Court Opinion

ID: 4382196
Source: CourtListenerOpinion
Date Created: 2019-03-29 13:06:22.480434+00
Date Added: 2024-06-11T14:50:03.823901
License: Public Domain

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                 THE SUPREME COURT OF NEW HAMPSHIRE

                           ___________________________

Merrimack
No. 2018-0025

 EDWARD F. HAYES, JR., TRUSTEE OF THE SURVIVOR’S TRUST A C/U THE
           HAYES FAMILY TRUST DATED JANUARY 20, 2000

                                        v.

 JAMES J. CONNOLLY, TRUSTEE OF THE ANN D. CONNOLLY LIVING TRUST

                         Argued: November 27, 2018
                        Opinion Issued: March 29, 2019

      Cleveland, Waters and Bass, P.A., of Concord (David W. Rayment and
Mark S. Derby on the brief, and Mr. Rayment orally), for the petitioner.

      Gallagher, Callahan & Gartrell, P.C., of Concord (Samantha D. Elliott
and Robert J. Dietel on the brief, and Ms. Elliott orally), for the respondent.

      BASSETT, J. The petitioner, Edward F. Hayes, Jr., as trustee of the
Survivor’s Trust A, certified under the Hayes Family Trust dated January 20,
2000 (Hayes Trust), appeals the order of the Superior Court (Kissinger, J.), in
an action to partition real property. The property at issue is owned in equal
shares by the respondent, James J. Connolly, co-trustee of the Ann D.
Connolly Living Trust (Connolly Trust), and the Hayes Trust. The Hayes Trust
argues that the trial court erred by specifically enforcing the terms of a contract
the parties had abandoned. It further asserts that the trial court erred in
ordering a private sale based on appraisals because the Hayes family needed to
maximize the liquidation value of the property. Therefore, it argues that the
only “reasonable and fair remedy . . . was [a] private auction.” The Hayes Trust
further contends that the court erred in impermissibly penalizing it for seeking
partition, and by excluding certain testimony regarding a witness’s interest in
purchasing the property. We affirm.

       The property, a seasonal residence on Lake Sunapee, has been owned by
the parties’ families since 1953. In 1992, owners from the two families entered
into an agreement addressing how the liabilities and expenses of the property
would be shared, and what would occur “[u]pon the dissolution, or the death of
either of the [owners].” The Hayes family conveyed its one-half interest in the
property to the Hayes Trust in 2000 and the Connolly family conveyed its one-
half interest to the Connolly Trust in 2004.

        In 2015, Edward Hayes, the successor trustee of the Hayes Trust, sought
to liquidate the trust’s interest in the property because the trust beneficiaries
no longer had the financial ability to maintain the property. The Hayes family
asked Edward’s son, Michael Hayes, to represent the family’s interest in
negotiations with the Connolly family, which appointed James Connolly as
their representative. Michael stated that the Hayes Trust did not wish to
continue “joint ownership or usage,” and that he, acting as an individual,
wished to purchase the entire property. The Connolly family did not wish to
sell their interest, preferring that the property continue to be shared in
accordance with the status quo. After negotiations reached an impasse, the
Hayes Trust petitioned the court to partition the property, asking that the court
“(1) Order the sale of the Property either to Mike personally at a market value to
be determined by a third party appraiser to be appointed by the Court; or (2)
. . . order the Property to be placed on the market and sold at the highest and
best price obtainable . . . .”

      During the course of litigation, the Connolly Trust argued that the
agreement from 1992 is an enforceable contract that gives it “an express right
to purchase the Property and an equitable procedure to determine the
purchase price.” The 1992 Agreement provides that:

      Upon the dissolution, or the death of either of the [owners], the
      other or the surviving [owner] shall have the right to purchase the
      interest of the deceased [owner] at a price agreed upon by the
      [owners] . . . provided the decedent’s lawful heirs . . . do not desire
      to continue the decedent’s ownership of the subject property. This
      Agreement shall be binding on the decedent’s heirs under the
      aforementioned provisions. If the [owners] cannot agree on the
      purchase price, then the [owners] shall each select one appraiser
      or the legal representative of the deceased [owner] shall select one
      appraiser, and these two shall agree, if possible, in good
      conscience, on the value of the interest of the dissolving and/or the

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      deceased [owner], and such agreed value shall be binding and
      conclusive on all parties hereto or claiming hereunder. But if these
      two are unable to agree, they shall select a third appraiser and
      then the decision of any two of the appraisers shall be binding and
      conclusive on all Parties hereto or claiming hereunder.

The court observed that “no member of either the Connolly or Hayes families
raised the 1992 Agreement until well after the initiation of this case” and
concluded that, because the original signatories demonstrated a mutual lack of
a commitment to be bound by its terms, the 1992 Agreement was not an
enforceable contract.

       Following a bench trial and a view, the trial court concluded that the
property was not suited for physical partition. Then, “taking into account both
families’ strong emotional ties to the Property and The Hayes Family Trust’s
need to liquidate its assets,” the trial court awarded the Hayes Trust’s interest
in the property to the Connolly Trust in exchange for half of the property’s fair
market value. The trial court ordered that fair market value be determined
following “a process similar with that set out in the 1992 Agreement.” The
court reasoned that “[a]lthough the 1992 Agreement does not constitute an
enforceable contract, it still suggests that at one time the Hayes and Connolly
families believed its process for ascertaining the value of the Property was fair
and equitable.” Accordingly, the trial court ruled that the property be
partitioned and held that, if the parties could not agree on a price, each would
select an appraiser to determine the fair market value. If the two appraisers
disagreed, a third appraiser would be selected by the two appraisers, and
agreement between any two of the three appraisers would establish the fair
market value. This appeal followed.

       Partition actions are governed by RSA chapter 547-C, which vests the
trial court with broad power to determine the rights of those with an interest in
real property. See RSA 547-C:30 (Supp. 2018). Partition proceedings are
“remedial in nature” and provisions of RSA chapter 547-C “are to be liberally
construed in favor of the exercise of broad equitable jurisdiction.” Id. “In
entering its decree [on a petition to partition] the court may, in its discretion,
award or assign the property or its proceeds on sale as a whole or in such
portions as may be fair and equitable.” RSA 547-C:29 (2007). The statute sets
forth a list of factors the court “may consider” including the parties’ actions
relative to the property, “any contractual agreements entered into between the
parties in relation to sale or other disposition of the property,” and “any other
factors the court deems relevant.” Id.

       “An action for partition calls upon the court to exercise its equity powers
and consider the special circumstances of the case, in order to achieve complete
justice.” DeLucca v. DeLucca, 152 N.H. 100, 102 (2005). “The court has broad
and flexible equitable powers which allow it to shape and adjust the precise relief

                                        3
to the requirements of the particular situation.” Brooks v. Allen, 168 N.H. 707,
711 (2016) (quotation omitted). “A court of equity will order to be done that
which in fairness and good conscience ought to be or should have been done. It
is the practice of courts of equity . . . to administer all relief which the nature of
the case and facts demand.” Id. (quotation omitted). “[T]he jurisdiction of the
court extends to adjustment of conflicting claims in a fair division of the
proceeds in the light of the attendant circumstances.” Id. (quotation omitted).

      We will uphold a trial court’s equitable order unless it constitutes an
unsustainable exercise of discretion. Id. In doing so, the question is “whether
the record establishes an objective basis sufficient to sustain the discretionary
judgment made.” State v. Lambert, 147 N.H. 295, 296 (2001) (explaining
unsustainable exercise of discretion standard). “The party asserting that a trial
court order is unsustainable must demonstrate that the ruling was
unreasonable or untenable to the prejudice of his case.” Foley v. Wheelock, 157
N.H. 329, 332 (2008). We will not disturb the findings of the trial court unless
they lack evidentiary support or are legally erroneous. Brooks, 168 N.H. at 711.
Indeed, our review of the trial court’s decision is limited: we will not substitute
our judgment for that of the trial court unless the findings and rulings are
unsupported by the evidence or are erroneous as a matter of law. Ryan v.
Perini Power Constructors, Inc., 126 N.H. 171, 173 (1985). Nor will we reweigh
the equities. In the Matter of Heinrich & Heinrich, 164 N.H. 357, 365 (2012).

       The Hayes Trust first argues that the trial court erred “when it found
that the parties had abandoned the 1992 Agreement, and then specifically
enforced the terms of the abandoned contract under the guise of a remedy
upon partition.” The Connolly Trust counters that even though the “trial court
did grant a remedy similar to that which is specified in the prior 1992
agreement,” it was not enforcing the abandoned contract, but rather was
ordering “a common-sense, equitable remedy, and one which even the
petitioner acknowledged was a fair approach.”

       Interpretation of a trial court order presents a question of law for this
court. In the Matter of Salesky & Salesky, 157 N.H. 698, 702 (2008). Here, we
do not construe the court’s order as specifically enforcing the 1992 Agreement.
Rather, the trial court, having found that “physical partition is not a viable
option,” concluded that the “fairest solution” was to award the Hayes Trust’s
interest in the property to the Connolly Trust in exchange for half of the
property’s fair market value. Indeed, at trial, Edward Hayes, Jr., the Hayes
Trust’s trustee, acknowledged that “one fair method” for “dealing with this type
of situation” was reflected by the 1992 Agreement. We do not see how a
method of partition becomes unfair, unreasonable, or inequitable merely
because parties are no longer contractually bound to use that method. To
adopt the Hayes Trust’s argument, and conclude that the trial court could not
order this method of partition, would in effect preclude a trial court from
ordering specific relief merely because the parties once had agreed to those

                                          4
very terms. Such an outcome would be illogical. Moreover, it would be
contrary to the broad terms of the partition statute, which empowers a court to
enter a decree “as may be fair and equitable” after considering “any contractual
agreements entered into between the parties in relation to sale or other
disposition of the property,” and “any other factors the court deems relevant.”
RSA 547-C:29. We conclude that the Hayes Trust has failed to demonstrate
that the trial court’s ruling was unreasonable or untenable.

      The Hayes Trust next argues that the trial court erred when it ordered a
private sale based on fair market value as determined by appraisals, instead of
a private auction or a public listing and sale. It asserts that “[t]he fairest
remedy was a private auction among the Hayes and Connolly family members”
because it “guarantees that the Property with sentimental value will not be sold
outside the family, and it will fairly compensate the selling party for parting
with real property to which he or she may have an emotional attachment.” It
further contends that a private sale based on fair market value was
unreasonable because it discounted the Hayes Trust’s need to maximize the
return on its interest in the property.

       RSA 547-C:25 provides that if a court finds that property cannot be
divided, “the court may order it to be sold and the proceeds from the sale to be
divided among the owners . . . and may make all other orders that may be
necessary to cause such sale and the distribution of the proceeds, as a court of
equity may do in like cases.” RSA 547-C:25 (2007). The trial court, after finding
that “physical partition is not a viable option,” declined to order that the value of
the property be established by the method proposed by the Hayes Trust. It
reasoned that it would be “grossly inequitable to require the Connolly Trust to
pay a premium over fair market value.” The trial court, although recognizing the
Hayes Trust’s interest in maximizing the value of the property, was not
convinced “that the beneficiaries’ financial need is so great that it justifies
forcing the Connolly family to possibly choose between selling their well-beloved
interest in the Property or paying more than fair market value . . . merely in
order to maximize the value of the Property to a marginal degree.” Even if the
method of valuation proposed by the Hayes Trust would have also been an
equitable way to partition the property, it has not established that the method
selected by the trial court was unreasonable or untenable. See Foley, 157 N.H.
at 332. Accordingly, we conclude that the trial court sustainably exercised its
discretion when it ordered that the property be partitioned by private sale based
on its appraised or agreed upon fair market value. See Brooks, 168 N.H. at 711.

       To the extent that the Hayes Trust is also arguing that the trial court
order is unsustainable because, by “definition and common sense, it is not
possible for a dollar amount to be ‘grossly inequitable’ and ‘marginal’ at the
same time,” we disagree. By our interpretation, the trial court did not premise
its conclusion on the size of the premium, but rather on the existence of a
premium. The trial court merely made the determination that equity does not

                                         5
require leveraging the Connolly family’s emotional attachment to the property
to set a price higher than fair market value. We conclude that the Hayes Trust
has failed to demonstrate that this ruling was unreasonable or untenable.

      The Hayes Trust next contends that the trial court “[i]mpermissibly
[p]enalized” it for seeking partition. This argument is based upon the Hayes
Trust’s interpretation of a statement in the trial court’s order: “considering [the
Hayes Trust] alone desires to change the family sharing arrangement that has
been in place for decades, . . . it would be grossly inequitable to require the
Connolly Trust to pay a premium over fair market value to retain its interest in
the Property.” We, however, do not construe the order as penalizing the Hayes
Trust for filing suit. See Salesky, 157 N.H. at 702. Rather, the court accurately
summarized the parties’ respective positions, noting that the Hayes Trust sought
to change the longstanding arrangement, while the Connolly Trust sought to
maintain the status quo. The statement is neither erroneous nor punitive.

        Finally, the Hayes Trust argues that the trial court erred when it
excluded testimony from Michael Hayes regarding his interest in purchasing
the property. We review the trial court’s rulings on admissibility of evidence
under the unsustainable exercise of discretion standard. McLaughlin v. Fisher
Eng’g, 150 N.H. 195, 197 (2003). We will not disturb the court’s ruling unless
a party establishes that it is clearly untenable or unreasonable to the prejudice
of its case. Id. The Hayes Trust argues that Michael’s testimony was relevant
“to support the proposition that there was a good supply of ready, willing, and
able buyers willing and able to pay a premium for the Property.” However, the
proposition that those buyers exist does not appear to have been in dispute.
On the contrary, the court implicitly found that such a class of buyers could
force the Connolly Trust to choose between selling “their well-beloved interest
in the Property or paying more than fair market value” to keep it, an outcome
the court found to be “grossly inequitable.” Based upon this record, we cannot
conclude that the trial court’s ruling to exclude the proffered testimony was
untenable or unreasonable.

       In sum, the record establishes an objective basis sufficient to sustain the
method of partition and valuation chosen by the trial court — a private sale
based on appraisals. See Brooks, 168 N.H. at 711. The Hayes Trust, having
concluded that it needs to sell its interest in the property because it can no
longer bear the cost of ownership, is relieved of that burden, and it will receive
fair compensation. The Connolly Trust, desiring to keep its share of the
property, is able to do so if it purchases the Hayes Trust’s interest for a price
equal to half of the property’s fair market value.

                                                  Affirmed.

     LYNN, C.J., and HICKS, HANTZ MARCONI, and DONOVAN, JJ.,
concurred.

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