Brzica v. Trs. of Dartmouth Coll.

• Citation: 791 A.2d 990,147 N.H. 443
• Decision Date: 22 February 2002
• Docket Number: Nos. 2000–411,2000–648.,s. 2000–411
• Court: Supreme Court of New Hampshire
• Parties: Matt BRZICA and another v. TRUSTEES OF DARTMOUTH COLLEGE and another.

147 N.H. 443

791 A.2d 990

Matt BRZICA and another

v.TRUSTEES OF DARTMOUTH COLLEGE and another.

Nos. 2000–411

2000–648.

Supreme Court of New Hampshire.

Feb. 22, 2002.

Rehearing Denied March 21, 2002.

Wiggin & Nourie, P.A., of Manchester (W. Wright Danenbarger and Mary Ann Dempsey on the brief, and Mr. Danenbarger orally), for the plaintiffs.

Sean M. Gorman, of Hanover, on the brief and orally, for defendant Trustees of Dartmouth College.

Orr & Reno, P.A., of Concord (Steven L. Winer on the brief and orally), for defendant Association of Alumni of Dartmouth College.

NADEAU, J.

The plaintiffs, seven Dartmouth College alumni, appeal dismissal of their petition for declaratory judgment and injunctive relief. They argue that the Trial Court (Fitzgerald , J.) erred in ruling that: (1) the plaintiffs failed to allege sufficient facts to maintain a cause of action for misrepresentation; (2) no fiduciary duty existed between the trustees of Dartmouth College and individual alumni; (3) a fundraising campaign did not constitute trade or commerce and the alumni were not consumers under the Consumer Protection Act; (4) res judicata and the Bricker doctrine applied to these facts; and (5) the plaintiffs failed to state a claim for breach of the duty of good faith and fair dealing. In addition, the plaintiffs argue that the trial court erred by denying them the ability to discuss the trustees' minutes with their counsel, by refusing to allow adequate discovery and by allowing the Association of Alumni of Dartmouth College to intervene. We affirm.

I. Facts

Between 1991 and 1996, Dartmouth College undertook a capital campaign called the "Will–to–Excel Campaign" (campaign). The campaign raised approximately $568 million from Dartmouth alumni, including some but not all of the plaintiffs. Three years after completion of the campaign, the Board of Trustees of Dartmouth College (trustees) announced that it sought a "substantial change to the current residential and social system" and was "prepared to make a major investment to improve these areas of the College." Possible changes could affect "the fraternity and sorority system, dining arrangements, and other aspects of student life." A committee on the "Student Life Initiative" was established and, in January 2000, presented an extensive report to the trustees. The trustees indicated that changes to the residential and social system would require a modification of the fraternity and sorority system and expressed an intention to engage in "community discussion" prior to making any changes.

In 1999, the plaintiffs brought this action seeking declaratory judgment and injunctive relief to prevent Dartmouth College from eliminating single-sex fraternities and sororities and expending campaign funds for this purpose. The plaintiffs alleged that the conduct of the trustees in raising the campaign funds: (1) constituted a breach of fiduciary duty; (2) constituted misrepresentation; and (3) violated the New Hampshire Consumer Protection Act. In addition, the plaintiffs alleged that certain trustees were not properly elected and their presence on the board amounted to a breach of fiduciary duty by the trustees as well as a breach of good faith and fair dealing under an 1891 agreement between the trustees and the alumni. Finally, the plaintiffs alleged that the decision regarding the Student Life Initiative was made under the constraint of a "trustees charge" which prevented consultation by alumni trustees with the alumni constituency and thereby constituted a breach of the duty of good faith and fair dealing arising under the 1891 agreement.

II. Intervention

We begin with the plaintiffs' contention that the trial court erred in allowing the alumni association to intervene in this case. The alumni association is an unincorporated association consisting of all living alumni. It moved to intervene because of concern about the effect a decision regarding amendments in 1990 to the trustee election process could have on nominating alumni trustees and on its constitution.

Superior Court Rule 139 provides that "[a]ny person shown to be interested may become a party to any proceeding in equity on his petition briefly setting forth his relation to the cause." "The right of a party to intervene in pending litigation in this state has been rather freely allowed as a matter of practice." Scamman v. Sondheim, 97 N.H. 280, 281, 86 A.2d 329 (1952). A trial court should grant a motion to intervene if the party seeking to intervene has a right involved in the trial and a direct and apparent interest therein. Snyder v. N.H. Savings Bank, 134 N.H. 32, 35, 592 A.2d 506 (1991). We may not overturn the trial court's decision unless we are persuaded that the court's exercise of discretion is unsustainable. See id. at 34, 592 A.2d 506; cf. State v. Lambert, 147 N.H. 295, ––––, 787 A.2d 175 (2001) (explaining "unsustainable exercise of discretion" standard).

The plaintiffs argue that because they have not asked for relief against the association, it does not have a sufficient interest in this litigation to support its intervention. We find this argument unpersuasive. As discussed below regarding application of the Bricker doctrine to the facts of this case, the relief the plaintiffs sought against the college would have a direct effect on the association. The trial court's exercise of discretion in granting the motion to intervene is sustainable.

III. Fundraising Counts

Counts I–III of the petition for declaratory judgment evolve from the plaintiffs' main allegation that prior to or during the campaign, the trustees decided to eliminate single-sex fraternities and sororities from the Dartmouth campus, but withheld the announcement until after the conclusion of the capital campaign. Count I alleges that the trustees' failure to make this disclosure constituted a breach of fiduciary duty owed by the trustees to the alumni. Count II alleges that this nondisclosure constituted a negligent or intentional misrepresentation by the trustees. Count III alleges that this nondisclosure constituted an unfair or deceptive act or practice in violation of the Consumer Protection Act, RSA chapter 358–A.

The trial court dismissed the fundraising counts, ruling that: the plaintiffs failed to plead misrepresentation with particularity; there is no fiduciary relationship between the trustees and the alumni; and the alleged conduct did not fall within the scope of the Consumer Protection Act. The plaintiffs then moved to reopen consideration of the fundraising counts based on "newly discovered evidence." The trial court denied the motion because the plaintiffs had not overcome the requirement in Superior Court Rule 15 that they have had a good faith factual basis for their allegations when they filed the petition for declaratory judgment and injunctive relief. The trial court subsequently imposed sanctions for the plaintiffs' Rule 15 violation.

A. Fiduciary Duty

Count I alleges that the trustees breached a fiduciary duty to alumni for failing to announce the proposed change to the residential system prior to or during the fundraising campaign. The plaintiffs argue that the inclusion of alumni trustees on the board creates an inference that a fiduciary relationship exists between the board and the alumni and, more specifically, that the board and its alumni trustees owed a fiduciary duty to the alumni with respect to the use of alumni donations in implementing major policy changes.

In this State, "[a] fiduciary relationship has been defined as a comprehensive term and exists wherever influence has been acquired and abused or confidence has been reposed and betrayed." Lash v. Cheshire County Savings Bank, 124 N.H. 435, 438, 474 A.2d 980 (1984) (quotation and brackets omitted). "[A] confidential relation exists between two persons when one has gained the confidence of the other and purports to act or advise with the other's interest in mind." Cornwell v. Cornwell, 116 N.H. 205, 209, 356 A.2d 683 (1976). "Once a person becomes a fiduciary, the law places him in the role of a moral person and pressures him to behave in a selfless fashion while contract law does not go beyond the morals of the market place where self-interest is the norm." Lash, 124 N.H. at 438, 474 A.2d 980 (quotations and brackets omitted).

The trial court found that, even assuming that the trustees had concealed from the alumni a decision to eliminate fraternities and sororities, the "[plaintiffs] have pled no facts, even taking all they pleaded as true and construing all reasonable inferences in favor of [them], sufficient to establish that a fiduciary duty exists between the trustees and the alumni." The trial court explained that

[t]he [plaintiffs] fail to allege, nor can the Court conceive, of a manner in which the trustees have "acquired influence" over the alumni and "abused" such influence or "reposed and betrayed" a confidence by executing a fund raising campaign. The Court finds that the presence of an alumni trustee on the board does not create a fiduciary relationship in and of itself. A college does not acquire influence over its alumni by soliciting donations in a capital campaign, or by the receipt of donations from alumni. The nature of the transaction is a voluntary gift by the alumni to the college for the benefit of the college. Neither a confidential relationship nor a fiduciary relationship has been created by this transaction.

(Citation omitted.)

We agree with the trial court that no facts were pled to establish that the alumni stood in such a submissive, inferior or dependent position with respect to the college in the capital campaign so as to support the existence of a fiduciary relationship.

B. Misrepresentation

The plaintiffs argue that the trustees indicated during the campaign that the purpose for raising the funds included: (1) to provide financial assistance to students; (2) to keep increases in tuition at a modest level; (3) to construct a new library and...