Town of Salem v. Local Gov't Ctr., Inc. (In re Town of Salem)

168 N.H. 572

133 A.3d 595

APPEAL OF TOWN OF SALEM & a. (New Hampshire Bureau of Securities Regulation)

Town of Salem & a.

v.Local Government Center, Inc. & a.

Nos. 2014–0650

2014–0736

Supreme Court of New Hampshire.

Argued: September 10, 2015

Opinion Issued: February 18, 2016

Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester, filed no brief, for petitioner New Hampshire Bureau of Securities Regulation.

McLane, Graf, Raulerson & Middleton, P.A., of Manchester, filed no brief, for respondents Local Government Center Property–Liability Trust, LLC and New Hampshire Municipal Association Property–Liability Trust, Inc.

Ramsdell Law Firm, PLLC, of Concord (Michael D. Ramsdell on the brief and orally), for respondents Health Trust, Inc.; Local Government Center Health Trust, LLC; and LGC–HT, LLC.

Douglas, Leonard & Garvey, P.C., of Concord (Richard J. Lehmann on the brief and orally), for the Towns of Salem, Temple, Auburn, Bennington, Meredith, Northfield, Peterborough, and Plainfield.

City Solicitor's Office, of Concord (James W. Kennedy, city solicitor, and Danielle L. Pacik, deputy city solicitor, on the brief), for plaintiff City of Concord.

Ramsdell Law Firm, PLLC, of Concord (Michael D. Ramsdell on the brief and orally), for the defendants.

HICKS, J.

In the first of these consolidated appeals, the Towns of Salem, Temple, Auburn, Bennington, Meredith, Northfield, Peterborough, and Plainfield (the Towns) appeal an order of the presiding officer of the New Hampshire Bureau of Securities Regulation (Bureau) denying their motion to share in the distribution of approximately $17.1 million in excess earnings and surplus by one of the respondents, Health Trust, Inc. (Health Trust), in an administrative action brought by the Bureau against: Health Trust; Local Government Center, Inc.; Local Government Center Real Estate, Inc.; Local Government Center Health Trust, LLC; Local Government Center Property–Liability Trust, LLC; New Hampshire Municipal Association Property–Liability Trust, Inc. (Property Liability Trust); LGC–HT, LLC; and Local Government Center Workers' Compensation Trust, LLC (collectively, the administrative respondents). See RSA 5–B:5, I(c) (2013).

In the second appeal, the Towns and the City of Concord (collectively, the plaintiffs) appeal an order of the Superior Court (McNamara, J.) granting the motion to dismiss filed by, among others,^* defendants Local Government Center, Inc.; New Hampshire Municipal Association Property–Liability Trust, Inc.; New Hampshire Municipal Association, LLC; Health Trust, Inc.; LGC–HT, LLC; LGC–PLT, LLC; Local Government Center Healthtrust, Inc.; Local Government Center Property–Liability Trust, LLC; and Local Government Center Real Estate, Inc. (collectively, the civil action defendants). We consolidated these related civil and administrative cases on appeal. For ease of reference, we will, where applicable, collectively refer to the administrative respondents and the civil action defendants as LGC. We affirm in part, vacate in part, and remand.

The following facts were found by the trial court or the presiding officer, were recited by us in the related case of Appeal of Local Government Center, 165 N.H. 790, 85 A.3d 388 (2014), or appear in the record before us. The first appeal, challenging the administrative order, involves subsequent proceedings in the matter before us in Appeal of Local Government Center. The identities of, and the relationships between and among, the respondents in that appeal, as well as the factual and procedural background of the administrative action against them, are described in Appeal of Local Government Center and repeated here only as necessary. Generally, those respondents are or have been involved in the operation of pooled risk management programs pursuant to RSA chapter 5–B. See Appeal of Local Gov't Ctr., 165 N.H. at 794–96, 85 A.3d 388 ; RSA ch. 5–B (2013 & Supp. 2015). The superior court action from which the second appeal arises named three additional defendants—New Hampshire Municipal Association, LLC; LGC–PLT, LLC; and Local Government Center Healthtrust, Inc.—alleging that they, along with the other defendants, "are companies and corporations offering products and services governed by RSA 5–B." The plaintiffs are municipalities that were members of pooled risk management programs run by several of the defendants.

In 2011, the secretary of state commenced an adjudicative proceeding prompted by a staff petition filed by the Bureau alleging that the administrative respondents had violated RSA chapters 5–B and 421–B. See Appeal of Local Gov't Ctr., 165 N.H. at 797, 85 A.3d 388. The presiding officer issued an order on August 16, 2012 (the August 16 Order) ruling that the administrative respondents had violated several provisions of RSA chapter 5–B, including RSA 5–B:5, I(c), which provides, in pertinent part:

I. Each pooled risk management program ... shall:

....

(c) Return all earnings and surplus in excess of any amounts required for administration, claims, reserves, and purchase of excess insurance to the participating political subdivisions.

See id. at 798, 85 A.3d 388. The August 16 Order required that Health Trust and Property Liability Trust return excess funds of $33.2 million and $3.1 million, respectively, to those political subdivisions that were members of those programs on August 16, 2012. The August 16 Order also directed the Bureau and the administrative respondents to enter into an "agreed-upon plan" to distribute excess funds to members that had participated in the program at any time after June 10, 2010; however, if those parties failed to reach an agreement, the order required distribution only to Health Trust's and Property Liability Trust's current members. The parties failed to reach agreement, and the excess funds were ordered to be distributed to current members.

The administrative respondents appealed the August 16 Order to this court. See Appeal of Local Gov't Ctr., 165 N.H. at 790, 793–94, 85 A.3d 388. We affirmed in part, vacated portions of the order not relevant here, and remanded for further proceedings. See id. at 809, 810, 814, 85 A.3d 388. Thereafter, the Bureau filed a motion for entry of default order against the administrative respondents alleging noncompliance with the August 16 Order. The issues related to that motion were resolved by a consent decree incorporated into the presiding officer's order. During that proceeding, the Towns were permitted to intervene in order to be heard on their proposal to participate, as former members of Health Trust, in the further distribution of approximately $17.1 million in excess funds. Their motion proposing such a distribution was denied, and the Towns now appeal.

Meanwhile, the plaintiffs filed suit against the civil action defendants in superior court. Their amended complaint alleged that they had been members of pooled risk management programs run by the civil action defendants at various times, but were no longer members on August 16, 2012. Therefore, they did not participate in the distribution of excess funds. They alleged:

As a result of the manner by which payment was made under the administrative order, the plaintiffs hereby request the Court to award money damages pursuant to common law for their recovery.... [S]ince no monies have yet flowed back from LGC to these nine plaintiff communities, they are now forced to seek justice pursuant to their common law rights, wholly separate and apart from any administrative action pursued by the Secretary of State.

The plaintiffs' amended complaint pleaded, among other things, claims for breach of contract and implied-in-fact contract, and breach of fiduciary duty. The civil action defendants filed a motion to dismiss, which the trial court granted. The trial court concluded that: (1) the remedies for overcharges afforded by RSA 5–B:4–a "are intended to be exclusive in nature"; and (2) even if the plaintiffs have a contractual right to the payment of excess funds, "this action may not proceed because LGC has complied with a final administrative order ... to make a distribution of the funds Plaintiffs seek." The plaintiffs now appeal.

We first review the trial court's dismissal of the plaintiffs' civil action. "In reviewing the trial court's grant of a motion to dismiss, our standard of review is whether the allegations in the [plaintiffs'] pleadings are reasonably susceptible of a construction that would permit recovery." In re Estate of Mills, 167 N.H. 125, 127, 105 A.3d 1057 (2014). "We assume that the facts set forth in the [plaintiffs'] pleadings are true[,] ... construe all reasonable inferences in the light most favorable to [them], ... [and] then engage in a threshold inquiry that tests the facts in the [complaint] against the applicable law." Id. "[W]e will uphold the granting of the motion to dismiss if the facts pled do not constitute a basis for legal relief." Estate of Ireland v. Worcester Ins. Co., 149 N.H. 656, 658, 826 A.2d 577 (2003).

The plaintiffs argue that the trial court erred in: (1) construing RSA 5–B:4–a as abrogating their common law claims; and (2) ruling that LGC's compliance with the August 16 Order immunizes it from the plaintiffs' common law claims. We first address the plaintiffs' contention that the trial court erred in finding "that RSA 5–B:4–a ‘vests exclusive jurisdiction relating to overcharges in the Secretary of State,’ " and provides exclusive remedies therefor. Resolving this issue requires us to engage in statutory interpretation.

Statutory interpretation is a question of law, which we review de novo. In matters of statutory interpretation, we are the final arbiter of the intent of the legislature as expressed in the words of the statute considered as a whole. We first look to the language of the statute itself, and, if possible, construe that language according to its plain and ordinary meaning. We interpret legislative intent from the statute as written and will not

...