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Pro Done, Inc. v. Teresa Basham et al.
June 29, 2018 - Brief
Case records
Open case pageDocket: 2018-0060
| Date | Record Text | Type | Party | |
|---|---|---|---|---|
| May 3, 2019 | Pro Done, Inc. v. Teresa Basham et al. | Opinion | Supreme Court | Pre-Reporter |
| October 11, 2018 | Pro Done, Inc. v. Teresa Basham, Timothy John Hooper, and Terrence Lee Hooper | Oral argument text | Pro Done, Inc.; Teresa Basham, Timothy John Hooper, and Terrence Lee Hooper | |
| July 19, 2018 | I. No Principle Other Than An Expansive Application of The | Brief | ||
| June 29, 2018 | 20180060 - Brief Current page | Brief | ||
| Undated | 20180060 - Brief | Brief |
TABLE OF CONTENTS
Page
L CLARIFICATION OF QUESTIONS PRESENTED FOR REVIEW.......csscssssssssssessercesees | Il. STATEMENT OF THE CASE AND FACTS uous ccesccccsseccesescussscerescecucusensessscasesceseuseas 1
HI SUMMARY OF THE ARGUMENT uuu... cceeccccsesssssscececvesecssceeseveversnsnrsteuteecscevsesnenavers 3
TV. ARGUMENT ooo cec cc cccccescsscsscscccccesccecncuscscecevssnscecesenucnsauscseseseussucusescuceseusececsteecucensersansucees 4
¥..
VI.
A. The trial court correctly held that the Releases provide only affirmative defenses and do not give rise to independent claims for breach of contract. 4
I The release provisions within the Releases do not give rise to an independent cause of action for breach of comtrach) wscsssscssscssesscnnsssscennevaponsncumrassavensanererumememnennremmncenne 6
2% The covenant not to sue extract contained in the Releases do not give rise to an
independent cause of action for breach of contract because they do not contemplate
recovery of consequential damages by or any other form of relief for the non-
breaching party in the event of a suit brought in breach.............00+ sane a
B. Plaintiff's discussion of the American Rule is irrelevant because the trial court’s dismissal had nothing to do with an award of attorneys’ fees. 10
C. ‘The trial court did not err in dismissing the FAC despite Plaintiff’s request for equitable relief because, in dismissing its claim for damages, the Court dismissed the cause of action upon which equitable relief would be based.. nardinersitiensiibile 12
D. ‘The trial court did not conduct any improper fact-finding or credibility
determinations in dismissing Plaintiffs case...........cccccsserscserecssensseerseeseersensasseneeseasoasnesaress 15
CONCLUSION 0c cccccccsseeseseeeesenesscnececscneerseeesessesessessnsassseasseneceucnesecsesserseasssessaasaeseeneeases 16
REQUEST FOR ORAL. ARGUMEIND seassrvencsnncrsmnsusnesvecnnenccnteeansauninsmenanentavecenmsersaste 17
TABLE OF AUTHORITIES
Federal Cases Page(s) Arivalé, .dne. v. Rughy Fabries Cor, 363 F204. 002 QE: Cit. 1966)
8, 10
Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 586 F.Supp. 1286 (S.D.N.Y. 1984)....., .......cccce ees ce
Boudinot v. Shrader, Not Reported in F.Supp.2d, 2013 WL 1481226 (S.D.N.Y. April 10, 2013)...
western staan bees cpp ets evEHecemeniRsa Pardsettmet nie mea svedabeersomeousreinpessuntenevaaumetasiamini snueLsimepisecnevensesnane
6
Bukurary: Mueller Grp, LLG, 592.F 3d 255 Cist Git. 201 QD ecreecersenewornrecswereecemamayod
6
Cook v. SCI Maryland Funeral Services Inc., Not Reported in F.Supp.3d, 2016 WL
4536291
(DM0-201 6 pean aon ererenreurciT TE arr 9
1
Isbell v. Allstate Ins. Co., 418 F.3d 788 (7th Cir. 2005)
6
Melanson y. Browning-Ferris Indus., Inc., 281 F.3d 272 (1st Cir. 2002)
6
State Cases
ATV Watch v. N.H. Dep’t of Resources & Econ. Dev., 155 N.H. 434 (2007)
13, 14
Cihvol Keone wv. Cleaveland, , 167 BEE. FEL TROLS)
14
General Linen Services, Inc. v. Franconia Inv. Associates, L.P., 150 N.H. 595 (2004)
15
Fat Bullies Farm: LLG vy. Devenport, T7O NA. TT (BOT)
12
Halifax-Am. Energy Co., LLC v. Provider Power, LLC, 180 A.3d 268 (N.H. 2018)
12
Herkeemy, Adams, ITT SLB, 687 (1977 ize cs ecpwmngageiminmcnioiss covesweusmsees oemowemmuensicees {
2
In re State, 147 N.H. 426 (2002)
15, 16
Kaye v. Wilson-Gaskins, 135 A.3d 892 (Md. App. 2016)
6, 7, 8, 9, 10, 11, 13, 16
Shelton v. Tamposi, 164 N.H. 490 (2013)
12
Other Authorities Restatement (Second) of Contracts §
284
I. CLARIFICATION OF QUESTIONS PRESENTED FOR REVIEW
The sole question legitimately presented for review is whether the trial court correctly
dismissed Plaintiff's lawsuit for failure to state a claim on the grounds that a covenant not to sue
contained within the Release in question did not provide for consequential damages or any other
form of relief to the non-breaching party in the event of an alleged future breach of the Release.
The trial court correctly held that the Release provides an affirmative defense -- and nothing
more. The Release and its legal effect, which is the sole subject of this appeal, may be read in its
brief entirety at pages 190-192 of Plaintiff's Appendix (“Pl’s App.”).
Additional deficiencies in Plaintiffs statement of the questions presented for review are
as follows.
First, Plaintiff's references to the “American Rule” in its introductory paragraph, in
Question 4 and throughout its brief are misplaced. The trial court did not reference the American
Rule in its dismissal. The primary cases on which the trial court relied do not reference the
American Rule. The trial court’s decision was not based in any part on the application of the
American Rule. Plaintiff's effort to recast the trial court’s decision as a referendum on the
American Rule should not confuse the Court’s analysis of the very simple issue at hand.
Second, and importantly, Plaintiff failed to preserve Question 4 for review. The pages of
the Appendix that Plaintiff cites do not include any discussion of Defendants’ alleged “obvious”
or “bad faith” breach. See Pl’s App. at 262-264.
II. STATEMENT OF THE CASE AND FACTS
Plaintiff's state court action, from which this appeal was taken, is a collateral attack on a
pending federal court action. Sibling Defendants’ federal court action against Joseph Willey,
Janet Willey and Curtis Nuckols in the United States District Court for the District of New
Hampshire (“Federal Action”) includes a claim of intentional misrepresentation against Mr.
Willey for his failure to disclose to Sibling Defendants the prospects for a sale of Pro-Cut
Licensing Company, LLC, Pro-Cut International Limited, LLC, and Brake Solutions, Inc.
(collectively, “Pro-Cut”) to Snap-on, Inc. (“Snap-on”). Pl’s App. at 58-59. In the Federal
Action, Sibling Defendants seek, in part, to set aside the Releases as the product of Mr. Willey’s
fraud, id., and the defendants in the Federal Action have counterclaimed based on the very same
incorrect legal theory at issue here -- that the Releases give rise to a cause of action. Pl’s App. at
278-279. Because this Court will resolve the legal question of whether the Releases give rise to
a cause of action, and due to the relevance to that determination to the counterclaim based on
diversity jurisdiction in the Federal Action, the District Court has now stayed the Federal Action
pending this Court’s resolution of the legal question regarding the effect of the Release. Order
Staying Case, Hooper, et al., v. Willey, et al., No. 16-cv-44-JL (Laplante, J.) (D.N.H. May 16,
2018).
Plaintiff states in its brief: “The trial court granted Plaintiff's motion to amend and
invited the parties to supplement their pleadings. While Ransmeier supplemented his pleadings
and moved to dismiss the First Amended Complaint, the Sibling Defendants did not.” Pl’s Brief
at 6 (citations to appendix omitted). This is an inaccurate depiction of the record. The trial
court’s order granting Plaintiff's motion to amend stated, in relevant part:
[T]he prudent course of action is to grant Plaintiff's motion. In an effort to expedite
the resolution of these issues, the Court shall not require the Defendants to refile their
respective motions to dismiss but will, instead, construe the Defendants’ arguments as
relating to the amended complaint. However, should the Defendants wish to file
supplemental pleadings they are given leave to do so within 20 days....
App. 429-430 (emphasis added), The Sibling Defendants chose to stand on their prior motion to
dismiss rather than submit additional briefing. Any suggestion the Sibling Defendants have not
properly moved to dismiss the Complaint is not supported by the record below.
Sibling Defendants object generally to the disparaging nature of Plaintiff's recitation of
the trial court’s actions on page 7 and 8 of its Brief. As is explained further below, the trial
court’s actions in this matter were at all times proper and correct.
Ill. SUMMARY OF THE ARGUMENT
Plaintiff's First Amended Complaint (“FAC”) includes a total of three claims ~ breach of
contract, tortious interference with contractual relationships, and civil conspiracy ~ which are all
based on an alleged breach of Releases! entered into by Sibling Defendants that are identical for
all purposes relevant to this appeal. The trial court — in a clear and straight forward order ~ held
that the Releases provided only affirmative defenses and did not give rise to any action for
breach of contract. Because all of Plaintiff's claims relied on the existence of a valid claim for
breach of contract, the trial court dismissed the entire FAC.
The trial court correctly found that the covenant not to sue language in the Releases does
not contemplate an award of consequential damages to the non-breaching party, and therefore the
covenant not to sue does not give rise to a claim for breach of contract but is instead construed
merely as a release. The trial court’s decision was based on sound case law and an historical
analysis of the treatment of release and covenant not to sue language in this country. Rather than
attack the central holding of the trial court’s decision, Plaintiff instead makes various collateral
attacks, most of which were not even presented below.
' Unless otherwise defined herein, capitalized terms used herein are intended to have the definitions assigned to
them in Plaintiffs Brief.
First, Plaintiff argues that the trial court’s decision denigrates traditional principles of
contract law in favor of the American Rule, which Plaintiff spends multiple pages of its brief
disparaging. Plaintiff's argument seemingly comes out of nowhere, given that the trial court’s
decision is not based in any sense on the application of the American Rule. In fact, the trial court
does not once mention the American Rule in its decision.
Next, Plaintiff argues that in dismissing its entire action the trial court ignored Plaintiff's
request for injunctive relief. Plaintiff ignores the distinction between a cause of action and a
remedy, and conflates the trial court’s determination that Plaintiff's FAC lacked any cognizable
cause of action, on the one hand, with a determination merely that monetary damages were
unavailable as a remedy for the breach of contract action, on the other. The trial court’s
determination that Plaintiff failed to sufficiently plead a cause of action left Plaintiff without any
claim on which it could prevail, which is an essential requirement for obtaining the permanent
injunction that Plaintiff sought. Accordingly, Plaintiff's request for injunctive relief properly did
not factor into the trial court’s decision that Plaintiff had not stated a claim.
Finally, Plaintiff argues that the trial court engaged in improper fact-finding by making a
determination about the intent of the parties to the Releases. This argument ignores the plain
language of the trial court’s decision, which makes clear that the trial court’s determination was
based solely upon its reading of the plain language of the Releases, as pled in Plaintiff's FAC.
The Court must affirm the trial court’s dismissal of Plaintiff's action with prejudice.
IV. ARGUMENT
A. The trial court correctly held that the Releases provide only affirmative defenses
and do not give rise to independent claims for breach of contract.
The Releases state in relevant part:
[T]he Seller hereby fully, finally and forever releases, discharges, quit claims
and covenants not to sue and otherwise agrees not to enforce any claim, cause
of action, right, title or interest (collectively, the “Claims”) against, the
Company, its respective officers, directors, managers, members, employees,
agents, and representatives, as well as their successors and assigns (“Released
Persons”) of from, and with respect to any and all claims, counterclaims,
covenants, agreements, obligations, liabilities, actions or demands of any kind
or character in connection with any prior ownership interest in the Company
by the seller, including but not limited to any claim based on any future
transaction that the Company or any unit holder may enter into in relation to
the equity of the Company.
Pl’s App. at 190-191 (emphasis added). Notably, the Releases do not state that a suit brought in
violation will give rise to a claim for breach of contract, nor do they contain any provisions for
consequential or other damages, attorney’s fees, litigation expenses or any other fee shifting
provisions, nor does the Release provide any form of affirmative relief. Jd.
The New Hampshire Supreme Court has not ruled on whether a plaintiff may maintain a
breach of contract action based upon such a Release. However, the trial court, relying on the
historical treatment of releases and covenants not to sue in this country, properly concluded that
the Releases at issue do not give rise to a breach of contract claim because they fail to include
any language contemplating any offensive properties including an award of consequential
damages to the non-breaching party. Plaintiffs Addendum’ (“PI’s Add.”) at 10. As the trial
court noted, the treatment of releases and covenants not to sue has evolved over time, resulting in
the requirement that for covenant not to sue to give rise to a claim for breach, it must contain
language indicating an intent that a non-breaching party may recover consequential damages. /d.
at 7-9,
1. The release provisions within the Releases do not give rise to an independent
cause of action for breach of contract.
The trial court began by observing that a release operates by “tak[ing] effect immediately,
thereby instantaneously discharging any obligation created by the release in the party
relinquishing a claim.” Pl’s Add. at 7. Therefore, because “[t]he release takes effect on delivery
... and, subject to the occurrence of any condition, discharges the duty, ” Restatement (Second)
of Contracts § 284, “[the] release cannot be breached because complete performance is tendered
at the moment [the] release is effectuated.” Kaye v. Wilson-Gaskins, 135 A.3d 892 (Md. App.
2016); Pl’s Add. at 7.
This interpretation of a release is confirmed by the black letter law that “[a] release is an
affirmative defense; it does not supply a defendant with an independent claim for breach of
contract.” Bukuras v. Mueller Grp., LLC, 592 F.3d 255, 266 (1st Cir. 2010). See also, Boudinot
v. Shrader, 2013 WL 1481226 *8 (S.D.N.Y. April 10, 2013) (analyzing Delaware law and
applying “the view of the First Circuit” in Bukuras — that a release is an affirmative defense,
which does not give rise to a cause of action for breach of contract); /sbell v. Allstate Ins. Co.,
418 F.3d 788, 797 (7th Cir. 2005) (“The Release does not result in breach upon the filing of a
suit. Instead, it provides [defendant] with an effective affirmative defense should a claim be
raised.”). “Waiver and releases are affirmative defenses on which the [defendant] bears the
burden.” Melanson v. Browning-Ferris Indus., Inc., 281 F.3d 272, 276 (ist Cir. 2002) (citing
Fed. R. Civ. P. 8(c)).
While the release provisions in the Releases could potentially provide an affirmative
defense for use by Plaintiff in the event that it was sued by Sibling Defendants (it wasn’t), they
do not give rise to an independent cause of action for breach of contract.
2. The covenant not to sue extracts contained in the Releases do not give rise to
an independent cause of action for breach of contract because they do not
contemplate recovery of consequential damages by or any other form of
relief for the non-breaching party in the event of a suit brought in breach.
Covenants not to sue were created as a remedy to the problems that arose from using
releases in cases involving multiple joint obligors. As stated in Corbin on Contracts and cited by
the trial court:
The device of a contract not to sue was adopted to escape the technical rule, applicable to
joint obligations, that the discharge of one joint obligor necessarily discharges all the
others. Not wishing to give effect to this judicially created unreasonable rule, the
common law courts held that a release of one joint obligor, expressly reserving all rights
against the other joint obligors, would be interpreted as a mere contract not to sue the one
rather than a release.
A key distinction between the release and the covenant not to sue is that “a release is an
immediate discharge, and performance is complete at the time the release is effectuated”
however “a covenant not to sue... is a promise for the maker to undertake the future
performance of forbearance from litigation.” Kaye, 135 A.3d at 904. However, “[a]t early
common law, a covenant not to sue, unlike a release, was no defense to a suit brought in breach
of the covenant” and “[t]he covenantee’s only remedy was a suit for damages in which he could
recover any amount that had been recovered against him in the breaching action.”? Bellefonte Re
Ins. Co. v. Argonaut Ins. Co., 586 F.Supp. 1286, 1287 (S.D.N.Y. 1984). In other words, while a
covenant not to sue was helpful in the event of joint obligors, it did not provide an affirmative
defense to a suit brought in breach, but necessarily required that the non-breaching party bring a
second suit to recover damages. Pl’s Add. at 8.
In order to avoid this circuity of action, the common law courts began to treat covenants
not to sue as releases. 13 Corbin on Contracts § 67.14 at 145 (“Historically, to refuse to give a
contract not to sue effect as a discharge resulted in an unnecessary and highly undesirable
circuity of action [and] [t]o avoid such a result, the contract not to sue operated as a release.”’).
This is now the approach taken by modern courts when confronted with a covenant not to sue
and no joint obligor(s). /d. at 144 (“In spite of its promissory form, a contract never to sue
indicates an intention to discharge the obligor in any case not involving a joint obligor, and the
parties are held to have consummated a discharge because of the legal effect of their intent.”);
Pl’s Add. at 8-9.
As a result of this evolution over time, courts now require that in order to give rise to an
action for breach, a covenant not to sue needs to include language evidencing an intent that a
breach of the covenant would entitle the non-breaching party to recover consequential damages:
(I]n order to avoid circuity of action, when parties agree that an obligee will never pursue
a claim, we will give that language the effect of a discharge unless the parties clearly
express that they intend for the obligor to recover consequential damages as a result of
the obligee’s failure to honor that discharge in their agreement.
Kaye, 135 A.3d at 907. See also Artvale, Inc. v. Rugby Fabrics Corp., 363 F.2d 1002, 1008 (2d
Cir. 1966) (“The question, in other words, is to be solved not by invoking an abstract rule of law
but by seeking to determine what the parties fairly contemplated, or would have had they
addressed their minds to the problem.”); Pl’s Add. at 9.
In its decision, the trial court relied on the reasoning of the Court of Special Appeals of
Maryland in Kaye v. Wilson-Gaskins, 135 A.3d 892 (Md. App. 2016). See Pl’s Add. at 7-9. In
Kaye, the court held that a release contained in a settlement agreement entered into by the parties
did not give rise to a claim for breach of contract upon one party’s suit against another because
there was no “clear expression” in the release that the breaching party “would be liable for the
consequential damages resulting from the breach.” 135 A.3d at 908. That reasoning is entirely
consistent with the issue presented in this appeal because the Release does not include a clear
expression (or any expression) that a breaching party would be liable for consequential damages.
In an effort to distinguish Kaye, Plaintiff cites a subsequent unreported case from the U.S. District Court for the District of Maryland, Cook v. SCI Maryland Funeral Services Inc., Not Reported in F.Supp.3d, 2016 WL 4536291 (D.Md 2016)
907
(“[W]hen parties agree that an obligee will never pursue a claim, we will give that language the
effect of a discharge unless the parties clearly express that they intend for the obligor to recover
consequential damages as a result of the obligee’s failure to honor that discharge in their
agreement”).
In Cook, the District Court recognized, just as Kaye held, that “there could be situations
where the settling party bargained for both a release and a covenant not to sue, with the breach of
the latter entitling the non-breaching party to contract damages including consequential
damages.” Cook, 2016 WL 4536291 *3 (underline added). Under Cook, the covenant not to sue
still must indicate that the parties intended that the non-breaching party could recover
consequential damages. That is not the case here. While the Release does contain the words
“covenant not to sue, ” the trial court cogently explained historically how that came to be, why
that is part and parcel of the Release, and explained the differing effects where a Release such as
the one before the Court does not provide for an award of consequential damages for its breach.
Pl’s Add. at 7-9. Contrary to Plaintiffs claim that the trial court’s decision ignored the covenant
not to sue language included in the Releases, the trial court clearly explained that the inclusion of
such language ~ when unaccompanied by language evidencing an intent to award consequential
damages -~ is construed to operate as a release, providing an affirmative defense but not a claim
for breach:
[E]ven assuming the Releases were intended to operate as covenants not to
sue, because the Releases are devoid of any suggestion that the parties
bargained for consequential damages, the Court finds the Releases — as their
names suggests — operated as releases and their performance was effectively
completed upon consummation of the agreements. As such, a breach of the
Releases cannot be grounds for a breach of contract action.
Pl’s Add. at 10.4
Plaintiff's citations to New Hampshire Supreme Court decisions on contractual
interpretation are inapposite, since the trial court did not “render [the terms of the Releases] a
superfluous or a nullity, ” but rather interpreted those terms to operate as a release in accordance
with the law. Similarly, Plaintiff's emphasis on its claimed entitlement to expectation damages
ignores the law, which clearly requires an affirmative indication that the parties intended for
consequential damages to be recoverable before even a claim for breach of covenant not to sue
may be maintained, let alone any recovery of damages. See Kaye, 135 A.3d at 908.
Accordingly, the trial court properly dismissed Plaintiff's claim because the Release is
devoid of any suggestion that the parties bargained for consequential damages.
B. Plaintiff's discussion of the American Rule is irrelevant because the trial court’s
dismissal had nothing to do with an award of attorneys’ fees.
Plaintiff foreshadows its inapposite discussion of the “American Rule” in its “Questions
Presented, ” which mischaracterizes the trial court’s dismissal. Pl’s Brief at 1. Plaintiff begins by
inaccurately framing its appeal as “a conflict between, on the one hand, traditional contract law
doctrines... and, on the other hand, the so-called ‘American rule’ and its questionable historical
roots.” Jd. Plaintiff then claims that the trial court “grant[ed] a motion to dismiss Plaintiff's
breach of contract claim by invoking the so-called ‘American Rule, ’” id., which is patently
incorrect, because nowhere in its decision dismissing Plaintiff's claim did the trial court ever
once invoke the American Rule. See Pl’s Add.
Plaintiff spends roughly three pages discussing the historical application of the American
Rule in this and other jurisdictions, despite the very clear and obvious fact that the trial court’s
decision was not based on and did not reference the American Rule. Pl’s Brief at 16-18.
Additionally, the case on which the trial court primarily relied in its decision — Kaye v. Wilson-
Gaskins, 135 A.3d 892 (Md. App. 2016) — does not mention the American Rule or discuss
attorneys’ fees in any significance; the court’s discussion centered on whether the release and
implied covenant not to sue in that case permitted a breach of contract action. Furthermore, even
the case on which Plaintiff rests its entire chief argument — Cook v. SCI Maryland Funeral
Services Inc., Not Reported in F.Supp.3d, 2016 WL 4536291 (D.Md 2016) — fails to include any
discussion of the American Rule. Ultimately, Plaintiff's dissatisfaction with the American Rule
is irrelevant to this appeal. Plaintiffs insistence on attacking the American Rule as un-American
is undeserving of this Court’s attention. /d, For a doctrine so minor and easily ignored, as
Plaintiff claims, it is enough of a core tenant of United States jurisprudence to have been coined
the “American Rule.”
Despite Plaintiffs protestations to the contrary, “New Hampshire generally follows the American Rule; that is, absent statutorily or judicially created exceptions, parties pay their own attorney’s fees.” Shelton v. Tamposi, 164 N.H. 490, 501 (2013)
117
N.H. 687, 691 (1977) (holding for the first time that “[w]here an individual is forced to seek
judicial assistance to secure a clearly defined and established right, which should have been
freely enjoyed without such intervention, an award of counsel fees on the basis of bad faith is
appropriate.”).
The Court need not entertain any argument from Plaintiff that ignores its long-standing
position on the award of attorneys’ fees. More importantly, however, the trial court’s decision
did not reference or rely on the American Rule. Accordingly, Plaintiff's argument on the
American Rule is inapposite.
C. The trial court did not err in dismissing the FAC despite Plaintiff’s request for
equitable relief because, in dismissing its claim for damages, the Court dismissed
the cause of action upon which equitable relief would be based.
Plaintiffs only request for equitable relief is at Paragraph F of the prayer for relief that
concludes its FAC. Pl’s App. at 19-20. Despite seeking a permanent injunction in this
paragraph, Plaintiff fails to include any allegations elsewhere in its FAC to support the grant of a
permanent injunction.
“The issuance of injunctions, either temporary or permanent, has long been considered an extraordinary remedy.” ATV Watch v. N.H. Dep’t of Resources & Econ. Dev., 155 N.H
434, 437
(2007) (quotation omitted). “An injunction should not issue unless there is an immediate danger
of irreparable harm to the party seeking injunctive relief, there is no adequate remedy at law[, ]
and the party seeking an injunction is likely to succeed on the merits.” /d. (quotation, ellipses,
and brackets omitted; underline added).
Injunctive relief is a remedy, it is not an independent basis for liability. Thus, the
issuance of a permanent injunction necessarily requires: 1) an underlying claim; and 2) the
party’s success on that claim. Here, Plaintiff's request for injunctive relief is presumably made
as an alternative to its request for monetary damages, since it is a prerequisite for the issuance of
an injunction that “there [be] no adequate remedy at law.” ATV Watch, 155 N.H. at 437. In
arguing that the trial court improperly dismissed or ignored its request for a permanent
injunction, Plaintiff conflates the trial court’s determination that Plaintiff failed to plead a valid
cause of action, on the one hand, with a determination that Plaintiff is not entitled to monetary
damages, on the other.
The trial court’s dismissal was not based on its determination that monetary damages
were unavailable as a remedy for Plaintiff's action. Instead, as explained above, the trial court
dismissed outright Plaintiff's underlying action because the covenant not to sue extract in the
Releases that formed the purported basis of Plaintiff's breach of contract claim did not provide
for consequential damages in the event of a breach, which is a prerequisite for any breach of
contract action based on a breach of a covenant not to sue. See Kaye, 135 A.3d at 908. Because
the trial court dismissed the underlying claim for which Plaintiff sought either damages or
injunctive relief, Plaintiff is entitled to neither. In other words, because Plaintiff is unable to
show success on the merits of its breach of contract claim, it is not entitled to injunctive relief on
that claim. See ATV Watch, 155 N.H. at 437.
Plaintiff cites City of Keene v. Cleaveland, 167 N.H. 731 (2015) for the proposition that
“[a] court thus erred when dismissing a request for equitable relief without a separate
consideration of the factual circumstances and basis for the request for injunctive relief.” Pl’s
Brief at 19. In City of Keene, the plaintiff City brought claims — including tortious interference
with contractual relations — against certain individuals who were protesting parking meter
enforcement. 167 N.H. at 733. The City also sought preliminary and permanent injunctive
relief. Jd. The trial court dismissed the City’s underlying claims and its request for injunctive
relief. /d. In vacating the dismissal of the requests for injunctive relief, the Supreme Court
found that the “trial court did not consider the factual circumstances of the case prior to making
its determination as to whether injunctive relief was warranted.” /d. at 742. The Court held that,
despite the dismissal of the underlying claim for tortious interference with contractual relations,
the City had sufficiently pled that the defendants were engaged in conduct that endangered its
“significant governmental interests” in “providing a safe workplace for its employees.” Jd. at
743. The Court held that the trial court improperly dismissed the request for injunctive relief
without analyzing the additional factual allegations that may provide support for that relief. Jd.
at 744.
This case is highly distinguishable from City of Keene. In that case, the plaintiff had pled
sufficient allegations separate from its underlying claim of tortious interference with contractual
relations that could independently support a request for injunctive relief. /d. at 742-743. Here,
Plaintiff's claim for injunctive relief is entirely dependent on its underlying claims of breach of
contract. Plaintiff seeks injunctive relief solely as a remedy to stop the alleged breach, and
therefore the requested injunctive relief is dependent entirely on the existence of the underlying
claim. Accordingly, the trial court’s dismissal of the underlying claims of breach of contract and
tortious interference was fatal to any claim for injunctive relief.
D. The trial court did not conduct any improper fact-finding or credibility
determinations in dismissing Plaintiffs case.
Plaintiff's argument that the trial court made fact-finding and credibility determinations
in its order rests on Plaintiffs inaccurate recollection of its own pleading. Plaintiff claims the
trial court improperly found that the parties to the Releases did not intend for a breach of the
releases to give rise to an award of consequential damages to the non-breaching party. Pl’s App.
at 20-23. This is a mischaracterization of the trial court’s decision. The trial court properly
found that there was “no clear indication in the Releases that the parties contemplate
consequential damages to be award[ed] as a result of their breach.... [B]ecause the Releases are
devoid of any suggestion that the parties bargained for consequential damages, the Court finds
the Releases... operated as releases....” Pl’s Add. at 10 (emphasis added). The language of
the decision makes clear that the trial court found only that the language in the Releases was
devoid of any contemplation of consequential damages. Interpretation of the unambiguous
language of the Releases — as alleged by Plaintiff in its FAC, PI’s App. at 6 — is not improper at
the motion to dismiss stage because the Releases form the entire basis of Plaintiff's claims.
New Hampshire courts “give an agreement the meaning intended by the parties when
they wrote it.” General Linen Services, Inc. v. Franconia Inv. Associates, L.P., 150 N.H. 595,
597 (2004) (citation omitted). ““When interpreting a written agreement, [courts] give the
language used by the parties its reasonable meaning, considering the circumstances and context
in which the agreement was negotiated, when reading the document as a whole.” Jn re State,
147
N.H. 426, 429 (2002) (citation omitted). “Absent ambiguity, the parties’ intent will be
determined from the plain meaning of the language used.” /d. (emphasis added).
As alleged in the FAC, the language of the Releases is clear. See Pl’s App. at 1-21. The
trial court properly determined the parties’ intent “from the plain meaning of the language used”
in the Releases. Jn re State, 147 N.H. at 429. Based only on the unambiguous language of the
Releases, the trial court properly found that there was “no clear indication in the Releases that
the parties contemplated consequential damages to be awarded as a result of their breach.” Pl’s
Add. at 10.
As explained above, Plaintiff may only maintain an action for breach of a covenant not to
sue if the covenant not to sue “clear[ly] express[es]” that the breaching party “would be liable for
the consequential damages resulting from the breach.” Kaye, 135 A.3d at 908. The trial court’s
interpretation of the language of the Releases, as alleged by Plaintiff in the FAC, is proper at the
motion to dismiss stage in order to determine if Plaintiff has stated a claim for breach of contract.
It is obvious from a reading of the trial court’s order that the trial court properly assessed the
allegations in the FAC and found that Plaintiff had failed to sufficiently allege either: 1) that the
Releases contemplated that consequential damages shall be awarded in the event of a breach; or
2) that the language of the Releases is ambiguous as to whether consequential damages shall be
awarded in the event of a breach. Based on the controlling Releases, the FAC failed to state a
claim for breach of a covenant not to sue.
V. CONCLUSION
For the foregoing reasons, Sibling Defendants respectfully request that this Court affirm
the trial court’s decisions dismissing this case.
VI. REQUEST FOR ORAL ARGUMENT
Sibling Defendants request oral argument of not less than fifteen minutes. Timothy J.
McLaughlin will argue for the Sibling Defendants.
Date: June 29, 2018
Respectfully submitted,
TERRENCE LEE HOOPER,
TIMOTHY JOHN HOOPER
TERESA BASHAM, and
TERESA BASHAM, as Non-Independent
Trustee of the P.R. Hooper 1998 GST
Exempt Trust f/b/o Teresa Basham
By their Attorneys,
William E. Christie (Bar #11255)
Timothy J. McLaughlin (Bar # 19570)
Alexander W. Campbell (Bar # 268958)
P.O. Box 2703/107 Storrs Street
Concord, NH 03302
(603) 225-7262
tmclaughlin@shaheengordon.com
wehristie@shaheengordon.com
acampbell@shaheengordon.com
CERTIFICATE OF SERVICE
I, William E. Christie, certify that on this date service of the foregoing document was made upon counsel for all parties via electronic mail and First Class mail.
Footnotes
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Corbin on Contracts § 67.14 (2003)...
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Initially, Plaintiff improperly included the trial court’s order as part of its Appendix. After being notified of this mistake by the Court, Plaintiff submitted the trial court’s order. Although it was not made clear in the cover letter accompanying Plaintiff's late submission, Defendant’s will construe the trial court’s order as an Addendum to Plaintiff's brief. The Addendum therefore consists of ten pages, which includes, at page 1, the clerk’s notice of decision.
-
Corbin on Contracts § 67.14 at 143 (2003) (underline added). Thus, the covenant not to sue, at least initially, served a very particular purpose that is generally not applicable to this case. See Pl’s Add. at 7-9.
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Under this interpretation, Pro Done would be unable to recover any damages in its suit for breach of the covenant not to sue, because no amount has been recovered against it.
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As the court noted in Artvale, 363 F.2d at 1008, “certainly it is not beyond the powers of a lawyer to draw a covenant not to sue in such terms as to make clear that any breach will entail liability for damages.”