UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Davis Frame Co., Inc.,

Plaintiff

v. Civil No. 05-cv-160-SM

Opinion No. 2006 DNH 021

Patrice Reilly

and James Reilly,

Defendants

O R D E R

Davis Frame Co., Inc. (“Davis Frame”), a designer,

manufacturer, and seller of timber frame home packages, has sued

its former customers, Patrice and James Reilly (“the Reillys”),

in five counts. Defendants assert three counterclaims: (1)

violation of the Sherman Act, 15 U.S.C. § 1 (Count I); (2)

violation of the New Hampshire Consumer Protection Act (“CPA”),

N.H. REV. STAT. ANN. (“RSA”) § 358-A; and (3) fraudulent

misrepresentation. Before the court is plaintiff’s motion to

dismiss all three counterclaims. For the reasons given,

plaintiff’s motion to dismiss is granted.

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The Legal Standard

A motion to dismiss for “failure to state a claim upon which

relief can be granted,” FED. R. CIV. P. 12(b)(6), requires the

court to conduct a limited inquiry, focusing not on “whether a

plaintiff will ultimately prevail but whether the claimant is

entitled to offer evidence to support the claims.” Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974). When considering a motion to

dismiss under Rule 12(b)(6), the court must “accept as true the

factual allegations of the complaint and construe all reasonable

inferences therefrom in favor of [plaintiff].” Perry v. N.E.

Bus. Serv., Inc., 347 F.3d 343, 344 (1st Cir. 2003) (citing

Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16 (1st Cir.

1998)). “A district court may grant a 12(b)(6) motion to dismiss

for failure to state a claim upon which relief can be granted

only if ‘it clearly appears, according to the facts alleged, that

the plaintiff cannot recover on any viable theory.’” Pomerleau

v. W. Springfield Pub. Sch., 362 F.3d 143, 145 (1st Cir. 2004)

(quoting Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52

(1st Cir. 1990)).

Case 1:05-cv-00160-SM Document 21 Filed 02/22/06 Page 2 of 20
1 Specifically, Davis Frame promised to “furnish Purchaser

with sets of preliminary plans including the following: all floor

plans, four [4] elevations, a building cross section, and a

preliminary timber frame plan.” (Compl., Ex.1.)

3

Background

The facts are drawn from plaintiff’s complaint and

defendants’ counterclaim, and are construed most favorably to

defendants. At some point in early September 2003, the Reillys,

who had some incomplete architectural plans, spoke with Dana

Roberts, then a Davis Frame employee, about the possibility of

having Davis Frame use those incomplete plans to prepare a useful

set of plans and drawings for a timber frame home. (Countercl.

¶ 13.) Reilly thought he might cut the timber for the home

himself. Roberts did not object, “and it was understood that the

Reillys could take the plan to be developed by [Davis Frame] to

any company they wanted to cut the timber.” (Id.) 

On September 15, 2003, the parties executed a “Design

Deposit Agreement” covering the production of “preliminary plans

and drawings.”1 (Compl., Ex. 1.) The first paragraph of that

agreement provides:

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The undersigned PURCHASER, wishing to obtain

preliminary plans and drawings of a custom designed

timber frame package from the Davis Frame Company,

Inc., in order to determine whether Purchaser wishes to

purchase said package, and Davis Frame Company, Inc.

desiring to provide such plans, hereby agree as

follows:

(Id. (emphasis added).) Under the agreement, Davis Frame

promised to furnish the Reillys with a set of preliminary plans,

and the Reillys promised to pay Davis Frame a deposit, from which

Davis Frame would be paid for its design work at a rate of $60

per hour, plus various expenses. (Id.) In addition, in the

event the Reillys decided to purchase a Davis Frame package, the

agreement called for some or all of their deposit to be credited

toward the purchase price of the frame package. (Id.) Finally,

the agreement provides:

7. Purchaser represents that the plan

specifications or drawings of any kind (hereinafter

“plans”) provided by the Purchaser to Davis Frame

Company, Inc. are the exclusive property of the

Purchaser, and the Purchaser shall have the full right

and authority to utilize the plans without violation of

any law prohibiting such use.

. . .

9. Once the plans are produced and designed for

the Purchaser by Davis Frame Company, Inc., Purchaser

assigns all of their rights in and to said plans to

Davis Frame Company, Inc. Davis Frame Company, Inc.

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2 Ultimately, $609.80 of that deposit was returned to the

Reillys, under the terms of the agreement. (Countercl. ¶ 15.)

5

shall own the exclusive copyright to the plans subject

to its use in Purchaser’s construction of its Davis

Frame Company, Inc. timber frame package.

(Id.)

After the parties executed the Design Deposit Agreement, the

Reillys paid Davis Frame a deposit of $5,250.2 (Countercl.

¶ 15.) Davis Frame, in turn, produced a set of plans which it

sent to the Reillys on October 31, 2003. (Compl. ¶ 12.) Among

other identifying information, the plans contained Davis Frame’s

copyright notice. (Compl. ¶ 13.)

Subsequently, the Reillys informed Davis Frame that they did

not want to purchase a Davis Frame package. (Countercl. ¶ 17.) 

In response, Davis Frame “informed the Reillys that [it] would

pursue ‘all avenues available’ unless [] the Reillys purchased a

timber frame package from [Davis Frame] or, in the alternative,

paid [Davis Frame] an additional $10,000.” (Id.) In its

complaint, Davis Frame quotes its communication with the Reillys

at greater length: “[I]f you cho[o]se to cut the frame yourself

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or if you cho[o]se to have another timber frame company cut this

frame, without purchasing the copyrights, we will seek all

avenues available to us.” (Compl. ¶ 15.)

On May 4, 2004, the Reillys filed an altered copy of the

plans produced for them by Davis Frame with the Roxbury,

Connecticut, Building Department, an altered copy of the plans

produced for them by Davis Frame. The principal alterations to

those plans included: (1) deletion of Davis Frame’s copyright

notice and logo; (2) addition of an engineer’s seal; and (3)

renumbering of the pages. The substantive content of the two

sets of plans is identical. The Town of Roxbury approved the

plans, and the Reillys have commenced construction based on them.

Davis Frame sued the Reillys for copyright infringement,

breach of contract, trademark infringement, unfair competition,

and violation of the New Hampshire Consumer Protection Act. The

Reillys have asserted counterclaims for violation of the Sherman

Act (Count I) and the New Hampshire Consumer Protection Act

(Count III), as well as fraudulent misrepresentation (Count II). 

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Discussion

A. Sherman Act (Count I)

In Count I of their counterclaim, the Reillys assert that

Davis Frame’s license to use its copyrighted architectural plans,

conditioned on the purchase of a timber frame package,

constitutes a “tying” arrangement in violation of section 1 of

the Sherman Act, 15 U.S.C. § 1. In objecting to Davis Frame’s

motion to dismiss, the Reillys state their claim this way: “The

contract in issue, as alleged even by [Davis Frame], ties the use

of the architectural plans to the purchase of [Davis Frame’s]

custom timber frame package.” (Def.’s Obj. at 2.) Davis Frame

seeks dismissal on grounds that the facts alleged by the Reillys

satisfy none of the four elements of a Sherman Act tying claim,

and that even an adequately pled tying claim would be trumped by

the Copyright Act.

Section 1 of the Sherman Act provides:

Every contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or

commerce among the several States, or with foreign

nations, is hereby declared to be illegal.

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15 U.S.C. § 1. “Section 1 of the Sherman Act prohibits a seller

from ‘tying’ the sale of one product to the purchase of a second

product if the seller thereby avoids competition on the merits of

the ‘tied’ product.” Borschow Hosp. & Med. Supplies, Inc. v.

Cesar Castillo Inc., 96 F.3d 10, 17 (1st Cir. 1996) (citing 15

U.S.C. § 1; Data Gen. Corp. v. Grumman Sys. Support Corp., 36

F.3d 1147, 1178 (1st Cir. 1994)). 

The United States Supreme Court has defined tying in the

following way:

A tying arrangement is “an agreement by a party to

sell one product but only on the condition that the

buyer also purchases a different (or tied) product, or

at least agrees that he will not purchase that product

from any other supplier.” Northern Pacific R. Co. v.

United States, 356 U.S. 1, 5-6 (1958). Such an

arrangement violates § 1 of the Sherman Act if the

seller has “appreciable economic power” in the tying

product market and if the arrangement affects a

substantial volume of commerce in the tied market.

Fortner Enterprises, Inc. v. United States Steel Corp.,

394 U.S. 495, 503 (1969).

Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 461-

62 (1992) (parallel citations omitted).

There are essentially four elements to a per se tying

claim: (1) the tying and the tied products are actually

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two distinct products; (2) there is an agreement or

condition, express or implied, that establishes a tie;

(3) the entity accused of tying has sufficient economic

power in the market for the tying product to distort

consumers’ choices with respect to the tied product;

and (4) the tie forecloses a substantial amount of

commerce in the market for the tied product.

Borschow, 96 F.3d at 17 (quoting Data General, 36 F.3d at 1178-

79).

Here, Davis Frame, the counterclaim defendant, argues that

the Reillys have failed to allege facts sufficient to establish

any of the four elements of a tying claim. The Reillys, of

course, disagree.

This case presents an unusual factual basis for a Sherman

Act tying claim. In Eastman Kodak, for example, “Kodak

implemented a policy of selling replacement parts for

micrographic and copying machines only to buyers of Kodak

equipment who use Kodak service or repair their own machines.” 

504 U.S. at 458. That is, Kodak tied the sale of a product

customers wanted (Kodak parts) to the purchase of a product they

did not necessarily want (Kodak service). In United States v.

Loew’s Inc., Loew’s, while selling television stations the right

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to broadcast motion pictures, “conditioned the license or sale of

one or more feature films upon the acceptance by the station of a

package or block containing one or more unwanted or inferior

films.” 371 U.S. 38, 40 (1962). In other words, Loew’s tied the

sale of a product consumers wanted (good movies) to the purchase

of a product they did not necessarily want (bad movies). 

Here, in contrast with Eastman Kodak and Loew’s, there are

not two things that may be purchased, but three: design services,

copyright in the finished design, and timber frame packages. The

Reillys claim that Davis Frame illegally tied copyright in its

plans to timber frame packages. But, on the facts alleged by the

Reillys, and construing all reasonable inferences in their favor,

Davis Frame did not tell the Reillys that they could not purchase

the right to use the copyrighted design without also purchasing a

timber frame package. To the contrary, Davis Frame offered to

sell the Reillys the right to use the copyrighted design for

$10,000, without any obligation to purchase a timber frame

package. Because Davis Frame did not tell the Reillys they could

not purchase one thing without also purchasing another, there was

no tying arrangement of the sort contemplated by the Sherman

Case 1:05-cv-00160-SM Document 21 Filed 02/22/06 Page 10 of 20
3 Plainly, Davis Frame did not tell the Reillys they could

not purchase preliminary plans and drawings without also

purchasing a timber frame package and, in fact, the Reillys were

able to do just that.

11

Act.3 Accordingly, the Reillys have failed to state a claim

under the Sherman Act, and Davis Frame is entitled to dismissal

of Count I of the Reillys’ counterclaim.

B. Fraudulent Misrepresentation (Count III)

In Count III of their counterclaim, the Reillys assert that

they “were induced to enter into the Agreement [with Davis Frame]

by means of the fraudulent representation that [they] could use

the Work [i.e., the plans drafted by Davis Frame] in the creation

of their home without further obligation to [Davis Frame].” 

(Countercl. ¶ 26.) More specifically, the Reillys describe their

claim as follows:

Sometime prior to and/or on or about September, 19,

2003, the Reillys met one Dana Roberts (hereinafter

“Roberts”), now a former employee of [Davis Frame]. 

The Reillys told Roberts that they desired to convert

the above described architectural plan into a plan that

included timber framing and that James Reilly[] may cut

timber himself. No objection was made by Roberts and

it was understood that the Reillys could take the plan

to be developed by [Davis Frame] to any company they

wanted to cut the timber.

. . .

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[Davis Frame] sought to sell the Reillys a timber frame

package after the Work [i.e., the preliminary plans and

drawings] was completed. When the Reillys decided not

to purchase a timber frame package, [Davis Frame]

informed the Reillys that [Davis Frame] would pursue

“all avenues available” unless [] the Reillys purchased

a timber frame package from [Davis Frame] or, in the

alternative, paid [Davis Frame] an additional $10,000.

. . .

That [Davis Frame] knew the Reillys were under the

assumption they could take the plan to be developed by

[Davis Frame] to any company they wanted to cut the

timber.

That [Davis Frame] did not disclose that the terms of

the Agreement require the Reillys to [] purchase a

timber frame package after the Work was completed upon

learning of the Reillys’ assumption.

That [Davis Frame] failed to correct the Reillys’

mistake as to the basic assumption on which they

entered the Agreement.

That [Davis Frame]’s non-disclosure of the terms of the

Agreement of which the Reillys were mistaken amounts to

a failure to act in good faith and a failure to act in

accordance with reasonable standards of fair dealing.

(Countercl. ¶¶ 13, 17, 27-30.) In their objection to Davis

Frame’s motion to dismiss, the Reillys state their

misrepresentation claim somewhat differently: “The

misrepresentation is of a fact, namely, that the Reillys could

use the copyrighted work without purchasing a timber frame

package from [Davis Frame].” (Pl.’s Obj. at 15.) 

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Davis Frame moves to dismiss Count III on grounds that the

Reillys have failed to: (1) identify a material fact (as opposed

to an opinion or promise) that Davis Frame allegedly

misrepresented; (2) identify any injury they suffered from

relying upon Davis Frame’s alleged misrepresentation; and (3)

plead their claim with adequate specificity.

While Count III is captioned as a counterclaim for

fraudulent misrepresentation, it reads like a fraudulent

inducement defense to Davis Frame’s breach of contract claim. 

However, because the Reillys have framed that argument as a

counterclaim rather than as a contract defense, the court will

analyze it as such. Under New Hampshire law:

To establish fraud, a plaintiff must prove that

the defendant made a representation with knowledge of

its falsity or with conscious indifference to its truth

with the intention to cause another to rely upon it. 

Patch v. Arsenault, 139 N.H. 313, 319 (1995). In

addition, a plaintiff must demonstrate justifiable

reliance. Gray v. First NH Banks, 138 N.H. 279, 283

(1994). A plaintiff cannot allege fraud in general

terms, but must specifically allege the essential

details of the fraud and the facts of the defendants’

fraudulent conduct. Proctor v. Bank of N.H., 123 N.H.

395, 399 (1983).

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Snierson v. Scruton, 145 N.H. 73, 77 (2000) (parallel citations

omitted). 

On the facts alleged by the Reillys, it is difficult to

identify, precisely, the alleged false statement. The Reillys

argue that an agent of Davis Frame told them, falsely, that they

“could use the copyrighted work without purchasing a timber frame

package,” but it is not clear how that statement could be false,

given the Reillys’ own allegation that they were told that they

could use the copyrighted work, without purchasing a timber frame

package, if they purchased a license to use the copyrighted work. 

In other words, based upon the Reillys’ own factual allegations,

the statement they claim to be false was, in fact, true; Davis

Frame did afford the Reillys an opportunity to use the

copyrighted work without purchasing a timber frame package.

That leaves the Reillys’ apparent contention that Davis

Frame’s misrepresentation of the terms of the Design Deposit

Agreement, i.e., that they were free to use the Davis Frame plans

once they were produced, induced them to enter into that

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4 It is not at all clear that one party to an agreement can

fraudulently misrepresent the terms of that agreement to the

other. Moreover, because the Reillys’ ability (i.e., legal

right) to use the plans to build a house was based upon their

agreement with Davis Frame, the case they cite for the

proposition that failure to disclose a buyer’s inability to build

a house, Van Der Stok v. Van Voorhees, 151 N.H. 679 (2005), is

inapposite; in that case, a seller’s statement that a buyer would

be able to build a house on the land the buyer purchased from the

seller was a misrepresentation because the seller knew that he

had previously been denied a zoning permit to build on that land. 

Here, by contrast, the alleged misrepresentation did not concern

knowledge uniquely in the hands of Davis Frame; it concerned the

terms of a written agreement between Davis Frame and the Reillys.

15

agreement.4 But if an agent of Davis Frame said something that

was inconsistent, the agreement itself corrected that

inconsistency, and because the agreement explicitly stated that

Davis Frame retained the copyright in the plans it produced, the

Reillys’ reliance upon any oral statement to the contrary was

neither reasonable nor justifiable.

The Reillys’ allegation that Davis Frame somehow failed to

“disclose” the meaning of the agreement is meritless. The

agreement said what the agreement said. The Reillys had an

opportunity to read it before they executed it, and they make no

allegation that they executed the agreement in reliance upon an

inconsistent representation by Davis Frame to the effect that

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paragraph nine (the copyright ownership provision) did not apply

to them.

C. New Hampshire Consumer Protection Act (Count II)

In Count II of their counterclaim, the Reillys assert that

Davis Frame’s tying arrangement and its fraudulent

misrepresentation constitute unfair business practices under the

New Hampshire Consumer Protection Act. However, Davis Frame is

not liable for unlawful tying or for fraudulent

misrepresentation. As a result, those two theories cannot serve

as the basis for a CPA claim. On the facts alleged, there is no

other basis for a CPA claim.

New Hampshire’s Consumer Protection Act makes it “unlawful

for any person to use any unfair method of competition or any

unfair or deceptive act or practice in the conduct of any trade

or commerce within the state.” RSA 358-A:2. The Act prohibits

fifteen enumerated business practices, see RSA 358-A:2, I-XIV, as

well as any other unfair or deceptive practice that “attain[s] a

level of rascality that would raise an eyebrow of someone inured

to the rough and tumble of the world of commerce.” Barrows v.

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Boles, 141 N.H. 382, 390 (1996) (quoting Levings v. Forbes &

Wallace, Inc., 396 N.E.2d 149, 153 (Mass. App. Ct. 1979); citing

Tagliente v. Himmer, 949 F.2d 1, 7 (1st Cir. 1991)).

The Reillys have alleged no conduct on the part of Davis

Frame that rises to the requisite level of rascality. Based upon

the written agreement, and the factual allegations in the

Reilly’s counterclaim, Davis Frame’s business practice works in

the following way: (1) a person interested in determining whether

he or she wants to purchase a timber frame package first pays

Davis Frame to execute a set of preliminary plans and drawings,

in which Davis Frame retains the copyright; (2) those who decide

to purchase a timber frame package have part or all of the cost

of drafting their plans credited against the cost of the timber

frame package, and do not pay for a license to use Davis Frame’s

copyrighted plans; (3) those who decline to purchase a timber

frame package from Davis Frame, and who do not wish to use the

copyrighted plans, pay full price for those plans; and (4) those

who decline to purchase a timber frame package from Davis Frame,

but who do wish to use the copyrighted plans, pay full price for

the plans, and must also buy a license to use them. In other

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words, Davis Frame provides an incentive to encourage potential

customers to purchase its timber frame packages by reducing the

design fee and waiving a licensing fee for those who purchase

Davis Frame packages.

Davis Frame’s policy does not amount to an unfair or

deceptive business practice under the New Hampshire CPA. There

is nothing unfair in requiring customers pay the costs of

drafting preliminary plans and drawings, and there is nothing

unfair in Davis Frame’s retaining the copyright in plans it

drafts, or in requiring customers to purchase a license to use

those copyrighted plans. Similarly, there is nothing at all

deceptive in Davis Frame’s business practice. 

The possibility that customers might pay full price (at

least $1,750) for a plan that is never used to build a house is

disclosed in the first paragraph of the Design Deposit Agreement,

which recites that the purpose of producing preliminary plans and

drawings is to allow a purchaser of plans and drawings “to

determine whether Purchaser wishes to purchase said [timber

frame] package.” In other words, people in the Reillys’ position

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agree to purchase plans and drawings and assume the risk that,

for whatever reason, they may later decide not to purchase a

timber frame package, thus forfeiting the opportunity to have

some or all of the price of the plans credited against the cost

of a package. In like manner, Davis Frame’s explicit retention

of a copyright in its plans and drawings, as explained in

paragraph nine of the agreement, lets purchasers know at the

outset that they have a limited right – or no right at all – to

use the plans to do anything other than decide whether to

purchase a Davis Frame package. Again, customers agree to

purchase plans knowing, at the outset, that they are not also

purchasing a license to use the plans. Davis Frame’s business

practice is not deceptive because all the information consumers

need to protect themselves is spelled out in the agreement they

sign before Davis Frame does any work. 

Because the business practice described in the counterclaims

is not expressly prohibited by the CPA, and does not rise to the

level of rascality necessary for an unenumerated business

practice to violate the CPA, Davis Frame is entitled to dismissal

of Count II of the Reillys’ counterclaim.

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Conclusion

For the reasons given, Davis Frame’s motion to dismiss the

Reillys’ counterclaims (document no. 12) is granted. The case

shall continue on track for trial on Davis Frame’s claims against

the Reillys.

SO ORDERED.

____________________________

Steven J. McAuliffe

Chief Judge

February 22, 2006

cc: W. E. Whittington, IV, Esq.

Michael J. Bujold, Esq.

Neal E. Friedman, Esq.

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