UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Harris Wayside Furniture 

Company, Inc., Harris 

Furniture Company, Inc.,

and Harris Brothers 

Furniture Company, Inc.

v. Civil No. 06-cv-392-JM

Idearc Media Corp., f/k/a

Verizon Directories Corp.

O R D E R

This action arises out of a billing dispute between

plaintiffs (“Harris Furniture”) and defendant (“Idearc”), over

publishing advertisements in defendant’s telephone directories,

popularly known as the “Yellow Pages.” Plaintiffs assert five

causes of action based on defendant’s refusal to publish

advertisements in its 2005 Yellow Pages. Although plaintiffs

commenced this suit in Belknap County, New Hampshire, Superior

Court, defendant removed the action to this court because of the

diversity of the parties and the amount in controversy. See

Document no. 1; see also 28 U.S.C. §§ 1446 (removal statute) &

1332 (diversity jurisdiction statute). Defendant then moved to

dismiss the complaint, which is currently before the court. See

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Document no. 14. For the reasons set forth below, defendant’s

motion is granted in part, and denied in part. 

Discussion

A. Background

Plaintiffs are three furniture stores that operate in

Laconia, Plymouth and Chichester, New Hampshire and are owned by

the same family. They have advertised their stores in the

defendant’s Yellow Pages directories for several years. In 2000

and 2001, defendant made some bookkeeping errors, which resulted

in one of plaintiffs’ stores being billed for the other stores’

advertising. Robert Harris, one of the owners, contested the

bill, claiming the charges had already been paid and had been

improperly credited to the wrong account. This prompted a string

of correspondence between Mr. Harris and defendant through the

fall of 2001, and resulted in defendant referring the billing

dispute to a collection agency. In March 2002, the collection

agency informed Mr. Harris that plaintiffs owed defendant

$10,043.00 in principal, plus another $2,810.75 for interest and

fees, for a total of $12,853.75. 

On March 22, 2002, Mr. Harris reached an agreement with

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defendant’s employee, Cindy Bundy, regarding the disputed amount. 

Ms. Bundy agreed to accept $7,700.00 from plaintiffs, and to

adjust the amount owed by $2,343.00, to satisfy the outstanding

principal amount of $10,043.00 and to resolve the dispute. 

Plaintiffs sent defendant a check for $7,700.00, which defendant

cashed on April 2, 2002. Plaintiffs’ next bill from defendant,

dated April 21, 2002, reflected a $0.00 balance on the account.

For the next three years, business continued as usual

between the parties, with defendant extending plaintiffs’ credit

and plaintiffs timely paying the bills received. In May 2005,

Mr. Harris entered into a new agreement to advertise the Laconia

and Plymouth stores in defendant’s Super Yellow Pages directory

that was to be published that summer. In September 2005,

however, Mr. Harris learned the stores’ advertisements were not

in the directory as he had expected. Defendant’s district sales

manager informed Mr. Harris that the ads had not been included

because plaintiffs had an outstanding balance due of $2,343.00,

the exact amount plaintiffs thought had been forgiven when the

settlement was reached in March 2002. Plaintiffs were further

notified that this outstanding balance caused plaintiffs to be

placed on a “credit restriction” status, requiring plaintiffs to

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either pay the balance due or prepay one year in full before

defendant would publish plaintiffs’ advertisements. 

Since plaintiffs contested the outstanding balance, they

opted to prepay 100% of the cost of advertising for their

Chichester store in the Concord directory. Despite this advance

payment, defendant continued to bill plaintiffs monthly for the

Chichester store advertising. Since April 10, 2006, defendant

and two collection agencies have pursued collection of the

monthly bills, which plaintiffs have not paid because of the

prepayment they had already made. 

B. Standard of Review

The standard of reviewing a motion to dismiss is wellsettled. See Aponte-Torres v. Univ. of P.R., 445 F.3d 50, 55

(1st Cir. 2006) (citing authority). A complaint need only

contain “a short and plain statement of the claim showing that

the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), to

“‘give the defendants fair notice of what the plaintiff[s’] claim

is and the grounds upon which it rests.’” Id. (quoting Conley v.

Gibson, 355 U.S. 41, 47 (1957)). All factual averments are

accepted as true and all reasonable inferences therefrom are

indulged in plaintiff’s favor. See Aulson v. Blanchard, 83 F.3d

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1, 3 (1st Cir. 1996). Despite this generous standard of review,

plaintiffs must support their claims with specific facts, not

conclusory allegations and bald assertions, respecting each

material element of the legal theory asserted. See id. (citing

Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.

1990); see also Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st

Cir. 1988). A complaint will be dismissed under Rule 12(b)(6)

“‘only if it is clear that no relief could be granted under any

set of facts that could be proved consistent with the

allegations.’” Lalonde v. Textron, Inc., 369 F.3d 1, 6 (1st Cir.

2004) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514

(2002)). The issue, therefore, is “‘not whether a plaintiff will

ultimately prevail but whether the claimant is entitled to offer

evidence to support the claims.’” Swierkiewicz, 534 U.S. at 511

(internal quotation omitted). With these standards in mind, I

turn to the five claims plaintiffs assert.

C. Governing Law

Plaintiffs’ claims here are based on common law and New

Hampshire statutory law. Defendant argues, however, that this

dispute is governed by Texas law, because the “Application for

Directory Advertising” expressly provides Texas law shall govern

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“all disputes relating to this Application.” See Document no.

14, Exhibit A, Section 19 (the “Application”). Because this

action is before the court based on the diversity of the parties,

the forum state’s choice of law rules apply to determine whether

Texas or New Hampshire law governs the dispute. See Klaxon Co.

v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (following

Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) to conclude

that federal courts exercising their diversity jurisdiction must

follow the conflict of laws rules of the states in which they

sit); see also Guy v. Starwood Hotels & Resorts Worldwide, Inc.,

No. 03-cv-183JD, 2005 WL 2172034, at *2 fn.4 (D.N.H. Sept. 7,

2005) (citing authority). In asserting Texas law governs the

dispute here, defendant relies on the New Hampshire choice-of-law

rule that a court will uphold governing law provisions in a

contract that the parties freely negotiated. See Alternative

Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 32 (1st Cir.

2004) (stating rule that a federal court may accept the parties’

agreement about what law governs); see also Gilbert v. Atl. Trust

Co., No. 04-cv-327, 2006 WL 1049707, at *2, fn. 4 (D.N.H. Apr.

19, 2006) (citing New Hampshire law upholding choice of law

provisions in contracts); Allied Adjustment Serv. v. Heney, 125

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N.H. 698, 700, 484 A.2d 1189, 1191 (1984) (citing Restatement

(Second) of Conflict of Laws, § 187)). 

Defendant’s reliance on this rule is misplaced, however,

because under both New Hampshire and Texas law, the Application

is not a contract, so its provisions are not binding on the

parties. The Application provided:

PUBLISHER NOT BOUND TO PUBLISH. I understand

that this Application is not an agreement by 

Publisher to publish my advertising and Publisher

may choose not to publish my advertising.. . .

I understand that Publisher will be bound by

this Application only if and when Publisher 

publishes my advertising, and that such publication

will evidence Publisher’s agreement to publish my

advertising on the terms set forth in this Application

(but only as to the advertising published, and not

as to any advertising listed on this Application 

not published).. . . If Publisher does not publish

my advertising, it will refund any money I previously

paid for the advertising not published and have no

further obligation to me, and I will have no

further obligation to Publisher.

Application, Section 2 (emphasis added). This section explicitly 

states “Publisher will be bound by this Application only if and

when” an ad is published. To give Section 2 its plain meaning,

Section 19's provision for Texas law to govern all disputes

“relating to this Application” could only be invoked after

defendant became bound to the Application by publishing

plaintiffs’ advertisements.

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 By its express terms, the Application was an offer to

contract, not a contract. Under both New Hampshire and Texas

law, a contract is formed only after an offer has been accepted

and consideration has been exchanged. See Syncom Indus. v. Wood,

__ N.H. __, 920 A.2d 1178, 1187 (2007) (“Offer, acceptance, and

consideration are essential to contract formation.”); see also

Chisholm v. Ultima Nashua Indust. Corp., 150 N.H. 141, 144, 834

A.2d 221, 225 (N.H. 2003) (same); Vt. Info. Processing v. Mont.

Beverage Corp., No. 08-06-00094-CV, __ S.W.3d __, 2007 WL

1635163, at *4 (Tex. App. June 7, 2007) (same). “An offer is a

‘manifestation of willingness to enter into a bargain, so made as

to justify another person in understanding that his assent to

that bargain is invited and will conclude it.’” Bourque v. FDIC,

42 F.3d 704, 708 (1st Cir. 1994) (quoting Restatement (Second) of

Contracts, § 24 at 71 (1981) and citing 1 Corbin on Contracts §

1.11 at 31 (rev. ed. 1993)). The Application manifested

plaintiffs’ “willingness to enter into a bargain” with defendant

to publish their advertising, and clearly communicated that

defendant’s “assent to that bargain [was] invited and [would]

conclude it.” Bourque, 42 F.3d at 708. As such, it was simply

an offer to contract for advertising, nothing more. See id.; see

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1Defendant does not proffer an argument outside of the

contract provision for why Texas law should govern this dispute. 

Absent some showing by defendant of a conflict between Texas and

New Hampshire law, rendering a choice of law analysis necessary,

I am obliged to apply New Hampshire law to the claims plaintiffs

assert here. See Guy, 2005 WL 2172034, at *2 fn.4 (citing

Keeton v. Hustler Magazine, 131 N.H. 6, 13, 549 A.2d 1187 (1988)

to explain that the first question is whether the substantive law

of the interested states actually conflicts and applying New

Hampshire law where no conflict shown); see Young v. Lepone, 305

F.3d 1, 13 (1st Cir. 2002) (explaining no choice of law analysis

necessary where no conflict between the law exists); see also SIG

Arms, Inc., 122 F. Supp. 2d at 259 (same). 

9

also Chisholm, 150 N.H. at 145 (explaining a valid offer may

propose the exchange of a promise for a performance).

Because there was never an enforceable contract, Section

19's provision for Texas law to govern disputes arising out of

the Application is inapplicable. See Allied Adjustment Serv.,

125 N.H. at 700, 484 A.2d at 1191 (upholding choice of law

provision in a contract). There is no need for a choice of law

analysis, and New Hampshire law governs the claims asserted

here.1 See SIG Arms Inc. v. Employers Ins., 122 F. Supp. 2d 255,

259 (D.N.H. 2000) (placing burden of proof on party asserting the

application of a foreign state’s law).

D. Claims for Relief

 1. Implied Duty of Good Faith and Fair Dealing

Plaintiffs entitle count I “Consequential Damages and

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2Defendant cites Texas law to support its position, but also

references New Hampshire cases which stand for the same legal

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Attorney’s Fees,” which does not state a cause of action but

rather states the relief sought. In this count, however,

plaintiffs allege defendant had a duty “to keep true, complete

and accurate records and to properly invoice plaintiffs for their

respective advertising charges and to deal with plaintiffs fairly

and in good faith.” See Document no. 1, Notice of Removal,

Exhibit A, Writ of Summons filed in Belknap County Superior

Court, dated September 5, 2006 (“Writ”), Count I. Plaintiffs

further allege defendant breached its duty to treat them fairly,

when it accepted plaintiffs’ advertising orders for the 2005

directory but failed to publish them, and restricted plaintiffs’

credit because of the disputed outstanding balance, as a

“malicious” attempt to compel payment of the $2,343.00 balance

purportedly due. Plaintiffs claim to have lost revenue because

of the unpublished advertising.

Defendant argues count I should be dismissed because it is

essentially a contract claim, despite sounding in tort, and under

the Application it was neither obliged to publish the advertising

nor is it liable for consequential damages resulting from its

decision not to publish the ads.2 Defendant further argues that

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propositions as the Texas cases on which it relies. As discussed

above, New Hampshire law governs the claims asserted here. 

11

because the Application expressly reserved defendant’s right to

decline to publish the advertising, it did not breach the implied

duty of good faith and fair dealing when it declined to publish

the ads. Accordingly, defendant concludes, plaintiffs have no

breach of contract claim and Count I should be dismissed.

Defendant’s argument reads plaintiffs’ complaint in count I

too narrowly. Defendant contends that Count I “is based entirely

on the assertion that Idearc had breached a duty to publish the

Plaintiff’s [sic] advertisements in its 2005 directories.” Doc.

No. 14 at 9. The “duty” plaintiffs elude to is broader than a

mere “duty to publish,” which could have arisen only if the

Application had been accepted and a contract had been formed,

neither of which happened here. While Count I may be inartfully

pled, and appears to combine elements of both a contract and a

tort claim, generously construing the complaint in plaintiffs’

favor as I am required to do at this preliminary stage of review,

Count I states a claim for a breach of the implied duty of good

faith and fair dealing in contract formation. See Donovan v.

Castle Springs, No. 01-413-M, 2002 WL 31906183, at *8 (D.N.H.

Dec. 20, 2002) (explaining how the implied duty of good faith and

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fair dealing arises in three distinct categories of contract

cases, including the actions taken to form a contract). 

Under New Hampshire law, contract formation carries implied

good faith obligations which are “‘tantamount to the traditional

duties of care to refrain from misrepresentation and to correct

subsequently discovered error, insofar as any representation is

intended to induce, and is material to, another party’s decision

to enter into a contract in justifiable reliance upon it.’” Id.

at *9 (quoting Centronics Corp. v. Genicom, Corp., 132 N.H. 133,

139, 562 A.2d 187, 191 (N.H. 1989)). This “good faith bar to

misrepresentation is antecedent to the agreement itself.” 

Centronics Corp., 132 N.H. at 139. To state a claim based on a

breach of the implied duty of good faith and fair dealing in

contract formation, plaintiffs must allege defendant made a

misrepresentation that induced them to enter into a contract. 

See Donovan, 2002 WL 31906183 at *9. “One acts in bad faith,

under these circumstances, by making a promise, without any

intention of keeping it, for the purpose of inducing another to

enter into a contract.” Id. (citing Hydraform Prods. Corp. v.

Am. Steel & Aluminum Corp., 127 N.H. 187, 200, 498 A.2d 339

(1985)).

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Accepting as true plaintiffs’ claim that defendant accepted

their advertising orders for the 2005 directory with no intention

of publishing the ads, but rather for the purpose of extorting

the outstanding balance which plaintiffs believed had been

settled in March 2002, I find that plaintiffs allege the minimal

facts necessary to state a claim for a breach of the implied duty

of good faith in contract formation. Plaintiffs’ assertion that

defendant “maliciously attempted to compel payment” by

restricting their credit, see Writ, count I, suggests the type of

bad faith making of a promise – here to publish advertising – to

induce plaintiffs into signing the Application, which defendant

then used to its advantage to collect on a previously settled

debt. See Plntffs’ Obj. to Def.’s Mot. to Dismiss (Document no.

18) at 5. I find these allegations clear the threshold of

putting defendant fairly on notice of the claim lodged against it

in Count I. Defendant’s motion to dismiss Count I, therefore, is

denied.

2. Fraudulent and Negligent Misrepresentation

Counts II and III are substantively similar, differing only

to the extent that Count II asserts fraudulent misrepresentation

while Count III asserts negligent misrepresentation. In both

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counts, plaintiffs claim defendant, in order to justify its

refusal to publish the ads in 2005, misrepresented that an unpaid

balance was due. As in Count I, the claims link the March 2002

settlement with the 2005 refusal to publish, muddling what, in

fact, plaintiffs assert was the challenged misrepresentation on

which they relied. 

Defendant argues the only representation it made was that

plaintiffs had an outstanding balance, which was made after

plaintiffs had executed the Application and, therefore,

plaintiffs could not have relied on that representation when they

decided to advertise with defendant in 2005. Defendant further

contends that the negligent misrepresentation claim is based on

the alleged breach of contract, which is not a cognizable cause

of action. Defendant concludes that plaintiffs cannot argue both

that defendant settled the 2002 dispute by accepting their $7,700

payment, and that defendant’s 2002 agreement to the settlement

was, in fact, a misrepresentation. See Document no. 14 at 12.

I disagree. Indulging all reasonable inferences from the

facts alleged in plaintiffs’ favor, Counts II and III complain

that the March 2002 “settlement” was the misrepresentation on

which plaintiffs relied when they continued to do business with

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defendant. Plaintiffs claim that in 2002 defendant conducted

itself in a way which indicated it accepted the $7,700 as payment

in full. That apparent acceptance was misrepresented, because,

in 2005, defendant, contrary to the terms of the prior agreement,

claimed that a balance was still owed by plaintiffs, and refused

to publish plaintiffs’ advertising until that balance was paid. 

(a) Fraudulent Misrepresentation

Under New Hampshire law, to state a claim for fraud,

plaintiffs must allege that defendant “‘intentionally made a

representation with knowledge of its falsity or with conscious

indifference to its truth with the intention to cause another to

rely on it.’” M&D Cycles, Inc. v. Am. Honda Motor Co., 208 F.

Supp. 2d 115, 120 (D.N.H. 2002) (quoting Snierson v. Scruton, 145

N.H. 73, 77, 761 A.2d 1046 (2000)), aff’d, 70 Fed.Appx. 592 (1st

Cir. 2003); see also Alternative Sys. Concepts, 374 F.3d at 29,

fn.5 (stating elements of claim under New Hampshire law). 

Plaintiffs must also allege they justifiably relied on that

representation, to their detriment. See M&D Cycles,, 208 F.

Supp. 2d at 120 (citing Gray v. First NH Banks, 138 N.H. 279,

283, 640 A.2d 276 (1994)). Finally, the factual details of the

fraud must be specifically alleged. See Snierson, 145 N.H. at

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77.

Plaintiffs allege defendant misrepresented that plaintiffs’

account balance was zero, while knowing that it did not accept

that the March 2002 agreement had settled the disputed amount

owed. Plaintiffs further allege defendant made that

misrepresentation to induce them into ordering advertising in

2005. Plaintiffs assert they justifiably relied on the

misrepresentation, because their accounts reflected a zero

balance over the three years from April 2002 until May 2005 when

they executed the Application. Finally, plaintiffs claim that

reliance caused them detriment, both because defendant did not

publish their ads and because defendant attempted to use the 2005

Application to extort $2,343.00 from them. At this preliminary

stage of review, these allegations sufficiently state a claim for

fraudulent misrepresentation. Defendant’s motion to dismiss

Count II is denied.

(b) Negligent Misrepresentation 

To state a claim for negligent misrepresentation, plaintiffs

must allege (i) defendant misrepresented a material fact, (ii) on

which they justifiably relied. See Snierson, 145 N.H. at 78

(citing Hydraform Prods. Corp., 127 N.H. at 200). “‘It is the

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duty of one who volunteers information to another not having

equal knowledge, with the intention that he [or she] will act

upon it, to exercise reasonable care to verify the truth of his

[or her] statements before making them.’” Id. (quoting Patch v.

Arsenault, 139 N.H. 313, 319, 653 A.2d 1079, 1084 (1995)). As

outlined above for the fraudulent misrepresentation claim,

plaintiffs have alleged enough facts that show defendant knew it

was misstating plaintiffs’ account balance between April 2002 and

May 2005, and that plaintiffs justifiably believed their account

had been paid in full when they executed the Application in 2005,

to state a claim for negligent misrepresentation. Defendant’s

motion to dismiss Count III is also denied.

3. RSA 358-A Claim

In Count IV, plaintiffs contend defendant’s same

misrepresentation of their account balance, its solicitation of

plaintiffs to advertise in the Yellow Pages, its subsequent

placement of plaintiffs on credit restriction and its refusal to

publish the ads pending payment of the outstanding $2,343,

violated the statutory prohibition against unfair and deceptive

trade practices, codified at New Hampshire Rev. Stat. Ann.

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3In their motion papers, the parties mistakenly argue

whether the Texas Deceptive Trade Practices Act can be invoked

here. See Tex. Bus. & Com. Code Ann. § 17.46(a) (“DTPA”). As

previously explained, New Hampshire law governs this dispute. 

Since plaintiffs have not moved to amend the complaint to add a

claim for a violation of the DTPA, I decline to consider it now. 

18

(“RSA”) 358-A (1995).3 Defendant seeks to dismiss this claim

because the allegations are not among the enumerated offensive

acts outlined in the statute, see RSA 358-A:2 (Supp. 2006), nor

do they describe a “‘level of rascality that would raise an

eyebrow of someone inured to the rough and tumble of the world of

commerce.’” Document no. 14 at 13 (quoting State v. Moran, 151

N.H. 450, 452, 861 A.2d 763 (2004)). Again defendant’s argument

is unavailing.

New Hampshire courts have construed RSA 358-A broadly to

protect against the full spectrum of unethical or unscrupulous

actions that can arise in the business or trade context. See

Milford Lumber Co. v. RCB Realty, 147 N.H. 15, 18, 780 A.2d 1259,

1261 (2001); see also Anheuser-Busch Inc. v. Caught-on-Blue,

Inc., No. 02-196-JD, 2003 WL 21715330, at *6 (D.N.H. July 22,

2003) (explaining that RSA 358-A provides a non-exclusive list of

unlawful acts or practices). Ordinary breaches of contract,

statements in the form of opinion, or mere puffery are not

actionable. See Private Jet Servs. Group, Inc. v. Sky King,

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Inc., No. 05-98-JD, 2006 WL 2864057, at *5 (D.N.H. Oct. 4, 2006). 

To determine whether a challenged action is unfair or deceptive,

the court must inquire:

“(1) whether the practice, without necessarily

having been previously considered 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).”

Milford Lumber Co., 147 N.H. at 19 (quoting FTC v. Sperry &

Hutchinson Co., 405 U.S. 233, 244-45 n.5 (1972) (internal

quotation omitted)). 

Although defendant argues that the challenged conduct is

limited to the credit restriction and refusal to publish,

plaintiffs’ real focus appears to be on how defendant misused the

2005 Application to coerce payment of $2,434.00 which plaintiffs

believed had been forgiven nearly three years previously. At

base, this action involves defendant reneging on a settlement

agreement, which, by its words and conduct, defendant had

communicated it had accepted. Accepting the facts alleged as

true and indulging all reasonable inferences in plaintiffs’

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favor, I find this about face on the settlement agreement was

unfair, and defendant’s decision to restrict plaintiffs’ credit

and not publish their ads until that previously settled debt was

paid rises to the level of rascality needed to state a viable RSA

358-A claim. Defendant’s motion to dismiss Count IV is denied. 

4. Defamation

Plaintiffs’ final count asserts a claim for defamation. 

“Typically, ‘[a] plaintiff proves defamation by showing that the

defendant failed to exercise reasonable care in publishing a

false and defamatory statement of fact about the plaintiff to a

third party, assuming no valid privilege applies to the

communication.’” Thomas v. Tel. Publ’g Co., __ N.H. __, __ A.2d

__, 2007 WL 1299870, at *3 (N.H. May 1, 2007) (quoting Pierson v.

Hubbard, 147 N.H. 760, 763, 802 A.2d 1162 (2002)). Here,

plaintiffs’ entire complaint arises out of defendant’s failure,

or refusal, to publish its advertisements. Even generously

reading the complaint in plaintiffs’ favor, I can find no

allegation of a false statement being published. Moreover,

plaintiffs declined to respond to defendant’s motion to dismiss

this claim. Under the circumstances, defendant’s motion to

dismiss Count V is granted.

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Conclusion 

For the reasons set forth above, defendant’s motion to

dismiss (document no. 14) is granted with respect to Count V of

the Complaint, and denied with respect to Counts I, II, III and

IV.

SO ORDERED.

____________________________________

James R. Muirhead

United States Magistrate Judge

Date: June 25, 2007

cc: Philip A. Brouillard, Esq.

Lawrence M. Edelman, Esq.

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