Bedford School District & a. v. State of New Hampshire & a.

Citation: 194 A.3d 481Docket: 2017-0422

Court: Supreme Court of New Hampshire; August 17, 2018; New Hampshire; State Supreme Court

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The opinion is subject to potential motions for rehearing and formal revisions before publication. Readers are encouraged to report any editorial errors to the New Hampshire Supreme Court for correction prior to printing. The case involves an appeal by the State and other defendants against the Bedford School District and William Foote, who were awarded attorney’s fees by the Superior Court for recovering withheld education funding in fiscal year 2016 due to a statutory cap under RSA 198:41, III(b). The State contends that the trial court erred in awarding fees because it did not find bad faith on its part, and also claims Bedford waived its right to fees by accepting appropriated education funds that included a waiver provision. The court reverses the attorney’s fee award. The excerpt also outlines the statutory framework for determining adequate education costs and references a related case (Dover v. State) in which a stipulation was reached stating that if the City of Dover successfully challenged the funding cap, the State would promptly pay withheld funds and be bound by the ruling for other districts without requiring their intervention.

In June 2016, Bedford sought to enjoin the funding cap from RSA 198:41, III(b) while the Dover case was pending, but the trial court denied the motion, citing a lack of demonstrated irreparable harm. The court noted that any fiscal shortfall for Bedford in FY 2016 would likely be addressed by the outcome of the Dover case. In September 2016, the Dover court issued a permanent injunction stating the funding cap was unconstitutional, a decision the State chose not to appeal. However, the State failed to distribute the withheld funds to Bedford within ten business days following the judgment. In November 2016, Bedford filed for summary judgment to recover $4,287,533 withheld due to the cap and requested attorney's fees. The State disputed both the obligation to pay the withheld funds within ten days and the request for attorney's fees. In January 2017, a legislative bill (HB 354-A) was proposed to appropriate additional education grants, including Bedford's withheld amount, but had not passed by early April. On April 6, 2017, the trial court ordered the State to pay Bedford the withheld funds within 30 days and to cover attorney’s fees, citing the necessity of judicial intervention to enforce Bedford’s rights. The court noted it did not find bad faith but deemed attorney’s fees appropriate due to the State's failure to fulfill its commitments. The court allowed Bedford to file for fees, and on April 27, 2017, HB 354-A passed, appropriating the withheld amount but requiring a waiver of any claims against the State for prior education payments. The funds were wired to Bedford on May 1, and Bedford subsequently requested attorney’s fees. The State contested the fee award, arguing that acceptance of the funds constituted a release of any claims for fees. On June 19, the court awarded Bedford $21,479 in attorney’s fees, attributing the amount to the State's inconsistent litigation approach. The State appealed, contending the trial court erred in awarding fees without a finding of bad faith.

The State contends that Bedford waived its claim for attorney's fees by accepting payment from HB 354-A, while Bedford argues that the trial court acted within its discretion in awarding those fees, asserting that no explicit finding of bad faith is necessary and that the award can be justified on other grounds. Bedford maintains that receiving funds from the State does not constitute a waiver of its right to attorney's fees. The court concludes that by accepting the funds, Bedford waived its right to the fees, thus not requiring a review of the trial court's discretion in awarding them.

Bedford initially claims that the State failed to preserve the waiver issue for appeal because it was not raised in the summary judgment pleadings. Bedford further argues that even if the waiver was timely raised, the State should have sought reconsideration to preserve it for appellate review. The court disagrees, noting that the State raised the waiver issue at the earliest opportunity when responding to Bedford's affidavit for fees. The trial court implicitly rejected the waiver argument when it awarded the fees, thereby preserving the State's argument for review.

The court emphasizes that addressing waiver involves statutory interpretation, where it serves as the final authority on legislative intent as expressed in the statute. Bedford argues that the funds were not "accepted" because they were provided via wire transfer. The State counters that Bedford's failure to protest this transfer indicates acceptance. The court agrees with the State, noting that the term "acceptance" is not defined in HB 354-A. Consequently, it interprets the term using its common meaning, which involves agreeing to an offer either expressly or through conduct, thus concluding that Bedford's actions constituted acceptance.

Bedford received a payment of $4,287,533.00 from the State on May 1, 2017, and was aware of HB 354-A's waiver provision at that time. By accepting the funds without returning them, escrow-holding them, or informing the State of its intention to keep the funds while maintaining its claim for attorney’s fees, Bedford effectively accepted the terms of HB 354-A. Bedford argued that the payment was not disbursed under HB 354-A but was ordered by the Superior Court; however, the State countered that the payment's source did not change due to the court order, and Bedford provided no legal basis to claim otherwise. The trial court's order to pay preceded the HB 354-A appropriation, but the payment was still subject to HB 354-A's conditions. Bedford contended that the waiver does not apply to its attorney's fees since they were awarded due to the State's alleged contradictory representations rather than a failure to make required payments. The State maintained that the fees were related to recovering capped adequacy payments from fiscal year 2016 and asserted that Bedford waived its right to those fees by accepting the HB 354-A funds. The court agreed with the State's position.

The trial court awarded attorney’s fees based on the litigation strategy used by the State, but the case primarily concerns adequacy payments for education under RSA 198:41, III](b) and constitutional obligations per Part II, Article 83 of the New Hampshire Constitution for the 2016 Fiscal Year. The award of fees is deemed to fall within a statutory waiver, as it pertains to claims related to the State's adequate education payments from September 1, 2008, to June 30, 2016, as stated in Laws 2017, 28:1. During oral argument, Bedford introduced two new arguments against the waiver of its right to attorney’s fees: one based on RSA 198:42, II regarding funding from the general fund for education grants, and another concerning a separation of powers issue stemming from the waiver provision in HB 354-A. However, since these arguments were raised for the first time at oral argument, the court declined to address them, referencing precedent that discourages consideration of new issues not presented in prior briefs. Ultimately, the court concluded that Bedford waived its right to attorney’s fees, resulting in the reversal of the trial court's decision. The opinion was concurred by Chief Justice Lynn and Justices Hicks and Hantz Marconi.