By Attorney Jonathan Mermin
New Hampshire businesses may be
surprised to learn that, notwithstanding the ordinary meaning of the word
“consumer,” a business acting in the role of seller may avail itself of the
protections of the New Hampshire Consumer Protection Act against the buyer of
its goods or services.
The Consumer Protection Act creates a cause of action
for any person injured by the use of “any unfair method of competition or any
unfair or deceptive act or practice in the conduct of any trade or commerce
within this state.” R.S.A. 358-A:2, 358-A:10. The real bite of the
Consumer Protection Act lies in its remedial sanctions, which override the
“American rule” presumption that unless the parties have contractually agreed
otherwise, each side is responsible for payment of its own legal
expenses. The CPA provides that the Court can order an award of
reasonable attorney’s fees to a prevailing plaintiff, and in the event of “a
willful or knowing violation,” direct the bad actor to pay to the plaintiff as
much as three times the dollar value of plaintiff’s actual damages.
Notwithstanding the statute’s designation as a “Consumer Protection Act,”
the New Hampshire Supreme Court has ruled that a business in the role of seller
may proceed under the Act as a plaintiff if the requirements for a cause of
action are met. In Milford Lumber Co., Inc. v. RCB Realty, Inc., 147 N.H.
15 (2001), the plaintiff lumber company sued a developer under the Consumer
Protection Act after the developer failed to pay several invoices for building
materials supplied by the lumber company. The defendant argued that the
plaintiff could not proceed under the CPA because the Act limited its
protections to “consumers,” a category which, in the defendant’s view, did not
include a corporation in the business of selling lumber.
The Supreme
Court disagreed. It observed that the CPA provides that “’[i]t shall be
unlawful for any person to use any unfair method of competition or any unfair or
deceptive act or practice in the conduct of any trade or commerce within this
state.’” The Court noted that the term “person” is defined broadly by the
Act to include “natural persons, corporations, trusts, partnerships,
incorporated or unincorporated associations, and any other legal entity.” The
Court therefore ruled that the “suggestion that the statute forecloses a seller
from a private cause of action is unsupported by a plain reading of the
statute’s language,” and held that the Act “does not bar sellers from availing
themselves of its protection.” The Court acknowledged that its
construction of the plain meaning of the Act was very broad, and “may permit
suits beyond what the legislature intended when it promulgated the Act.”
The
Court then offered some guidance as to the conduct required to establish a
violation of the Act. Cautioning that an “ordinary breach of contract
claim is not enough to establish a cause of action under the Consumer Protection
Act,” the Court pointed out that the facts of the Milford Lumber case went
beyond a mere breach of contract, because the defendants did not simply fail to
pay invoices for the plaintiff’s lumber. “Rather, they made intentionally
vague representations regarding the relationship” with their partner in the
development “to facilitate the use of [their partner’s] account with the
plaintiff to procure lumber,” and then turned around and “used those same
misrepresentations as a basis for completely disclaiming” any obligation to pay
for the lumber. In the Court’s view, “it would be harmful for commerce in
New Hampshire to allow such unethical and unscrupulous activity to
continue.” The Court also noted that it “found . . . helpful” the test
used in Massachusetts to determine the applicability of that state’s consumer
protection statute: “The objectionable conduct must attain a level of
rascality that would raise an eyebrow of someone inured to the rough and tumble
of the world of commerce.”
The remedies available under the Consumer Protection Act—attorney’s fees and
treble damages in cases of willful or knowing violation of the statute—are
significant. New Hampshire businesses on either side of a potential
lawsuit pertaining to a commercial dispute that may involve “any unfair method
of competition or any unfair or deceptive act or practice in the conduct of any
trade or commerce within this state” should be aware that these remedies are
available, and that if credibly asserted, they may either help to pay for—or,
more likely, encourage a reasonable settlement of—a litigated commercial
dispute.
Attorney Daniel P. Luker, a principal in Preti Flaherty’s Concord
office, can be reached at 603.410.1540 or dluker@preti.com
Attorney Mermin can be reached at Preti Flaherty’s Portland office at
207.791.3000 or jmermin@preti.com
