Opinion
216-2020-CV-00555
04-14-2022
New Hampshire Electric Cooperative, Inc. v. Consolidated Communications of Northern New England, LLC
ORDER
David A. Anderson, Judge
Plaintiff brought this action against Defendant for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment/quantum meruit. Plaintiff also seeks a number of declaratory judgments pertaining to the timing, effect, and scope of the termination of an agreement between the parties. Defendant has filed a counterclaim, seeking its own declaratory judgments and alleging claims for rescission, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Defendant now moves to amend its Answer and Counterclaims. (Def.'s Mot. Am.) Plaintiff objects. (Pl.'s Obj. Mot. Am.) For the reasons that follow, Defendant's motion to amend its Answer and Counterclaims is GRANTED in part and DENIED in part.
FACTUAL BACKGROUND
I. Procedural History
This case arises from a dispute over the parties' General Agreement Joint Use of Wood Poles, as amended (hereinafter the "JUA"), which provides for the joint use of utility poles throughout New Hampshire. (Pl.'s Obj. Mot. Am. ¶ 1.) Plaintiff is a not-for- profit, member-owned and governed utility cooperative that provides retail electricity services in New Hampshire. (Compl. ¶ 1.) On July 1, 1977, Plaintiff and New England Telephone and Telegraph Company ("NETTC"), Defendant's predecessor in interest, entered into the JUA. (Def.'s Mot. Am. ¶ 1.) The stated purpose of the JUA was for the parties to cooperate in the joint use of their respective utility poles, and it set forth the parties' respective rights and obligations concerning pole specifications and the installation, maintenance, repair, replacement, and removal of poles and the equipment attached thereto. (Id.)
In 2003, Verizon - New England, Inc. d/b/a Verizon - New Hampshire ("Verizon"), as successor to NETTC, and Plaintiff "made three adjustments to the JUA and specifically noted that 'the parties desire to make certain specific amendments in the existing [JUA] without substantively changing the majority of the provisions within.'" (Pl.'s Obj. Mot. Am. ¶ 2.) Several other entities preceded Defendant's interest in the JUA, most recently FairPoint Communications, Inc. ("FairPoint"), which in turn assumed Verizon's interest in the JUA as of March 31, 2008. (Id. ¶ 3.) On November 7, 2007, Plaintiff and FairPoint entered into three separate agreements: a Second Amendment to the General Agreement Joint Use of Wood Poles ("Second Amendment"); Vegetation Management Inter-Company Operating Procedure No. 8 ("IOP No. 8"); and a Settlement Agreement ("2007 Settlement Agreement"), which all became effective March 31, 2008. (Id. ¶ 4.)
After acquiring FairPoint in July 2017, Defendant notified Plaintiff by letter on May 24, 2018 that it intended to terminate the JUA, effective as of May 24, 2019. (See id. ¶ 2.) On July 31, 2020, Plaintiff commenced the present lawsuit, in response to which Defendant filed an Answer asserting several affirmative defenses and counterclaims. (See id. ¶ 8-9.) This Court granted summary judgment in Plaintiff's favor on May 3, 2021 as to Count II of the Complaint and Counts I and II of Defendant's counterclaims. (Id. ¶ 11; see also May 3, 2021 Order (Anderson, J.).) That is, the Court held that Defendant's termination was not effective as to joint poles in existence at the time of termination and rejected Defendant's claim that the JUA was an unenforceable, perpetual contract. (See May 3, 2021 Order (Anderson, J.).)
Defendant now seeks to amend its Answer and Counterclaims to include the following: a count for declaratory judgment adjudicating Defendant's responsibility for joint vegetation management invoking IOPs 3 and 8; affirmative defenses of impracticability and lack of consideration; specific references to the 2007 Settlement Agreement; and additional allegations in its counterclaim for rescission and, in the alternative, requesting reformation of the JUA. (Def.'s Mot. Am. ¶¶ 9, 12, 13.)
II. Status of Discovery
On October 28, 2021, the parties filed an Assented Motion to Continue Jury Trial requesting various modifications to the case schedule, which this Court granted. (Def.'s Mot. Am. ¶ 5.) Pursuant to the case structuring order granted on November 1, 2021, the discovery deadline was May 15, 2022, and trial was scheduled for the weeks of July 11, 2022 and July 18, 2022. (Id.) The parties are currently moving forward with depositions and securing agreeable dates. (Pl.'s Obj. Mot. Am. ¶ 15.) Plaintiff alleges, however, that Defendant's conduct during discovery has caused delays in the litigation. (Id. ¶ 13.) The most recent exchange occurred on February 11, 2022 when Defendant produced its e-discovery to Plaintiff. (Id. ¶ 24.)
On March 24, 2022, the parties filed another Assented Motion to Continue Jury Trial requesting further modifications to the case schedule, which this Court granted. (See March 28, 2022 Order (Anderson, J.).) The current case schedule sets an April 19, 2022 deadline for the parties to propose a new Case Structuring Order individually or jointly. (Id.)
ANALYSIS
The Court has broad discretion to allow amendments to pleadings. See RSA 514:9 (granting courts discretion to allow substantive amendments "in any action, in any stage of the proceedings, upon such terms as the court shall deem just and reasonable, when it shall appear to the court that it is necessary for the prevention of injustice."). Generally, the Court "should allow amendments to pleadings to correct technical defects but need only allow substantive amendments when necessary to prevent injustice." Keshishian v. CMC Radiologists, 142 N.H. 168, 175 (1997). In other words, New Hampshire courts permit liberal amendment of pleadings absent surprise to the opposing party, introduction of an entirely new cause of action, or substantially different evidence. See Sanguedolce v. Wolfe, 164 N.H. 644, 647-48 (2013).
I. Amended Declaratory Judgment Claim
Plaintiff argues that Defendant's amended declaratory judgment claim, which theorizes that it is not required by the JUA to participate in a joint arrangement with Plaintiff for the maintenance of Defendant's attachments, is futile based on the plain language of the contract. (Pl.'s Obj. Mot. Am. ¶ 31-32.) In essence, however, the counterclaim mirrors Plaintiff's breach of contract claim alleging that Defendant is required to reimburse Plaintiff for vegetation management costs at a rate of 40% of each total invoice. (See Compl. ¶ 94.) As such, the counterclaim sets forth more detailed factual assertions about Defendant's disagreement with Plaintiff's reading of the JUA and its IOPs. Specifically, the counterclaim alleges that the JUA and IOPs require Defendant's ongoing input and agreement to the scope, timing, location, and cost of a vegetation management program. (See Am. Answer ¶¶ 101-104.)
Plaintiff also asserts that the claim is barred by the doctrines of laches. (Pl.'s Obj. Mot. Am. ¶ 31.) "Unless it is inequitable, a court of equity in applying the doctrine of laches will follow substantially the analogy of the statute of limitations." Cote v. Cote, 94 N.H. 372, 374 (1947) ("As a general rule, courts of equity, equally with courts of law, are bound by the statute of limitations."). "[T]he defendant bears the burden of proving that [the statute of limitations] applies in a given case." Billewicz v. Ransmeier, 161 N.H. 145, 149 (2010). Plaintiff offers no dates or time period wherein Defendant should have first raised the amended declaratory judgment claim, therefore, Plaintiff has not demonstrated that the doctrine applies.
The claim closely aligns with Defendant's prior requests for declaratory judgment, which the Court decided on summary judgment in Plaintiff's favor. Indeed, Defendant's amendment logically responds to the failure of its prior declaratory judgment claims. The claim, moreover, simply restates Defendant's stance on Plaintiff's breach of contract claim, requiring no additional or exhaustive discovery on Plaintiff's part. Nor does the claim create any reasonable surprise for Plaintiff. For those reasons, Defendant's motion is GRANTED as to Defendant's amended declaratory judgment claim.
II. Amended Affirmative Defense of Impracticability
Plaintiff next contends that an affirmative defense of impracticability is futile and that New Hampshire does not recognize impracticability as a breach of contract defense. (Pl.'s Obj. Mot. Am. ¶ 50-51.) Instead, Plaintiff asserts, New Hampshire law recognizes frustration of purpose, which Defendant has already pled. (Id. ¶ 52.) For its part, Defendant argues that the doctrine of impracticability is synonymous with impossibility, which New Hampshire courts recognize. (Def.'s Mot. Am. 4-5.) The court agrees with Defendant.
In the Restatement, for example, impossibility means not only strict impossibility but also impracticability. See Restatement (First) of Contracts § 454 (1932) ("'Impossible' must be given a practical rather than a scientifically exact meaning. Impracticability rather than absolute impossibility is enough."); see also Wheeler v. Blumling, 521 F.3d 1, 3, n.3 (1st Cir. 2008) ("The doctrine[s] of commercial frustration and impracticability [i.e., impossibility] both concern the effect of supervening circumstances upon the rights and duties of the parties" (brackets in original)); E. Allan Farnsworth, Contracts § 9.6, at 715 (2d ed. 1990) ("If a party expressly undertakes to perform, even though performance becomes impracticable [or impossible], impracticability [or impossibility] will not excuse performance, and the party will be liable for damages for nonperformance.").
New Hampshire courts have likewise recognized impossibility of performance as a defense to an action for specific performance. See Kelly v. Pine Trail Cottages Condo. Ass'n, No. 2019-0720, 2021 WL 1821893, at *3 (N.H. May 6, 2021) ("Impossibility of performance is a defense to an action for specific performance.") (non-precedential order); Hawthorne Trust v. Maine Savings Bank, 136 N.H. 533, 539 (1992) ("In land contracts, specific performance will be decreed unless, in the discretion of the trial court, to do so would be inequitable or impossible.").
Frustration of purpose, moreover, is distinguishable from the doctrine of impossibility. See Wheeler, 521 F.3d at 3 (characterizing defendant's argument as one of frustration of purpose rather than impossibility (emphasis added)); Bartlett v. Mut. Pharm. Co., 659 F.Supp.2d 279, 308 (D.N.H. 2009) (discussing defendant's frustration of purpose separate and distinct from additional impossibility argument); Modern Law of Contracts § 18:15 ("There is a great difference between impossibility and frustration").
The doctrine[s] of commercial frustration and impracticability [i.e., impossibility] both concern the effect of supervening circumstances upon the rights and duties of the parties; however, with commercial frustration, performance remains possible, but the expected value of performance to the party seeking to be excused has been destroyed by the fortuitous event which supervened to cause an actual, but not literal, failure of consideration.Wheeler, 521 F.3d at 3, n.3 (brackets in original). Contrary to Plaintiff's contention, Defendant's prior assertion of frustration of purpose as an affirmative defense does not preclude it from raising the doctrine of impossibility. Where Defendant has raised frustration of purpose, the court interprets its amended defense of impracticability as properly within a claim under the recognized doctrine of impossibility of performance.
That impracticability is substantively different from Defendant's original affirmative defenses, however, does not impede its ability to amend. Indeed, Defendant's impracticability argument restates its longstanding position that Plaintiff does not have an enforceable right under the JUA and IOPs to the vegetation management fees, and, therefore, should be adjudicated alongside Plaintiff's claims. As such, Defendant's motion is GRANTED as to Defendant's amended defense of impracticability.
III. Amended Affirmative Defense of Lack of Consideration
Plaintiff also argues that lack of consideration is an entirely new theory of defense unsupported by Defendant's original arguments, in addition to being futile due to the express recognition of proper consideration in the 2007 Settlement Agreement. (Pl.'s Obj. Mot. Am. ¶ 46.) Defendant distinguishes the 2007 Settlement Agreement from the terms of IOP 8, which it contends is silent as to consideration and which, according to Defendant, Plaintiff seeks to enforce as a contract. (Def.'s Mot. Am. 5.) The court disagrees with Defendant.
Plaintiff does not incorporate IOP 8 as an independent contract giving rise to its breach of contract claim. Rather, Plaintiff alleges that Defendant breached the JUA (Compl. ¶ 93), which incorporates various IOPS, or Intercompany Operating Procedures, that define "the parties' respective rights and obligations concerning, among other things, the installation, maintenance, repair, replacement, and removal of poles, as well as vegetation management along attachments to the poles," (Def.'s Mot. Am. ¶ 1). Even assuming Plaintiff asserts IOP 8 as an independent ground for breach of contract, for Defendant to assert that the Second Amendment to the JUA and IOP 8 are not supported by adequate consideration contradicts the language in the 2007 Settlement Agreement, which Defendant itself uses to argue that the JUA was not serving its intended purpose, among other things, in support of its claim for rescission. (See Am. Answer ¶¶ 10, 76.)
It is true that Defendant may plead claims and defenses in the alternative. However, Defendant's own amendments demonstrate the validity of the Settlement Agreement, and, therefore, the JUA itself-including the Second Amendment and IOP 8. (See Pl.'s Obj. Mot. Am. ¶ 47 ("The 2007 Settlement Agreement, stated specifically that 'in consideration of the promises and mutual covenants set forth herein, and for good and valuable consideration, the receipt of which is hereby acknowledged and undersigned, the Parties agree…'"); Am. Answer ¶ 76.) In particular, the 2007 Settlement Agreement states that the parties:
agree to negotiate in good faith to arrive at new or amended Joint Use Arrangement which conform to the terms set forth in this Agreement. Such
Joint Use Arrangement shall also substantively include the terms set forth in: (i) the Second Amendment to the General Agreement Joint Use of Wood Poles […] and (ii) Vegetation Management Inter-Company Operating Procedure No. 8 […](Def.'s Am. Answer, Ex. A ¶ 9.) In the least, the 2007 Settlement Agreement recognizes that the Second Amendment and IOP 8 restate the ongoing right held by Defendant to use Plaintiff's poles, even if not exercised, and the relative assignment of maintenance and other responsibilities to the jointly used areas in consideration for that right. Moreover, the Second Amendment ratified the original JUA-which Defendant does not argue is unsupported by consideration-specifically noting that the JUA, as amended, "shall continue in full force and effect," and that the parties agreed to the amendment "in consideration of the mutual covenants and agreements expressed in the original Agreement and contained herein." (Pl.'s Att. 1, Ex. A at 2, ¶ 14.)
Notably, both the Second Amendment and IOP 8 were entered into in November 2007, along with the Settlement Agreement, and all three became effective March 31, 2008. To argue that two of the three clearly parallel agreements lack adequate consideration while simultaneously upholding the validity of the third is incongruous and, despite the recent continuation, unjustifiably prejudices Plaintiff at a time when discovery should be focusing on the critical issues in the case. Defendant's motion to include an amended affirmative defense of lack of consideration is DENIED.
IV. References to the 2007 Settlement Agreement
Defendant also seeks to amend its Counterclaims to include specific references to the 2007 Settlement Agreement. Plaintiff primarily argues that because the 2007 Settlement Agreement is separate from the JUA and incorporated IOPs, any reference to the Agreement has no bearing on the dispute and, in particular, may increase the scope of discovery. (Pl.'s Obj. Mot. Am. ¶¶ 62-63.) Defendant emphasizes that Plaintiff concedes the Agreement itself is not a surprise, and that the Agreement includes a Second Amendment to the JUA and IOP 8. (Def.'s Resp. Obj. 3, 5.)
While Plaintiff continues to accuse Defendant of causing delays and attempting to protract litigation, Plaintiff fails to note any example of intentionally dilatory behavior on Defendant's part. Even if Plaintiff revisits discovery in relation to the 2007 Settlement Agreement, Plaintiff has already sought discovery concerning the Agreement and, indeed, served its latest request for production in February. (See Def.'s Resp. Obj. 3 ("NHEC served its third set of requests for production of documents earlier this month, increasing its total number of document requests to 85."). Notably, the Court is not presently aware that any depositions have occurred. In light of the recent Assented Motion to Continue Jury Trial, moreover, both parties have ample time to address any discovery concerns moving forward, and may reflect those concerns in their proposed Case Structuring Order, whether filed jointly or individually. Given the public policy in favor of permitting liberal amendments to pleadings, and the minimal prejudice, if any, to Plaintiff, Defendant's motion is GRANTED as to references made to the 2007 Settlement Agreement.
V. Amended Counterclaim Seeking Reformation
Finally, Defendant seeks to include a request for reformation, in the alternative to rescission, within Count III (Rescission) of its Counterclaims. (Def.'s Mot. Am. ¶ 13.) Specifically, Defendant requests reformation of the JUA "to conform to the Parties' mutually beneficial intent and reflect terms that are reasonable in the present circumstances." (Id.) Plaintiff argues that claims exploring "what the parties recognized, assumed, or intended beyond that which is in the agreements" relates "directly to the discovery [Defendant has] been dilatory in providing." (Pl.'s Obj. Mot. Am. ¶¶ 42-43.)
The court does not find that the amended allegations prejudice or surprise Plaintiff, nor require substantively new discovery. Plaintiffs objection demonstrates it was previously aware of and, indeed, sought discovery concerning negotiations between the parties in 2007 and Defendant's due diligence when acquiring FairPoint in 2017. (See id. ¶ 43.) Defendant's amendments to Count III largely include references to the 2007 Settlement Agreement and the impracticability of performance, which this Court has already allowed. For those reasons, the motion to amend to include, in the alternative, a request for reformation within Count III (Rescission) is GRANTED.
CONCLUSION
Consistent with the foregoing, Defendant's motion is GRANTED IN PART and DENIED IN PART.
SO ORDERED.