Coutu v. State

Michael Coutu v. State of New Hampshire and New Hampshire Bureau of Securities Regulation

No. 2015-cv-488

State of New Hampshire MERRIMACK, SS SUPERIOR COURT

September 23, 2016

ORDER

Plaintiff, Michael Coutu ("Coutu"), has brought an action against the Defendants alleging breach of an agreement pursuant to which he would provide services to the State of New Hampshire and the New Hampshire Department of Securities Regulation. The original Complaint, filed on September 8, 2015, alleged only breach of contract. Plaintiff amended his Complaint to add claims for violation of the New Hampshire Consumer Protection Act ("CPA") and the Whistleblower Protection Act, RSA 275-E (Whistleblower Claim). Defendants moved to dismiss those claims, Counts II and III of the Amended Complaint. For the reasons stated in this Order, the Motion is GRANTED.

I

A trial court may grant a motion to dismiss only if "it determines, after considering the evidence and construing all inferences therefrom most favorably to the non-moving party, that no rational juror could conclude that the non-moving party is entitled to any relief." Dillman v. N.H. College, 150 N.H. 431, 434 (2003). If the plaintiff has not made allegations in the complaint that are "reasonably susceptible of a construction that would permit recovery," the moving party is entitled to dismissal of the claims against them. See Hobin v. Coldwell Banker Residential Affiliates, Inc., 144 N.H. 626, 628 (2000). The threshold inquiry involves testing the facts alleged in the pleadings against the applicable law. See Williams v. O'Brien, 140 N.H. 595, 598 (1995). In rendering such a determination, the Court "assume[s] the truth of all well-pleaded facts alleged by the plaintiff and construe[s] all inferences 'in the light most favorable to the plaintiff.'" Bohan v. Ritzo, 141 N.H. 210, 212 (1996). The Court may also consider "documents attached to the pleadings, . . . documents the authenticity of which are not disputed by the parties, . . . official public records, . . . or documents referred to in the complaint." Beane v. Dana S. Beane & Co., 160 N.H. 708, 711 (2010) (citation and internal quotation omitted). Dismissal is appropriate if the facts pled "do not constitute a basis for legal relief." Id. The Court "need not accept allegations . . . that are merely conclusions of law.'" Id.

Plaintiff's Amended Complaint alleges that "in September 2014, the Defendants entered into an agreement with Mr. Coutu pursuant to which Mr. Coutu would provide services to the State of New Hampshire and the New Hampshire Bureau of Securities Regulation ("BSR") by acting as a liaison between the BSR and certain pooled risk management programs to monitor the pooled risk management programs' compliance with and implementation of orders entered in legal proceedings between the BSR and the aforementioned pooled risk management programs." (Amended Compl. ¶ 1.) The contract provided that Coutu would be paid no more than $180,000 and be reimbursed for mileage at the State's current rate. (Id. at ¶ 17.) It also provided that Coutu was to "submit invoices to the State of New Hampshire in equal monthly installments of$15,000 which invoice shall be paid by the State on or about the 18^th of each month commencing September 18, 2014 through and including August 18, 2015." (Id.) Coutu alleges that from the execution of the agreement until its termination on May 28, 2015, he fulfilled his obligations under the agreement. (Id. at ¶ 20.) On or about April 17, 2015, Coutu submitted an invoice to Defendants for $16,485.76 for services rendered and expenses incurred pursuant to his obligations under the agreement. (Id. at ¶ 21.) That invoice remains unpaid. (Id.) On or about May 15, 2015, Coutu submitted an invoice to the Defendants for $6660.50 for the services rendered by him between April 19, 2015 and May 15, 2015 and requested payment of the April 17, 2015 invoice. (Id. at ¶ 24.) That invoice also remains unpaid. (Id. at ¶ 25.) Coutu terminated the agreement on or about May 28, 2015. "In his termination letter, Mr. Coutu advised the BSR of the State of New Hampshire's obligation to pay him $23,156.26 for services rendered prior to termination." (Id. at ¶ 26.) Defendants have continued to refuse to pay Coutu's invoices. (Id. at ¶ 27.)

The Amended Complaint fleshes out the reason for the breach of contract Coutu alleges. He asserts that he was required by the express terms of the agreement to "analyze and participate at committee and board meetings of the PLT," referring to the Property and Liability Trust ("PLT"), one of the pooled risk entities. (Id. at ¶ 29.) He alleges that "in the course of meetings with the PLT . . . it became apparent to Coutu that there were actions he recommended to the BSR that would ensure PLT sufficient liquidity to timely pay operating expenses and insured claims and, thereby, avert what would otherwise be a significant risk that it would be rendered bankrupt." (Id. at ¶ 30.) His recommendations would have resulted in what he calls the "resuscitation of PLT asone of the valid options available to BSR." (Id. at ¶ 31.) He alleges that Secretary of State William Gardner, who supervised BSR, had "a personal vendetta against the PLT and was absolutely determined to ensure the PLT would cease writing duly renewed business, regardless of the consequences." (Id.) Coutu alleges:

32. Because Coutu's responsible efforts in accord with his contractual obligations contravened Gardner's personal grudge, Gardner undertook to punish Coutu by both personal attacks and, ultimately, refusal to pay him sums under the Agreement.

33. Indeed, it became plainly evident that Gardner was personally angered by Coutu's position that the BSR's failure to consider allowing the PLT to resume underwriting or, alternatively, assuring sufficient liquidity in its runoff, was contrary to its obligation to act in the best interest of the members and its policyholders.

34. While the Defendants have alleged that Coutu breached the Agreement, they continued to accept his services for a period of approximately 5 months during the allegedly "violative" conduct, yet never provided him with a notice of breach required under ¶ 8 of the Agreement.

35. As a result of the Defendant's wrongful conduct, Coutu has not been paid for services rendered, has been personally impugned and has been unnecessarily required to sue for compensation due and owing.

36. Gardner abused his authority, violated his public trust and his oath of office, by conduct that addressed his personal animus towards PLT at the expense of the public.

(Id. at ¶¶ 32-36.)

Based upon these allegations, Coutu asserts two counts in his Amended Complaint in addition to his breach of contract claim. Count II alleges violation of the CPA and asserts in relevant part:

46. By failing to pay Coutu for wages earned based upon the personal animus of a State official, the Defendants have engaged in an unfair method of competition.

(Id. at ¶ 46.)

Count III alleges a violation of the Whistleblower Act:

52. By his actions, Coutu sought to avert PLT's bankruptcy and thereby require the BSR to honor its obligations to PLT members and policyholders.

53. In good faith, and pursuant to the Agreement and BSR's acknowledgment of Coutu as an insurance and financial expert, Coutu objected to Gardner's refusal to consider steps necessary to allow PLT to resume underwriting or, alternatively, to ensure sufficient liquidity for an orderly runoff, thereby risking significant losses by PLT, its members, policyholders and claimants.

54. As a result of Coutu's good faith efforts to challenge violations of law, he has been subject to reputational attacks, Defendants have failed and refused to pay him sums due and owing and required him to incur fees to collect same.

(Id. at ¶¶ 52-54.)

III

The Court believes that a CPA action may not be maintained based upon the allegations of the Complaint for two reasons. First, the Complaint does not allege a deceptive conduct on the part of the Defendants. Second, the conduct alleged is not within the scope of the CPA.

A

The CPA creates a private right of action for "any person injured by another's use of any method, act or practice declared unlawful under this chapter." RSA 358-A: 10. The CPA provides a nonexhaustive list of conduct that constitutes unfair methods of competition or unfair or deceptive acts or practices. RSA 358-A: 2, I-XVI. Conduct not specifically enumerated may nonetheless be deceptive and violative of the Act.

The New Hampshire CPA is based upon the Federal Trade Commission Act and the statute itself requires that the Court look to the Federal Trade Commission Act for guidance. RSA 358-A:13; State v. Moran, 151 N.H. 450, 452-53 (2004). The Federal Trade Commission determines if actions are unfair or deceptive by inquiring:

(1) Whether the practice, without necessarily having been previouslyconsidered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise - whether, in other words, it is within at least the penumbra of some common-law, statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).

Id. at 453 (emphasis supplied).

In cases such as this, in which the conduct alleged does not include one of the specific types of conduct that are set forth in the statute, the Court has adopted the so-called "rascality test," which was first articulated by the Massachusetts courts, in Barrows v. Boles, 141 N.H. 382, 390 (1986), to determine if the conduct falls within the purview of the act. In Barrows, the Court held that an ordinary breach of contract does not present the occasion for remedies under the CPA, and for conduct not specifically enumerated in the statute to violate the Consumer Protection Act, "the offending conduct must obtain a level of rascality that would...