Opinion
216-2020-CV-00312
03-19-2024
Vermont Telephone Company, Inc. v. FirstLight Fiber, Inc.
ORDER ON PLAINTIFF'S MOTION FOR ATTORNEYS' FEES
DAVID A. ANDERSON, JUDGE
Plaintiff Vermont Telephone Company, Inc. ("VTel") brought this action against Defendant FirstLight Fiber, Inc. ("FirstLight") arising out of FirstLight's termination of the parties' contract. Plaintiff's amended complaint alleges a claim for breach of contract. Defendant filed a counterclaim for breach of contract. The Court held a nine-day jury trial beginning on September 25, 2023. On October 11, 2023, the jury returned a verdict in VTel's favor on its breach of contract claim and awarded it $1,250,000 in consequential damages. VTel now moves the Court to award VTel the attorneys' fees it has incurred. (Doc. 247.) FirstLight objects. (Doc. 248.) For the reasons set forth below, VTel's motion for attorneys' fees is DENIED.
FirstLight terminated the Dark Fiber Lease Agreement ("the Lease") in July 2019 after VTel employee Samuel Coleman escorted newspaper reporter Colin Meyn into a collocation facility owned by Consolidated Communications ("Consolidated") at which both parties maintained equipment. FirstLight cited VTel's act of escorting Meyn into the collocation facility to photograph FirstLight's equipment as a breach of the Lease's confidentiality provision, entitling it to terminate the Lease. The Lease also contained a provision limiting the amount of consequential damages the parties would be entitled to in case of a breach. The Court previously held that the above provision would not apply in the face of a party's bad faith conduct. (Doc. 246 at 4-6.) Accordingly, the Court instructed the jury to only award VTel consequential damages if it found both that FirstLight breached the Lease and said breach was done in bad faith. The jury returned a verdict in VTel's favor, explicitly finding that FirstLight breached the Lease in bad faith. FirstLight moved for judgment notwithstanding the verdict, which the Court denied. (See generally id.) The Court denied FirstLight's motion in large part because it found that although the parties presented conflicting evidence as to FirstLight's bad faith conduct, it was nevertheless reasonable for the jury to credit VTel's evidence over FirstLight's. (Id. at 10.)
Consequently, VTel now argues that it is entitled to its attorneys' fees under Harkeem v. Adams, 117 N.H. 687 (1977), because the jury found that FirstLight acted in bad faith. (Doc. 247 ¶ 9.) Further, VTel reasons that FirstLight's bad faith conduct in terminating the Lease without justification required VTel to commence litigation to enforce its legal rights under the Lease. (Id. ¶ 8.) In response, First Light argues that only a jury can award attorneys' fees on the basis of bad faith litigation conduct. (Doc. 248 ¶ 2.) Moreover, FirstLight contends that even if the Court can award attorneys' fees based on FirstLight's bad faith conduct, such an award is not warranted here because FirstLight meritoriously defended this suit, which VTel had to bring to clarify its rights under the Lease. (Id. ¶ 6.)
"New Hampshire adheres to the American Rule on the question of attorney'sfees: parties pay for their own attorneys' costs, subject to certain statutorily and judicially created exceptions." Board of Water Comm'rs, Laconia Water Works v. Mooney, 139 N.H. 621, 628 (1995). "Attorney's fees have been awarded in this State based upon two separate theories: 'bad faith litigation' . . . and 'substantial benefit.'" New Hampshire Motor Transport Ass'n v. State, 150 N.H. 762, 770 (2004). Under the bad faith exception articulated in Harkeem, a court may properly award attorney's fees in the following situations where: (1) one party has acted "in bad faith, vexatiously, wantonly, or for oppressive reasons"; (2) a litigant's conduct is "obdurate or obstinate"; (3) it should have been unnecessary for the prevailing party to bring suit in the first place; and (4) an individual is forced to seek judicial assistance "to secure a clearly defined and established right, which should have been freely enjoyed." 117 N.H. at 690-91.
The New Hampshire Supreme Court uses the terms "attorney's fees" whereas the parties use the term "attorneys' fees." The Court uses the former when discussing supreme court precedents and the latter in reference to the request in this case.
As a preliminary matter, the Court disagrees with FirstLight's contention that the Court cannot award attorney's fees on the basis of bad faith absent VTel specifically submitting the question of bad faith litigation conduct to the jury. Generally, the decision of whether to award a prevailing party attorney's fees is within the sound discretion of the trial court. See Town of Barrington v. Townsend, 164 N.H. 241, 249 (2012) (stating that the supreme court will affirm a trial court's award of attorney's fees as long as there is "some support in the record" for the decision); see also Harkeem, 117 N.H. at 690 (explaining that despite the general principle that each party pays its own attorney's fees, "when overriding considerations so indicate, the award of fees lies within the power of the court, and is an appropriate tool in the court's arsenal to do justice and vindicate rights."). Even in the context of determining whether a party engaged in bad faith conduct throughout litigation, the supreme court has opined that the issue of whether submitting the question of attorney's fees is properly left for the court or the jury was moot where the judge awarded attorney's fees based on the jury's factual findings regarding bad faith. See Van Der Stok v. Van Voorhees, 151 N.H. 679, 683 (2005). The supreme court made no distinction between a finding of bad faith generally and a finding of bad faith in relation to litigation conduct. Id. Indeed, the supreme court has explained that trial judges are in the best position to award attorney's fees, even on the basis of bad faith litigation conduct. Maguire v. Merrimack Mut. Ins. Co., 133 N.H. 51, 55-56 (1990) ("Given the nature of cases at the trial level, with their settlement conferences, pre-trial hearings, evidentiary determinations, and live witnesses, the trial judge may have insights not conveyed by the record, and is, therefore, in the best position to decide whether a party's claim constitutes bad faith or is patently unreasonable.").
FirstLight's arguments to the contrary are not persuasive. For example, FirstLight relies on a case in the insurance context for the proposition that determining whether the defendant's conduct during litigation was in bad faith was a jury question. See Drop Anchor Realty Tr. v. Hartford Fire Ins. Co., 126 N.H. 674, 679 (1985). In Drop Anchor, the supreme court held that "an insured is entitled to attorney's fees if the insurer acted in bad faith in promoting unnecessary litigation." Id. The supreme court further explained that determining whether a defendant's delay to make payment constituted bad faith is a jury question. Id. Drop Anchor, however, does not stand for the broad proposition that all questions related to bad faith litigation conduct must be determined by the jury prior to the court awarding attorney's fees. Id. Instead, Drop Anchor's holding is limited to establishing the jury's role in making specific factual findings regarding an insured's conduct during litigation. Id. Accordingly, the Court has the discretion to award attorney's fees in this case on the basis of FirstLight's purported bad faith litigation conduct. See Maguire, 133 N.H. at 55-56.
The Court now turns to VTel's overarching argument that it is entitled to attorneys' fees under Harkeem because the jury found that FirstLight terminated the Lease in bad faith. A jury verdict may form the basis of a court's award of attorney's fees under Harkeem. See Van Der Stok, 151 N.H. at 685 (explaining that because the jury specifically found that plaintiff's conduct was "wanton, malicious, and oppressive", the exception under Harkeem for unnecessarily prolonging litigation "may be applicable."); see also Anderson v. Smith, 150 N.H. 788, 794 (2004) (finding that trial court acted within its discretion in awarding plaintiff attorney's fees because of defendant's bad faith conduct because of the jury's verdict finding that defendant acted in bad faith). However, the Court is not convinced that a jury finding of bad faith requires that the Court grant VTel its attorneys' fees. As the Court detailed above, the Court has discretion in determining if any of the bad faith exceptions outlined in Harkeem apply in the present case. See Maguire, 133 N.H. at 55-56. In considering the four circumstances in Harkeem that the Court outlined above, the Court finds that VTel is not entitled to its attorneys' fees.
First, the Court notes that the cornerstone of awarding a party attorney's fees pursuant to the opposing party's bad faith conduct is rooted in the party's conduct during litigation, not the actions that gave rise to the present lawsuit. See Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 30-31 (2017) (describing the exception laid out in Harkeem as the "bad faith litigation theory" and further explaining that a party does not engage in "bad faith litigation" when it brings suit to collect money from a solvent defendant). The bulk of VTel's argument focuses on FirstLight's actions in terminating the lease, not its actions during the litigation itself, and certainly the jury's verdict focused solely on actions prior to the filing of the lawsuit.
The only part of VTel's motion that the Court construes as arguing that FirstLight engaged in bad faith conduct during the lawsuit itself is VTel's claim that FirstLight's discovery practices caused it to incur significant and unnecessary legal fees. (Doc. 247 ¶ 57.) In particular, VTel claims that FirstLight made unsupported claims of privilege on certain discovery documents, requiring Court intervention. (Id. ¶ 58.) To the contrary, FirstLight maintains that it attempted to meet and confer with VTel and that it had legitimate bases for its claims of privilege. (Doc. 248 ¶ 18.) The Court is not convinced that ordinary tribulations over discovery are sufficient to establish that FirstLight conducted its litigation in a vexatious or wanton manner. Cf. Fat Bullies Farm, LLC, 170 N.H. at 28 (finding that "pursuing a contentious litigation strategy" does not violate New Hampshire's consumer protection act). Accordingly, the Court finds that FirstLight's conduct in defending VTel's lawsuit is not "obdurate or obstinate" or done "in bad faith, vexatiously, wantonly, or for oppressive reasons." Harkeem, 117 N.H. at 690-91.
Next, the Court is not persuaded that absent FirstLight's conduct, VTel would not have needed to bring suit to enforce its rights under the Lease. VTel argues that absent FirstLight's bad faith breach of the Lease, it never would have needed to sue FirstLight in the first place. The current litigation, at its essence, involves both parties litigating their respective rights and legal obligations under the Lease. This does not strike the Court as a situation where bringing suit in the first place was unnecessary. See DiMinico v. Centennial Ests. Coop., Inc., 173 N.H. 150, 161 (affirming trial court's decision not to award attorney's fees based on defendant's bad faith conduct because the case involved "a good faith dispute concerning the scope of [the plaintiff]'s leasehold."). Similar to DiMinico, the parties' present dispute required the Court to interpret multiple sections of the Lease, with the Court finding a relevant section of the Lease to be ambiguous. See id.; see also Woodstock Soapstone Co., Inc. v. Carleton, 133 N.H. 809, 818 (1991) (finding attorney's fees not warranted under Harkeem where "[t]here was a genuine dispute regarding lease payments and the assignment of the purchase option, and there was no evidence that th[e] action was pursued without reasonable basis in the facts or claim of law.").
As VTel repeatedly points out, the Court acknowledges that the jury found that FirstLight breached the Lease in bad faith. However, at trial, the jury heard conflicting testimony from both parties from which the jury could also have reasonably concluded that FirstLight did not act in bad faith. For example, FirstLight's employees and expert witness testified that they believed the act of escorting Meyn into the collocation facility divulged confidential information in the form of FirstLight's equipment configuration. On the other hand, VTel's employees and expert witness testified that generally the telecommunications industry does not view equipment configuration as confidential information. Hence, the fact that the jury's verdict required them to make credibility assessments of each parties' witnesses illustrates the necessity of VTel filing suit in the first place. See Maguire, 133 N.H. at 56 (agreeing with the trial court that an award of attorney's fees under Harkeem was not warranted because "witness credibility played a substantial role in the verdict."). Accordingly, notwithstanding the jury's verdict of bad faith, because the parties had competing, reasonable interpretations of the Lease that required judicial intervention and jury credibility determinations to resolve, it was not unnecessary for VTel to bring suit to define the scope of its rights under the Lease. See Woodstock Soapstone Co., 133 N.H. at 818; see also Harkeem, 117 N.H. at 690-91.
Relatedly, the Court also finds that this is not a situation where VTel needed to file suit to protect a clearly established legal right. The crux of this particular bad faith exception is whether an individual has 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. The supreme court in Harkeem explained that the awarding of attorney's fees in this situation is based on "the courts' power to enforce their own decrees." 117 N.H. at 691. Harkeem also reasons that such an award of attorney's fees is appropriate because it "merely shifts the cost of what should have been an unnecessary judicial proceeding to the responsible party." Id.
In that same vein, the supreme court also distinguishes between lawsuits that merely bring a cause of action to litigate entitlement to certain remedies from those brought to secure rights to which an individual has a legally defined interest. Compare id. (finding that defendant did not have a clearly vested right in his fraud counterclaims because "these are merely causes of action, which must be litigated in order to obtain relief.") with LaMontagne Builders, Inc. v. Brooks, 154 N.H. 252, 260 (2006) (affirming trial court award of attorney's fees under Harkeem because defendant's conduct necessitated the entire post-judgment litigation because of his refusal to pay the court issued judgment).
Here, the Lease provides VTel a vested legal right of which FirstLight's breach thereof could entitle VTel to file suit. The standard, however, is that VTel's right must be clearly established so that, as noted below, it is at least akin to a judgment. Van Der Stok, 151 N.H. at 684. Consequently, the present situation is more akin to Van Der Stok than LaMontagne Builders because VTel, despite having a vested interest in a leasehold, nevertheless needed to file suit against FirstLight to establish FirstLight's breach of the Lease. See Van Der Stok, 151 N.H. at 684; see also DiMinico, 173 N.H. at 161 (illustrating that even though plaintiff had a vested right in its leasehold interest, plaintiff still needed to file suit to define scope of said interest, thus making an award of attorney's fees for bad faith inappropriate); Funtown USA, Inc. v. Town of Conway, 129 N.H. 352, 354-55 (1987) (explaining that an award of attorney's fees was warranted where plaintiff had to commence litigation to build a water slide that it had already gained the required permits to build).
Indeed, Harkeem emphasizes that this exception is most applicable when a party has to seek further judicial involvement to secure a right that a court had previously established. 117 N.H. at 691. There, the supreme court found that defendant's bad faith conduct entitled plaintiff to his reasonable attorney's fees because although a previous supreme court decision found that plaintiff was entitled to unemployment benefits, defendant "subject[ed] [plaintiff] to further litigation by raising new arguments before the superior court." Id. 691-92. The supreme court reasoned that an award of attorney's fees was justified because plaintiff won a hard fought victory by availing himself of all available legal channels "before he obtained vindication." Id. It then follows that, unlike in Harkeem, because VTel first had to litigate its leasehold rights, VTel's rights were not clearly established by the time it brought suit. Id. Accordingly, VTel did not bring suit to enforce a clearly defined, vested legal right which it should have been otherwise freely enjoyed without judicial involvement. Id.
Ultimately, the Court declines to exercise its discretion to award VTel its requested attorneys' fees because it does not find any "overriding considerations" to justify such an award here. Harkeem, 117 N.H. at 690. As the Court explained above, FirstLight did not engage in bad faith conduct in relation to the present litigation. The Court acknowledges that the jury found that FirstLight breached the Lease in bad faith. However, such a verdict does not automatically entitle VTel to its attorneys' fees. See Van Der Stok, 151 N.H. at 685. Also, VTel's own conduct here contributed to the lawsuit. VTel's act of escorting Meyn into the collocation facility without prior permission led FirstLight to believe that VTel breached the Lease's confidentiality provision. As the Court explained above, although the jury evidently believed VTel's witnesses rather than FirstLight's, the Court has previously found that both parties presented evidence as to the other side's potential bad faith conduct. (See Doc. 246 at 10); see also Maguire, 133 N.H. at 56. Therefore, FirstLight's bad faith conduct alone was not responsible for VTel needing to file the present lawsuit, making an award of VTel's attorneys' fees under Harkeem inappropriate. 117 N.H. at 690-91.
Accordingly, for the foregoing reasons, VTel's motion for attorneys' fees is DENIED. VTel's request for discovery sanctions is also DENIED. To the extent that VTel seeks its costs under the bad faith theory, VTel's motion is DENIED for the above reasons. The Court reserves judgment on the rest of VTel's request for costs because the Court will address said request in the parties' separately filed motions for costs.
SO ORDERED.