THE STATE OF NEW HAMPSHIRE
Case No. 217-2012-CV-00326
Lawrence J. Spellman,
North Country Auctions, LLC,
Daniel Dagesse, Jr.,
Balsams View, LLC,
Coos County Planning Board,
Town of Colebrook Planning Board,
Attorney General Michael Delaney,
Neil Tillotson Trust,
John Doe, Jane Roe
COMBINED OPPOSITION TO MOTIONS TO DISMISS
ANDY MARTIN, J.D.,
Adjunct Professor of Law
Principal address for
service of documents:
NATIONAL LITIGATION CENTER
P. O. Box 1851
New York, NY 10150-1851
Toll-free tel. (866) 706-2639
Toll-free fax (866) 707-2639
with additional courtesy copy
[if defendants desire to serve
a second copy] to:
Andy Martin, J.D.
816 Elm Street #251
Manchester, NH 03101-2105
SERVICE OF NOTICES IS RESPECTFULLY
REQUESTED BY FAX OR E-MAIL
Additional e-mail address available upon request
DATED: May 14, 2011
Defendants ask the court to dismiss this mixed state and federal constitutional case.
Plaintiff respectfully asks the Court to allow the lawsuit to proceed under either of one or two legal doctrines: (i) existing New Hampshire common law or (ii) an adaptation on the common law to reflect the realities of modern state government.
This is a case where corporate insiders and law firms are profiting from the misery of the poor in the North Country of New Hampshire. The testamentary intent of Neil and Louise Tillotson has been ignored and swept away into the dustbin.
Is there a federal or state legal remedy for this dereliction of public responsibility and breach of fiduciary duty by the New Hampshire Attorney General? That is the challenging question which the Court must decide. Most respectfully the Court is asked to fashion a series of equitable remedies that will revive the testamentary intent of Neil and Louise Tillotson.
The facts of this case
1. Grafton Corbett, President of Tillotson Corporation, stated that a closing of The Balsams hotel would be “quite disastrous, and would take a long time to recover.” (Appendix. p. 1)
2. In 2010 the manager of The Balsams stated “Business is up 20% over last year,…This August is up 30 percent.” (Appendix p. 3)
3. After agreeing to a contract to purchase the Balsams, Ocean Properties sought to reduce the purchase price because of potential “serious reservations [by local planning boards]” and because of the increased cost of potential renovations. (Appendix pp. 5-7 at 6)
4. After Ocean Properties walked away from its purchase agreement, Rick Tillotson expressed his views on the testamentary intentions of his family. (Appendix p. 8). Tillotson stated:
My father…would never have wanted these results of the deal. Even if the hotel had lost money since his death, this “lost” money was used to pay wages to the people to whom the Trust was created to benefit…long term, loyal employees, who deserved better than this.
5. A Choate (Choate Hall & Stewart) letter dated November 23, 2011 was received by the Attorney General’s Charitable Trusts Unit (hereinafter “AG”) on November 28, 2011. (Appendix pp. 9-15). The Choate letter referred to a “strong desire” (App. p. 9) and noted the latest contract “[eliminated] any requirement of a minimum investment in capital improvements to the hotel.” It appears that the contract also eliminated an earlier claw-back provision that would have provided the Tillotson Trust with a bonus payment if the hotel was purchased and then resold in a short period of time.
In an apparent question of fraudulent behavior, the AG was advised that “the Buyer [was] assuming $386,000 of hotel gift certificates,” although there was no stated plan or timetable to reopen the hotel. (App. p. 12) What has happened to the “gift certificates” is unclear. Choate further told the AG that the buyers had “done a detailed study of what needs to be done to make improvements to the hotel.” (App. p. 13) Choate said a “solicitation of offers” requested “a description of the offeror’s plans for continued operations of The Balsams Resort….[but] TC will not demand any contractual commitment with respect to such plans.” (App. p. 15) One of the benefits of the latest sale was that the buyer demanded “no due diligence.” (App. p. 12)
6. Appendix page 16 is a calendar. The AG received the sale materials on Monday, November 28th, and approved the plans four (4) days later without any public notice or public input (Appendix p. 16).
7. The AG’s approval reads as though it was prepared in blank by Choate, an issue to be pursued in discovery (Appendix pp. 17-19). The AG disclosed that Attorney General Michael Delaney had personally participated in the approval process (App. p. 19) although the AG has refused to disclose when and how Delaney participated in the approval decision.
8. The AG never saw and never sought any financial operating information as part of the sale/approval process and thus had no idea what The Balsams’ losses were and how they were being apportioned within the structure of the various Tillotson entities.
9. The purchaser Balsams View LLC claimed it had “met Tillotson’s criteria,” although those criteria have never been reduced to writing in any document which was made available to the AG (other than in Choate letters). (Appendix p. 20)
10. Attached to the Petition in this lawsuit was a very laudatory report in the Washington Post concerning the service and ambience of The Balsams (Petition, Exhibit A). Plaintiff did simple research on the Internet and found more laudatory comments on The Balsams in tripadvisor.com (Appendix. p. 22).
11. Attorney Ovide Lamontagne (et al.) wrote an article in the New Hampshire Bar Journal in which he discussed the best practices for the AG to follow in approving a charitable sales, among them public notice and public hearings. (Appendix pp. 23-25)
12. In an article published in the Colebrook Chronicle on August 10, 2012 defendant Daniel Dagesse stated he was “[B]usy… [k]eeping up with the discovering of disrepair.” (Appendix pp 26-27). Dagesse had previously waived any “due diligence.” (App. p. 12). Dagesse claimed he “discovered” part of the resort was “absolute junk” (App. 27) and further claimed his property “is in such disrepair.” Dagesse claimed to have “discovered” problems in the water line (App. p. 27), although the need to repair the water line was commonly known or could have been discovered upon reasonable inquiry and due diligence. The water line apparently met New Hampshire state health requirements when the hotel closed in September, 2011.
The issues raised by the defendants
1. Factual issues
The AG raises factual questions about the Plaintiff’s residence and relationship to the State of New Hampshire, challenging the factual allegations of Plaintiff’s petition. The hearing on September 17, 2012 is a hearing on legal issues, not factual ones, and thus Plaintiff’s allegations must be taken as true. Plaintiff has a due process constitutional right to an evidentiary hearing if the AG wants to persist in challenging the facts of Plaintiff’s Petition, see Unisys v. Department, 220 Conn. 689, 600 A.2d 1019, 1023 (Conn. 1991). Plaintiff also has a right to an evidentiary hearing on sovereign immunity issues raised by the AG, see Gordon v. H.N.S. Management, 272 Conn. 81, 861 A.2d 1160, 1168 (Conn. 2004).
2. Legal issues
The AG has asserted a grab-bag of defenses and arguments in support of his effort to terminate this lawsuit. Most of these defenses will be discussed; others are so insubstantial they will be allowed to dissolve of their own inertia.
The Duties of the Attorney General
1. State law requires the Attorney General
to promulgate rules of procedure
Although Plaintiff’s Petition is a civil action, based on mixed federal and state constitutional claims, the substance of the duties performed by the AG’s Charitable Trust unit have been recognized as primarily administrative. The AG is supposed to promulgate rules (NHRS 7:22) and Plaintiff has requested a copy of those rules since he could not find them online. Thus, the proceedings on which this petition’s constitutional claims are premised also have strong attributes of an administrative inquiry.
2. The Attorney General appears to act in a totally
Although Ovide Lamontagne suggests there is some rhyme and reason to the AG’s Charitable review procedures on occasion (Appendix pp. 23-25), in the current lawsuit the AG devoted all of four days to reviewing a complex, multi-million dollar transaction, in which the AG’s decision appears to have been pre-written by Choate attorneys in Boston, not New Hampshire public officials in Concord.
The Charitable Trusts Unit
The Attorney General claims the Plaintiff lacks standing to litigate. But the General’s assertion is simply not an accurate statement of New Hampshire law. New Hampshire case law makes the AG an indispensable party in any Charitable trust litigation:
It is well-settled in this jurisdiction that the Attorney General, or the Director of Charitable Trusts as his representative, is an indispensable party in any judicial proceeding involving the enforcement and supervision of charitable trusts. Concord N.B. v. Haverhill, 101 N.H. 416, 145 A.2d 61, 63 (N.H. 1958).
The Court goes on to state that “other interested parties” may appear and be heard…particularly where they are acting for the benefit of the charitable trust as a whole.” 145 A.2d 64. Thus, in order to litigate claims against the Tillotson Trust, the AG is an indispensable party. It is stupid to suggest that someone who has been made an indispensable party by case law is protected by sovereign immunity from being a party.
Likewise, this Court must engage in “every presumption favoring jurisdiction,” In Re Judicial Inquiry, 293 Conn. 247, 977 A.2d 166, 170 (Conn. 2009).
More significantly, both New Hampshire and Connecticut case
law states that where the legislature does not limit the universe of potential litigants who can seek judicial review, standing requirements are likewise reduced or eliminated by the “open door” policy of the legislature in refusing to limit access to the courts. In Appeal of Campaign, 162 N.H. 245, 27 A.3rd 726, 731 (N.H. 2011) the New Hampshire Supreme Court cited the Connecticut Supreme Court for the view that “Thus, where the legislature has provided that only certain persons or entities can invoke an agency’s jurisdiction, the question of standing under the applicable statute is an issue of subject matter jurisdiction.” Plaintiff is aware of no similar statutory restrictions or limitations on who can petition or invoke the jurisdiction of the Charitable Trust division of the AG’s office.
Likewise, in Ruel v. New Hampshire, 163 N.H. 34, 35 A.3rd 636, 641-642 (N.H. 2011) the New Hampshire Supreme Court again held that the lack of a limiting standard in a statute permits broadly-based access to judicial review.
In this lawsuit, Plaintiff raises critical issues about the way a trust created to benefit the North Country has been manipulated to enrich Boston lawyers and Manchester insiders, at the expense of helpless children who are being deprived of assistance despite the express intentions of Neil and Louise Tillotson. The AG is visibly manipulated and controlled by the bad guys.
The Factual and Legal Issues Raised by the Plaintiff
1. The “LaMontagne Rules” can be a road map for the Court
Because this lawsuit raises several issues of first impression, Plaintiff suggests the Court consider the “Lamontagne Rules” (Appendix pp. 23-250 as a roadmap for “best practices” in a dispute involving the Director of Charitable Trusts.
2. Lack of public notice/input
The record in this lawsuit, for example, reflects that the AG approved a complex, multi-million-dollar application in a record time of four days. There was no public notice and no public input and the entire process was secret and conspiratorial.
3. The Attorney General ignored the horrible economic
consequences of his preemptory behavior
As Rick Tillotson makes clear (Appendix p. 8), the AG ignored the testamentary intent of his father, and ignored the economic calumny the AG was dumping on helpless citizens of the North Country.
4. What did they know and when did they know it?
The contract for sale was signed on November 23rd, with a closing date of December 2nd. How could Choate lawyers have known they could get approval in one week (with two days off for state workers for Thanksgiving) without some insider deal that was fixed and rigged in advance? Why would anyone set a closing date for a complex, multi-million dollar transaction one week after the signing of the contract? Something smells. This Court cannot ignore the obvious.
The motions to dismiss should be denied without prejudice
1. The Private Attorney General doctrine
Although the issue seems apodictic, the issue of what “standing” is and how standing issues arise under New Hampshire law are an important consideration in this lawsuit. Unlike the Article III “case or controversy” requirement in the U. S. Constitution, standing rules in New Hampshire are judge-made limitations on citizen access to the judicial system. They are not constitutional restrictions. The existence of standing case law decisions is a fact, but those decisions are not fashioned out of a restriction appearing in the New Hampshire Constitution. Likewise, the Connecticut Supreme Court has stated:
Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather, it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests…Unisys v. Department, 220 Conn. 689, 600 A.2d 1019, 1022 (Conn. 1991).
What makes this a classic case for application of the “private attorney general” doctrine is that it is the attorney general himself who has failed to act and who has violated his oath of office. Federal courts, even though they are subject to the more restrictive conditions of Article III, still recognize that “consumer spokesman” have a right to be heard, Utah P.S. v. El Paso N.G., 395 U.S., 464, 466, 89 S. Ct. 1860, 1861 (1969).
The New Hampshire Supreme Court has adopted and freely applies the “private attorney general” concept, Couture v. Monmouth, 117 N.H. 294, 371 A.2d 1184 (N.H. 1977) and applies federal case law to state court decisions, 371 A.2d 1186.
Plaintiff is not asking this Court to make new law. Rather, he is asking the Court to apply existing New Hampshire law to the unique aspects of this lawsuit.
2. The Jus Tertii doctrine
The defendants’ claims that Plaintiff lacks “standing” are really a claim that Plaintiff is a not third-party beneficiary or not a victim of the perversions of the Tillotson Trust by the defendants. The AG in passing suggests Plaintiff is not a third-party “beneficiary.” Plaintiff is not a beneficiary of Mr. Tillotson’s will, but the AG came close to addressing the judicial doctrine that does apply in this instance: jus tertii.
Although jus tertii is an ancient common law doctrine, no New Hampshire court has ever addressed a case raising jus tertii issues. The U. S. Supreme Court classifies the doctrine of jus tertii as “third-party standing.” Petitioner undersigned meets the test for application of the jus tertii doctrine in this lawsuit.
In fact, the U. S. Supreme Court has acknowledged that state courts have even broader discretion to apply the law of jus tertii than federal courts. “[State courts] are…not bound by the prudential limitations on jus tertii that apply to federal courts.” City of Revere v. Massachusetts General, 463 U.S. 239, 243, 103 S.Ct. 2979 (1983).
What is the doctrine of jus tertii and what is “third party standing?” In Maryland v. J. H. Munson Co., 467 U.S. 947, 956, 104 S. Ct. 2839 (1984) the Supreme Court stated:
Where practical obstacles prevent a party from asserting rights on behalf of itself, for example, the Court has recognized the doctrine of jus tertii standing.
The beneficiaries of the Tillotson Trust are largely working people without the means to litigate. Hungry children can hardly be expected to come to court; Plaintiff is in a functional and practical sense their guardian ad litem in asserting their rights through this jus tertii proceeding.
In an extraordinary action, the Pennsylvania Supreme Court granted Petitioner undersigned special leave of court to represent children of a U. S. Marine. The children had been seized by an unscrupulous judge at the outset of the Iraq invasion. The Pennsylvania Supreme Court granted petitioner special leave of court to appear pro haec vice and petitioner succeeded in obtaining an order which returned the children to their father’s (the Marine’s) home (Appendix pp. 28-34). Petitioner’s court victory became the launching point for a nationwide effort to protect military personnel and eventually triggered a revisiting and revising of federal laws protecting our uniformed personnel. Thus petitioner has deep experience litigating similar claims as those presented by questions involving the maladministration of the Tillotson Trust.
North Country children especially have been robbed by the rich and powerful in Boston and Manchester, but these helpless children have no means to protect their right to benefit from Mr. Tillotson’s beneficence and testamentary intent as explicated by his son (Appendix P. 8). North Country parents have also been robbed of a paycheck, approximately 300 of them. When was the last time a Concord politician created 300 jobs in the North Country? The helpless victims in this case, and the impecunious families that were literally thrown out on the street, are a classic case for allowing Plaintiff to proceed under jus tertii standing. See also Edmonson v. Leesville Concrete, 500 U.S. 614, 629, 111 S. Ct. 2077 (1991).
3. The amount of “standing” required to stand up in court Plaintiff has made generalized factual allegations of his standing which must be taken as true on a motion to dismiss. But how much “standing” is required? In U.S. v. S.C.R.A.P., 412 U.S. 669, 689 n. 14, 93 S.Ct. 2405, the Court noted that an “identifiable trifle” is sufficient to confer standing. Although S.C.R.A.P. has been criticized, it is still the law. Whatever the Court decides as to state law issues in this lawsuit, the petition before the Court is a mixed federal/state proceeding and S.C.R.A.P is controlling as to the federal issues. It may be persuasive as to the state issues as well. S.C.R.A.P. is certainly more applicable that the unpublished probate court orders appended to the AG’s motion to dismiss.
4. The “fraud, corruption or favoritism” doctrine
Although Plaintiff calls this section a “doctrine”, which he asks the Court to accept, New Hampshire law already recognizes this doctrine in skeletal form. In Scamman v. Sondheim, 97 N.H. 280, 86 A.2d 329 (N.H. 1952) the New Hampshire Supreme Court broadened standing participation in cases where there is prima facie evidence that a trust has been subjected to “fraud or collusion,” 86 A.2d 330. Plaintiff asks this Court to make explicit what is implicit in Scamman [sic] to follow the lead of Connecticut courts in this regard, Unisys, supra, 600 A.2d at 1022 (“courts will intervene…where fraud, corruption or favoritism has influenced the conduct of…officials…”).
The manner in which trustees, attorneys and other insiders have lied, distorted and misrepresented the truth, and ignored Mr. Tillotson’s wishes and intentions, provide a very solid foundation for acceptance by the Court of New Hampshire’s ancient common law doctrine of standing based on official “fraud or collusion,” Scamman, supra, as brought up to date by the court in this instance. Insiders, law firms and others should not be allowed to profit from the misery of the poor in the North Country.
5. Plaintiff as an expert witness and real estate expert
Before taking on the salvation of The Balsams, Plaintiff performed a top-to-bottom analysis of the structure. He has the professional experience to do so (see Petition). Obviously, a “historic” building is not one built to current standards. Times have changed. But Plaintiff has watched the Waldorf-Astoria hotel in New York and The Breakers hotel in Palm Beach renovate, and neither historic hotel has ever closed to guests while renovations were in progress.
Plaintiff believes the evidence will eventually show parts of The Balsams were right up-to-date (the kitchen was first class, and it was stripped and sold for scrap by the defendants).
Certainly the sold-out accommodations at The Balsams reflect that for the segment of the vacationing public wanting a traditional New Hampshire family resort, The Balsams retained its popularity (Appendix. p. 22 and Exhibit A to the Petition).
The claim by defendants that The Balsams was “junk” is itself junk.
Conclusion: What Happens When “The System” Fails?
A wealthy man, Neil Tillotson, left a large fortune, in the hundreds of millions of dollars, to people who were in financial distress. Their distress has only worsened as their sources of income have either been shut down (The Balsams) or exported to China (Ethan Allen). Nearly 1,000 jobs have disappeared. Rick Tillotson provided a profound insight into his father’s testamentary intent (Appendix p. 8). While the trustees have claimed to be “losing money,” that “money” was going into the desperate pockets of people in the North Country who benefited directly from Balsams paychecks.
In addition, on information and belief Plaintiff submits that the “losses” at The Balsams have been greatly exaggerated because the bulk of the “losses” represented intra-company payments between various Tillotson enterprises, and were not genuine economic losses as the facts have been represented to both the public and the AG (discovery is necessary on this issue).
The state officials who were left to administer Tillotson’s millions betrayed his intent and favored lawyers and insiders over the intended beneficiaries, an all-too-usual tragedy in our “anything goes,” “who cares” predatory legal system.
But the question before the Court remains: who steps in when the AG fails and refuses to perform his statutory and common law duties? That is the core of the current controversy.
This is how Plaintiff suggests the Court should proceed and how the Court should rule in the first instance: Plaintiff suggests that the Court (i) deny the motions to dismiss without prejudice; (ii) the Court permit discovery to proceed so that a more fully-developed factual record can be prepared and (iii) the Court vacate the approval of the sale and remand the matter of the sale to the AG for the AG to have a new opportunity to engage in meaningful administrative review.
It is likely that whichever side loses this case will appeal. The Court thus has an institutional duty to allow the Supreme Court to receive the fullest-possible trial court record. Plaintiff has not filed a lis pendens on the real estate (New Hampshire law does not favor such a step) and he will not seek a temporary injunction if the AG is allowed to reconsider, so there are no barriers to the other defendants proceeding with their “remodeling project” while the case is vacated and remanded for a de novo review by the AG. The claim that the plaintiff’s search for the truth is somehow hamstringing the private defendants is ludicrous and borders on the scurrilous.
Defendants are trying to blame the Plaintiff for their own
lack of financial resources and lack of sound business judgment.
Alternatively, the Court could consider encouraging the parties to seek a transfer of the case without a ruling to the Supreme Court for review of the serious federal and state constitutional issues presented by the Petition.
The defendants have sought to portray this lawsuit as a joke. This case is no joke. Wealthy lawyers and “trustees” took food off the plates of hungry children in the North Country. Families that were struggling are in worse shape as a result of the trustees’ legerdemain. The poor national economy continues to deteriorate. It is perhaps surprising that no one but Plaintiff is actively working on the plight of the poor who have been treated badly by the Tillotson trustees, but that is clear basis of this petition to the Court.
The Court has broad equitable powers; this is a case that cries out for the judicious exercise of that authority.
ANDY MARTIN, J.D.,
Adjunct Professor of Law
 The New Hampshire Supreme Court frequently cites and relies on decisions of its sister court in Connecticut, see e.g. Appeal of Campaign, 162 N.H. 245, 27 A.3rd 726, 731 (N.H. 2011).
 The judicial article of the New Hampshire Constitution does not contain a “case or controversy” requirement and simply states “The judicial power of the state shall be vested in the supreme court, a trial court of general jurisdiction known as the superior court,…”
 Petitioner had a small, behind-the-scenes role in S.C.R.A.P.
 Ironically, in a very difficult economy, bookings at The Balsams held up surprisingly well and the resort remained very popular with its traditional, family-oriented clientele right down to the day the place was padlocked by its feckless owner. The hotel was an absolute delight. The attempts by Tillotson trustees, the AG and Balsams View LLC to besmirch The Balsams are regrettable if not despicable.