2011-121, Jeffrey Frost & a. v. Commissioner, New Hampshire Banking Department & a.

The respondents, the Commissioner of the New Hampshire

orally), for the respondents. attorney general, on the brief, and Lisa M. English ___________________________, assistant attorney general, Michael A. Delaney, attorney general (Danielle L. Pacik, assistant

Joshua M. Wyatt on the brief, and Mr. Walker orally), for the petitioners. a.m. on the morning of their release. T Devine, Millimet & Branch, P.A., of Manchester (Alexander J. Walker and reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address:

COMMISSIONER, NEW HAMPSHIRE BANKING DEPARTMENT & a.

THE SUPREME COURT OF NEW HAMPSHIRE v.

editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New

page is: http://www.courts.state.nh.us/supreme.

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

which would help pay down or satisfy the mortgage.

represented to Chretien that he was expecting a large insurance settlement, term financing, and instead opted to refinance after closing. In addition, Recio purchase the property. Recio rejected Chretien’s suggestions to look for long-

In December p. 2 2008, Recio and Secor decided to exercise the option to

closing and the transfer of title.” was “fully due and payable on the third anniversary date of the real estate

Chretien to provide a first mortgage loan for $4 p. 2 25,000 at 6.25% interest, which

executed an option to purchase the property, which, if exercised, obligated term lease with Chretien. At the time of the lease execution, the parties also of $475,000. After further discussions, Recio and William Secor signed a long-

properties with an option to purchase. The parties agreed on a purchase price

September p. 2 2008, Robert Recio expressed interest in leasing one of Chretien’s

The second transaction involved a property owned by Chretien. In

that Frost Family has ever made.

remaining purchase price in cash. This transaction is the only mortgage loan

Frost Family, secured by a mortgage, for the financed amount. Cayer paid the financing from Frost Family. At closing, Cayer executed a promissory note to $137,000. In lieu of third-party financing, Cayer requested $3 p. 2 2,000 in seller

Department. See

In September p. 2 2008, Frost Family sold a condominium to Cheryl Cayer for

as a mortgage loan originator unless such individual obtains a license from the

designated manager of Chretien/Tillinghast, LLC (Chretien), The following facts are drawn from the record. Frost is a member and

conducted by Frost Family and the other by Chretien. it became unlawful for any individual to transact business in New Hampshire arose as the result of two seller-financed real estate transactions, one amended RSA chapter 397-A (Supp. p. 2 2009). Accordingly, effective April 1, 2009, state-licensed mortgage loan originators, the New Hampshire legislature

of real estate acquisition, holding, and development. The underlying dispute

legislation establishing minimum standards for licensing and registration of

violation of the provisions of the chapter.

LLCs) are New Hampshire limited liability companies organized for the purpose Frost Family, LLC (Frost Family). Chretien and Frost Family (collectively, the § 5101, which enhanced consumer protection by requiring states to pass and a member of Enforcement for Mortgage Licensing Act of p. 2 2008 (the SAFE Act), 12 U.S.C. mortgage bankers and brokers. In response to the Secure and Fair

statute authorizes license suspension and revocation, as well as penalties for

RSA 397-A:3, I. In addition, effective July 31, p. 2 2009, the

( p. 2 2006) (amended 2009, 2011) governs the licensing of nondepository first The statutory backdrop to this case is as follows. RSA chapter 397-A p. 3 Frost became a licensed mortgage loan originator, see

a loan originator license application to the Department. On April 1, 2009,

In March 2009, after both instances of seller-financing, Frost submitted

investigation, which disclosed the two seller-financed transactions by the LLCs.

without a New Hampshire mortgage servicer registration.” See mortgage loan,” and that Frost Family was “servicing [the Cayer] mortgage loan

Department. Upon receipt of Recio’s complaint, the Department initiated an

served as either the mortgage broker or mortgage banker for [the Cayer]

unlicensed mortgage banking). The complaint was also forwarded to the

“financial services-related employment.” It alleged that “[i]n fact Frost Family employed through” Frost Family, he failed to disclose that Frost Family was a his mortgage loan originator’s license application that “he was and still is self-

criminal violations of RSA chapter 397-A (prohibiting, among other things, Subsequently, Frost was charged with four class A misdemeanors alleging fraudulently induced him to enter into the sale for an inflated price.

servicer registration or a valid mortgage banker license. See initiating documents, the Department alleged that although Frost disclosed on

Attorney General’s Office alleging, among other things, that Frost and Chretien

to actively service this . . . residential mortgage loan” without a valid mortgage Suspension and Cease and Desist Order,” as well as a “Staff Petition.” In these mortgage loan transaction with Recio and Secor, and that Chretien “continues his application] . . . that he is also part owner of [Chretien],” which conducted a

thereafter, Recio filed a complaint with the Consumer Protection Bureau of the by Recio that he had not previously filed for bankruptcy protection. Shortly Department alleged that “Frost, by continuing his employment with both [LLCs] granted relief from the automatic stay based on fraudulent misrepresentations id. Finally, the

Frost through an “Order to Show Cause with Immediate Emergency In 2010, the Department initiated administrative proceedings against companies). The Department alleged further that “Frost failed to include [on (Supp. 2009) (describing registration requirements for mortgage servicing

Recio filed for bankruptcy. In the bankruptcy court, Chretien sought and was

“Mortgage banker”).

(Supp. 2009) (amended 2011) (defining “Originator”), sponsored by Academy

proceedings on the property Chretien sold to Recio and Secor. In response, In late 2009, Frost, as manager of Chretien, initiated foreclosure

plus interest, until March 2012, promised to pay $425,000 at 6.25% interest, in monthly payments of $300,

made. and payable. This transaction is the only mortgage loan Chretien has ever

by a mortgage to Chretien. Under the terms of the note, Recio and Secor On March 13, 2009, Recio and Secor executed a promissory note secured order as a final order. See p. 4 Subsequently, the parties agreed to treat the preliminary injunction

sanctions. Frost,” it did not need to consider the issue of the retrospective nature of the court concluded that since the Department “may not impose any penalties on

on the September 2008 or the March 2009 transactions.” Further, the trial

because he is now a loan originator, it [could] take no action against him based

concluding that “[w]hile the [Department] may have jurisdiction over Frost After a hearing, the trial court granted the preliminary injunction,

violation.

retrospective laws by seeking to impose a $25,000 fine for each alleged against Frost and violated the State Constitution’s prohibition against contended that the respondents lacked subject matter jurisdiction to proceed

declaratory findings on issues of law, the trial court did not err. requires statutory interpretation, and the superior court has authority to issue which included a request for a temporary restraining order. The petitioners regulate the LLCs. Specifically, they argue that because resolution of this issue Department lacks subject matter jurisdiction under RSA chapter 397-A to its authority to grant both a preliminary and permanent injunction because the

the petitioners initiated a declaratory judgment proceeding in superior court, under RSA chapter 541-A (2007). Frost did not file such a request. Instead, I. The Department’s Appeal Department notified Frost that he could request a hearing with the Department Conversely, the petitioners maintain that the trial court properly exercised denied.

administrative remedies. have abstained from intervening and required the petitioners to exhaust their maintains that under the doctrine of primary jurisdiction, the trial court should preliminary and permanent injunction in the superior court.” The Department permitted to bypass the statutory administrative procedures by seeking a The Department first argues that the petitioners “should not have been

At the time the administrative proceedings were initiated, the attorney’s fees. The petitioners filed such a motion, which the trial court order, however, the trial court allowed the petitioners to file a motion for

397-A:1, XVII(a), RSA 397-A:3, III, and/or RSA 397-B:1, IV-c.” mortgage broker and mortgage servicer and [was] therefore in violation of RSA

Mortgage Loan Originator, work[ed] for more than one mortgage banker or while employed by mortgage banker licensee, Academy Mortgage, as a licensed the river’s diversion. Id p. 5 The plaintiffs brought an action in superior court for damages caused by

superior court granted the defendants’ motion, and the plaintiffs appealed. Id. exclusive jurisdiction over matters involving state waters. Id. at 705. The In Wisniewski arguing the trial court lacked jurisdiction over the action because the board had

was ever submitted, but the board took no further action. Id. a permit application and detailed plans for the diversion of the river. Id. No plan its order and deferred further action on the issue until the defendants submitted 2 Am. Jur. 2d Administrative Law and restore the affected area. Id. Later, however, the board voted to reconsider defendants’ actions, the board ordered them to return the river to its original flow Water Resources Board. Wisniewski, 123 N.H. at 704. Upon learning of the plaintiffs’ property and theirs without prior authorization by the New Hampshire

the sound discretion of the trial judge,” Dolan v. Utica Mut. Ins. Co. without prejudice.”); see also State v. Lambert, 147 N.H. 295, 296 (2001). invoke the primary jurisdiction doctrine and to either stay or dismiss the action court applies an abuse of discretion standard to the district court’s decisions to Services, Inc. v. Qwest Corp., 493 F.3d 1225, 1239 (10th Cir. 2007) (“This agency under the primary jurisdiction doctrine for abuse of discretion.”); TON Cir. 2011) (“We review a district court's denial of a request to refer a case to an Communications v. U.S. South Communications after that tribunal has rendered its decision., 650 F.3d 1257, 1262 (9th abstain on primary jurisdiction grounds . . . for abuse of discretion.”); GCB question within the jurisdiction of an administrative tribunal until Inc., 660 F.3d 686, 690 (3d Cir. 2011) (“We review a district court’s decision to they could decide, will in fact not decide a controversy involving a unsustainable exercise of discretion standard. See Thus, under the primary jurisdiction doctrine, courts, even though Baykeeper v. NL Industries, Supp. 305, 308 (D. Mass 1986), we review the court’s decision under an issue within the special competence of an administrative agency. particular regulatory duties. It applies to claims that contain some, 630 F. (2004). Because the decision to refrain from exercising its jurisdiction “rests in between the courts and administrative agencies charged with to an agency.” 73 C.J.S. Public Administrative Law and Procedure § 77, at 270 issue or issues . . . involve purely questions of law, the matter will not be referred

[The doctrine] is concerned with promoting proper relationships

decide it.” Wisniewski v. Gemmill, 123 N.H. 701, 706 (1983). decided by the specialized administrative agency that also has jurisdiction to exercising its concurrent jurisdiction to decide a question until it has first been The doctrine of primary jurisdiction “provides that a court will refrain from procedure is exclusive and must be followed. See p. 6 procedure for appeal or review of an administrative agency’s decision, that

exhaustion of administrative remedies. Whenever a statute provides a

We note that our decision here does not alter our law regarding

constitute an unsustainable exercise of that discretion. that the trial court’s decision not to refrain from exercising its jurisdiction did not

do not agree that such limitation is warranted here. We conclude, therefore, 6

exclusively within administrative discretion). PELRB where her claims required resolution of disputed fact, and were therefore 258 (1998) (requiring plaintiff to exhaust her administrative remedies before the exhausted. See Konefal v. Hollis/Brookline Coop. School Dist., 143 N.H. 256, an agency decision may be reviewed, administrative remedies typically must be exhaustion requirement is not a matter for the court’s discretion.”). Thus, before here, where agency action is pending, the trial court’s discretion is limited. We remedies a court has no jurisdiction to review an interlocutory order and the discretionary, it nevertheless maintains that in circumstances such as those § 475, at 403 (2004) (“[W]here a statute requires exhaustion of administrative dissent apparently acknowledges that the doctrine of primary jurisdiction is Commission, 101 N.H. 503, 506-07 (1959); 2 Am. Jur. 2d. Administrative Law

transactions. See outcome of the Department’s administrative proceedings centered on these over the two transactions at issue here, there is no need for the court to await the Similarly, if RSA chapter 397-A does not grant the Department jurisdiction

referral to agency where agency lacks jurisdiction over the matter). While the properly resolve this legal issue. See 73 C.J.S., supra § 77, at 270 (noting no Department’s jurisdiction requires statutory analysis, the trial court could necessary implications of those statutes”). Because a determination of the directly from the statutes that create them or give them authority and from the and Procedure, § 62.04, at 62-4, 62-5 (noting agencies’ powers “come solely and

5 G. J. MacDonald, Wiebusch on New Hampshi re Civil Practice

authorization by the board.” Id. infringement of riparian rights when the filling and dredging was not given prior board no jurisdiction over disputes between private parties involving an was “inapplicable . . . because RSA chapter 483-A granted the water resources the doctrine of primary jurisdiction. Id. at 706. We concluded that the doctrine alternative argument that the trial court’s order should have been affirmed under filling or dredging in state waters.” Id. Moreover, we rejected the defendants’ action for a violation of its riparian rights when the board has not authorized the the board and to eliminate the common law right of a property owner to bring an chapter 483-A, did not intend “to vest exclusive jurisdiction over state waters in On appeal, we reversed, concluding th at the legislature, in enacting RSA clearly erroneous findings of fact. N.H. Dep’t of Envtl. Se p. 7 injunction absent an error of law, an unsustainable exercise of discretion, or at law and would suffer irreparable harm. We will uphold the issuance of an court found that without an injunction, the petitioners had no adequate remedy isolated transaction,” RSA chapter 397-A was inapplicable. In addition, the trial to be in the business of making or brokering mortgage loans, by virtue of a single merits. The trial court reasoned that since none of the petitioners could “be said concluded that the petitioners demonstrated a likelihood of success on the decision to exercise its equitable powers to grant temporary relief, the trial court

challenges the trial court’s interpretation of RSA chapter 397-A. In reaching its administrative proceedings against Frost. Specifically, the Department Next, the Department contends that the trial court erred in enjoining its

57, 63 (2007).

not required under certain circumstances.” Konefal exhaustion of administrative remedies doctrine is flexible, and that exhaustion is jurisdiction. review remedies, here, exhaustion is not required. “We have recognized that the dispositive, the trial court sustainably exercised its discretion to maintain Assuming, however, that RSA 397-A:17 implies exclusive administrative exhaustion is not necessarily required). Thus, here, where an issue of law is (where the issue is a question of law, such as the interpretation of a statute, see also Bedford Residents Group v. Town of Bedford, 130 N.H. 632, 639 (1988) discretion.” Pheasant Lane Realty Trust, 143 N.H. at 141-42 (quotation omitted); question of law rather than a question of the exercise of administrative is not required to exhaust administrative remedies where the issue on appeal is a Realty Trust v. City of Nashua, 143 N.H. 140 (1998), we explained that “[a] party Metzger v. Brentwood, 115 N.H. 287, 290 (1975). For example, in Pheasant Lane

exhaust. Accordingly, there is no exclusive review process that Frost was required to outlines the procedural steps in the revocation or suspension process. does not set forth a similar review procedure. Rather, this section simply By contrast, RSA 397-A:17 (mortgage license revocation and suspension)

agency’s decision.”). RSA chapter 541 is authorized, it is the exclusive means of challenging an judicial review. 5 G.J. MacDonald, supra § 62.2 p. 8 8, at 62-28 (“When review under this section, a petitioner must exhaust administrative remedies before seeking order of the [agency], except as otherwise specifically provided.”). Thus, under state to set aside, enjoin the enforcement of, or otherwise review or impeach any other than the appeal herein provided for shall be maintained in any court of this in accordance with RSA chapter 541. See RSA 541:22 (2007) (“No proceeding mortgage lending license by the banking commissioner may appeal the decision For example, RSA 397-A:7 provides that an applicant who is denied a 8

loans. conclusion that the LLCs were not engaged in the business of making mortgage Department’s administrative proceedings. We agree with the trial court’s single isolated transaction, thereby subjecting Frost, as its agent, to the “engage[d] in the business of making or brokering mortgage loans” by virtue of a in RSA 397-A:4. The question, then, is whether either of the LLCs was a person 397-A, we need not consider, as the dissent suggests, the exemptions delineated the scope of the Department’s subject matter jurisdiction under RSA chapter to the exemption set forth in RSA 397-A:4, II. Because our analysis focuses on person be a natural person relates not to this jurisdictional predicate, but rather the business of making or brokering mortgage loans.” The qualification that a the statute grants the Department jurisdiction only over “persons that engage in RSA 397-A:2, I (emphasis added). Thus, by its plain and unambiguous language,

living units. residence by the borrower and which consists of not more than 4 which is or shall be occupied in whole or in part as a place of secured by real property located in the state of New Hampshire, that engage in the business of making or brokering mortgage loans This chapter shall provide for the department’s regulation of persons

We review the trial court’ s statutory interpretation de RSA 397-A:2 provides in pertinent part that:

person’s own investment without an intent to resell such mortgage loans”). scheme and not in isolation. Id. include. Id. We also interpret a statute in the context of the overall statutory legislature might have said or add language that the legislature did not see fit to legislative intent from the statute as written and will not consider what the meaning to the words used. Fog Motorsports #3, 159 N.H. at 26 p. 8 8. We interpret examining the language of the statute, we ascribe the plain and ordinary considered as a whole. Kenison v. Dubois, 152 N.H. 448, 451 (2005). When arbiter of the intent of the legislature as expressed in the words of the statute Motorsports #3 v. Arctic Cat Sales, 159 N.H. 266, 267 (2009). We are the final

mortgage loans within any calendar year with the person’s own funds and for the 3 p. 9 97-A:4, II (exempting “[a]ny natural person making not more than 4 first companies were not . . . ‘natural person[s],’” so licensure was required. See RSA that mortgage loans executed by the LLCs were not exempt “because those (exempting certain classes of persons from licensing requirements). It argues mortgage transactions that are not specifically exempt under RSA 397-A:4 397-A. The Department maintains that the chapter applies to all residential The Department argues that the tr ial court misinterpreted RSA chapter 9

more than 3 mortgage loans to purchasers of the property for all or real property who in any 12 consecutive month period makes no The provisions of this chapter shall not apply to . . . [a]n owner of

2011, RSA 3 p. 9 97-A:4 (Supp. 2011) was amended to provide as follows: Subsequently, however, section four was again amended. Effective July 1,

RSA 3 p. 9 97-A:4, III-IV (Supp. 2009). mortgage loan secured by a dwelling that served as the individual’s residence.” individual,” or “[a]n individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the requirements only “[a]ny individual who offers or negotiates terms of a residential narrowed the exemptions for seller-financing to exclude from the licensing In response to the federal SAFE Act, the New Hampshire legislature initially our construction. See Franklin v. Town of Newport, 151 N.H. 508, 512 (2004). Finally, the subsequent legislative history, while not controlling, supports

engaging in the business of making loans under similar statutes.”). isolated act of loaning money as an accommodation to a customer or friend is not Currier v. Tuck, 112 N.H. 10, 12 (1 p. 9 972) (“It has been held that an occasional estate professional engaged in the business of renting or selling properties.”); cf. engagement in trade or commerce. Id loans. In Green Meadows Mobile Homes v. City of Concord. at 578-79 (“The plaintiff was not a real the plaintiff’s involvement in a single transaction was insufficient to constitute transaction does not constitute being “in the business” of making mortgage nature, and not undertaken in the ordinary course of a trade or business. Thus under the Act are not available when the subject transaction is strictly private in sales agreement, did not violate the Consumer Protection Act because remedies plaintiff, who rented and attempted to sell her real property through a lease and Similarly, in Hughes v. DiSalvo, 143 N.H. 576, 578 (1999), we concluded that the managing manufactured housing parks.” Id. (quotations and brackets omitted). business of selling such units, but rather [were] in the business of owning and petitioners on occasion [sold] manufactured housing units, they [were] not in the (2007), we held that the petitioners were not “dealer[s]” because “while the

Our case law supports the contention that a single mortgage lending

transactions or dealings, rather than a single incident. or gain” (emphasis added)). Thus, to “engage in the business” implies multiple profit; a particular occupation or employment habitually engaged in for livelihood ( p. 9 9th ed. 2009) (defining “business” as “[a] commercial enterprise carried on for (unabridged ed. 2002) (defining “business”); see also Black’s Law Dictionary 226 intercourse of any nature.” Webster’s Third New International Dictionary 302 Generally, however, “business” is defined as “transactions, dealings, or The statute does not define the phrase “engage in the business.” p. 10 10

benefit on the public through this action.” We disagree.

II. The Petitioners’ Cross-Appeal

over Frost as a mortgage loan originator. decision, however, does not otherwise limit the Department’s regulatory authority

protection against retrospective laws”; and (3) “they conferred a substantial

Frost with respect to the LLCs’ single mortgage lending transactions. Our discretion by enjoining the Department from taking disciplinary action against We conclude, therefore, that the tr ial court sustainably exercised its the Department acted in bad faith; (2) the Department “intru[ded] upon the Specifically, they maintain that they are entitled to attorney’s fees because: (1) Finally, the petitioners challenge the trial court’s denial of attorney’s fees.

made, either for the decision of civil causes, or the punishment of offenses.”). highly injurious, oppressive, and unjust. No such laws, therefore, should be Hampshire Constitution. See N.H. CONST. pt. I, art. 23 (“Retrospective laws are and RSA 397-A:17 would not have violated Part I, Article 23 of the New application of the suspension and penalty provisions set forth in RSA 397-A:14 imposed on Frost, we need not address the Department’s argument that its Given our holding herein, and the fact that penalties were not, in fact,

based upon those transactions. the LLCs occurred, he is not subject to disciplinary action by the Department licensed mortgage loan originator, after the two seller-financed transactions by although Frost became subject to the Department’s regulation when he became a mortgage banker or mortgage broker and mortgage servicer . . . .” Therefore, broker, see RSA 397-A:1, XII-XIII, so Frost did not “work[ ] for more than one application. Moreover, neither of the LLCs was a mortgage banker or mortgage thus, Frost had no obligation to disclose the two transactions on his license in the business of making or brokering mortgage loans,” RSA 397-A:2, I, and, of the LLCs conducted only one mortgage lending transaction, neither “engage[d] mortgage lending requires more than a single isolated transaction. Because each We conclude, therefore, th at in context, “engag[ing] in the business” of

transactions per year. made clear that the statute applies only to persons who make numerous loan lending.” N.H.H.R. Jour. 1579 (2011). With this amendment, the legislature has amendments “harshly eliminated any legal commerce in most private residential to “restore common sense to New Hampshire law” after the July 2009 combat the “excessive enforcement of the SAFE Act,” see RSA 397-A (2009), and RSA 397-A:4, VI; Laws 2011, 212:1. The purpose of the amendment was to

mortgage is secured . . . . part of the purchase price of the real estate against which the p. 11 11

The court ruled that “the theory that the State’s conduct in related criminal

did address their argument regarding the Department’s investigatory tactics.

Despite the petitioners’ representations to the contrary, the trial court

tactics” and the disputed staff petition. We disagree.

protect themselves against the Department’s “unconstitutional investigatory

argue that litigation was “unnecessary” and was prompted only by their need to “obstinate and unlawful” pre-lawsuit conduct. In particular, the petitioners failed to consider, in its bad faith analysis, the Department’s allegedly

Nevertheless, the petitioners contend that the trial court erred when it

litigation tactics, nor did it seek “burdensome discovery.” act in bad faith. The Department neither employed obstinate or unreasonable

First, the record supports the trial court’s finding that the Department did not

the general public.” Id Tulley v. Sheldon judicial exception to the general rule that precludes recovery of such fees.”

been unnecessary for the successful party to have brought the action.” Id

agree and conclude that the trial court sustainably exercised its discretion.

fees may be awarded when a litigant’s actions confer a substantial benefit upon authorized by statute, an agreement between the parties, or an established

characterized as unreasonably obdurate or obstinate, and where it should have

Bedard v. Town of Alexandria warranting departure from the general rule. After review of the record, we Here, the trial court found that the petitioners met none of the standards

(quotations omitted). “Under the substantial benefit theory[,] . . . attorney’s “A prevailing party may be awarded attorney’s fees when that recovery is.

wantonly, or for oppressive reasons, where the litigant’s conduct can be Arcidi fees is appropriate where one party has acted in bad faith, vexatiously, ellipsis omitted). “Under the bad faith litigation theory, an award of attorney’s

Arcidi v. Town of Rye based upon two separate theories: bad faith litigation and substantial benefit.” or to an extent clearly unreasonable to the prejudice of the objecting party. judicially-created exceptions, attorney’s fees have been awarded in this State

, 159 N.H. 269, 272 (2009) (quotation omitted). “As to

absent an unsustainable exercise of discretion. Grenier v. Barclay Square

, 150 N.H. at 704. some support in the record for the trial court’s determination, we will uphold it. court’s decision regarding attorney’s fees. Grenier, 150 N.H. at p. 11 116. If there is ruling on this issue, we acknowledge the “tremendous deference” given a trial

reversal, the discretion must have been exercised for reasons clearly untenable Commercial Condo. Owners’ Assoc., 150 N.H. p. 11 111, 115 (2003). To warrant

We will not overturn the trial court’s decision concerning attorney’s fees the question whether court or agency will initially

p. 12 power between courts and agencies, for it governs only

primary jurisdiction does not necessarily allocate in the proceeding before the court. The doctrine of some question or some aspect of some question arising

promotion of the public benefit, not the petitioners’ own benefit. See

until after an administrative agency has determined

exception inapplicable. As the trial court noted, the exception is based on

the court should refrain from exercising its jurisdiction jurisdiction is to guide a court in determining whether The precise function of the doctrine of primary

Finally, the trial court did not err in finding the substantial benefit

that found in a prominent administrative law treatise: Perhaps the best elucidation of the doctrine of primary jurisdiction is

understanding the statutes involved in this case. the fact that the petitioners filed an expert report to aid the trial court in

enforcement proceedings before the banking department, I would reverse.

We agree that the rights at issue were not clearly defined, as is evidenced by

primary jurisdiction, the superior court erred in enjoining the ongoing

suggests that the petitioners were not forced to litigate a clearly defined right. Moreover, as the trial court noted, the complexity of the underlying suit

LYNN, J., dissenting. Because I conclude that, under the doctrine of

Affirmed

lawsuit conduct.

DUGGAN, J., retired, specially assigned under RSA 490:3, joined, dissented. DALIANIS, C.J., and HICKS, J., concurred; LYNN, J., with whom

159 N.H. at 746. petitioners’ claim that the trial court failed to address the Department’s pre- Bedard, application to a highly regulated industry.” Thus, we find no merit in the Department] took a legal position which involved complex statutes and their

alleged flaws in the staff petition (i.e. rejected the petitioners’ argument that an award of fees was supported by

unconstitutional retroactive penalties). The trial court noted that “[the “illusory” charges by “duplicating” alleged misconduct, and threatening

authorize an award of attorney’s fees . . . [cannot] be sustained.” Further, it proceedings and issuing search warrants and administrative actions would concerned the banking department’s subject matter jurisdiction and was

p. 13 declining to apply the doctrine because the issue addressed by the trial court

holds that the trial court did not unsustainably exercise its discretion in While acknowledging the doctrine of primary jurisdiction, the majority

efficiency.” (quotations omitted)).

jurisdiction doctrine seeks to facilitate.”); cf

regulatory authority and integrity of the agency”). administrative expertise, preserving agency autonomy and promoting judicial

proper working relationship between court and agency that the primary power, 13 is a prudential doctrine, rather than one based on the absence of judicial

justification includes the principle that courts are not to make adverse decisions that threaten the responsibilities. See administrative agency, the powers granted to it by the legislature, and the powers withheld[; t]his Konefal v. Hollis/Brookline Coop. School Dist. respect for the separation of powers and the statutory purpose underlying the creation of the (Mich. 2001) (noting that one of the justifications for the primary jurisdiction doctrine “relates to branches of government. See, e.g., Travelers Ins. Co. v. Detroit Edison Co., 631 N.W.2d 733, 741 courts is based on the reasonable policies of encouraging the exercise of implicate separation of powers concerns because it relates to the relationship between the 1 Although not grounded in an absence of judicial power, the primary jurisdiction doctrine does

[is] whether preliminary reference of issues to the agency will promote that subject to judicial review.” (quotations omitted)). Because primary jurisdiction

will have an adverse impact on the agency’s performance of its regulatory knowledge, expertise, and central position within a regulatory regime.”); resolution of the issue; and (3) the potential that judicial resolution of the issue it a preferable forum for resolving the issue in dispute; (2) the need for uniform

rule requiring administrative remedies to be exhausted prior to appealing to the

concurring in part and concurring in the judgment) (“[The question], in a word, § 14, at 272 (3d ed. 1994); see administrative disposition of an issue, at which point the agency action may be also Walsh, 538 U.S. at 673 (Breyer, J.,

rulings by allowing courts to take advantage of an agency’s specialized (“[Primary jurisdiction] seeks to produce better informed and uniform legal determination: (1) the extent to which the agency’s specialized expertise makes following factors are often cited as relevant considerations in making this United States v. Western Pac. R. Co., 352 U.S. 59, 64 (1956). However, the 1 there is no “fixed formula” for determining when the doctrine applies.

(“Primary jurisdiction in an agency requires judicial abstention until the final

(2003) (Breyer, J., concurring in part and concurring in the judgment) Pharmaceutical Research and Mfrs. of America v. Walsh, 538 U.S. 644, 673 Roebuck & Co. v. Carpenters, 436 U.S. 180, 199 n. 29 (1978); see also 3 K. Davis, Administrative Law Treatise § 19.01, at 3 (1958), quoted in Sears,

court or agency will finally decide the issue. decide a particular issue, not the question of whether omitted)); Bar Harbor Banking & Trust Co. v. Alexander

p. 14 normally confided to the agency’s expertise” (quotations, brackets, and citation

first instance); cf integrity of the statutory scheme” (quotation omitted)); Luskins Inc. v.

Unlike the instant case, Wisniewski v. Gemmill Zar v. S.D. Bd. of Examiners of Psychologists

which is that the court is acting – and risks disruption – in a field that is

executive department, is empowered to determine its own jurisdiction” in the made a designated determination if such postponement will protect the 14 invalidity of administrative rules; supreme court disagreed, citing Myers v.

which the majority primarily relies, did not involve an action in which the

ongoing administrative enforcement proceeding, i.e. merchant subject to agency proceedings for misleading consumer advertising); Psychologists from conducting disciplinary proceedings involving licensees). None of the cases relied on by the majority involved an effort to enjoin an (reversing trial court’s entry of injunction that prevented Board of Examiners of this restraint is the very one that underlies the primary jurisdiction doctrine,. Smith v. N.H. Bd. of Psychologists, 138 N.H. 548, 554 (1994)

doctrine of separation of powers, an administrative agency, a branch of the agency, the Court will postpone consideration of an action until the agency has Bethlehem Corp., 303 U.S. 41, 58 (1938), for proposition that “[u]nder the administration of a particular statutory scheme has been entrusted to an statute regulating permissible finance charges, explaining that “[w]here the whether Board lacked jurisdiction to discipline licensee because of alleged licensee; trial court had reasoned that it should make initial decision as to (reversing writ of prohibition preventing disciplinary proceedings against

jurisdiction doctrine required dismissal of declaratory judgment action filed by Consumer Protection, 657 A.2d 788, 793 (Md. 1995) (holding that primary department proceedings did constitute an unsustainable exercise of discretion. action pending the outcome of administrative review. In part the reason for resorting to that remedy where . . . the requested relief would enjoin agency and admonishing that “the trial court must be especially careful before

Protection from holding hearing to determine whether bank had violated presents a particularly compelling reason for a court to stay its hand. See 1980) (lifting temporary restraining order that prevented Bureau of Consumer

I would find that the trial court’s decision to enjoin the ongoing banking position are distinguishable in important respects from this case. Accordingly, owed to an administrative agency, and that the cases it relies on to support its 2000) (reversing grant of injunction against agency enforcement proceeding, 2010); accord Dept. of Public Works v. L.G. Indus., 758 A.2d 950, 957 (D.C. Interfaith Community Organization v. PPG, 702 F. Supp. 2d 295, 310 (D.N.J.

whether a licensee had violated a regulatory regime, a circumstance that

majority takes too narrow a view of the circumstances under which deference is purely a question of law rather than of administrative discretion. I believe the p. 15 Procedures Act governing adjudicative proceedings. See have to have been conducted pursuant to the provisions of the Administrative department could have decided, at an administrative hearing, which would

disputes that this was an issue Frost could have challenged, and the

placed on a statute of doubtful meaning by the agency charged with its worst, had a mistaken view of the scope of its regulatory authority. But no one have long taken the view that substantial deference is due to the interpretation business” as used in RSA 397-A:2 (2006 & Supp. 2011), the department, at U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843-45, 866 (1984), we over him. Thus, even accepting the majority’s construction of “engage in the agency’s reasonable construction of an agency-administered statute, see Chevron gone so far as to adopt the federal rule, which requires courts to defer to an invoking primary jurisdiction than did Wisniewski opportunity to rule upon the extent of its jurisdiction. Although we have not demonstrate that this case presents a far more compelling argument for broad and ambiguous language, the agency generally is given the first administrative law that where the legislature has described an agency’s powers in body as arguable – as that presented here. It is a well-recognized principle of cases were also not nearly as complex – or the legal position of the governmental described as a “black hole”). Furthermore, none of the parties before the court proceedings, but the land use and/or property tax statutes at issue in those distinguishable. Not only did none of those cases involve agency enforcement N.H. 632 (1988), and Metzger v. Brentwood, 115 N.H. 287 (1975), also are Nashua, 143 N.H. 140 (1998), Bedford Residents Group v. Town of Bedford, 130 The other cases cited by the majority, Pheasant Lane Realty Trust v. Ci ty of recognizes, the department therefore unquestionably had “regulatory authority”

(2006); RSA 541-A:30, III (2007). Collectively, the foregoing considerations

remedies would relegate parties to a dispute resolution process the Court

Frost was a licensee of the banking department, and, as the majority plaintiff was seeking. See Wisniewski, 123 N.H. at 707. Here, by contrast, because the suit concerned the alteration of the course of a public water body, have the authority to award the type of relief, i.e., monetary damages, that the parties in which the defendant sought dismissal based on the argument that, was a licensee of the water resources board, nor did the board Instead, the lawsuit was a common law action for damages between private

(1989) (expressing concern that requiring exhaustion of administrative 704; cf. Coit Independence Joint Venture v. FSLIC, 489 U.S. 561, 586-87 proceedings had lain dormant for nine months before suit was filed. See id. at a hearing at the time he sought judicial relief, in Wisniewski, the agency proceedings against petitioner Frost and had extended him the opportunity for where the banking department was actively pursuing administrative

agency (the former water resources board) was not even a party to that case. plaintiff sought an injunction against the regulatory agency itself; indeed, the case. Instead, RSA 397-A:3, I (2006 & Supp. 2011) provides: “Any p. 16 transactions conducted by Frost Family and Chretien. However, this is not the majority that the statute does not reach the two isolated mortgage loan

II R. Pierce, Jr., Administrative Law Treatise

pertinent section regarding the scope of the statute, I would agree with the

inapplicable to:

jurisdiction. determining the scope of the agency’s statutory examination of the nature and frequent difficulty of

“engage in the business” language found in RSA 397-A:2, I, were the only making or brokering” certain mortgage loans. RSA 397-A:2, I (2006). If the comprehensive regulatory scheme for “persons that engage in the business of 397-A:4 (2006) provided, in relevant part, that RSA chapter 397-A was

active consideration); cf

It makes eminently good sense, however, upon

At the times pertinent to this case, RSA chapter 397-A established a department.” (Emphasis added.) And, when these transactions occurred, RSA property located in this state shall be required to obtain a license from the is plainly engages in the business of making or brokering mortgage loans secured by real exempt under RSA 397-A:4 that, in its own name or on behalf of other persons,

statutory jurisdiction – seems strange at first glance.

issue is likely to be of “material aid” to judicial resolution of the dispute. Ricci agency’s primary jurisdiction is often broader than its statutory jurisdiction. The resulting situation – an

ultra vires).

(declining to require exhaustion of administrative remedies when agency action

to agency where issue was novel, agency regarded resolution of issue as v. Time Warner Cable, 523 F.3d 1110, 1115-16 (9th Cir. 2008) (referring matter v. Chicago Mercantile Exchange, 409 U.S. 289, 299-300, 302 (1973); see Clark

or prohibited by a . . . regulatory statute” and when agency resolution of an conduct that is the subject of court litigation “is . . . at least arguably protected ultimately is determined not to be within the agency’s Put another way, the primary jurisdiction doctrine comes into play when

court to refer an issue to an agency . . . when the issue The primary jurisdiction doctrine often compels a

(1st Cir. 2007). As Professor Pierce explains: statute. See Verizon New England v. Maine Public Utilities, 509 F.3d 1, 11-12 ensuring that an agency is given the first opportunity to construe an ambiguous doctrine of primary jurisdiction complements our substantial deference policy by (2007); cf. Win-Tasch Corp. v. Town of Merri mack, 120 N.H. 6, 9-10 (1980). The implementation. See Grand China v. United Nat’l Ins. Co., 156 N.H. 429, 434 isolation but in the context of the entire statutory scheme. State v. Jennings p. 17 statutory interpretation – that statutory provisions are not to be considered in

business” of making or brokering loans is inconsistent with a first principle of 17

necessary to specifically exclude them in the above exemptions? person could be considered engaged in the business of making mortgages; and, of course, the habitually make or broker mortgage loans, why would it have found it person who makes even one seller-financing mortgage suggests that without the exemption such “engage in the business” to cover only non-natural persons who regularly or mortgage as part of seller-financing in connection with even one respect to natural persons, the legislature found it necessary to include a specific exemption for a second is to exclude any natural person who provides a first or second The same argument cannot be made as to the RSA 397-A:4, III exemption. The fact that, with addressed in order to properly construe the statute: If the legislature intended make or broker mortgages with some level of regularity in order to be engaged in the business. fewer than five first mortgage loans within a calendar year. The effect of the entities (non-natural persons) from the safe harbor, not to signify that entities did not have to the exclusion of non-natural persons from this exemption was merely intended to disqualify conduct that might otherwise constitute “engaging in the business,” it might be contended that 3 Insofar as the RSA 397-A:4, II exemption is designed to establish a safe harbor for a course of was covered by these exemptions. exempt Frost Family or Chretien from the reach of RSA chapter 397-A. 2 Nor do petitioners argue that any other provisions of RSA 397-A:4 in effect at the relevant times the exemptions in determining what is meant by the term “engage in the Because neither Frost Family nor Chretien is a “natural person,” neither department’s authority under RSA chapter 397-A. Indeed, failing to consider simply ignore these exemptions in construing the scope of the banking State v. 3 See

majority offers no answer to what is the seminal question that must be 159 N.H. 1, 3 (2009). By failing to consider the overall statutory scheme, the the first exemption is to create a safe harbor for natural persons who make III. Any natural person

(Emphases added.) she sells to another. Contrary to the majority’s suggestion, it is not proper to

obligation. property he or

“engage in the business” term found in RSA 397-A:2, I, and :3. The effect of statutory exemptions results in an ambiguity as to the intended meaning of the loans.

real estate as security for a purchase money or more first or second mortgages or deeds of trust on

investment without an intent to resell such mortgage person’s own funds and for the person’s own first mortgage loans within any calendar year with the II. Any natural person making not more than 4 p. 18 (3) simultaneously represented more than one mortgage banker. See

Family and Chretien.

in the business” of making or brokering mortgage loans.

legislature clearly created a safe harbor exemption that covers non-natural persons such as Frost up to three loans is not practical.” (emphasis added)). The 2011 amendment is the first time the as a loan originator, (2) serviced loans for non-licensed mortgage bankers, and department, even in harmless circumstances when licensing private citizens who intend to make requires any person to get a mortgage loan originators license from the New Hampshire banking which involved complex statutes and their application to a highly regulated industry.” (emphasis added)); N.H.H.R. Jour. the defendants acted in bad faith, the court found, “[the banking department] took a legal position ___ (May 25, 2011) (remarks of Rep. Manuse) (“Current law be completed now while ensuring that the exemption will not undermine the current law.” Sen. Boutin) (“This de minimis exemption would allow a number of the transactions which cannot licensed. See 397-A:2 and :3 would exclude Frost Family and Chretien from being “engaged Hearing on SB 28 before Senate Commerce Comm. (Jan. 25, 2011) (testimony of seller-financing of real estate transactions would be allowed without the need for the seller to be too would come to the conclusion that the most sensible construction of RSA clear, the amendment was intended to change existing law to expand the circumstances in which RSA chapter 397-A. Given the statute’s ambiguity, it may be that ultimately I clearly did more than clarify pre-existing law. On the contrary, as its legislative history makes they had occurred after the 2011 amendment to RSA 397-A:4 had taken effect, that amendment importantly, while the actions of Frost Family and Chretien would appear to have been exempt if statute, it will not be consulted when the statutory language is plain.” (quotation omitted)). More 126, 129 (1999) (“While legislative history may be helpful in the interpretation of an ambiguous court’s denial of the petitioners’ request for attorney’s fees. Rejecting the petitioners’ claim that were engaged in the business of making or brokering mortgages. See considered this report and found it “valuable and helpful.” It also is demonstrated by the trial Appeal of Cote, 144 N.H. 2011 amendment, the statute was ambiguous with respect to whether Frost Family and Chretien into whether Frost (1) made misrepresentations in his application for licensure majority deems it necessary to reference legislative history confirms my view that, prior to the with respect to the conduct at issue. On this point, I note initially that the very fact that the been licensed, then there is a basis for the banking department’s investigation A:4 supports its construction of the 2005 version of the statute – the version that is controlling the statute is construed so as to require Frost Family and Chretien to have 5 I cannot agree with the majority that the legislative history of the 2011 amendment to RSA 397-

To be clear, it is not my purpose to attempt a definitive construction of his interpretation of the scope of activity falling within the reach of the statute. The trial court necessary to provide the trial court with an expert report from a banking law attorney opining on less than completely clear. This is demonstrated by the fact that the petitioners found it 4 Both the petitioners and the trial court seemed to recognize that the meaning of the statute was mortgage. exemption does not apply to non-natural persons even if they make only one seller-financing

A:1, XVII, :3, III, :17 (2006 & Supp. 2011).4

Chretien, to be deemed “engaged in the business” of making or brokering that the legislature intended non-natural persons, such as Frost Family and redundant.”). Reading the statute as a whole, one plausible construction is and the legislature is presumed not to use words that are superfluous or Pierce, 152 N.H. 790, 791 (2005) (“All words of a statute are to be given effect, dissent.

p. 19 DUGGAN, J., retired, specially assigned under RSA 490:3, joins in the

For the reasons stated above, I respectfully dissent.

public policy.

Needless to say, such a development would not be consonant with sound argument that the agency has misinterpreted its regulatory authority. proceedings any time imaginative counsel is able to fashion a plausible

the way for future licensees to attempt to circumvent agency enforcement

In closing, I also must note my concern that today’s decision may pave

administrative proceedings.

required the trial court to refrain from interfering with the ongoing

government that has been given primary jurisdiction to regulate in the field respect for the proper functioning of an agency of a coordinate branch of banking department had not obviously overstepped the bounds of its authority,

this court is premature at this time. Rather, in my view, where, as here, the point is that any such construction of the statute by either the trial court or