Hobin v. Coldwell Banker Residential Affiliates, Inc.
| Citation | 744 A.2d 1134,144 N.H. 626 |
| Decision Date | 31 January 2000 |
| Docket Number | No. 97–877.,97–877. |
| Court | Supreme Court of New Hampshire |
| Parties | Ross T. HOBIN v. COLDWELL BANKER RESIDENTIAL AFFILIATES, INC. |
S. David Siff, of Concord, on the brief, and Ferriter, Scobbo, Caruso & Rodophele, P.C., of Boston, Massachusetts (Gerald J. Caruso, on the brief and orally), for the plaintiff.
Devine, Millimet & Branch, of Manchester (Steven E. Grill, on the brief), and Wiggin & Dana, of New Haven, Connecticut (Edward W. Dunham and Patrick J. Corcoran, on the brief, and Mr. Dunham orally), for the defendant.
The plaintiff, Ross T. Hobin, the owner of a Coldwell Banker franchise, appeals from an order of the Superior Court (Gray , J.) dismissing his claims against the defendant, Coldwell Banker Residential Affiliates, Inc. (Coldwell Banker), relating to Coldwell Banker's alleged placement of additional franchises in Hobin's territory. The trial court dismissed the claims of breach of the implied covenant of good faith and fair dealing, breach of contract, misrepresentation, and violation of New Hampshire's Consumer Protection Act, RSA ch. 358–A (1995 & Supp.1998), for failure to state a claim. We affirm.
Upon review of the rulings on this motion to dismiss, we assume the following facts alleged by Hobin to be true for purposes of this appeal. See Buckingham v. R.J. Reynolds Tobacco Co. , 142 N.H. 822, 825, 713 A.2d 381, 383 (1998). In 1994, Hobin, who operated a real estate office in Rye, contacted Coldwell Banker about becoming one of its franchisees. At the time, the nearest Coldwell Banker office was Marple Associates (Marple), located 5.5 miles away in Portsmouth. Marple maintained a Rye telephone number, but no office in Rye.
Although the real estate market was depressed and Coldwell Banker was having difficulty selling new franchises in the area, Hobin thought he could make a franchise successful if Marple did not expand into Rye. Hobin raised the issue of Marple's potential expansion in his discussions with a Coldwell Banker recruiter, who told him that Coldwell Banker treated Rye as a "small market" area for which it charged a reduced franchise fee, implying that it could not support a second franchise and that the probability of a second franchise in Rye would be unthinkable. Throughout discussions of other Coldwell Banker franchisees, including its largest, Hunneman Real Estate Corporation (Hunneman), the recruiter did not mention the possibility of any franchisee opening an office in Rye. The recruiter did, however, suggest that Coldwell Banker's internal policies and procedures for awarding franchises would not permit the placement of a second franchise in such proximity to an existing franchise as to jeopardize that franchisee's business. As a result of these representations, Hobin executed a franchise agreement effective July 25, 1994, and entered Coldwell Banker's Small Market Program.
Throughout the next two years, Hobin competed with the Joycelyn Caulfield Agency (Caulfield), which maintained two locations—the first in Rye, within 300 feet of Hobin's office, and the second in North Hampton, 3.2 miles away. Sometime around January 1997, Hunneman, which had purchased Marple in late 1995, also purchased Caulfield, resulting in its ownership of three offices within 5.5 miles of Hobin.
As represented to Hobin by the recruiter, Coldwell Banker maintains procedures for approving the placement of one franchise near or in another franchisee's territory. During Hobin's discussions with Coldwell Banker executives regarding his dissatisfaction with the additional Coldwell Banker offices in his territory, he discovered that those procedures include review of the proposed placement by a committee of ten to fifteen individuals and an opportunity for the existing franchisee to comment upon the placement. He also learned that, as Coldwell Banker's largest franchisee, Hunneman is given special preference and does not have to follow normal franchise-placement procedures. Coldwell Banker did not follow its procedures in permitting Hunneman to locate in Rye and North Hampton, but rather granted approval on a single telephone call from Hunneman's owner to Coldwell Banker's Franchise Development department.
Hobin brought a petition for injunctive relief against Coldwell Banker, Hunneman, and Caulfield. He later nonsuited his claims against Hunneman and Caulfield. He appeals the dismissal of his claims against Coldwell Banker for breach of implied covenant of good faith and fair dealing, breach of contract, misrepresentation, and violation of RSA chapter 358–A.
The standard of review in considering a motion to dismiss is "whether the plaintiff's allegations are reasonably susceptible of a construction that would permit recovery." Miami Subs Corp. v. Murray Family Trust and Kenneth Dash Partnership , 142 N.H. 501, 516, 703 A.2d 1366, 1375 (1997) (quotation omitted). "[W]e assume the truth of the facts alleged in the plaintiff's pleadings and construe all reasonable inferences in the light most favorable to him." Buckingham , 142 N.H. at 825, 713 A.2d at 383 (quotation omitted). "If the facts pled do not constitute a basis for legal relief, we will uphold the granting of the motion to dismiss." Id .
As a preliminary matter, we note that in the franchise agreement, which was appended to the petition, the parties chose the law of California, the State of Coldwell Banker's incorporation, to govern the agreement and their "legal relationships." "Where parties to a contract select the law of a particular jurisdiction to govern their affairs, that choice will be honored if the contract bears any significant relationship to that jurisdiction." Kentucky Fried Chicken Corp. v. Collectramatic, Inc. , 130 N.H. 680, 684, 547 A.2d 245, 247 (1988) (brackets and quotation omitted). California bears a significant relationship to the controversy based on Coldwell Banker's incorporation therein. See Ferrofluidics v. Advanced Vacuum Components , 968 F.2d 1463, 1467–68 (1st Cir.1992) (applying New Hampshire law). Accordingly, California law applies. See id. Hobin, relying on the Restatement (Second) of Conflict of Laws § 187(2)(b) (1971), argues that if we conclude that the application of California law favors Coldwell Banker, we should ignore the parties' choice of law as a matter of public policy. He fails, however, to articulate a fundamental policy of our State that would be so offended by the application of California law as to justify overruling the parties' choice of law. We will therefore honor the parties' selection of California law.
Hobin's first issue is whether the trial court erred in dismissing his claim of breach of the implied covenant of good faith and fair dealing. The court dismissed the claim because the action of which Hobin complains, the grant of another franchise in Hobin's marketing area, is expressly permitted in the franchise agreement.
Hobin argues that although the agreement expressly reserved Coldwell Banker's right to place additional franchisees in Hobin's territory, Coldwell Banker had the duty to exercise its discretion in accordance with the covenant of good faith and fair dealing implied in all contracts. According to Hobin, allowing Coldwell Banker's largest franchisee to open two locations in his small-market territory, one within 300 feet of his office, was a breach of that duty.
Coldwell Banker counters that, under California law, the express terms of a contract always limit any implied covenants, and a party may not pursue a cause of action for breach of an implied covenant where the supposed covenant contradicts the express term.
The franchise agreement provided, in pertinent part:
Although the parties agree that the agreement expressly provided that Coldwell Banker may place additional franchises in Hobin's market area, they disagree as to whether the implied covenant of good faith and fair dealing implied in every contract, see Carma
, 2 Cal.4th 342, 6 Cal.Rptr.2d 467, 826 P.2d 710, 726 (1992), operated to limit the extent of its discretion to do so.
In determining that a tenant had not breached the implied covenant of good faith and fair dealing against its landlord when the actions complained of were expressly allowed in the lease, the Carma court discussed two apparently inconsistent principles: that the covenant of good faith and fair dealing should be implied to limit the exercise of a discretionary power, and that express terms of a contract cannot be varied by an implied covenant. Id. at 726–28.
On one hand, as argued by Hobin, Id. at 726.
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