. Commissioner, New Hampshire

Banking Dep’t., 163 N.H. 365, 376 (2012).

The Frost case is instructive and controlling here. There an individual (“Frost”) was a

member of two different LLCs. Each of the LLCs had made only a single mortgage loan. The

New Hampshire Banking Department commenced proceedings against Frost because he did not

disclose on his license application that he had “engaged in the business of making or brokering

mortgage loans” within the meaning of RSA 397-A: 2. Id. at 375.

Because that RSA did not define the term “engage in the business,” this Court turned to

the CPA, RSA 358-A, for guidance and concluded that:

“…the plaintiff’s involvement in a single transaction was insufficient to constitute engagement in trade or commerce… Because each of the LLCs conducted only

22

one mortgage lending transaction, neither “engage[d] in the business of making or brokering mortgage loans…and, thus, Frost has no obligation to disclose the two transactions on his license application.” Id. at 376, emphasis added.

In determining whether Fat Bullies and Simmons were engaged in the real estate business

at the time of the transaction in July of 2010, this Court is the final arbiter of the legislative

intent. George v. Al Hoyt & Sons, Inc., 162 N.H. 123, 128 (2011). Accordingly, this Court must

look to the trial record. There is no evidence that Fat Bullies was ever engaged in the real estate

business. It was formed in anticipation of engaging in the real estate business to the extent that if

it purchased the Farm, it intended to sell it for a profit. (App. at 30-31) [10/25/12 Order]. Gould

testified at trial that the LLC was formed for the sole purpose of purchasing and reselling the

Farm. There was no intent or plan to engage in the real estate business generally. (Tr. 207:10-

25: 208; 209:1-4).

Similarly, there is no evidence that Simmons was engaged in the real estate business in

the year 2010. While there was general evidence of various family trusts’ real estate activities in

the past, (Tr. 903:15-25; 904:1-7), there was none which established that he was a trustee or

beneficiary of any of those trusts, that he controlled those trusts or that Simmons individually

was engaged in the real estate business as of July, 2010. Significantly, when he was asked on

direct by his attorney whether he had “a property right now that is on the market,” the trial court

sustained an objection based on relevance. (Tr. 789:8-12).

In fact, Simmons had earlier submitted an affidavit attesting that neither he nor any

family trust had been involved in a real estate transaction in New Hampshire at any time near the

date of the Option. (App. at 271-72) [7/3/12 Simmons Affidavit, ¶¶4-7]. While this affidavit

was not a trial exhibit, it is a part of the record in this case and was before the trial court when it

found a CPA violation. Also, Simmons denied at trial that he personally owned real estate and

23

that the real estate in question was, instead, owned by one or more family trusts. (Tr. 903:15-25;

904:1-7).

In summary, there is no evidence at trial that either Fat Bullies or Simmons were engaged

in the real estate “business” in New Hampshire at or about the time of the Option transaction.

Therefore, the requisite jurisdictional requirement (engaged in trade or commerce at the time of

the transaction) has not been met.

Indeed, the Devenports’ counsel actually conceded in a post-trial filing that the

jurisdictional issue was “an issue that was not presented to the jury.” (App. at 216, emphasis

added) [7/24/14 Devenport Surreply in Support of Objection to Motion to Set Aside Jury

Verdict, ¶15]. The Devenports had the burden of proof on the jurisdictional “trade or

commerce” requirement. They have admitted that they failed to do so, and that admission should

be dispositive.

In summary, the Devenports failed to establish the requisite jurisdictional requirement of

“trade or commerce” and the trial court thus erred in finding a CPA violation.

B. The Trial Court Also Erred in Basing its Finding of a CPA Violation on the Nine Acts Described in its October 9, 2014 Order.

The trial court’s order denying Fat Bullies’ and Simmons’ motion to set aside the jury’s

CPA verdict and to dismiss the CPA claim lists nine factors on which it based its finding of a

CPA violation. (Supp. at 41) [10/14/14 Order]. Specifically, it found that:

• Simmons and Gould showed up “unannounced” at the Devenports’ home.

• Simmons introduced Gould as his attorney.

• Simmons “displayed” a “binding legal document and cash deposit.”

• Simmons did not suggest that the Devenports retain a lawyer.

24

• Despite knowing that the asking price for the Farm was $800,000, the document proposed the sales price as $700,000.

• Simmons did not warn the Devenports ahead of time that he would be bringing Gould or the “binding legal document” or that he would be “changing the price term of the proposal.”

• Simmons did not point out the change in the price term or explain what an option was.

• Simmons misrepresented that he would keep the Farm as a horse farm.

• Simmons later threatened to sue Bret Devenport when he encountered him at a local gas station later in May, 2011 [ten months later].

Research reveals that since the 1970 enactment of the CPA, this Court has rendered

opinions in 24 CPA cases and has found violations in only five of those cases. A review of those

five cases reveals that the conduct in those cases was egregious, involving: misrepresentations of

intent to pay for materials received (Milford Lumber Co, Inc. v. RCB Realty, Inc., 147 N.H. 15

(2001)); criminal conduct involving acceptance of advance payment for construction materials

with no intent to perform job (State v. Moran, 151 N.H. 450 (2004)); willful misrepresentations

of product quality (Boynton v. Figueroa, 154 N.H. 592 (2006)); contractor accepting and

pocketing payment for construction materials but never ordering them (George v. Al Hoyt &

Sons, Inc., 162 N.H. 123 (2011)); and failure to disclose defective drainage system during sales

pitch (Unit Owners Assn. of Summit Vista Lot 8 Condominium v. Miller, 141 N.H. 39 (1996)).

It is against this backdrop of these cases that the finding of a CPA violation must be

evaluated; and we now examine the factors considered by the trial court in reaching its

conclusion that a violation occurred. None of them rises to the level of conduct “that would raise

an eyebrow of someone inured to the rough and tumble of the world of commerce.” (George,

supra at 129).

25

1. Showing Up “Unannounced.”

If arriving unannounced at a home constitutes a CPA violation, that statute is violated

every day in New Hampshire when friends, neighbors and solicitors knock on a door. This is not

the type of “oppressive or unethical” conduct that the legislature intended to outlaw. If the

Devenports did not wish to grant Simmons and Gould an audience, all they had to do is turn

them away. Remember, it was the Devenports who had approached Simmons about a sale not

the other way around. More importantly, both Devenports testified at trial that Simmons had

called before arriving, so his appearance was not unannounced because “we were expecting

them.” (Tr. 311:9-11; 312:17-21; 566:21-23). The trial court’s conclusion that Simmons and

Gould showed up unannounced is thus demonstrably not true.

2. Introducing Gould as an Attorney.

Bringing an attorney to a meeting does not even begin to rise to the level of

“unscrupulous” or “unethical” conduct.” There is no case in New Hampshire (or elsewhere to

Appellant’s knowledge) to support such a strange proposition.

3. Displaying a “Binding Legal Document” and One Thousand Dollars.

Legal documents are displayed every day when parties negotiate contracts; and bringing

the consideration stated in the “legal document” is both understandable and appropriate. There is

no New Hampshire case that even suggests that such conduct is a CPA violation. The Option

was short and simple – not a lengthy opaque tome. (App. 244-45) [Ex. 3 and 3-A at trial].

4. Failure to “Suggest” that the Devenports Retain Counsel.

There was no duty to advise the Devenports that they should retain counsel. Absent a

“special relationship” (and the record is devoid of any such evidence) there is no duty to advise

another person of their rights. (Sintras v. Harmon, 148 N.H. 478, 483 (2002); Simpson v.

26

Calivas, 139 N.H. 1, 4 (1994); Petition of David Eskeland, 166 N.H. 554, 561 (2014). Had the

Devenports been affirmatively told not to seek counsel the case might be different.

5. Including a $700,000 Consideration in the Option.

The trial court found that it was unfair/deceptive to draft the option with a $700,000

consideration when Simmons knew that the Devenports were asking for $800,000. But Bret

Devenports’ trial testimony flatly contradicted this erroneous conclusion. He actually testified

that there was “no harm done” by Simmons’ attempting to negotiate a lower sale price. (Tr.

319:3-12). If the recipient of an alleged unfair act does not believe that he was harmed by that

act, logic informs us that there can be no CPA violation. As the Massachusetts Supreme Judicial

Court noted in Cabot Corp. v. AVX Corp., 863 N.E. 2d 503, 512 (Mass. 2007), “[h]ard

bargaining is not unlawful; it is not only acceptable, but indeed, desirable, in our economic

system, and should not be discouraged by the courts.”

Further, the trial court’s conclusion is tantamount to finding illegality in a negotiator’s

making a counter offer. To hold that bargaining over a purchase price constitutes a CPA

violation would mean that every prospective buyer is required to meekly accept the asking price

or suffer the consequences of a CPA violation. The law in New Hampshire is also clear that

“hard bargaining” is not a CPA violation. (Axenics, Inc. v. Turner Construction Co., 164 N.H.

659, 676 (2013); Barrows v. Boles, 141 N.H. 382, 390 (1996) “selfish bargaining” not a CPA

violation. Indeed, Simmons’ conduct cannot even be characterized a “hard” or even “selfish”

bargaining given the facts that the meeting lasted less than 15 minutes, the Devenports read the

Option and required that the figure be changed to $800,000 (which it was) and the only question

they asked was about the “down payment money” which they willingly accepted. (Supp. at 33)

[10/14/14 Order].

27

6. Failure to Announce in Advance that Simmons was Coming with Gould and with an Option Containing a $700,000 Consideration Figure.

These “acts” have already been discussed in items 1 through 3 above and do not even

remotely shock the conscience.

7. Simmons Did Not Point Out the $700,000 Price Change and Failed to Advise the Devenports About the Option.

As noted above, Simmons had no duty to advise the Devenports about the meaning of the

Option. The Devenports read the Option and insisted that the $700,000 be changed to $800,000

(Supp. at 33) [10/14/14 Order], and that change was made. In short the Devenports suffered not

one penny of harm because of the $700,000 counteroffer negotiation.

8. Simmons Misrepresented That He Would Keep the Farm as a Horse Farm.

It must be noted first that the “misrepresentation” caused the Devenports no harm

because they subsequently and unilaterally reneged on their Option agreement and later sold the

Farm to the same individual (Alan Perkins) who Simmons had first approached in the summer of

2010 to inquire if he had an interest in buying the Farm. (See “Causation” discussion in Sub-

Section E, infra). Accordingly, there can be no CPA violation because the Devenports were not

damaged by the alleged “misrepresentation.”

Further, because the jury found that there had been no fraudulent inducement (App. at 68)

[Verdict Form: answers 7A, B and C], it was improper to base a finding of a CPA violation on

the Devenports’ failed fraudulent inducement claim. While it is true that the burden of proof for

the fraud/misrepresentation claim (clear and convincing evidence) was different from the CPA

preponderance burden, it was error for the trial court to conclude that the jury found as it did

solely because they were operating under a different evidentiary standard. (Supp. at 42)

28

[10/14/14 Order]. Fraud and a standard of clear and convincing evidence are intertwined so one

cannot be separated from the other.

It is equally plausible that the jury could have determined that they simply did not believe

the Devenports’ testimony that Simmons had misrepresented his intentions to operate the Farm

in perpetuity. We recognize that in cases involving a challenge to a jury verdict, this Court will

uphold a jury verdict if there is any rational basis for doing so. AKWA Vista, LLC v. NRT, Inc.,

160 N.H. 594, 598 (2010). But the jury verdict is not being challenged here. It is the trial

court’s finding of a CPA violation based on an alleged fraudulent misrepresentation that was

error, because the jury did not find that fraudulent activity occurred.

While research has not located any New Hampshire case on point, a Massachusetts

Federal District Court decision, Trenwick Am. Reinsurance Corp. v. IRC, Inc., 764 F. Supp. 2d

274, 307 (D. Mass. 2011), is instructive. There the court held that absent a finding of fraud,

there can be no violation of M.G.L. Ch. 93, the Massachusetts counterpart of New Hampshire’s

CPA. This supports Fat Bullies’ position that the jury’s finding of no fraudulent

misrepresentation in this case means that there can be no CPA violation on the same conduct.

9. Simmons Threatened to Sue the Devenports in May, 2011.

Simmons was justifiably upset when he learned (months after the Devenports sent the

Note informing him that they had decided not to sell the Farm) that they had in fact quietly sold

the Farm to the Perkins. The CPA is not intended to deter a wronged party telling a defendant

they will be sued and that litigation will be expensive. If this rises to the level of a CPA

violation, every person who is informed about litigation and is then later sued will be able to

assert a CPA counterclaim! The New Hampshire legislature could not have contemplated such

an absurd result.

29

In summary, none of the acts listed by the trial court, individually or collectively, rise to

the level of a CPA violation. Instead, they are a mosaic of Simmons’ comments, acts and non-

acts, which the trial court has simply labeled as immoral, unethical, oppressive and

unscrupulous. No New Hampshire CPA case supports such a conclusion. The trial court erred

when it concluded that these privileged and innocuous acts were a CPA violation.

C. The Trial Court Erred in Belatedly Adding Another Reason for a Finding of a CPA Violation in a Subsequent Order After the Liability Phase of the Trial was Completed.

In its later fee award order the trial court belatedly listed a tenth reason for a finding of a

CPA violation. While acknowledging that it had held that Fat Bullies and Simmons “committed

unfair business practices leading up to the signing of the Option” (Supp. at 52) [5/5/15 Order],

the trial court then made a new finding that Fat Bullies and Simmons also violated the CPA by

“aggressively litigating the case” with the result that the Devenports were forced to “incur over

$200,000 in legal fees over a course of more than four years.” Id. at 53. It justified that new

finding by incorrectly asserting that the trial court “has not yet had the opportunity to make” such

a new finding. Id. As previously noted, the trial court listed the nine specific events/actions that

constituted a CPA violation; and it did not find at that time that “aggressively litigating” the case

was also a violation. But, there had been no new evidence thus the trial court did have the

opportunity to make such an additional finding but failed to do so.

More importantly, the trial court’s new finding is not supported by the trial record.

Specifically, the Order states that “Fat Bullies knew from the beginning that the Devenports were

in financial straits” (Supp. at 53, emphasis added) [5/5/15 Order]; and reasoned that “so Fat

Bullies knew that aggressively litigating the case could force the Devenports to settle to keep

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costs down.” But it cited no evidence that anyone was aware of the Devenports’ financial

condition and/or that an “aggressive” litigation scheme was used to force a settlement.

When this fact was brought to the trial court’s attention in a motion to reconsider, the trial

court blew off the argument, finding that “the Fat Bullies parties knew generally that the

Devenports were in need of money,” because “for one thing” they were able to observe the

condition of the barn which their expert claimed was “below average” (App. at 79, emphasis

added) [7/24/15 Order] and that Simmons told Bret that the Option consideration paid to Bret

would “give him enough money to make it to Michigan.” Id. But Fat Bullies’ expert disagreed

that the barn was “functionally obsolete.” (Tr. at 959:4-8). From these nebulous and scanty

facts the trial court erroneously went on to “infer that it was generally discussed that the

Devenports needed money from the sale to be able to move.” Id. By whom, when and where the

reader must guess because the record is devoid of facts from which to so infer.

Simply because the Devenports’ barn was (in the opinion of the Devenports’ expert

appraisal witness) functionally obsolete does not support an inference that Fat Bullies and

Simmons knew that the Devenports were in such precarious financial condition that aggressive

litigation could force them to settle. In fact, before suit was even filed the Devenports were

sitting on $650,000 from the sale and Bret Devenport testified they owned eight or nine rental

properties in Michigan. (Tr. at 288-90). Further, there is no evidence in the record to support the

unfounded inference that aggressive litigation tactics were designed to force a settlement. In

fact, the trial court conceded that both sides had engaged in aggressive litigation tactics. (Supp.

at 67). [11/2/15 Order]. “To be sure, Fat Bullies was not alone in aggressively litigating the

case.” (Supp. at 48) [5/5/15 Order]. Yet, the trial court improperly singled out only Fat Bullies’

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litigation tactics for both criticism and censure in the form of CPA liability and the imposition of

an enormous fee award.

When Fat Bullies brought to the trial court’s attention that it should have refrained from

making additional fact findings after the liability phase of the trial was over, the trial court

justified its new finding because “issues of bad faith litigation were reserved for the Court…”

[and] “the responsibility for making those findings ultimately lies with the Court.” (Supp. at 54;

emphasis added) [5/5/15 Order]. But the trial court had already expressly declined to base its fee

award on the “bad faith” standards enunciated by Harkeem v. Adams and RSA 507:15. Id. at 8.

Thus, the sole issue was whether there was a CPA violation; and that determination should have

been based on a trial record which would support the CPA claim (and does not) and not on

whether, in retrospect, Fat Bullies and Simmons engaged in bad faith litigation practices which

could be separately sanctioned if it had been true.

In response to a similar claim that litigation tactics were designed to make the litigation

“prohibitively expensive,” this Court ruled that aggressive litigation tactics do not necessarily

constitute a CPA violation. Axenics, Inc. v. Turner Construction Co., 164 N.H. 659, 677 (2013).

Fat Bullies’ and Simmons’ litigation tactics were not unfair litigation practices. The trial

court only said that the case was “aggressively” litigated by both sides. There was no finding

that Fat Bullies employed egregious litigation tactics. It is an attorney’s duty to a client to

“aggressively” litigate claims so long as court and ethics rules are observed and there is no

finding of ethical violations in this case. Accordingly, the finding of a CPA violation based on

“aggressive,” but not egregious, litigation cannot be sustained or it will chill defense of claims by

the Bar based on this precedent.

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D. The Trial Court’s Finding of Bad Faith Litigation is Undermined by Two of its Earlier Rulings.

The trial court justified its award of attorney’s fees as CPA damages by determining that

the Fat Bullies litigation “never should have been brought.” (Supp. at 48) [5/5/15 Order]. But

this finding is inconsistent with two of the trial court’s earlier rulings.

In denying a motion to dismiss the breach of contract claim, the trial court found “that the

Option Agreement is a valid and enforceable contract.” (App. at 19) [10/16/12 Order]. Even

more significantly, when all the evidence was in and just before the jury was charged, the trial

court denied the Devenports’ motion for a directed verdict on the contract claim, ruling that “the

contract remains intact before (sic) the jury’s consideration…” (Tr. 1,104: 5-8).

The ruling that the Option was a valid and enforceable contract, combined with the denial

of the motion for a directed verdict, must be construed to mean that the trial court believed that

the Option was valid on its face; that Fat Bullies had made a prima facie case; and that the jury,

therefore, should be permitted to consider the contract issues. Thus, it necessarily follows that

Fat Bullies acted in a good faith belief that the Option was valid when it filed the contract claim.

The trial court’s belated determination that the initial filing of the contract claim

constituted a CPA violation is wholly inconsistent with its earlier rulings. Kukene v. Genualdo,

145 N.H. 1 (2000), is a case directly on point. There this Court vacated and remanded a trial

court’s finding of bad faith because the trial court’s earlier rulings were inconsistent with that

finding. “Thus, the trial court’s finding of bad faith is undermined by its previous decisions to

permit the plaintiff to litigate the case.” Id. at 5.

As in Kukene, the trial court’s previous decisions to permit the litigation to continue and

go to the jury undermine the court’s finding of bad faith in this case. For this reason alone, the

finding of bad faith litigation practices cannot stand.

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E. The Devenports Were Not Proximately Harmed by the Conduct of Fat Bullies and Simmons.

It is well established in New Hampshire and elsewhere that a plaintiff must prove, (i)

there was a duty owed which was breached; (ii) that the injury was caused by the defendant’s

behavior; and (iii) the amount of damages. Witte v. Desmarais, 136 N.H. 178, 182 (1992).

Thus, the Devenports must show “that the damages were caused by the defendant’s alleged

wrongful acts, as well as the extent and amount of such damages.” Audette v. Cummings, 165

N.H. 763, 770 (2013), emphasis added; See also Trull v. Volkswagen of America, Inc., 145 N.H.

259, 267 (2000), we demonstrate below that the Devenports have not done so.

1. The Devenports Did Not Introduce Any Causation Evidence During the Trial.

There was no evidence at trial which demonstrated how the Devenports were damaged by

the CPA violation. There is nothing in the record which even tends to establish that the

Devenports’ incurred legal fees as a direct consequence of any CPA violation.

2. The Devenports Were Not Harmed by Any of Simmons’ Conduct.

The Devenports were not harmed by Simmons’ conduct. The facts that he showed up

unannounced with Gould and the Option containing the $700,000 price, did not cause any harm.

The Devenports welcomed Simmons and Gould to their home; and they testified at trial that the

meeting was cordial and they felt no pressure. (Tr.504:1-6). They both read the Option, noted

the $700,000 figure and insisted on changing the price to $800,000; and they were promptly paid

$1,000. (Tr. 504: 9-16).

It is inconceivable that the Devenports were forced to incur legal fees because of these

banal actions. There is no legal nexus between these acts and the attorney's fees liability which

they subsequently incurred. Likewise, the Devenports were not harmed by Simmons’

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"misrepresentation" concerning continued operation of the Farm because, within a few weeks,

they unilaterally abrogated the Option agreement and then sold the Farm to the Perkins. (See

discussion supra at Section IV, supra). Nor could they have suffered any economic loss as a

result of the threat of a lawsuit which was issued months after the Devenports had secretly

elected to part company with plaintiffs and sold to Perkins.

Perhaps the best evidence of the fact that no causation exists is the timing of the filing of

the Devenports’ CPA claim. Fat Bullies’ writ was filed in May of 2011, and while the

Devenports promptly asserted a fraud defense in their response to the writ, they did not file their

CPA claim until almost a year later. The April 25, 2012, writ (filed on behalf of the Devenports

and Perkins) (App. at 109) was a response to Fat Bullies’ interference and equity claims against

the Perkins which were filed in November, 2011 and April, 2012, respectively.

The Devenports were not forced to file the CPA claim to defend themselves against Fat

Bullies’ original writ. They waited a year and then tagged along with the Perkins by filing that

joint claim with their shared attorney which was an afterthought, prompted by Fat Bullies’

lawsuits against the Perkins.

IV. The Trial Court Erred in Awarding Attorney’s Fees as a Form of CPA Damages and Then Doubling Those Fees.

The Devenports’ 2012 writ did not claim attorney’s fees as damages. (App. at 121)

[4/25/12 Writ]. They sought “treble damages and attorney’s fees” (emphasis added), not double

attorney’s fees. Nevertheless, the trial court adopted the Devenports’ post-trial argument that

“attorney’s fees are properly considered damages pursuant to [the CPA]…and “the Court finds

that the Devenports are entitled to these fees under the CPA…” (Supp. at 51) [5/5/15 Order]. It

further held that “Fat Bullies’ and Simmons’ acts were both knowing and willful, and thus will

double the damages pursuant to the statute.” (Supp. at 58) [5/5/15 Order].

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It was error for the trial court to reach this conclusion because there are no New

Hampshire CPA cases holding that attorney’s fees are a cognizable form of damages in and of

themselves. Further, the single Massachusetts case relied on by the trial court is readily

distinguishable and its holding has been subsequently narrowed. Finally, and as noted, the

Devenports did not incur attorney’s fees as a proximate result of the pre-litigation conduct which

the trial court erroneously found violated the CPA.

A. The Sole Massachusetts Case Relied on by the Trial Court is Inapposite.

The trial court relied on a single Massachusetts case of Columbia Chiropractic Group,

Inc. v. Trust Ins. Co., 430 Mass. 60 (1999). (Supp. at 52) [5/5/15 Order]. But the facts in

Columbia were materially different from those in this case. In Columbia the plaintiff had over-

billed and falsely billed the defendant insurance company for chiropractic services allegedly

performed. When the insurer refused to pay the claims, the plaintiff filed suit and the insurer

filed a CPA counterclaim. The crux of the CPA counterclaim was that Columbia’s billing

practices were fraudulent. But, there are no similar facts in this case. This case’s counterpart to

the Columbia invoices is the Option, which the trial court, on two occasions ruled was valid or

presumptively valid. (See discussion supra in section D).

Further, the jury rejected the Devenports’ affirmative fraud claim. Also distinguishing

the Columbia case is the fact that the defendant there was forced to defend the coverage issue

because Columbia had brought suit to collect and the insurer simultaneously filed a CPA

counterclaim. As noted above, the Devenports did not file a timely counterclaim. Instead, only

in response to the claims against the Perkins, they jointly filed a tag along CPA claim under a

different docket number almost a year after Fat Bullies commenced its breach of contract case.

(App. at 80) [7/24/15 Order].

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Finally, unlike this case, the suit in Columbia was initiated in an attempt to collect

invoices that were fraudulently inflated and false that the act of attempting to collect them was

unfair and deceptive. Accordingly, it follows that it was error for the trial court to conclude, as it

did, that “the bringing of the contract claim was a part of Fat Bullies unfair trade practices, and

the CPA counterclaim [sic] was a vehicle to recover fees for litigation into which the Devenports

were forced.” (Supp. at 57, emphasis added) [5/5/15 Order].

If the trial court believed that the Option was valid on its face in 2012 and that the trial

evidence had established the presumptive validity of the Option in 2014 by denying a directed

verdict, it could not have been an act of bad faith for Fat Bullies to have initiated a claim based

on that same Option. The trial court later acknowledged that the Devenport’s writ was not a

counterclaim and was filed later “after Fat Bullies had sued them [the Perkins],” but it simply

dismissed the distinction as “one without a difference.” (App. at 80) [7/24/15 Order].

In summary, the trial court’s reliance on Columbia was misplaced because, unlike this

case, the Columbia plaintiff’s conduct in bringing a lawsuit to enforce fraudulent invoices (which

forced the defendant to file a CPA counterclaim) was so egregious that the defendant was

entitled to recover its attorney’s fees as CPA damages. Here, the contract lawsuit was brought to

enforce an Option which the trial court deemed presumptively valid; and the Devenports were

not forced to (and indeed, they did not) file a counterclaim.

B. Several Later Massachusetts Appeals Court Decisions Have Distinguished Columbia Chiropractic and Refused to Award Attorney’s Fees as CPA Damages.

Subsequent Massachusetts Appeals Court decisions have refused to apply the Columbia

standard for the same reasons argued above — namely that the CPA plaintiff was not “forced” to

incur legal fees in response to a lawsuit which itself violated the CPA. The appeals court in Tech

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Plus, Inc., et al. v. Ansel, et al., 59 Mass. App. Ct. 12 (2003), refused to apply the Columbia

Chiropractic rationale, reasoning that:

Finally, the plaintiffs contend that Piper showed that she had suffered a loss of money or property because she introduced evidence that she had incurred attorneys’ fees in bringing this action and in defending against the defendants’ counterclaims. A plaintiff, however, may not show that she has suffered a loss of money or property within the meaning of… [section] 11 merely by showing that she has incurred attorneys’ fees and other costs in bringing an action under the statute. [Citations omitted]. Rather, she must show that she was forced to incur such expenses as a result of the defendants’ initiation of litigation which itself constituted a violation of the statute. Id. at 21, emphasis added; See also G.H.E., Inc. v. Hoo, 87 Mass. App. Ct. 1127 (2015); State Room, Inc. v. MA-60 State Associates, L.L.C., et al., 85 Mass. App. Ct. 1106 (2014) and Doering Equipment Co., et al. v. John Deere Co., 61 Mass. App. Ct. 850, 858 (2004)).

Thus, the core inquiry in determining whether attorney’s fees were properly awarded as

CPA damages is whether the initiation of the contract action was itself a violation of the CPA.

As we have demonstrated above, the answer to that question must be in the negative.

Accordingly, it was error for the trial court to award the Devenports their attorney’s fees as

damages and then double that amount to $647,186.

V. The Trial Court Erred in its Determination of the Reasonableness of the Attorney’s Fees Awarded to the Perkins and Devenports.

A. The Trial Court Erred in its Calculation of the Fees Awarded to the Perkins.

1. Any Perkins Fee Recovery Should Be Limited to Time Spent

Obtaining the Dismissals of Perkins I and II. The trial court ruled that “…the claims (Perkins I and II) brought against the Perkins

were brought in bad faith as part of this course of conduct as that term is used in Harkeem…”

(Supp. at 47) [5/5/15 Order]; but it awarded them fees for time spent after those claims were

dismissed, reasoning that they were “not analytically severable.” (Supp. at 75) [11/2/15 Order].

This puzzling conclusion is not supported by the record.

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Fat Bullies proffered a series of schedules derived from the Perkins’ legal invoices which

identified the time spent working on the dismissal motions and time spent on post-dismissal

matters. These schedules (App. at 273-311) [Tab A] and (App. at 303) [Tab F]1 showed that the

post-dismissal work was readily identifiable and different from the fees associated with the

dismissal work. (App. at 273, 276) [Tab B] lists fees totaling $42,348.37 after dismissal. Those

fees and costs should be disallowed.

2. The Perkins Can Not Recover Fees for Their Unsuccessful Attempt to Obtain a Dismissal of the Breach of Contract Claim Against the Devenports.

In 2012, the trial court denied the Perkins’ motion to dismiss the contract claim against

the Devenports. (App. at 7) [10/16/12 Order]. The time spent on that effort was separately

recorded and different from other matters. But the trial court awarded fees for that unsuccessful

effort, “because apportionment is inappropriate.” (Supp. at 75) [11/2/15 Order]. But the trial

court never explained why it was “inappropriate” to not apportion that time.

(App. at 277) [Tab L] is a summary of that unsuccessful legal work ($23,191); and all of

it should be disallowed. Where a party prevails only on some claims “any fee award should be

reduced to exclude time spent on unsuccessful claims.” Van Der Stok v. Van Voorhees, 151

N.H. 679, 685 (2005).

3. Time Spent Unsuccessfully Opposing Fat Bullies’ Two Motions to Produce Un-redacted Billing Records Should Have Been Disallowed.

In support of their fee application, the Perkins provided heavily redacted billing records.

See sample redaction pages. (App. at 311-14). Because the trial court granted Fat Bullies’ two

motions to compel the production of un-redacted records (App. at 42) [2/20/13 Order] and (App.

1 The appendix containing lettered fees analysis were exhibits attached to Fat Bullies’ Objection to Reasonableness

of Fees dated June 25, 2015. (App. at 224).

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at 50) [12/9/14 Order], time spent opposing those motions ($4,123 and $5,302) (App. at 279)

[Tab C] should be excluded because the Perkins lost.

4. Time Spent on the Perkins’ CPA Claim Should Be Disallowed. As previously noted, the trial court denied Fat Bullies’ motion to dismiss the

Perkins/Devenport joint CPA/fraud writ. Fat Bullies had argued that it was error to refuse to

dismiss claims because the Perkins had no standing to assert them as the alleged conduct was

directed solely toward the Devenports. (App. at 103) [July, 2012 Motion to Dismiss]. That

belief is supported by the Perkins voluntary dismissal of their claims on the first day of trial.

The trial court erroneously concluded that because “[t]he fees incurred on the

unsuccessful claims share a common core of facts and are based on related legal theories …these

fees are reasonable.” (Supp. at 76) [11/2/15 Order]. But there was no relationship (legally or

factually), between the Perkins’ fraud/CPA writ and those implicated by Perkins I and II; and it

was error for the trial court to award $9,145 of fees for that work. (App. at 279-80) [Tab C].

5. The Trial Court Also Erred in Awarding Attorney’s Fees Incurred in Connection with the Deposition of Carol Naser.

The Perkins’ fees associated with the resumed deposition of Carole Naser ($2,639) (App.

at 285) [Tab E] should also be excluded. Fat Bullies noticed the deposition of Carole Naser who

was the Perkins’ manager of Runnymede Farm which was the optioned property. She refused to

answer any substantive questions and after a hearing on Fat Bullies’ motion for contempt, the

trial court ordered Naser to appear and respond to questions. (App. at 1) [2/14/12 Order]. That

resumed deposition would not have been necessary if Naser (the Perkins’ employee-manager)

had complied with the subpoena in the first instance.

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6. Summary.

In summary, the Perkins’ fees should be reduced by $77,048 which is the total of the

amounts discussed in sub-sections 1, 2, 4 and 5 above. Item 3 amounts are not included as they

are already counted in the $42,348 worth of post dismissal work. Those amounts would be

deducted only if all of the other post dismissal time were allowed.

B. The Trial Court Erred in its Determination of the Reasonableness of the Devenports’ Attorney’s Fees.

The trial court found that the Devenports’ reasonable attorney’s fees were $323,593. It

then doubled that amount for a final fee award of $647,186. (Supp. at 82) [11/2/15 Order]. This

unprecedented award is not reasonable and should be significantly reduced.

1. Because It Was Error to Award Attorney’s Fees as CPA Damages, the Maximum Fee Should Be No More Than $323,593.

The discussion in Section IV, supra, demonstrated that the trial court erred in awarding

doubled attorney’s fees as CPA damages. Thus, the maximum award should be no more than

$323,593. But, as discussed below, that award should be further reduced.

2. The Devenport’s Legal Fees Should Be Reduced by the Amount of Fees Incurred Before Their CPA Claim was Filed.

Before their CPA claim was filed, the Devenports incurred fees of $64,072 solely in

defending the undismissed and tried contract action. (App. at 286) [Tab J]. This amount should

have been disallowed as none of those fees were related to the CPA claim.

But the trial court ruled that those fees were “inextricably intertwined” with the CPA

fees. (Supp. at 75) [11/2/15 Order]. But this ruling was based on an erroneous finding that the

mere act of filing the contract claim was a CPA violation. But it was not unreasonable for Fat

Bullies to file its contract claim. (See Section III D, supra). Accordingly, the fee award should

be reduced by $64,072.

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3. There Are Additional Reasons Why the Devenports’ Fee Award Should Be Further Reduced.

a. The June, 2014 Fees Sought by the Devenports Are Excessive

and Unreasonable. During June, 2014 (the month of the trial) the Devenports employed several lawyers and

a paralegal for a total of 345 hours billed at $145,109.50, an average of 11.5 hours daily, or

$4,837 per day for the trial of a simple contract case. (App. at 287) [September, 2014 bill]. As

noted in Lipsett v. Blanco, 975 F.2d 934, 938 (1st Cir. 1992), “A trial court should ordinarily

greet a claim that several lawyers were required to perform a single set of tasks with healthy

skepticism” [and] “As a general matter, the time for two or three lawyers in a courtroom or

conference, when one would do, ‘may obviously be discounted…” Fee shifting is not to serve as

full employment or continuing education programs for lawyers and paralegals.

Fat Bullies’ counsel tried the case alone. (Supp. at 68) [11/2/15 Order]. In contrast, the

Devenports’ team consisted of numerous attorneys and a paralegal working on the same or

similar tasks. This type of Boston law firm overstaffing is clearly unreasonable. The excessive

fees should be reduced by $62,781 because the case was overstaffed by eight lawyers when two

at most would have sufficed. (App at 298-300) [Devenport Tab A].

b. The Trial Court’s Award of Post-Trial Motion Practice Fees Was Grossly Inflated.

The Devenports’ post-trial bills totaled approximately $100,000, a grossly inflated figure

due to unnecessary and duplicative work. (App. at 301-02) [Tab K] shows that work performed

on two motions to set aside the jury verdict was unnecessary because a team of three attorneys

spent 19 hours ($7,557) performing the same “reviewing” and “drafting” tasks. Four attorneys

were also employed to draft a “sur-reply” (App. at 302) [Tab K] which consumed 33 more hours

($13,370), with each engaged in identical “drafting” and “editing” activities. In summary, the

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Devenports’ attorneys spent more than 52 hours ($20,927) dealing with non-complicated

motions. That time should be sharply discounted by at least 80% (to $4,185) because this work

could easily have been accomplished by a single lawyer as it was by Fat Bullies. Fee shifting

precedent in this case will determine what this Court considers appropriate; but should not result

in a cash cow to be milked at will or dangerous precedent will be set in our State for all future

fee cases.

c. Time Spent on the Bill Redaction Issue Should Be Disallowed.

An enormous amount of time (154 hours) (App. at 306) [Tab F] was spent redacting

Hinckley, Allen & Snyder billing records and in drafting pleadings to support their untenable

position that the redactions involved privileged/ work product materials. This time was devoted

to, inter alia: (i) redacting the bills; (ii) preparation of a Vaughn index, (iii) creating a

“breakdown” or “analysis” of the bills and (iv) responding to Fat Bullies’ motion for sanctions

which resulted in a final order ultimately requiring the production of complete un-redacted bills.

(Supp. at 43) [5/5/15 Order]. No hourly rates were provided for many of the attorneys

performing these tasks, but a blended rate estimate produces a value of $46,200.

The trial court allowed all fees incurred in connection with the redaction issue, reasoning

that the redactions were not made in bad faith. (Supp. at 59) [5/5/15 Order]. But based on the

record (App. at 386) [Tab I, highlighted unredacted bills] which shows that none of the redacted

narratives contained any privileged materials, it is difficult to understand how the trial court

could have concluded that the Devenports’ attorneys acted in “good faith” in continuing to resist

production of their billing record narratives based on a non-existent privilege!

This court can see an example of a group of redacted bills in (App. at 386-97). The

assertion was the redactions involved attorney-client privileged communications and advice.

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The frivolity of this is evident in Perkins Tab I where (App. at 395) four times the words

“regarding same” were deleted. That is a bad faith use of a very important privilege to mask

nothing of value. Pages 396 and 397 are further examples of wasted time that should never have

been condoned by the trial judge. The unredacted copies are Tab I from the Fat Bullies’

Objection so that this court can see random page examples of frivolous incantation of the

attorney-client communications privilege which is rarely, if ever, plugged into routine billing

entries by an attorney.

Regardless, the test should not be whether the attorneys acted in good faith but whether

Fat Bullies was required to expend an unreasonable amount of time in obtaining what it was

entitled to and whether the Devenports prevailed on that issue (which they did not). This was

clear error. All of those fees ($46,200) should be disallowed.

d. The Hourly Rates Charged Were Not Reasonable.

Attorney Carter’s Affidavit filed in support of the Devenport/Perkins’ fee applications

(App. at 315) shows the following range of rates for the principal attorneys who worked on this

matter: Carter- $445 to $485, Deschenes- $325 to $375 and Fojo- $250 to $295.

Thus, the average rate for each is: Carter $465; Deschenes $350; and Fojo $273. These

rates stand in stark contrast to both the median ($225) and the mean ($302 for partners and $217

for associates) hourly rates for New Hampshire attorneys which are contained in The New

Hampshire Bar Association’s “The 2014 Economics of Law Practice Survey” (“N.H. Survey”)

submitted to the court by Fat Bullies. (App. at 324). But the trial court dismissed the N.H.

Survey and, instead, relied on the Carter Affidavit’s rates for “similarly situated firms in New

Hampshire.”. (Supp. at 72) [11/2/15 Order].

44

But the test should not be what the large metropolitan law firm rates (with large

overheads and platoons of associates and paralegals) are but whether the rates are “reasonable.”

In making that determination, this Court should be guided by the N.H. Bar Survey which shows

that their rates exceeded the statewide mean rates by 35%, 14% and 21% respectively — or a

blended average of 23%. Accordingly, the award should be reduced by 23% and an appropriate

precedential benchmark should be set in this case for all future cases.

e. Summary

The Devenports’ fee award should be adjusted as follows:

Original award by trial court $647,186 Less doubling factor -$323,593 Subtotal $323,593 Less pre-CPA contract defense work -$64,072 Subtotal $259,521 Less excessive June 2014 fees -$62,751 Subtotal $196,740 Less excessive post-trial motion practice time -$16,742 Subtotal $179,998 Less fees incurred for redaction issue -$46,200 Subtotal $133,798 Less 23% discount for excessive hourly rates -$37,726 Final adjusted total $96,072

VI. The Trial Court Erred in Quashing a Deposition Subpoena Duces Tecum for

Attorney Valhouli and in Narrowly Circumscribing his Trial Cross Examination.

A. The Deposition Subpoena.

Fat Bullies served Attorney Valhouli, who had long represented the Perkins family (App.

at 338) [9/20/12 Valhouli Affidavit, ¶4], with a deposition subpoena duces tecum which required

45

him to produce his records, for work performed for the Perkins and the Devenports. (App. at

146) [Valhouli Motion to Quash]. The trial court granted motions by the Devenports, Perkins

and Attorney Valhouli to quash that subpoena in its entirety. (Supp. at 16, 23) [12/18/12

Orders].

Fat Bullies intended to depose Attorney Valhouli because:

the records show a total of twelve phone calls (consuming a total of thirty six minutes) back and forth on October 12, 2010, the day Plaintiff exercised its Option. The first call was from the Devenports to Alan Perkins at 10:21 AM, shortly after the Option exercise letter was delivered. This was followed by Perkins’ call to Attorney Valhouli at 12:23 PM. A number of other calls were exchanged between then and late afternoon. The last phone conversation with Attorney Valhouli that day was placed by Alan Perkins at 4:42 PM and consumed eleven minutes. Eighteen minutes later at 5:11 PM Attorney Valhouli faxed a response letter to Attorney Simmons stating that his clients (the Devenports) would not honor the Option. (App. at 152) [9/18/12 Fat Bullies’ Objection to Motion to Quash].

Fat Bullies was shocked that the same lawyer would ethically represent the buyer and the

seller of a real estate transaction. But the trial court granted (without explanation) the motions to

quash, apparently based on arguments that any inquiry into that supposed representation was

privileged. (App. at 146) [Motions to Quash], (Supp. at 16, 23) [12/18/12 Orders]. Plaintiff was

thus denied the right to inquire at all into how Valhouli could be on both sides of a real estate

transaction and whether he was involved in interfering with the sale to Fat Bullies on behalf of

his long-term financial benefactor Alan Perkins.

The law is clear. Neither the fact of representation nor the content of billing narratives is

privileged. Hampton Police Assn., Inc. v Town of Hampton, 162 N.H. 7 (2011). (“A blanket

assertion [of privilege] is generally extremely disfavored.” (Id. at 16). Thus, inquiries about

when an attorney conferred with his client and what “subject matters” were discussed are not

privileged; and the trial court erred by endorsing the Devenport/Perkins/Valhouli arguments to

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the contrary and in barring every question about Mr. Perkins’ sudden legal involvement with the

Option he claimed to know nothing about and a property he allegedly had no interest in!

That the trial court was wrong was borne out by its later order which required the

Devenports and Perkins to produce their billing record narratives which they claimed were

“privileged and Fat Bullies may not compel its production.” (App. at 42) [2/26/13 Order]. The

trial court ultimately correctly rejected that argument, citing Hampton Police Assn. Id. at 5.

The error was not harmless error because it led to a summary judgment adverse to Fat

Bullies due to a “lack of evidence” of any interference. Further, had Fat Bullies been permitted

to examine Attorney Valhouli at deposition or trial about (i) when he was retained by the

Devenports; (ii) for what purpose he was retained; (iii) whether he advised them concerning their

ability to terminate the Option and how to reply to Fat Bullies’ letter exercising the Option; and

(iv) whether he was simultaneously advising the Perkins as his allegedly then “non-clients”

about the Option and its exercise, such information may well have changed the outcome of the

trial if it showed the jury that the Perkins and Devenports were collaborating (through their

mutual attorney) to terminate the Option and, instead sell the Farm to the Perkins. The lower

court should not be sustained if truth is what is at stake in trials in the Superior Court.

B. The Trial Court Erred in Limiting Attorney Valhouli’s Trial Cross Examination.

The trial court compounded its Valhouli deposition error by permitting him to testify as a

trial witness for the Devenports while massively circumscribing his cross examination.

Despite Bret Devenport’s testimony that (i) Alan Perkins recommended that the

Devenports retain the legal services of Attorney Valhouli (Tr. 377:1-25; 378:1-2); (ii) that

Valhouli was at that time the Perkins’ family attorney (App. at 338) [9/20/13 Valhouli Affidavit,

¶4.]; (iii) that Bret called Valhouli on September 1, 2010, to “look for advice” about “this

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[Option] transaction” (Tr. 390:4-10); (iv) that Bret spoke to Alan Perkins that same day (Tr.

390:11-14); (v) that there were several telephone calls between Alan Perkins, Bret Devenport

and Attorney Valhouli on October 8 and 12, 2010, (when decisions were made to terminate the

Option) (Tr. 391:12-21; 392:2-21); and (vi) that Bret’s telephone call with Valhouli on October

12, 2010, was about the “Option” (Tr. 392:15-17), the trial court refused to permit Fat Bullies to

question Valhouli about this at all when he testified at trial. (Tr. 1,123:24-25).

Indeed, when Fat Bullies’ counsel presented a list of proposed questions he wanted to ask

of Attorney Valhouli, the trial court denied all of them except for one. (Tr. 1,124-1,126;

1128:22). (Supp. at p. 1.) [Ex. 81]. Plaintiff’s counsel had the forethought to literally type out

all of his cross-examination so that the record was preserved as to what he would have asked

Attorney Valhouli. The questions were marked for identification to preserve the record for

appeal as counsel was concerned about Judge Wageling’s dismissive view of the significance of

Valhouli’s role in this sordid affair.

When Attorney Valhouli made his cameo appearance solely to explain that he had authored

a letter establishing a May 13, 2011, litigation deadline supposedly without the authorization of

his clients (Tr. 1130:8-24), Fat Bullies’ counsel was precluded from asking any questions about

the content of that letter or its background. (Tr. 1,131:13-25; 1,132:2-20).

As noted above in Section VI A, had Fat Bullies been permitted to examine Attorney

Valhouli about (i) when he was retained by the Devenports and for what purpose (ii) whether he

advised them about the Option and how to reply to Fat Bullies’ letter exercising the Option; and

(iii) whether he was simultaneously advising the Perkins, that information may well have

changed the outcome of the trial if it permitted the jury to see that the Perkins and Devenports

were collaborating (through their shared lawyer Valhouli) to terminate the Option and sell the

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Farm to the Perkins. It was error for the trial court to deny Fat Bullies the opportunity to develop

this evidence on cross examination. Attorney-client privilege cannot be waived so selectively as

to be a shield and a sword at the same time.2

While this argument may appear last in this brief, a review of the banished questions will

show how important it was to be able to explore the bona fides of a buyer and seller colluding

while defendants were asserting the real reason for canceling the sale was “kids in school” or

fraud by Fat Bullies.

CONCLUSION

For the reasons set forth above, Fat Bullies requests that this Court: (i) reverse the trial

court’s award of attorney’s fees to the Perkins; (ii) reverse the trial court’s finding of a CPA

violation and award of attorney’s fees as damages to the Devenports; and (iii) reverse the trial

court’s order dismissing the interference claim against the Perkins and (iv) remand the

interference issue back to the trial court for further proceedings with full exploration of the

shared attorney’s role in this matter.3

REQUEST FOR ORAL ARGUMENT

Fat Bullies requests that it be permitted 30 minutes for oral argument.

CERTIFICATE OF ATTACHMENT OF APPEALED DECISIONS

Counsel for Fat Bullies hereby certifies that the appealed decisions or orders are in

writing and are found in the Supplement appended to this brief.

2 The dual role of Attorney Valhouli is evident in a pleading he prepared on behalf of both the Perkins and

Devenports that was filed on November 25, 2015, seeking an attachment below. (App. at 362). This timely appeal

was filed six days later on December 1.

3 Remanding to the trial judge below is not possible as she has hired the opposing counsel’s firm as her personal

attorney in a pending unrelated matter. On January 8, 2016, she recused herself from further activity in this case

after awarding Attorney Carter $848,121.11 in fees and costs. (App. at 341) [1/8/16 Order].

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Respectfully submitted, FAT BULLIES FARM, LLC By its attorneys, Date: April 28, 2016 By: ____________________________________ Charles G. Douglas, III, Bar #669 Douglas, Leonard & Garvey, P.C. 14 South Street, Suite 5 Concord, NH 03301 (603) 224-1988

CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been mailed by first-class mail this 28th day of April 2016, to Christopher H. M. Carter, Esq., and Daniel M. Deschenes, Esq. at 11 South Main Street, Suite 400, Concord, NH 03301. __________________________________ Charles G. Douglas, III

Documents

THE STATE OF NEW HAMPSHIRE SUPREME COURT Fat Bullies … · 2017-11-30 · THE STATE OF NEW HAMPSHIRE SUPREME COURT Fat Bullies Farm, LLC v. Bret and Lori Devenport Alan and Donna