Chasan v. Village Dist. of Eastman, 86-081

• Decision Date: 08 December 1986
• Docket Number: No. 86-081,86-081
• Citation: 128 N.H. 807,523 A.2d 16
• Parties: Bruce J. CHASAN et al. v. VILLAGE DISTRICT OF EASTMAN et al.
• Court: New Hampshire Supreme Court

Page 16

523 A.2d 16

128 N.H. 807

Bruce J. CHASAN et al. v. VILLAGE DISTRICT OF EASTMAN et al.

No. 86-081.

Supreme Court of New Hampshire.

Dec. 8, 1986.

Elliott & Jasper, Newport (Louie C. Elliott, Jr., on the brief and orally), for plaintiffs, Bruce J. Chasan, William O. Granville, James F. Lennox, Austin Kovacs, Samuel J. Nicholas, Jr., and Alan Estey.

Sheehan, Phinney, Bass and Green P.A., Manchester (Michael C. Harvell and Elizabeth T. Luster, on the brief, and Michael C. Harvell orally), for defendants, Village Dist. of Eastman, Eastman Community Ass'n, Town of Springfield, Town of Enfield, and Town of Grantham.

JOHNSON, Justice.

The plaintiffs appeal from the granting by the Trial Court (DiClerico, J.) of the defendants' motion to dismiss their class action. They contend, inter alia, (1) that the trial court erred in finding that the plaintiffs did not establish the existence of contractual or equitable rights, (2) that certain taxes and charges imposed by the defendants are unreasonable and violative of part I, article 12 of the New Hampshire Constitution, and (3) that RSA 52:1 (Supp.1985) and RSA 670:3 are unconstitutional as applied to this case. We affirm the dismissal of the plaintiffs' action for the reasons articulated below.

The plaintiffs are property owners in the Village District of Eastman (VDE), which is comprised of adjacent sections of the towns of Grantham, Springfield, and Enfield; but they are not residents of those towns. They are also members of the Eastman Community Association (ECA), which is governed by a board of directors and the ECA Council. The ECA Council is a representative body elected by all Eastman property owners. The board of directors was initially elected by the incorporators at the organizational meeting, and members are thereafter elected by the ECA Council. Approximately ninety percent of all Eastman property owners are non-residents of the village. Plaintiff Chasan, a resident of Pennsylvania, owns two lots, one undeveloped and one with a vacation home. He also owns a one-half interest in an Eastman condominium.

Prior to February 15, 1981, the Eastman Water Company and the Eastman Golf Course were owned and operated by Controlled Environment Corporation, the original developer of Eastman. In 1980, the ECA offered to purchase the water company and the golf course from Controlled Environment. Before consummating the deal, the ECA Board of Directors sent a report to all Eastman property owners regarding the proposed purchase, which set forth, inter alia, the price terms of the agreement, along with a detailed explanation of these terms. In its description of the valuation of the water company, the report referred to certain assumptions and projections regarding operating costs and water fee revenues. The ECA board of directors recommended that the outright purchase of the golf course be financed by levying a special assessment against each lot. The revenue thus raised would be used as a down payment to secure interim financing. The ECA board also recommended in its report that a New Hampshire village district be formed pursuant to RSA 52:1 (Supp.1985) to absorb the municipal functions of the ECA. The report suggested that once formed, the village district would be able to issue tax exempt bonds to cover the purchase price of the water company assets. On February 15, 1981, the ECA voted to approve the purchase of the golf course and water company, and to form the proposed village district.

Following the issuance of the special assessment, the golf course and water company assets were purchased. In accordance with the vote of the ECA Council, the registered voters among the Eastman owners petitioned the towns of Grantham, Springfield and Enfield to form a village district. On March 20, 1981, a public meeting was held pursuant to RSA 52:2 and RSA 52:3, with those in attendance voting to establish the Village District of Eastman. This action was ratified by the legislature by special legislation. Laws 1981, ch. 198, effective June 3, 1981. The assets of the water company were then transferred to the VDE, which issued the tax exempt bonds. The ten percent or so of the property owners in Eastman that are eligible to vote at village district meetings, see RSA 670:3, established ad valorem taxes and voted to increase the payments that unimproved lot owners pay for the privilege of having a water system available to them at such time as they choose to utilize it. Plaintiff Chasan attempted to register to vote in VDE elections, but he was refused under RSA 670:3 due to his non-resident status.

Plaintiff Chasan filed a class action in superior court on May 18, 1984, after his individual federal suit was dismissed for failure to state a federal claim. See Chasan v. Village District of Eastman, 572 F.Supp. 578 (D.N.H.1983), aff'd without pub. opinion, 745 F.2d 43 (1st Cir.1984). On October 3, 1984, Chasan filed an amended petition, alleging that the acceptance of the board's report by the ECA membership gives rise to contractual and equitable rights, that a section of the town of Springfield was illegally included in the village district, and that the water rates and charges established by the VDE violate due process. The complaint also pleads a voting rights claim.

Plaintiffs Granville, Lennox, Kovacs, Nicholas and Estey moved to intervene as co-plaintiffs. Their motions were granted, and in December, 1984, the defendants filed a motion to dismiss. After hearing oral argument and considering the complaint and certain other documents referred to by the parties, the court granted the motion. The plaintiffs' appeal raises the following issues for our review: (1) whether it was procedurally proper for the trial court, in dismissing the plaintiffs' action, to base its ruling upon documents submitted by the parties in addition to the complaint; (2) whether the trial court was substantively correct in its ruling that the vote of the ECA, in response to the report submitted by the ECA board, did not create a contract; (3) whether the scheme of development proposed by the ECA for the acquisition and financing of the water company and golf course, considered in conjunction with the covenants for Eastman, created an equitable servitude that was binding on the VDE; (4) whether the water rates, fees, and ad valorem taxes imposed by the VDE are violative of part I, article 12 of the New Hampshire Constitution; (5) whether RSA 52:1 requires that a petition presented to the selectmen of a town for purposes of establishing a village district partly in that town be signed by ten registered voters residing in that town; (6) whether, in view of part I, articles 1, 12 and 28 of the New Hampshire Constitution, RSA 52:1 must be so construed; and (7) whether RSA 670:3 is unconstitutional.

We reject at the outset the plaintiffs' argument that the court erred in dismissing the complaint without an "evidentiary hearing," after considering documents in addition to the pleadings. The plaintiffs were heard on the motion to dismiss, and were not denied any requests to present evidence, and they cannot now complain of a lack of opportunity to be heard further, or to present additional evidence. Superior Court Rule 58 provides that in a hearing on a motion to dismiss, "all counsel shall be prepared ... to present all necessary evidence." The plaintiffs' argument that the trial court erred in not holding an additional "evidentiary hearing" is without merit. The plaintiffs had an opportunity to argue their case.

We next consider whether the trial court erred when it referred to documents submitted with the pleadings in formulating conclusions of law contrary to those alleged in the complaint. A hearing on a motion to dismiss is not, typically, a factual inquiry. M. Green, Basic Civil Procedure 108 (1972). Such a motion "challenge[s] the legal sufficiency of the facts which the opponent has alleged.... [I]t admits ... that the facts alleged are true, but it avoids the conclusion the pleader wishes drawn from those facts by pointing out that the facts are insufficient under the law to constitute a cause of action...." Id., see Hartman v. Town of Hooksett, 125 N.H. 34, 35, 480 A.2d 12, 13 (1984); Hamilton v. Volkswagen of America, 125 N.H. 561, 562, 484 A.2d 1116, 1117 (1984). Normally, a ruling on such a motion is made on the basis of the facts alleged on the face of the complaint. McDowell v. Blythe Bros., 236 N.C. 396, 399, 72 S.E.2d 860, 863 (1952). In the instant case, however, the plaintiffs, having themselves submitted documents along with their briefs in opposition to the motion, cannot object to the court's consideration of those documents in making its ruling. The plaintiffs' "objection" to "summary judgment treatment" of the pleadings is inconsistent with their acts, in submitting documents in addition to the bare pleadings. Having acquiesced in the procedure employed, the plaintiffs cannot now object to the form of the proceeding. Morrill v. Bank, 90 N.H. 358, 359, 9 A.2d 519, 522 (1939).

Ultimately, "the test of the validity of a form of procedure is ... whether or not it is what justice and convenience require." Id. In this case, consideration of the VDE Council report, along with reference to the Covenants for Eastman, was required in order for the court to render adequate and informed conclusions of law with respect to the numerous and complex issues in this case. We hold, therefore, that the trial court did not err in considering documents beyond the pleadings.

We do not agree with the plaintiffs that the trial court impermissibly refuted factual allegations of the complaint. While it is true that in ruling on a motion to dismiss, all facts properly pleaded are to be deemed true, and all reasonable inferences therefrom are to be construed in the light most favorable to the plaintiff, the plaintiff must nevertheless "plead sufficient facts to form a basis for the cause of...