Touma v. St. Mary's Bank

• Citation: 142 N.H. 762,712 A.2d 619
• Decision Date: 11 May 1998
• Docket Number: No. 96–072.,96–072.
• Court: Supreme Court of New Hampshire
• Parties: David M. TOUMA and another, v. ST. MARY'S BANK.

142 N.H. 762

712 A.2d 619

David M. TOUMA and another,

v.ST. MARY'S BANK.

No. 96–072.

Supreme Court of New Hampshire.

May 11, 1998.

Rehearing Denied July 31, 1998.

Dean, Rice & Howard, P.A., Manchester (Mark E. Howard, on the brief and orally), for plaintiffs.

Cook, Little, Rosenblatt & Manson, p.l.l.c., Manchester (Arnold Rosenblatt, on the brief and orally, and Michael S. Owen, on the brief), for defendant.

HORTON, Justice.

The plaintiffs, Dooley's II, Inc., a corporation that operated T.J. Dooley's II restaurant in Manchester, and its sole shareholder, David M. Touma, appeal the decision of the Superior Court (Groff , J.) that they failed to prove that the defendant's, St. Mary's Bank, defamatory foreclosure advertisement caused the decline and ultimate failure of the restaurant. The defendant cross-appeals the trial court's determination that the foreclosure advertisement was defamatory and the denial of its request for past due rent. We reverse in part, vacate in part, affirm in part, and remand.

The trial court found the following facts. In September 1991, after successfully operating T.J. Dooley's restaurant in Milford for several years, Touma, through his corporation Dooley's II, Inc., leased the premises then operating as the Hennessey House restaurant in Manchester. Touma closed the restaurant for extensive renovations in February 1992 and reopened as T.J. Dooley's II in May 1992. During this time, the Hennesseys, who owned the property, experienced financial problems and increased the outstanding mortgages with the defendant on their real estate, including the Manchester property. The plaintiffs were unaware of the Hennesseys' financial troubles.

From the beginning of the tenancy, the plaintiffs complained to the Hennesseys and later to the defendant about leaks in the property's roof that interfered with the restaurant's operation. The defendant's attempts to repair the leaky roof were unsuccessful.

In December 1992, the defendant notified the plaintiffs that the Hennesseys had defaulted on their mortgage payments. Due to the default, the defendant decided to foreclose on the property. On March 21, 1993, in preparation for the foreclosure sale, the defendant published a foreclosure sale notice in the Manchester Union Leader . The notice announced the public auction of "two well known N.H. restaurants" and included a photograph of the property that the plaintiffs were leasing, which was identified, both in the photo and in the heading, as T.J. Dooley's II. Although the plaintiffs' counsel complained about the misleading notice and asked the defendant to publish a retraction, the defendant failed to do so. Consequently, on March 26 and April 1, 1993, the plaintiffs printed a large notice in the Union Leader announcing that the restaurant was "alive and well" and would continue in business.

Despite the plaintiffs' efforts, total sales for the restaurant declined in March 1993 and thereafter. Believing that the defendant was responsible for the restaurant's decline, the plaintiffs sued for damages caused by the foreclosure notice and for failing to maintain the leased premises. The defendant counterclaimed for past due rent. Although the trial court determined that the foreclosure notice was defamatory, it found for the defendant on the plaintiffs' claims and for the plaintiffs on the counterclaim. The court ruled that presumed damages are not recoverable in a defamation action of this nature and that the plaintiffs failed to prove any special damages. Additionally, the court ruled that because any duty owed by the defendant was owed to the corporation only, Touma had no standing to sue in his individual capacity. These appeals followed.

We first address the defendant's argument that Touma lacks standing to pursue this appeal. The trial court determined that "[a]ny duty owed by the defendant for any of the claims was owed to the corporation only" and dismissed Touma in his individual capacity. The plaintiffs failed to raise this issue in their notice of appeal, and therefore the issue is not properly before us. See Sup.Ct. R. 16(3)(b) ; Appeal of Toczko , 136 N.H. 480, 487, 618 A.2d 800, 804–05 (1992). Consequently, although Touma remains a proper party concerning the issues raised in the defendant's cross-appeal, we will analyze the issues raised in the plaintiffs' appeal only as they pertain to the remaining plaintiff, Dooley's II, Inc.

In its cross-appeal, the defendant maintains that the foreclosure sale notice was not defamatory. Whether the notice was defamatory is a mixed question of law and fact; as such, we will reverse the trial court's ruling only for error of law. See Nash v. Keene Publishing Corp. , 127 N.H. 214, 219, 498 A.2d 348, 351 (1985).

"To be defamatory, language must tend to lower the plaintiff in the esteem of any substantial and respectable group, even though it may be quite a small minority." Duchesnaye v. Munro Enterprises, Inc. , 125 N.H. 244, 252, 480 A.2d 123, 127 (1984) (quotations omitted). Although the defendant maintains that the foreclosure sale notice did not suggest that the plaintiff's restaurant would be affected by the foreclosure, the trial court correctly determined that the notice "convey[ed] to a reasonable person that the restaurant itself was in default and being foreclosed upon." That financial problems serious enough to warrant foreclosure would injure the plaintiff's reputation in the community is plain. Consequently, the foreclosure sale notice was defamatory.

We also reject the defendant's argument that publication of the notice was conditionally privileged. "A conditional privilege is established if the facts, although untrue, were published on a lawful occasion, in good faith, for a justifiable purpose, and with a belief, founded on reasonable grounds of its truth." Id. at 253, 480 A.2d at 127–28 (quotation and ellipses omitted). Specifically, the defendant contends that the photograph and the description of the property as a "well known N.H. restaurant[ ]" were published "for a justifiable purpose"—to identify the location of the foreclosure sale to potential buyers. The defendant, however, would have achieved the same purpose if it had published the photograph and explicitly explained that the building and not the lessee restaurant was the subject of the foreclosure.

The defendant also maintains that the trial court erred in failing to award it past due rent for February 1994. "We sustain the findings and rulings of the trial court unless they are lacking in evidential support or tainted by error of law." Public Serv. Co. of

N.H. v. Town of Bow

, 139 N.H. 105, 107, 649 A.2d 65, 66 (1994) (quotation omitted).

Paul Carrier, the defendant's property manager, identified copies of checks that Touma wrote for rent through January 1994 only. Additionally, Donald Evans, an account officer with the defendant, testified that the disputed rental payment was being held in escrow. The trial court, however, found no "credible evidence to establish that plaintiff was in arrears in any amount on its rent." Because the only evidence in the record on this issue appears not to support this finding, we vacate and remand this issue to the trial court for its reconsideration.

We turn now to the corporate plaintiff's arguments. The plaintiff first argues that the trial court erred in determining that presumed damages are not...