B. v. Brooks

• Decision Date: 12 April 2011
• Docket Number: No. 2010–179.,2010–179.
• Parties: B.V. BROOKS and anotherv.TRUSTEES OF DARTMOUTH COLLEGE.
• Court: New Hampshire Supreme Court

161 N.H. 685

20 A.3d 890

268 Ed. Law Rep. 316

B.

v. BROOKS and another

v.TRUSTEES OF DARTMOUTH COLLEGE.

No. 2010–179.

Supreme Court of New Hampshire.

Argued: Feb. 10, 2011.Opinion Issued: April 12, 2011.

Wadleigh, Starr & Peters, P.L.L.C., of Manchester (Eugene M. Van Loan, III and Stephen J. Judge on the brief, and Mr. Van Loan orally), for the petitioners.McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Bruce Felmly on the brief), and Sullivan & Cromwell LLP, of New York, New York (Richard C. Pepperman, II on the brief and orally), for the respondents.Upton & Hatfield, LLP, of Portsmouth (Russell F. Hilliard on the brief), for the Association of Alumni of Dartmouth College, as amicus curiae.Zalkind, Rodriguez, Lunt & Duncan LLP, of Boston, Massachusetts (Harvey Silverglate and Ruth O'Meara–Costello on the brief), and Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester (Andru H. Volinsky on the brief), for Professor Todd J. Zywicki, as amicus curiae.DALIANIS, C.J.

The petitioners, seven Dartmouth College alumni and members of the Association of Alumni of Dartmouth College (Association), appeal the order of the Superior Court ( Vaughan, J.) granting summary judgment to the respondents, the Trustees of Dartmouth College (Trustees), on the petitioners' petition for declaratory and equitable relief. The petitioners argue that the trial court erroneously ruled that some of their claims were barred by the doctrine of res judicata and that they lacked standing to bring their remaining claims. We affirm.

I. Background

The relevant facts follow. The Dartmouth College Board of Trustees was created by charter in 1769. Brzica v. Trustees of Dartmouth College, 147 N.H. 443, 452, 791 A.2d 990 (2002). At that time, there were twelve trustees and vacancies were filled by a majority vote of trustees. Id. In 1891, in separate meetings, the board of trustees and the Association approved a new method of electing trustees. The petitioners refer to the new method of election as the “1891 Agreement,” although, in fact, the board and the Association never created or signed a written agreement memorializing their approval of the new election method. See id.

The new method allowed the Association to nominate suitable persons for five trusteeships (Alumni Trustees). See id. Another five trustees (Charter Trustees) were to be nominated by the board. The Governor of New Hampshire and the President of the college occupied the remaining two trusteeships, serving as ex officio trustees.

Although the total number of trustees increased in 1961 and 2003, the number of Alumni Trustees remained equal to the number of Charter Trustees. The parties refer to this as “parity.” In September 2007, however, the board voted to expand its size by adding new Charter Trustees. New Alumni Trustees were not added, thus making the number of Alumni and Charter Trustees unequal. As a result, Alumni Trustees comprised only one-third, and no longer one-half, of the non- ex officio trustees on the board.

In response, the Association sued the Trustees for breach of contract, breach of implied-in-fact contract and promissory estoppel. The breach of contract claims alleged that the Trustees breached an express or implied-in-fact contract to maintain parity between Alumni and Charter Trustees; the promissory estoppel count alleged that, even in the absence of a contract, the Trustees were barred by promissory estoppel from eliminating parity.

In June 2008, the alumni elected a new executive committee for the Association. In the campaign preceding the election, two slates of candidates ran against one another, the “Unity Slate” and the “Parity Slate.” The Parity State of candidates pledged to continue the lawsuit against the Trustees; the Unity State pledged to dismiss it. The Unity State won the election, and consistent with its campaign promises, adopted resolutions to dismiss the Association's lawsuit against the Trustees. Shortly thereafter, the Association and the Trustees entered into a stipulation to dismiss the Association's lawsuit with prejudice. The court approved the stipulation in a June 30, 2008 order.

In November 2008, the petitioners filed the instant lawsuit alleging claims for breach of contract, breach of implied-in-fact contract and promissory estoppel. The petitioners' breach of contract claims allege that the Trustees breached an express or implied-in-fact contract to maintain parity between Alumni and Charter Trustees. Their promissory estoppel claim alleges that the Trustees are barred by that doctrine from eliminating parity. The petitioners bring their breach of express contract claims either as third-party beneficiaries of the “1891 Agreement,” or as Association members. They bring their breach of implied-in-fact contract claim only as third-party beneficiaries of the “1891 Agreement.” They bring their promissory estoppel claim on their own behalf (neither as third-party beneficiaries of a promise made by the Trustees to the Association nor as Association members).

The Trustees moved for summary judgment, arguing that dismissal of the petitioners' lawsuit was warranted because: (1) it is barred by the doctrine of res judicata; and (2) the petitioners lack standing to sue to enforce the alleged “1891 Agreement” between the trustees and the Association. The trial court ruled that res judicata barred the petitioners' claims for breach of contract based upon their status as Association members and barred their promissory estoppel claim. Because the court found that the petitioners were not, in fact, third-party beneficiaries of the “1891 Agreement,” the court ruled that they could not prevail upon their breach of contract claims brought in that capacity. This appeal followed.

II. Discussion

We review the trial court's rulings on summary judgment by considering the affidavits and other evidence in the light most favorable to the non-moving party. See S. N.H. Med. Ctr. v. Hayes, 159 N.H. 711, 715, 992 A.2d 596 (2010). If this review does not reveal any genuine issues of material fact, i.e., facts that would affect the outcome of the litigation, and if the moving party is entitled to judgment as a matter of law, we will affirm. Id. We review the trial court's application of law to fact de novo. Id.

A. Res Judicata

We first address whether the trial court erred when it ruled that res judicata barred the petitioners' promissory estoppel and breach of express contract claims, which they brought as Association members. The applicability of res judicata is a question of law, which we review de novo. Meier v. Town of Littleton, 154 N.H. 340, 342, 910 A.2d 1243 (2006). Res judicata precludes the litigation in a later case of matters actually decided, and matters that could have been litigated, in an earlier action between the same parties for the same cause of action. Id. For the doctrine to apply, three elements must be met: (1) the parties must be the same or in privity with one another; (2) the same cause of action must be before the court in both instances; and (3) a final judgment on the merits must have been rendered in the first action. Id. We address each element in turn, limiting ourselves to the specific arguments the petitioners have briefed on appeal.

1. Same Parties

It is undisputed that the petitioners were not parties to the Association's lawsuit against the Trustees. “Although generally res judicata does not apply to nonparties to the original judgment, this rule is subject to exceptions.” Sleeper v. Hoban Family P'ship, 157 N.H. 530, 533, 955 A.2d 879 (2008). One exception concerns “a variety of pre-existing substantive legal relationships between the person to be bound and a party to the judgment.” Taylor v. Sturgell, 553 U.S. 880, 894, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008) (quotation and brackets omitted). “The substantive legal relationships justifying preclusion are sometimes collectively referred to as ‘privity.’ ” Sleeper, 157 N.H. at 534, 955 A.2d 879 (quotation omitted); Sturgell, 553 U.S. at 894 n. 8, 128 S.Ct. 2161. Qualifying relationships include unincorporated associations and their members. See Restatement (Second) of Judgments § 61 (1982) ( Restatement ); see also Headwaters, Inc. v. U.S. Forest Service, 399 F.3d 1047, 1053 (9th Cir.2005).

Pursuant to Section 61 of the Restatement, “[i]f under applicable law an unincorporated association is not treated as a jural entity distinct from its members, ... [a] judgment in an action by or on behalf of members of the association is binding on the members in accordance with the rules stated in §§ 41 and 42.” Restatement, supra § 61(1)(a). Under the Restatement, as a rule, “[a] person who is not a party to an action but who is represented by a party is bound by and entitled to the benefits of a judgment as though he were a party.” Restatement, supra § 41(1). If, on the other hand, “under applicable law an unincorporated association is treated as a jural entity distinct from its members, a judgment for or against the association has the same effects with respect to the association and its members as a judgment for or against a corporation, as stated in § 59.” Restatement, supra § 61(2). Under Section 59 of the Restatement, generally speaking, “a judgment in an action to which a corporation is a party has no preclusive effects on a person who is an officer, director, stockholder, or member of a non-stock corporation.” Restatement, supra § 59.

Thus, under the Restatement, if the applicable law treats an unincorporated association as a jural entity, then, as a rule, a judgment against the association will not have preclusive effect on an association member. By contrast, if the applicable law does not treat an unincorporated association as a jural entity, then, in general, a judgment against the association will have preclusive effect. See Restatement, supra § 35 comment d at 353–54.

New Hampshire adheres to the traditional common law view that an...