New Hampshire Supreme Court Denies Consumer Protection Act Claim in Real Estate Transaction Gone Bad

By on June 15, 2017

     In the recent case of Fat Bullies Farm, LLC, v. Lori Devenport et al., the New Hampshire Supreme Court had occasion to consider whether a series of less than truthful representations made by a prospective purchaser in the course of negotiating a real estate transaction gave rise to liability under NH RSA 358-A, New Hampshire Consumer Protection Act (the “Act”).

     After a trial in the matter, the Superior Court determined that the plaintiff and counterclaim defendants, Fat Bullies Farm and its principals, were liable for an award of enhanced damages – double attorney’s fees and double costs – pursuant to the Act.  On appeal, Fat Bullies Farm and its principals argued that the trial court erred in determining that the conduct underlying the award was sufficient to support liability under the applicable legal standard – that is, that the conduct was sufficiently unfair and deceptive to meet the “rascality test” for determining liability under the Act.

     The Act proscribes unfair and deceptive practices in commerce generally, and provides an inexhaustive list of specific types of conduct that give rise to liability under the Act.  For conduct not specifically listed, courts in New Hampshire consider the conduct complained of under the Act’s general proscription against unfair and deceptive conduct.  When considering whether any particular conduct not proscribed in the Act nevertheless supports liability, New Hampshire courts consider the conduct against the so-called “rascality test.”  Under the “rascality test” the conduct complained of must “attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.”  As a practical matter the court seeks guidance from the Federal Trade Commission Act (the “FTCA”) to determine whether such conduct runs contrary to the “rascality test” and offends the Act.

     The FTCA test considers whether the complained of activity offends public policy as embodied in other statutes, the common law or otherwise offends established norms of fairness, whether the conduct is immoral, unscrupulous, oppressive or unethical or whether it causes substantial harm to consumers.

      In the instant matter, the trial court found that Fat Bullies Farm’s conduct, which consisted of a course of unscrupulous behavior including misrepresenting their intentions for the future of the real property included in the proposed transaction, along with certain other selfish bargaining and business dealing tactics, was sufficient to establish liability under the Act. 

     The Supreme Court disagreed with the trial court’s decision, however, and held as a matter of law that misrepresentations concerning future uses of real property to be purchased could not give rise to liability under the Act if not contained in writing, because oral promises concerning real property are unenforceable under the Statute of Frauds.  The Supreme Court noted that even though Fat Bullies Farm’s misrepresentations encouraged property owner to sell the property to them, a course of misrepresentations of intent were not enough to support liability under the general proscription of the Act and the “rascality test” absent more.

     Each decision concerning liability under the general proscription of the Act and the related “rascality test” is inherently fact based, and therefore may not serve as strong precedent for future decisions of the Court.  Nonetheless, the Fat Bullies Farm decision further underscores the larger body of New Hampshire Supreme Court jurisprudence that demonstrates a pattern of restraint in its application of the Act to business dealings.  While other states with similar statutes apply the remedies offered by the Act liberally, the New Hampshire Supreme Court applies the remedy sparingly, and potential litigants should not be confident that, absent extraordinary circumstances, the Act provides redress for unscrupulous conduct in business dealings.  To consider whether the circumstances of your dispute merit consideration of a claim under the Act, litigants are well-advised to contact a New Hampshire litigator.       

Corey Giroux
Mr. Giroux’s practice focuses on representing the business interests of general contractors, construction managers, subcontractors, suppliers, owners, tradesmen and other business entities in litigation and other matters in New Hampshire and throughout New England.
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