UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Lakeview Management, Inc.;

Lakeview Neurorehabilitation

Center, Inc.; and Lakeview

Neurorehab Center Midwest, Inc.,

Plaintiffs

v. Civil No. 07-cv-303-SM

Opinion No. 2010 DNH 012

Care Realty, LLC; and

THCI Company, LLC,

Defendants

O R D E R

Before the court are two motions filed by Lakeview, one for

reconsideration and one for attorney’s fees. THCI objects. 

After hearing the motion for reconsideration, and considering the

motion for fees, both motions are denied.

Motion for Reconsideration

Lakeview does not contest specific factual findings, but

says the court erred in applying the installment-contract rule to

the facts, and so erred in concluding that THCI’s claim for

unpaid additional rent was not barred by the applicable statute

of limitations. THCI counters that Lakeview has not pointed to a

manifest error of law, and is merely reasserting arguments

already considered and rejected. 

Case 1:07-cv-00303-SM Document 174 Filed 01/22/10 Page 1 of 16
“The granting of a motion for reconsideration is ‘an

extraordinary remedy which should be used sparingly.’ ” Palmer

v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006) (quoting 11

CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2810.1 (2d ed.

1995)). “[M]otions for reconsideration are appropriate only in a

limited number of circumstances: if the moving party presents

newly discovered evidence, if there has been an intervening

change in the law, or if the movant can demonstrate that the

original decision was based on a manifest error of law or was

clearly unjust.” United States v. Allen, 573 F.3d 42, 53 (1st

Cir. 2009) (citing Marie v. Allied Home Mortg. Corp., 402 F.3d 1,

7 n.2 (1st Cir. 2005)). “[A] manifest error is ‘[a]n error that

is plain and indisputable, and that amounts to a complete

disregard of the controlling law.’ ” Venegas-Hernandez v.

Sonolux Records, 370 F.3d 183, 195 (1st Cir. 2004) (quoting

BLACK’S LAW DICTIONARY 563 (7th ed. 1999)). However, “[t]he

repetition of previous arguments is not sufficient to prevail on

a Rule 59(e) motion.” Prescott v. Higgins, 538 F.3d 32, 45 (1st

Cir. 2008) (quoting United States v. $23,000 in U.S. Currency,

356 F.3d 157, 165 n.9 (1st Cir. 2004)). 

In its memorandum decision (document no. 139), the court

relied upon General Theraphysical, Inc. v. Dupuis, 118 N.H. 277

(1978), and Pierce v. Metropolitan Life Insurance Co., 307 F.

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Supp. 2d 325 (D.N.H. 2004), in determining that New Hampshire

follows the installment-contract rule and that, in this case, a

separate three-year limitations period began to run each time

Lakeview made a payment of “additional rent” in an amount less

than was owed. Lakeview’s argument for reconsideration stresses

the following points: (1) the language in Pierce that appears to

support application of the installment-contract rule in this case

is mere dictum; and (2) more recent decisions by the courts

surveyed in Pierce hold that the installment-contract rule should

not be applied in cases like this. Lakeview says that it was

manifest error not to apply a “well-established” exception to the

installment-contract rule that pertains when “a claim arises from

a dispute over whether payments are owed under a lease or

installment contract or over the formula for calculating those

payments.” (Pl.’s Memo. of Law (document no. 142-2), at 2.) 

The New Hampshire Supreme Court has not expressly adopted an

exception to the installment-contract rule, nor has it applied

the described exception in a similar factual situation. 

Moreover, the statute-of-limitations argument raised in

Lakeview’s motion for reconsideration was previously raised and

rejected in a motion for summary judgment. (See document no.

42.) 

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Relevant New Hampshire precedent is scarce, so Lakeview

understandably relies on foreign decisions. But none is

sufficiently analogous to this case to support, much less compel,

a conclusion that the New Hampshire Supreme Court would recognize

and apply an exception to the installment-contract rule to the

facts presented here. Only one case cited by Lakeview, Air

Transport Ass’n of America v. Lenkin, 711 F. Supp. 25 (D.D.C.

1989), involved a lease. The others concerned insurance

premiums, see Norwest Bank Minn. Nat’l Ass’n v. FDIC, 312 F.3d

447 (D.C. Cir. 2002); pension benefits, see Brehm v. Sargent &

Lundy, 384 N.E.2d 55 (Ill. App. Ct. 1978); Kozak v. Ret. Bd. of

Firemen’s Annuity & Benefit Fund, 524 N.E.2d 1049 (Ill. App. Ct.

1988); Miele v. Pension Plan of N.Y. State Teamsters Conf.

Pension & Ret. Fund, 72 F. Supp. 2d 88 (E.D.N.Y. 1999); mortgage

escrow payments, see In re Mortgage Escrow Deposit Litig., Nos.

90 C 5816, et al., 1994 WL 496707 (N.D. Ill. Sept. 9, 1994); and

ERISA-governed long-term disability benefits; see Miller v.

Fortis Benefits Ins. Co., 475 F.3d 516 (3d Cir. 2007), Baker v.

The Hartford Life & Accident Ins. Co., No. 3:06-CV-1514-P, 2007

WL 2192298 (N.D. Tex. July 31, 2007). The lack of analogous

landlord/tenant cases is significant, given the fact-intensive

character and application of the installment-contract rule. See

Pierce, 307 F. Supp. 2d at 329-33 (devoting considerable

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attention to whether the installment-contract rule applies to

payment of insurance benefits). 

In addition, at least three cited cases, Air Transport,

Norwest, and Mortgage Escrow, involved attempts by obligors to

recover overpayments, rather than claims by obligees that they

had been underpaid. An obligor who makes a periodic payment

after being told by the obligee how the obligee calculated the

payment amount is situated somewhat differently than an obligee

like THCI. THCI was receiving periodic payments from Lakeview,

but Lakeview represented (via the estoppel certificate and the

cover memos it sent with some of its rent checks) that it was

calculating the payment amounts as prescribed by the lease terms,

when in fact Lakeview was using a different and unauthorized

formula, to its own substantial benefit.

The events triggering application of the installmentcontract-rule exception in the cases Lakeview cites are also

readily distinguishable from the circumstances of this case. 

Lakeview would have the statute of limitations begin to run on

the day when THCI first received a periodic payment of additional

rent based on the unauthorized calculation. That position,

however, ignores the estoppel certificate, in which Lakeview

disavowed any undisclosed side agreements altering the terms of

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the lease as disclosed, and it ignores the fact that at least

some of Lakeview’s non-conforming lease payments were made under

cover memos stating that the payments were in conformity with the

lease. In other words, Lakeview ignores factors that effectively

concealed its alternative, unauthorized, calculation of

additional rent, and the alleged bases for it. 

This is not a case like Air Transport, where the party

seeking the benefit of the installment-contract rule had been put

on notice, at the time of the first alleged overpayment, of the

lease interpretation it later claimed to be wrong. See Norwest,

312 F.3d at 454 (citation omitted) (“In [Air Transport], the

district court, interpreting District of Columbia law, held that

the limitations period for a tenant’s claim of overpayment of

rent based on the landlord’s alleged misinterpretation of a lease

provision commenced when the tenant first received notice of the

landlord’s interpretation.”). In a similar vein, the event that

triggered the running of the statute of limitations in Norwest

or, conversely, the event that prevented the plaintiff from

gaining the benefit of the installment-contract rule, was a

miscalculation of the premiums the defendant charged the

plaintiff which, in turn, was based on the defendant’s erroneous

interpretation of a statute. See 312 F.3d at 450. In Norwest,

as in Air Transport, at the time of the first contested payment,

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the party seeking the benefit of the installment-contract rule

knew or had constructive knowledge of the specific basis for the

calculation it later challenged, which, in turn, placed that

party on notice of a dispute over contract interpretation or

statutory construction. Here, by contrast, Lakeview did not

clearly inform THCI of the specific, different, basis upon which

it was calculating additional rent, and, in fact, concealed the

actual formula it used. The bottom line is this: Lakeview has

identified no authority, controlling or otherwise, for the

proposition that an obligor purportedly operating under an

undisclosed agreement with the obligee’s predecessor in interest,

who also represents to the successor obligee that the leaseprescribed calculation is in effect, but who in fact is not

honoring that lease provision, is, nevertheless, entitled to the

benefit of an exception to the installment-contract rule. 

Accordingly, Lakeview’s motion for reconsideration is denied.

There are two operative leases in this case — the New

Hampshire lease and the Wisconsin lease. The New Hampshire lease

is subject to the New Hampshire statute of limitations, while the

Wisconsin lease is subject to the Wisconsin statute of

limitations. Each lease independently requires Lakeview to pay

the full amount of rent for both the New Hampshire and Wisconsin

facilities. THCI is entitled to six years of unpaid additional

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rent, for both facilities, so long as its suit under the

Wisconsin lease is not barred by Wisconsin’s six-year statute of

limitations. It is not.

The court’s application of the installment-contract rule to

the facts of this case does not “amount[] to a complete disregard

of [Wisconsin] law.” Venegas-Hernandez, 370 F.3d at 195. In

Jensen v. Janesville Sand & Gravel Co., 415 N.W.2d 559 (Wis. Ct.

App. 1987), the Wisconsin Court of Appeals recognized that

state’s adherence to the installment-contract rule, id. at 561,

as well as this exception: “If a single total breach occurs, the

right to bring an action accrues at that time and the statute of

limitations begins to run.” Id. at 562 (quoting Segall v.

Hurwitz, 339 N.W.2d 333, 343 (Wis. Ct. App. 1983)). The

plaintiff in Jensen brought suit against his former employer to

collect a pension more than six years after his employer told him

“that his pension had been terminated, there was no intention to

restore the pension, he was completely removed from the pension

plan, and the board had refused to restore his payments.” 415

N.W.2d at 561. The employer in Jensen was held, under Wisconsin

law, not to have committed a single total breach sufficient to

trigger application of the exception to the installment-contract

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rule. Under that standard, Lakeview surely has not.1

Accordingly, THCI’s action under the Wisconsin lease to recover

six years of unpaid additional rent, for both facilities, is not

barred by the Wisconsin statute of limitations.

Interest at the “Overdue Rate”

The parties have also engaged on another issue: whether THCI

is entitled to interest on the unpaid rent Lakeview owes,

calculated at the “overdue rate” defined in the lease. It is.

The overdue rate is addressed in three provisions of the

lease, two of which are at issue here. The first provides:

3.2.3. Deficits. If the Additional Rent, as

finally determined for any calendar year (or portion

thereof), exceeds the sum of the quarterly payments of

Additional Rent previously paid by Lessee with respect

to said calendar year, within thirty (30) days after

such determination is required to be made hereunder,

Lessee shall pay such deficit to Lessor and, if the

deficit exceeds five percent (5%) of the Additional

Rent which was previously paid to Lessor with respect

to said calendar year, then Lessee shall also pay

Lessor interest on such deficit at the Overdue Rate

from the date that such payment should have been made

by Lessor [sic] to the date that Lessor receives such

payment.

1 Messner Manor Associates v. Wisconsin Housing & Economic

Development Authority, 555 N.W.2d 156 (Wis. Ct. App. 1996), on

which Lakeview relies, is inapposite. In that case, the court

did not rule that the statute of limitations began to run as a

result of the defendant’s breach of a contract. Rather, the

court ruled that there was no breach in the first instance. See

id. at 159-60.

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(Def.’s Ex. C., at 20.) The second relevant section provides: 

16.2 Remedies.

. . . .

(d) In addition to all of the rights and

remedies of Lessor set forth in this Lease and the

other Lease Documents, if Lessee shall fail to pay any

rental or other charge due hereunder (whether

denominated as Base Rent, or otherwise) within ten (10)

days after same shall have become due and payable, then

and in such event Lessee shall also pay to Lessor (i) a

late payment service charge (in order to partially

defray Lessor’s administrative and other overhead

expenses) equal to two hundred-fifty ($250) dollars and

(ii) to the extent permitted by applicable law,

interest on such unpaid sum at the Overdue Rate; it

being understood, however, that nothing herein shall be

deemed to extend the due date for payment of any sums

required to be paid by Lessee hereunder or to relieve

Lessee of its obligation to pay such sums at the time

or times required by this Lease.

(Id. at 79.)

Lakeview argues that: (1) Section 3.2.3. does not apply to

the facts of this case; (2) Section 16.2(d) is a general

provision that conflicts with, and is therefore governed by, the

more specific Section 3.2.3.; and (3) recovery of interest at the

overdue rate is barred by equity, because THCI sat on its claim

for underpayment of additional rent. THCI counters that: (1) it

is entitled to the overdue rate under both Sections 3.2.3. and

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16.2(d); (2) those provisions are not in conflict; and (3) equity

compels Lakeview’s payment of interest at the overdue rate.

It is not clear that Section 3.2.3. applies to the facts of

this case. That lease provision appears to have been intended to

encourage Lakeview to make a reliable estimate of the additional

rent due to THCI, and to penalize it for erroneous estimates made

in its own favor. THCI’s unpaid-rent claim is not that Lakeview

made erroneous quarterly estimates of the additional rent owed;

rather it claims that Lakeview made erroneous calculations of

both its quarterly and its annual additional rent obligation. 

It is not necessary, however, to determine whether THCI is

entitled to the overdue interest rate under Section 3.2.3.,

because it is plainly entitled to the overdue rate under Section

16.2(d), and Section 16.2(d) is not trumped by Section 3.2.3. 

Section 3.2.3. is consistent with Section 16.2(d), providing a

separate but similar incentive to make reliable quarterly

estimates upon pain of incurring interest obligations at the

overdue rate should the actual amount owed turn out to be more

than five percent greater than the quarterly estimates. Nothing

purports to limit the applicability of the overdue rate to the

situation described in Section 3.2.3. Section 16.2(d) provides a

remedy should Lakeview fail to make full rent payments in a

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timely fashion, “in addition to all of the rights and remedies of

the Lease set forth in the Lease.” The fact that consistent

remedies are available for two similar breaches does not bring

Sections 3.2.3. and 16.2(d) into conflict and, so, none of the

canons of construction Lakeview invokes are applicable. 

Finally, regarding the equities, the court notes that the

lease is relatively clear about giving THCI the right to make a

claim for underpayment of rent, at its discretion, during the

lease term and, of course, subject to applicable legal

limitations. THCI had rational business reasons to defer, or not

to press the issue unduly, while attempting to reach overall

agreement on a number of other pending issues. Lakeview was well

aware, early on in the relationship, that its additional rent

payments were considered suspect by THCI, and was also aware that

it might well be called upon at a future date to resolve the

matter by making up any deficiencies. Lakeview was fully capable

of accelerating resolution of that issue had it chosen to do so –

either through negotiation or a declaratory judgment action. 

That it chose to pursue a strategy of continuing effort to

resolve all issues in a global agreement, while not clearly

disclosing precisely how its additional rent calculations

differed from the method called for by the lease, militates

against a finding that THCI’s deferral somehow misled Lakeview or

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induced some type of reasonable reliance by Lakeview upon the

validity or effectiveness of the unauthorized additional rent

calculations.

Accordingly, THCI is entitled, under Section 16.2(d), to

interest on Lakeview’s late payment of additional rent at the

overdue rate.

Motion for Attorney’s Fees

Lakeview seeks to recover attorney’s fees incurred to secure

the court’s ruling that it validly extended its lease with THCI. 

A motion for attorney’s fees must “specify the . . .

statute, rule, or other grounds entitling the movant to the

award.” FED. R. CIV. P. 54(d)(2). Here, Lakeview bases its claim

on the common law of New Hampshire. In New Hampshire, “[t]he

general rule . . . is that each party to a lawsuit is responsible

for payment of his or her own attorney’s fees.” Van Der Stok v.

Van Voorhees, 151 N.H. 679, 684 (2005) (quoting Clipper

Affiliates v. Checovich, 138 N.H. 271, 277 (1994)). An exception

to that rule applies “where an individual is forced to seek

judicial assistance to secure a clearly defined and established

right, which should have been freely enjoyed without such

intervention.” Van Der Stok, 151 N.H. at 684 (quoting Funtown

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USA, Inc. v. Town of Conway, 129 N.H. 352, 354 (1987)). In such

cases, “an award of counsel fees on the basis of bad faith is

appropriate.” Van Der Stok, 151 N.H. at 684.

There are at least two reasons why Lakeview is not entitled

to recover attorney’s fees. First, THCI did not force Lakeview

to seek judicial assistance to secure its right to extend the

lease. It exercised its option to extend the lease five months

before it filed suit, pursuant to its rights under the lease. 

Lakeview’s suit was not based upon an effort by THCI to repossess

the property at the end of the fixed term. Rather, Lakeview’s

suit seemed largely premised upon its (mistaken) belief that THCI

was obligated to proffer some sort of “acceptance” of its

exercise of its options. The circumstances of this case are

vastly different from those in which attorneys’ fees have been

awarded to plaintiffs forced to litigate to secure clearly

defined and established rights. See Funtown USA, Inc. v. Town of

Conway, 127 N.H. 312, 315-16 (1985) (water-slide developer forced

to litigate when municipality repeatedly delayed issuance of

building permit, thus buying time to pass a zoning ordinance that

would prohibit applicant’s intended use); Harkeem v. Adams, 117

N.H. 687, 692-93 (1977) (unemployment compensation applicant

forced to litigate when state agency denied benefits for reasons

previously rejected by superior court). 

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Lakeview not forced to litigate to secure its lease

extension – it exercised its right to extend the lease before it

ever filed suit, and THCI had not moved to evict Lakeview or take

possession of the premises (it was Lakeview that insisted that

transition planning begin). And, Lakeview’s right to exercise

its option to extend the lease, under the circumstances, was

hardly “a clearly defined and established right.” Van Der Stok,

151 N.H. at 684. Under ordinary circumstances, the lease would

have given Lakeview a clearly defined and established right to

extend by notifying THCI of its intent to do so in a timely

manner. But here, given that Lakeview was in default, due to its

unilateral and undisclosed practice of paying additional rent at

a rate other than that specified by the lease documents, it

cannot be said that Lakeview’s right to extend the lease was

“clearly established” and subject to no legal doubt or reasonable

contest. The court ruled that the lease was validly extended,

but only after careful consideration of the pertinent facts and

application of equitable estoppel principles, based upon THCI’s

own manipulative conduct.

Because Lakeview was not forced to seek judicial assistance

to vindicate clear rights that ought to have been respected, and

because its right to exercise its option to extend the lease was

far from clearly defined and established under the factual

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circumstances, Lakeview is not entitled to attorney’s fees under

the doctrine established in Harkeem v. Adams.

Conclusion

For the reasons given, Lakeview’s motion for reconsideration

(document no. 142) and its motion for attorney’s fees (document

no. 158) are both denied. The clerk of the court shall enter

judgment in accordance with this order, and the court’s

memorandum order of March 31, 2009, and close the case.

SO ORDERED.

____________________________

Steven J. McAuliffe

Chief Judge

January 22, 2010

cc: Christopher H. M. Carter, Esq.

Daniel M. Deschenes, Esq.

Ovide M. Lamontagne, Esq.

Jonathan M. Shirley, Esq.

Leigh S. Willey, Esq.

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