THE STATE OF NEW HAMPSHIRE

Transcription

1 THE STATE OF NEW HAMPSHIRE HILLSBOROUGH, SS. SUPERIOR COURT NORTHERN DISTRICT 2004 Patrick J. Lorenz, et al. v. The Administrative Office of the Courts and The New Hampshire Supreme Court Docket No. 04-E-0153 ORDER ON DEFENDANTS MOTION TO DISMISS [32] The petitioners, fifteen court stenographers currently employed with the New Hampshire Superior Court ( the superior court ), collectively bring this Petition for Declaratory Judgment 1 requesting the court determine that respondents, the Administrative Office of the Courts ( the AOC ) and the New Hampshire Supreme Court ( the supreme court ), are equitably estopped from terminating petitioners as employees of the State of New Hampshire except for just cause based on poor individual job performance or misconduct. The respondents object and move to dismiss the petitioners petition, asserting, inter alia: (1) the petitioners have an adequate remedy at law and are therefore precluded from bringing this action in equity; and (2) the petition must be dismissed for failure to state a claim upon which relief may be granted. The court conducted a hearing on May 21, For the following reasons, the respondents motion to dismiss is GRANTED. 1 The petitioners initially filed a Petition for Protective Injunction [1] on April 6, The court conducted a hearing on April 22, 2004, to consider the Petition for Protective Injunction. However, on May 7, 2004, the petitioners filed a motion to amend their petition to a Petition for Declaratory Relief [48], pursuant to RSA 491:22 (1997 & Supp. 2003). During the May 21, 2004, hearing, all parties assented to the petitioners motion to amend.

2 The standard of review in considering a motion to dismiss is whether the plaintiff s allegations are reasonably susceptible of a construction that would permit recovery. Harrington v. Brooks Drugs, Inc., 148 N.H. 101, 104 (2002) (quoting Hobin v. Coldwell Banker Residential Affiliates, 144 N.H. 626, 628 (2000)). The court assume[s] the truth of all facts alleged by the plaintiff and construe[s] all reasonable inferences in the light most favorable to [the plaintiff]. Graves v. Estabrook, 149 N.H. 202, 203 (2003). The court must rigorously scrutinize the complaint to determine whether, on its face, it asserts a cause of action. Williams v. O Brien, 140 N.H. 595, 597 (1995) (internal quotations omitted) (emphasis in the original). What is involved is a pre-trial, threshold inquiry that tests the facts in the complaint against the applicable law. Id. If the facts do not constitute a basis for legal relief, [the court will grant] the motion to dismiss. Graves, 149 N.H. at 203. Relying on principles of equitable estoppel, the petitioners allege they reasonably and detrimentally relied on repeated promises and agreements, both written and oral, made by the respondents or their authorized agents, including justices and chief justices of the superior court. According to petitioners, the respondents assured them of continued employment with the superior court so long as the petitioners continued to perform their duties competently. Specifically, the petitioners proffer the following facts and inferences to support their assertions. In 1985, the superior court began investigating the use of sound recording equipment to maintain a record of court proceedings in two superior court locations, Merrimack and Strafford Counties. See Pet. Ex. 1 at 2. In a June 24, 1985, memorandum directed to the superior court stenographers, Chief Justice Dunfey stated: 2

3 Regardless of the outcome of the sound recording experiment, the members of the Court are committed to retaining all current stenographers. I wanted to make this fact clear to allay the natural anxiety that develops when a test of this type is conducted and court staff question the possibility of being replaced or demoted. I assure you that neither will occur. Id. The petitioners allege the assurances contained in Chief Dunfey s 1985 memorandum were often repeated, both orally and in writing, in subsequent years. See Pet. Mem. In Opp. to Mot. to Dismiss [47]. For instance, a memorandum from Dick Dore, the chief court reporter, dated March 11, 1992, and directed to the superior court reporters states in relevant part: Chief Justice DiClerico has asked me to write to all of you and once again clarify the monitor situation. As most of you know, at the conclusion of the experiment conducted at the Dover/Concord Courthouses some five to seven years ago, it was determined by the Court at that time that in the future new positions may be filled, through attrition, by monitors rather than Court Reporters. It should again be emphasized that Chief Justice DiClerico has continually assured us that no Court Reporter who is presently working with the Superior Court will lose his or her job as a result of being replaced by a monitor. Pet. Ex. 4. At hearing, the petitioners provided the court with additional items containing similar representations. These are: (1) a letter dated January 21, 1994, from then Chief Justice Nadeau; and (2) the minutes of the justices/court reporters meeting conducted at the Superior Court Center on August 30, See Pet. Ex. 2 & 3. The petitioners contend the respondents ratified these promises by failing to disavow them after becoming aware of the promises and then benefiting from the ongoing services provided by the petitioners. Specifically, the petitioners aver that prior to February 27, 2004, the general counsel for the judicial branch advised the State 3

4 Employees Association, with whom the petitioners were exploring membership, that the court stenographers were going to be terminated on or before June 3, See Pet. Mem. Opp. Mot. to Dismiss at 2. The petitioners also allege that, contrary to the foregoing advice given by the general counsel for the judicial branch, on or about February 27, 2004, Chief Justice Lynn of the superior court assured the petitioners that no such decisions have been made. Id. at 3. According to the petitioners, Chief Justice Lynn s assurance stemmed from statements allegedly attributed to the chief justice of the supreme court. The petitioners assert their reliance on these promises was reasonable because the assurances and promises were being made by justices and chief justices of the superior court, who had the apparent authority to hire and fire the petitioners. Furthermore, the petitioners maintain they reasonably relied on these promises by expending personal funds to purchase, maintain and update stenographic recording devices, thereby enabling them to more effectively complete their transcription and court reporting duties. The petitioners also claim they have occasionally declined or sacrificed other professional opportunities and altered their personal living circumstances to their detriment in reliance upon these promises of continued employment. According to their pleadings, despite assurances to the contrary, the petitioners were advised in March, 2004, that their positions were being eliminated. The petitioners allege their layoffs were expected to be completed by June 30, The petitioners also assert the respondents decision to terminate their employment with the superior court was made in October, 2003, pursuant to Supreme Court Administrative Order 4

5 The petitioners began this litigation after hearing that the decision to terminate their positions was a fait accompli. According to respondents, petitioners are essentially seeking enforcement of an alleged oral contract for lifetime employment. The respondents assert this alleged contract is unenforceable because: (1) the statements made by the justices and chief justices of the superior court reflected present intentions and goals rather than specific and definite promises for lifetime employment; and (2) a contract for employment or personal services cannot be enforced by specific performance. The respondents also argue the petition must be dismissed because equitable estoppel cannot be invoked against the government based upon an official s statements or promises unless such statements or promises were duly authorized, which here they were not. More specifically, according to the respondents, even if the statements of the superior court justices were in fact promises for lifetime employment rather than statements of present intentions or goals, the superior court justices and chief justices did not have the authority to make those promises to the petitioners. Moreover, the respondents argue the chief justice of the supreme court did not impliedly ratify the oral promises allegedly made by the superior court justices because implied ratification cannot be based solely on inaction or failure to disavow the alleged oral promises of the superior court justices. The petitioners dispute the respondents arguments primarily upon the basis of equitable estoppel. Specific performance of an executory contract for personal services is not ordinarily decreed even when the party to render the services is the plaintiff. Allbee v. Elms, 93 N.H. 202, 203 (citing Knox v. Allard, 90 N.H. 157, 163 (1939)). The rationale 5

6 for this rule is based in part upon the undesirability of compelling the continuance of personal association after disputes have arisen and the confidence and loyalty are gone.... Restatement of Contracts 2d, 367, Comment a at 192 (1981). Damages, rather than specific performance, is generally an adequate remedy for the breach of a personal contract. 71 Am. Jur. 2d Specific Performance 183 at 193 (2001) (citing Williamson County Broad. Co., Inc. v. Intermedia Partners, 987 S.W.2d 550 (Tenn. App. 1998)). Furthermore, [t]he loss of employment is not generally considered a loss that is inherently immeasurable or noncompensable in monetary terms. Id. (citation omitted). Here, regardless of how the petitioners have styled their suit in equity, the relief they are requesting is that the respondents be estopped from terminating their employment with the State of New Hampshire except for just cause based on individual misconduct or poor performance. As respondents contend, the petitioners are effectively proceeding upon the theory that they are entitled to specific performance of promised employment for life. Even if the court assumes, arguendo, that the petitioners were promised lifetime employment by the chief justice and justices of the superior court, such a promise is not enforceable in equity by specific performance or injunctive relief. See supra at 6; 42 Am Jur. 2d Injunctions 128 at 719 (2001). This conclusion is especially compelling if the person seeking specific performance may quit employment at any time. See 71 Am. Jur. 2d Specific Performance 185 at 196 (2001) (citing Knox v. Allard, 90 N.H. 157 (1939); Iran Age Pub. Co. v. Western Union Telegraph Co., 3 So. 449 (Ala 1888); Beatty v. Chicago, B. & Q.R. Co., 52 P.2d 404 (1935)). The petitioners seek to distinguish this case from the ones articulating the principles stated above on the basis that here the harm has been threatened, but has 6

7 not yet occurred. Relying on Reardon v. Lemoyne, 122 N.H (1982), the petitioners assert their declaratory judgment action is appropriate because they have not yet been fired and are merely seeking a declaration of their legal rights to continued employment. See Pet. Mem. at 5-6. In Reardon, three teachers and a principal employed by a private parochial school in Hampton, New Hampshire, signed written employment contracts, which contained specific provisions concerning the termination of their employment. Reardon, 122 N.H. at The school was administered and operated by the defendants, the Bishop of the Diocese of Manchester, the Diocesan Superintendent of Schools, the Diocesan School Board, and ten individual members of the Sacred Heart School Board. Id. at An employee faced with dismissal had a right to a hearing before the Sacred Heart School Board ( the board ), pursuant to an employment contract, provided the hearing was timely requested. Id. at When the plaintiffs were notified their contracts were not going to be renewed, they requested a public hearing before the board per their contract. Id. at When the board denied their request for a hearing, the plaintiffs filed a petition for declaratory judgment requesting the court construe their employment contracts. Id. Among other things, the plaintiffs specifically sought a ruling that they could only be dismissed for cause based upon substantial evidence, and that the cause in this case was not sufficient. Id. The trial court granted the defendant s motion to dismiss, ruling the plaintiffs could not prevail on the merits against these defendants. Id. at The New Hampshire Supreme Court reversed the trial court s decision, holding that a declaratory judgment action was a viable means for resolving the issues in this 7

8 case. Id. at The Reardon Court reasoned [t]he plaintiffs were not seeking an advisory opinion concerning their future rights; they were seeking a determination as to their existing rights. Id. The Reardon Court also recognized the declaratory judgment action was appropriate because it was filed while the plaintiffs were still teaching at the Sacred Heart School, and it might have prevented a potential invasion of their rights. Id. The present case is distinguishable from the facts and circumstances in Reardon. Unlike the case at hand, Reardon did not involve a decision upon the merits of the plaintiffs termination or nonrenewal. Rather, it involved a decision concerning the plaintiffs entitlement under their employment contract to a hearing about the propriety of their termination or nonrenewal. In other words, the decision in Reardon was based upon a procedural matter, not one involving the ultimate merits of the case. In the instant case, the plaintiffs are effectively seeking an advisory opinion about their future rights. Contrarily, in Reardon, [t]he plaintiffs were not seeking an advisory opinion concerning their future rights; they were seeking a determination of their existing rights[,] that is, their right to a hearing. Id. at 1050 (emphasis added). Therefore, as the respondents argue, specific performance is not available to the petitioners for the alleged promise of lifetime employment. The appropriate remedy in such a case is by way of an action for damages for breach of contract. The court also finds the petitioners have failed to state a claim upon which relief may be granted. As previously stated, the petitioners claim is based upon the principles of equitable estoppel. Equitable estoppel serves to forbid one to speak against his own act, representations or commitments communicated to another who reasonably relies 8

9 upon them to his injury. Cadle Co. v. Bourgeois, 149 N.H. 410, 418 (2003) (citation omitted). The party asserting estoppel bears the burden of proving four elements: first, a representation or concealment of material facts made with knowledge of those facts; second, the party to whom the representation was made must have been ignorant of the truth of the matter; third, the representation must have been made with the intention of inducing the other party to rely upon it; and fourth, the other party must have been induced to rely upon the representation to his or her injury. Healey v. Town of Durham Zoning Board of Adjustment, 140 N.H. 232, (1995) (quoting City of Concord v. Tompkins, 124 N.H. 463, (1984) (citations omitted)). The reliance by the party bringing the estoppel claim on the representation or concealment must have been reasonable. City of Concord, 124 N.H. at 468. Reliance is unreasonable when the party asserting estoppel, at the time of his or her reliance or at the time of the representation or concealment, knew or should have known that the conduct or representation was either improper, materially incorrect or misleading. Id. The respondents argue the petitioners reliance upon the alleged promises and statements made by the chief justice and various justices of the superior court was unreasonable because: (1) the alleged statements were statements of present intentions and goals rather than enforceable promises; and (2) the existence of personnel rules, which expressly subject the petitioners to termination at will and layoffs, conflicts with the alleged promises and undermines any claim of reasonable reliance by the petitioners. The petitioners refute these contentions, asserting: (1) whether the alleged statements were enforceable promises or statements of present intentions and goals raises a factual dispute inappropriate for resolution at this stage of the proceedings; and (2) New Hampshire Judicial Branch Personnel Rule 16(E) expressly 9

10 grants authority to the superior court justices to make binding promises of employment to the petitioners. Part II, Article 73-a of the New Hampshire State Constitution provides: The chief justice of the supreme court shall be the administrative head of all the courts. He shall, with the concurrence of a majority of the supreme court justices, make rules governing the administration of all courts in the state and the practice and procedure to be followed in all such courts. The rules so promulgated shall have the force and effect of law. (emphasis added). Additionally, RSA 490:26-b provides, in relevant part: The supreme court shall establish a uniform personnel classification and compensation system and salary and grievance procedures for all nonjudicial court personnel.... The salary and grievance procedures shall be established by administrative order of the supreme court. RSA 490:26-b (Supp. 2003). 2 Pursuant to both the constitutional authority and this statutory grant of administrative authority, the supreme court implemented the New Hampshire Judicial Branch Personnel Rules ( NHJBPR ). 3 See N.H. Judic. Pers. R. 1. The NHJBPR [applies] to all non-judicial personnel, except contractual or per diem employees, of the supreme court, superior courts, probate courts, district courts, municipal courts and the administrative office of the courts. N.H. Judic. Pers. R. 2. Therefore, the petitioners fall within the scope of the NHJBPR, which govern the terms of their employment as court stenographers. NHJBPR 16(E) states in relevant part that court stenographers of the superior court shall be appointed by and serve at the pleasure of the justices of the superior 2 RSA 490:26-b became effective in 1983 and was amended in 2001 to exclude application of the provision to employees covered by a collective bargaining agreement pursuant to RSA 273-A. 3 The NHJBPR were implemented pursuant to Administrative Order 85-1A, which was adopted on January 15, On March 4, 1996, the NHJBPR were amended and reissued pursuant to Administrative Order

11 court. N.H. Judic. Pers. R. 16(E). However, NHJBPR 16(A) specifically grants administrative authority to the justices of the superior court in accordance with Rule 3 of the NHJBPR, which provides in relevant part: Such authority is subject to the supervisory authority of the chief justice of the supreme court and respective Administrative Judges, supervisory judges, or as otherwise limited by statute or rule. N.H. Judic. Pers. R. 3(1) (emphasis added). Therefore, the authority granted to superior court justices to hire and fire court stenographers is subject to the supervisory authority of the chief justice of the supreme court and is limited to that which is permitted under the personnel rules and applicable law. The petitioners are also subject to the express provisions regarding layoffs and reinstatements contained in Rule 21 of the NHJBPR, which provides: Employee layoffs may become necessary because of a general reduction in work force, a change in the organization, a decline in the workload, insufficient funding, a change in state law, or a change in federal requirements. Layoff and reinstatement procedures will be developed by the administrative council, approved by the supreme court as necessary, and published as administrative orders at least 14 calendar days before the date of layoff becomes effective. (emphasis added). N.H. Judic. Pers. R. 21. The petitioners argue that [w]hile this Rule gives the defendants the authority to develop a layoff procedure, it does not specifically grant them the authority to decide who is to be subject to that procedure and when. That decision can only be made by the Chief Justice of the Superior Court, who is bound by the promises made by his predecessors, and those speaking for them. Pet. Mem. In Opp. To Mot. To Dismiss at 7. Contrary to this argument, the express language of Rule 21 grants ultimate supervisory authority to the supreme court. Moreover, the express 11

12 language of Rule 21 supports the respondents contention that the petitioners are at-will employees of the superior court. The petitioners assertion that NHJBPR 16(E) delegates to the superior court justices the authority to promise lifetime employment to the court stenographers is contrary to the express language contained in the NHJBPR and the constitutional and statutory administrative authority granted to the chief justice of the supreme court. Although the superior court justices have the authority to hire and fire court stenographers at will, they remain subject to both the supervisory authority of the chief justice of the supreme court and the NHJBPR, which have the force and effect of law and are promulgated by the New Hampshire Supreme Court. Moreover, the petitioners, as employees of the New Hampshire Superior Court, knew or should have known the substance of the NHJBPR. The court finds their reliance on only one section of the NHJBPR, that is, the language contained in Rule 16(E), was unreasonable given the relevant language contained in other sections of the NHJBPR. Even assuming, arguendo, that the petitioners reliance were reasonable, the court still finds the petitioners failed to adequately state a claim for equitable estoppel on which relief may be granted. [E]stoppel may be applied against the government, as a result of conduct or statements by government employees, provided that the government employees had the authority to act, and the party invoking governmental estoppel satisfies the elements of estoppel. City of Concord, 124 N.H. at 468. The attempt to act by a government official, by itself, when ultra vires, does not remedy that official s lack of authority for estoppel purposes. Id. at 469. Therefore, a party bringing an estoppel claim against the State... based on the representations or conduct of a 12

13 government official, cannot rely on the official s asserted or assumed exercise of authority not possessed. Id. (citing Storrs v. Manchester, 88 N.H. 139, 142 (1936)); see Healy, 140 N.H. at 240. Nor can a party rely on the apparent authority of a government official, to establish an estoppel claim, when the official acted outside his actual authority. Id. Furthermore, all private parties dealing with government officials are charged with notice of the extent and limits of their authority. Id. at 470 (quoting Richards v. Columbia, 55 N.H. 96, 99 (1874)). Consequently, a party relying on the representations of a government official is at risk that the official acted ultra vires. Id. Therefore, the party who relied upon the government official s unauthorized conduct or statements cannot be deemed to have been injured by the government. Id. at 471. Pursuant to Part II, Article 73-A of the new Hampshire Constitution, superior court judges cannot bind the New Hampshire Supreme Court in matters of administration. Constitutional authority to administer all of the courts is vested in the chief justice of the supreme court. Furthermore, the administrative authority of the chief justice of the superior court to hire and fire court stenographers is subject to the supervisory authority of the chief justice of the supreme court and to the NHJBPR, which are promulgated by the supreme court. See supra at Accordingly, the alleged promises of lifetime employment, made by various chief justices and justices of the superior court, were unauthorized and beyond the scope of their authority. As such, they cannot now be created by estoppel. Additionally, the petitioners cannot rely on the apparent authority of the chief justices and justices of the superior court to support their equitable estoppel claim because the chief justices and justices of the superior court were acting outside their actual authority. Moreover, the petitioners are employees of 13

14 the superior court and should reasonably have known the contents of the NHJBPR, which establish the terms of their employment. See City of Concord, 124 N.H. at (quoting Smith v. Epping, 69 N.H. 558, 560 (1899) (recognizing those dealing with the agent of a municipal corporation are [ ] bound to ascertain the nature and extent of [the agent s] authority ). While acknowledging the traditional New Hampshire rule of applying equitable estoppel against the government only when the governmental official was acting within the scope of his or her authority, the petitioners argue the court should rely on the more recent trend to relax the strict rules of estoppel when equities favor such a determination. The City of Concord Court acknowledged that other jurisdictions have applied governmental estoppel with frequency, even when the estoppel is created by the unauthorized conduct or statements of government officials. City of Concord, 124 N.H. at 471. Courts in other jurisdictions employ[ ] an equity balancing test, weighing the public interest in preventing the government from capriciously dealing with its citizens, against the risk, posed by estoppel, of undermining important governmental interests. Id. at 472. The petitioners assert the present case presents circumstances appropriate for the application of an equity balancing test to determine whether equitable estoppel against the respondents is appropriate despite lack of authority by the superior court justices to make the alleged promises of lifetime employment to them. The court does not find this assertion persuasive. In the City of Concord case, the Court recognized the Ninth Circuit s statement that reliance is reasonable when a person sincerely desirous of obeying the law would have accepted the information [relied upon] as true, and would not have been put on 14

15 notice to make further inquiries. Id. at 473. However, at the same time the Court also recognized that [r]eliance may be deemed unreasonable when the party alleging estoppel could have discovered the truth of the matter by visiting a local government office, or when the relevant regulations were published in the Federal Register. Id. (internal quotations and citations omitted). In the instant case, the NHJBPR were promulgated and have the force and effect of law. Moreover, the petitioners should have been aware of the NHJBPR which govern their employment as well as the constitutional provision vesting administrative authority over the courts with the supreme court. Consequently, application of the more modern equity balancing test is not appropriate given the facts and circumstances of this case. Finally, the petitioners argue the authority necessary for an equitable estoppel claim can be supplied by ratification. Specifically, the petitioners contend the alleged representations made by the justices of the superior court were incorporated in memoranda or meeting minutes which the supreme court received and failed to countermand. The petitioners assert the supreme court s failure to override the alleged commitments contained in the memoranda or meeting minutes constituted a ratification of the superior court justices promises of lifetime employment to the petitioners. The court disagrees. [T]he State... can be estopped by the ratified conduct of government officials. City of Concord, 124 N.H. at 469. The party asserting estoppel has the burden of establishing that the government ratified the conduct of the government official relied upon. Id. However, [s]ilence of government officials does not constitute governmental ratification and will not provide a basis for estoppel. Id. at 470. Therefore, a party 15

16 bringing a governmental estoppel claim cannot treat want of objection [by government officials] as a basis for an inference of consent because of silence. Id. (quoting State v. Hutchins, 79 N.H. 132, 140 (1919)). In their pleadings, the petitioners have failed to allege sufficient facts to support their claim that the chief justice of the supreme court or the supreme court ratified the alleged promises of lifetime employment. Moreover, the petitioners theory of implied ratification based upon silence or failure to disavow or countermand the alleged promises is unsupported by New Hampshire Law. Finally, any acceptance by the supreme court of the petitioners services as at-will employees is insufficient to serve as a ratification of the alleged promises of lifetime employment made by the superior court justices. While the court is sympathetic to the petitioners plight, it is duty bound to follow and apply the law which in this case compels a ruling that petitioners have failed to state a claim upon which relief may be granted. For the same reason, the court must reject the petitioners claim for specific performance because the appropriate remedy for their claim is an action for damages for breach of contract. SO ORDERED. Date: June 28, 2004 Philip S. Hollman Presiding Justice 16