THE STATE OF NEW HAMPSHIRE

SUPREME COURT

2010 TERM

Docket No. 2010-0259

J&M Lumber and Construction Company, Inc.

v.

J. Robert Smyjunas, Jr., Gorham Supermarket, LLC, Bitsy Realty, Inc. and Tolle Road Partners, Inc.

______________________________________________________

APPEAL FROM DECISION ON THE MERITS

COOS COUNTY SUPERIOR COURT _______________________________________________________

BRIEF FOR PLAINTIFF-APPELLEE

J&M Lumber and Construction Company, Inc. ________________________________________________________

Counsel for Appellee: Jack P. Crisp, Jr., Esquire NH Bar No. 193 The Crisp Law Firm, PLLC 15 North Main Street, Suite 208 P.O. Box 3397 Concord, NH 03302-3397 (603) 225-5252

Andrea Q. Labonte, Esquire NH Bar No. 12898 Wiggin & Nourie, PA 670 N. Commercial Street, Suite 305 P.O. Box 808 Manchester, NH 03105 (603) 669-2211

Jack P. Crisp, Jr. will represent the Appellant at oral argument

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TABLE OF CONTENTS

Page Table of Contents............................................................................................................. i Table of Authorities ........................................................................................................ ii Statutory Provisions ………………………………………………………………………1 Statement of the Case...................................................................................................... 2 Statement of the Facts …………………………………………………………………….3 Summary of Argument …………………………………………………………………...7 Argument …………………………………………………………………………….….10

I. The Trial Court did not err in ruling the Defendant had notice of the plaintiff’s easement claim and properly ruled it was a decided fact in this case by virtue of res judicata/collateral estoppel. …………………………..10

II. There was no error by the Trial Court in not dismissing the Plaintiff’s

“improper dissolution” claims on statute of limitations grounds. ………...14

III. The Trial Court’s decision not to dismiss the Plaintiff’s unjust enrichment claims as barred by the statute of limitations and the doctrine of laches was not error. …………………………………………………………………….16

IV. There was no error when the Trial Court did not dismiss the Plaintiff’s

implied duty of good faith and fair dealing claim. …………………………18

V. There was no error nor prejudice to the Defendant in the Trial Court’s admission of the Defendant’s joint tax return into evidence. ……………..20

VI. The Trial Court did not err in allowing Plaintiff’s expert accountant to

testify in this matter consistent with the expert disclosure. ………………..22 Conclusion.................................................................................................................... 25 Certification .................................................................................................................. 26 Request for Oral Argument ........................................................................................... 26

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TABLE OF AUTHORITIES New Hampshire Supreme Court Cases Page Cook v. Sullivan, 149 N. H. 774 (2003) …………………………………………………13 Figlioli v. R.J. Moreau Companies, Inc., 151 N.H. 618 (2005) …………………….22, 24 Great Lakes Aircraft Co. v. City of Claremont, 135 N.H. 270 (1992) ………………….19 See Irwin Marine v. Blizzard, 126 N.H. 271 (1985) …………………………………….20 Marcotte v. Timberlane/Hampstead School Dist., 143 N.H. 331 (1999) ……………….21 McLaughlin v. Fisher Engineering, 150 N.H. 195(2003) ……………………………….21 Norwood Group, Inc. v. Phillips, 149 N.H. 722 (2003) …………………………….7, 14, 15 Rallis v. Demoulas Super Markets, Inc., 159 N.H. 95 (2009) …………………………..14 State v. Pelletier, 149 N.H. 243 (2003) ………………………………………………….21 Taber v. Town of Westmoreland, 140 N.H. 613 (1996) …………………………..8, 11, 18 Cases from other Courts/jurisdictions Blair v. Robinson, 178 N.C. App. 357 (2006) ……………………………………………..15 Miller v. Bill Harbert Intern. Const., Inc, 608 F.3rd 871(2010) ……………………...8, 22 Statutes N.H. Rev. Stat. Ann. § 508:4, I. ………………………………………………………1, 17 Other authorities/rules N.H. R. Evid. 401 (2010)……………………………………………………………..20, 21 N.H. R. Evid. 403 (2010) ………………………………………………………………...21

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STATUTORY PROVISIONS

N.H. Rev. Stat. Ann. § 508:4

I. Except as otherwise provided by law, all personal actions, except actions for slander or libel, may be brought only within 3 years of the act or omission complained of, except that when the injury and its causal relationship to the act or omission were not discovered and could not reasonably have been discovered at the time of the act or omission, the action shall be commenced within 3 years of the time the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, the injury and its causal relationship to the act or omission complained of. II. Personal actions for slander or libel, unless otherwise provided by law, may be brought only within 3 years of the time the cause of action accrued.

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STATEMENT OF THE CASE

J. Robert Smyjunas, Jr. (hereinafter “Smyjunas”) filed this appeal following a

Coos County jury verdict against him in favor of the Plaintiff in the amount of One

Hundred Ten Thousand and Seven Dollars and One Cent ($110,007.01) on March 24,

2010 following a jury trial on March 23-24, 2010. Appendix of Appellant, p. 70. The

jury verdict imposed personal liability on Mr. Smyjunas for a judgment obtained in an

earlier equity action entitled J&M Lumber and Construction, Inc. v. Gorham

Supermarket, LLC, SS Gorham, LLC and J.C. Investors-NH, Coos County Superior

Court, Docket No. 00-E-72 (hereinafter “Equity Matter”). Mr. Smyjunas was the sole

shareholder, President, Treasurer, Secretary, and Sole Director of two corporate entities

(Tolle Road Partners, Inc. and Bitsy Realty, Inc.) which were members of Gorham

Supermarket, LLC (hereinafter “GS, LLC”). GS, LLC was indebted to J&M Lumber and

Construction, Inc. (hereinafter “J&M”) pursuant to a judgment in the Equity Matter. By

an Order on the Merits in the Equity Matter dated August 12, 2003, the Trial Court

ordered, among other things, GS, LLC liable for J&M’s attorney’s fees. Appendix of

Appellant, p. 8.

Following an unsuccessful appeal of the attorney’s fee award by GS, LLC to this

Court, and after a hearing on the amount of fees and costs, the Trial Court in 2005

awarded J&M $110,007.01. See Orders dated August 8, 2005 and November 14, 2005,

Appendix of Appellant at 24 and 26. When GS, LLC failed to pay the award, J&M was

forced to file suit to collect the Equity Matter judgment. J&M filed a Writ of Summons

in 2008 against GS, LLC, as well as Mr. Smyjunas, Bitsy Realty Inc., and Tolle Road

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Partners, Inc., seeking to pierce the corporate veil of the various entities and collect the

judgment from Defendant Smyjunas.

STATEMENT OF FACTS

Petition for Injunctive Relief filed August 3, 2000 (the Equity Matter): This case originally began with a Petition for Injunctive Relief (hereinafter

“Petition”) filed on or about August 3, 2000. J&M’s Petition was filed with the Coos

County Superior Court against the sequential owners of the property, GS, LLC, SS

Gorham, LLC and J.C. Investors-NH seeking to enforce J&M’s easement rights

associated with land J&M owned on the easterly side of Route 16 in Gorham, New

Hampshire. See Petition for Injunctive Relief, Docket No. 00-E-0072, Appendix of

Appellant at 1, and J&M’s Amended Petition for Injunctive Relief, Appendix at 1.1

J&M’s parcel had no direct access onto Route 16; however, the J&M parcel had three

expressly granted easements of varying widths running to Route 16, one of which was the

subject of the Petition.

GS, LLC purchased and developed land on Route 16 in Gorham adjacent to

J&M’s land for the purpose of constructing a Shaw’s Supermarket. The parcel was

conveyed subject to J&M’s fifty foot deeded easement and was set forth in the deed to

GS, LLC. J&M reminded Mr. Smyjunas and his project superintendent about the

existence of and its intention to use the easement prior to and during construction of a

supermarket. GS, LLC ignored these warnings. As a result of its development and

subsequent construction of a supermarket, J&M’s easement was obstructed by a one-way

1 J&M has submitted its own Appendix to include additional documents not included in Appendix of Defendant/Appellant, J. Robert Smyjunas, Jr. Documents included in Defendant’s Appendix are cited as Appendix of Appellant at ____, and documents including in J&M’s Appendix are cited as Appendix at ___.

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access road from the supermarket’s loading docks, retaining walls, fencing and

guardrails. After extensive litigation spanning three years, including an appeal to the

Wetlands Council, an appeal of that Board’s decision to the Superior Court, and several

days of trial in which GS, LLC fully participated and was represented by counsel, the

Trial Court found in favor of J&M. Mr. Smyjunas attended the trial as GS, LLC’s

representative and testified. On August 12, 2003, the Trial Court ordered a relocation of

J&M’s easement to the northerly end of the parcel where a controlled entrance to the

supermarket existed and further ordered GS, LLC, to pay J&M’s attorney’s fees and

costs. See Order on the Merits, Appendix of Appellant at 8.

GS, LLC subsequently appealed the Trial Court’s Order of August 12, 2003

requiring it to pay J&M’s attorney’s fees and costs and its finding of bad faith. See Notice

of Appeal, J&M Lumber and Construction Company, Inc. v. Gorham Supermarket, LLC,

SS Gorham, LLC, and J.C. Investors-NH, Docket No. 2003-0644, Appendix at 7. By

Order dated August 4, 2004, this Court affirmed the Trial Court’s Order, Appendix at 32.

Following a hearing on June 14, 2005, the Trial Court ordered Gorham

Supermarket to pay J&M’s attorney’s fees and costs in the amount of $110,007.01. See

Orders dated August 8, 2005 and November 14, 2005, Appendix of Appellant at 24 and

26. GS, LLC made no payment of any portion of the ordered amounts.

Writ of Summons dated March 24, 2008 (the Civil action):

On or about March 24, 2008, J&M filed a Writ of Summons (hereinafter the

“Writ”) with the Coos County Superior Court against J. Robert Smyjunas, Jr., GS, LLC,

Bitsy Realty, Inc. and Tolle Road Partners, Inc., Appendix of Appellant at 27. J&M’s

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Writ alleged five counts as follows: debt, piercing of corporate veil, improper windup of

a limited liability company, unjust enrichment, and breach of the implied duties of good

faith and fair dealing, and requested judgment in the amount of $110,007.01 plus interest

and costs. J&M was forced to file its Writ in an effort to collect the debt owed to it by

GS, LLC for the attorney’s fees and costs awarded by the Trial Court in 2005 as a result

of the prior litigation in the Equity Matter. GS, LLC had distributed the funds it received

from the sale of the property to a third party to its members without providing for the

known claim of J&M and then allowed the limited liability company to be dissolved by

the New Hampshire Secretary of State for failure to file and pay Annual Reports and the

related fees. A fourth entity controlled by Smyjunas allegedly paid for GS, LLC’s

litigation expenses. Transcript, p. 91.

Through discovery in the Equity Matter, J&M learned the Defendant, GS, LLC, a

New Hampshire limited liability company, was owned by the two other corporate

Defendants, Tolle Road Partners, Inc. and Bitsy Realty, Inc. Mr. Smyjunas was the sole

shareholder, President, Treasurer, Secretary, and sole Director of both corporations.

Transcript, p. 35. GS, LLC was formed on February 13, 1997. Mr. Smyjunas signed

the Certificate of Formation for GS, LLC and was responsible for the day-to-day

activities of the limited liability company as well as both corporations and for the

development of the supermarket site. Transcript, p. 74-77.

The Defendants filed a Motion to Dismiss all five counts of Plaintiff’s Writ of

Summons to which Plaintiff filed an Objection and Memorandum of Law in Support of

Objection to Motion to Dismiss. Appendix at 34 and 36. The Trial Court denied the

Defendant’s Motion to Dismiss in it’s entirely. Appendix of Appellant at 47.

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Just prior to the trial, Defendants filed a Motion in Limine seeking to exclude

Plaintiff’s expert accountant, Richard J. Brauel, Jr., CPA. The Motion complained for

the first time that Plaintiff’s expert disclosure dated December 31, 2008 was inadequate.

Defendants’ Motion in Limine, Appendix of Appellant at 52. The Defendants’ Motion

also sought to limit Plaintiff’s expert from testifying regarding the proper procedure for

dissolution and windup of a corporation. Plaintiff filed an Objection to Defendants’

Motion in Limine, Appendix at 95 Following argument by counsel on the Motion, the

Court ruled Plaintiff’s expert was allowed to testify as to the issues disclosed in the

December 31, 2008 expert disclosure, but granted the Motion as to second portion of the

expert’s testimony concerning the proper procedure for dissolution and windup.

Transcript at 25-26.

In addition, prior to trial the Plaintiff filed a Motion in Limine to Preclude

Defendants from Presenting New Evidence on Issues Decided in Prior Litigation. This

Motion sought to bar the Defendants from re-litigating issues and facts decided in the

prior Equity Matter, including the fact the Defendants had notice of J&M’s claim during

the time GS, LLC owned the property from 1997 to 1998 and prior to GS, LLC’s

dissolution in 2001. After argument on the Motion, the Court granted Plaintiff’s Motion

in Limine. Transcript at 18.

Following a Trial, the jury returned a verdict on March 24, 2010 in favor of J&M

in the amount of $110,007.01 against Defendant Smyjunas. Appendix of Appellant at 70.

This appeal filed by Defendant Smyjunas followed. There is a separate appeal pending

concerning the Trial Court’s denial of prejudgment interest dating back to the filing of the

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original Equity Matter. See J&M Lumber and Construction Company, Inc. v. J. Robert

Smyjunas, et al., Docket No. 2010-0356.

SUMMARY OF THE ARGUMENT Plaintiff contends all of the issues raised by Mr. Smyjunas are without merit and

in some instances factually incorrect.

The contention Mr. Smyjunas was unaware of Plaintiff’s easement or the related

claims following his interference with that easement is factually incorrect. A substantial

amount of evidence was produced during the trial of the Equity Matter establishing Mr.

Smyjunas’ knowledge of the easement, and conversations with Mr. Nadeau regarding

J&M’s continuing intention to use the easement. Nonetheless, he proceeded with site

work and construction that substantially impaired the future use of that easement,

including relocation of an existing curb cut that had benefited the J&M easement. Judge

Smith’s Order on the Merits as a matter of law could not have been made had he not

found Mr. Smyjunas had (a) forced J&M to seek judicial assistance to enforce a known

right, and (b) acted in bad faith.

Both contentions regarding the statute of limitation are also factually flawed. The

point at which a claim could have been brought against GS, LLC or Mr. Smyjunas did

not arise until after the appeal of the attorney’s fees award had been concluded and the

Court had held a hearing and issued an order on the amount of those fees. That did not

happen until August and November 2005. Appellant’s Appendix at 26 and 27. This

action was filed in March of 2008. In addition, the actual statute of limitation for actions

to collect on a judgment is twenty years. Norwood Group, Inc. v. Phillips, 149 N.H. 722

(2003).

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With respect to Count IV, Defendant’s argument ignores Judge Smith’s finding

Mr. Smyjunas had acted in bad faith. This finding is implicit in the award of attorney’s

fees and the Court’s citation of Taber v. Town of Westmoreland, 140 N.H. 613 (1996)

which requires bad faith as one of the conditions to such an award. Good faith and fair

dealing are generally applicable in contract disputes, but are also obligations parties have

in all their business dealings. To assume otherwise would condone the kind of conduct

which resulted in the Judge’s decision in the Equity Matter and the jury verdict in this

case. In support of this conclusion is the employment at will situation where no contract

exists, but an employer nonetheless has an obligation to act in good faith and deal fairly

with employees. Parties sharing an interest in land have the same common interest that

exists in an employment at will or contract situation. There is a shared interest that

requires a standard of conduct, which at a minimum includes good faith and fairness. It is

important to keep in mind the conduct at issue. First is ignoring the existence of a deeded

easement by constructing a road, retaining walls, fencing and guardrails over an

easement. Second is the relocation of a curb cut benefiting that easement without notice

to the easement-holder. Third is ignoring the warnings or cautions of the easement-

holder. Fourth is engaging in protracted litigation before the Superior Court, Wetlands

Board and this Court. Finally, there is the failure to pay the ordered award requiring a

further round of litigation.

Mr. Smyjunas’ contentions regarding the prejudicial effect of admitting his tax

return as an exhibit are also flawed. The case cited in support of this argument, Miller v.

Bill Harbert Intern. Const., Inc, 608 F.3rd 871(2010) involves facts which are

substantially more extreme than those at hand. The tax return was the best available

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evidence as to the distribution of the assets of the Defendant entities. The amount

involved in this matter was reasonably related to the sale price of the property for which

no objection has been raised regarding its prejudicial effect. Mr. Smyjunas was free to

testify as to his wife’s income, if that was an issue of concern. Furthermore, the IRS tax

return printouts produced for trial were the only ones available to the Plaintiff because

Mr. Smyjunas and his accountant claimed not to have copies of the returns that had been

filed.

Finally, with respect to Defendant’s argument regarding the testimony of certified

public accountant Richard A. Brauel, Jr. and his contention the disclosure was untimely,

it is important to understand the delay in discovery caused by the lack of cooperation by

the Defendant. Motions for Conditional Default and to Compel were necessary to obtain

discovery. Authorizations for accountants and the IRS were ultimately necessary to

obtain any financial documents. The financial information and records necessary for Mr.

Brauel’s testimony as originally anticipated and disclosed was not produced, despite

Plaintiff’s various efforts to obtain them. The Trial Court limited Mr. Brauel to those

matters which had been disclosed over the objection of Plaintiff. It also declined to allow

Mr. Brauel to testify regarding the proper manner of dissolving limited liability

companies and corporations, which were matters within his experience. Finally,

notwithstanding a December 2008 disclosure, no objection was filed until March 2010.

Plaintiff attempted to cure the disclosure to satisfy Mr. Smyjunas’ complaints, but the

Defendant and the Court deemed that attempt untimely.

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ARGUMENT

I. The Trial Court did not err in ruling the Defendant had notice of the plaintiff’s easement claim and properly ruled it was a decided fact in this case by virtue of res judicata/collateral estoppel.

The Defendant is mistaken in his contention the Trial Court erred in finding the

issue of “notice” had been decided in the Equity Matter. His contention is premised on

the incorrect assertion that “whether Mr. Smyjunas was aware of the Plaintiff’s easement

claim was not an issue in the Prior Lawsuit…” Appellant’s Brief, p. 6 and, his further

assertion “The basis for the Trial Court’s application of collateral estoppel was what can

only be characterized as dicta in the decision of the Prior Lawsuit.” Appellant’s Brief, p.

9. To the contrary, it was a central issue in the Equity Matter about which substantial

evidence was presented to the Court. That evidence included plans, referred to in Judge

Smith’s Order (Appellant’s Appendix at p.15) prepared at the direction of Defendant

Smyjunas and submitted to the Town of Gorham showing the Plaintiff’s easement and at

times indicating it was “to be abandoned”, testimony concerning reference to the

easement in GS, LLC’s deed by which it acquired title to the property, the deed itself as

an exhibit, testimony concerning Mr. Nadeau’s repeated efforts to advise the Mr.

Smyjunas of his desire to retain and use the easement, including conversations with Mr.

Smyjunas and his superintendent on the job site, relocation of the existing curb-cut from

the end of the easement along Route 16 to a northerly location and the fact Mr. Smyjunas

proceeded with construction of a road, retaining walls, fencing and guardrails over the

easement. As the Court noted “…petitioner made several attempts to alert Mr. Smyjunas

of his continuing interest in his easement, without result.” Order on the Merits, Appendix

of Appellant, p. 8.

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The Trial Court also found “It is uncontested by all parties that the easement was

not terminated in this case. The parties stipulate that the sale to Gorham Supermarket,

LLC, and all subsequent sales, were subject to J and M’s easement.” Order on the Merits,

Appendix of Appellant, p. 14. This stipulation is conclusive on the issue as to whether or

not Defendant Smyjunas had knowledge of the existence of Plaintiff’s easement at the

time he chose to proceed with the construction of a road, retaining walls, fencing and

guardrails for a Shaw’s Supermarket over that easement. The Defendant is bound by

the stipulation made in the Equity Matter. In fact, Defendant Smyjunas testified in that

case he had knowledge of the easement, but believed it had been abandoned. He did not

dispute that he proceeded with development and construction over the easement or that

he profited from these actions.

Mr. Smyjunas was aware he had impaired the use of J&M’s easement through the

development of the site and related construction. Having done so, he exposed himself to a

claim for his actions. Mr. Nadeau had made him aware of J&M’s continuing intention to

use the easement. It is reasonable to conclude the profit at stake was of greater concern to

Mr. Smyjunas than the risk associated with lawsuits regarding the easement. This

conclusion is bolstered by the failure to pay the award.

More importantly, the Court ordered GS, LLC to pay Plaintiff’s attorney’s fees

and costs because J&M was forced to seek judicial assistance to secure a clearly defined

right and because of the Defendant’s bad faith. “Where a party is forced to seek judicial

assistance to secure a clearly defined right, a court may award attorney’s fees to the

prevailing party if bad faith on the part of losing party is established.’ Taber v. Town of

Westmoreland, 140 N.H. 613, 616 (1996).” Order on the Merits, Appendix of Appellant,

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p. 23. In order for there to have been a clearly defined right upon which Plaintiff was

forced to seek judicial assistance, GS, LLC through its ultimate sole owner, Mr.

Smyjunas, had to have knowledge of Plaintiff’s right, namely the easement, which was

violated by the construction of a supermarket over that easement.

Additionally, implicit in Judge Smith’s finding of bad faith is his determination

GS, LLC, again through its ultimate sole owner, Mr. Smyjunas, had actual knowledge of

the Plaintiff’s easement and nonetheless, proceeded with construction over that easement.

There could be no other basis on which the Court could have found bad faith. The

question of Mr. Smyjunas having knowledge of the easement and the Plaintiff’s potential

claim arising from the Defendants’ conduct was an essential element to Judge Smith’s

Order. Had the evidence established Mr. Smyjunas innocently built a supermarket on the

Plaintiff’s easement thereby depriving it of that easement without knowledge the

easement existed, the Trial Court could not have found bad faith or that Plaintiff required

judicial assistance to enforce a clearly defined right.

For all of these reasons, it is clear from Judge Smith’s Order on the Merits his

finding GS, LLC and Mr. Smyjunas had knowledge of the easement and proceeded to act

in bad faith, were critical and essential factors in the award of attorney’s fees and costs. It

should be noted GS, LLC appealed that award to this Court, J&M Lumber and

Construction Co., Inc v. Gorham Supermarket, LLC, Docket No. 2003-0644 Appendix at

7, but did not argue Judge Smith had failed to find GS, LLC and Mr. Smyjunas had

knowledge of the existence of the easement or the related claim. Had he believed that to

be the case it would be the basis for this Court to find the award of attorney’s fees and

costs inappropriate because a known right had not been violated and bad faith had not

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been established. GS, LLC did appeal the Trial Court’s finding of bad faith and award of

attorney’s fees which contention was rejected by this Court. Order dated August 4, 2004,

J&M Lumber and Construction Co., Inc v. Gorham Supermarket, LLC, Docket No. 2003-

0644, p. 32

All of the factors set forth in Cook v. Sullivan, 149 N. H. 774 (2003) have been

met. The issue was identical in both actions. GS, LLC and Mr. Smyjunas’ knowledge of

the existence of the easement and proceeding with construction over that easement forced

your Plaintiff to seek judicial assistance to enforce a clearly defined right. It also

constituted bad faith. Knowledge of the existence of the easement and proceeding with

construction was an issue common to both cases. Judge Smith decided the issue of Mr.

Smyjunas’ knowledge of the existence of the easement and proceeding with construction

for the development of a supermarket on the merits. Had he not, as a matter of law, he

could not have made an award of attorney’s fees and costs for the Plaintiff. Mr. Smyjunas

was a party in privity in the Equity Matter and a party in the present action. He was the

only person who was a member, shareholder, director and/or officer of GS, LLC and its

members. As such he was in privity with a party to the Equity Matter, namely GS, LLC.

If any of these issues were viable under the evidence presented in the Equity Matter, Mr.

Smyjunas would have raised them in his appeal of Judge Smith’s award to this Court. His

failure to raise such issues would prevent him from doing so now unless the Court is

willing to let Mr. Smyjunas relitigate issues already decided and appealed.

Since there can be no question as to whether Judge Smith found Mr. Smyjunas had

actual knowledge of the existence of J&M’s easement, the jury instruction given by

Judge Vaughn and complained of by the Defendant was correct. The Court had already

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found and ruled that the Defendant had knowledge of J&M’s easement over the property

that was developed and proceeded with development and construction. It cannot be

reasonably concluded the jury instruction was substantial error or the jury was misled

regarding the applicable law, Rallis v. Demoulas Super Markets, Inc., 159 N.H. 95

(2009), as argued by Mr. Smyjunas.

II. There was no error by the Trial Court in not dismissing the Plaintiff’s

“improper dissolution” claims.

The Appellant contends Plaintiff’s claim of improper dissolution was barred by the

statute of limitations because it was brought more than three years after Plaintiff knew or

could have known of the allegedly improper dissolution of GS, LLC in January 2002. To

correctly state the Defendant’s contention, he asserts because the Plaintiff learned during

Mr. Smyjunas’ deposition the members of GS, LCC were corporations, it should have also

known Mr. Smyjunas had allowed these corporations to be dissolved. J&M should have

also known Mr. Smyjunas had not followed the appropriate statutory procedures regarding

such dissolution. See Appellant’s Brief, p. 13.

The claim of improper wind-up is specifically related to Plaintiff’s efforts to collect

the award made in the Equity Matter. The attorney’s fees award was not rendered nor

quantified by Judge Smith until his Orders dated August 1, 2005 and November 14, 2005.

Appellant’s Appendix at pp. 24 and 26. Additionally, the Equity Matter involved multiple

Respondents. Plaintiff could not have foreseen the Trial Court ordering only GS, LLC pay

attorneys fees and costs or know GS, LLC would fail to pay the award until after the

judgment had been issued and the Respondent refused to make payment. The statute of

limitations for collection of a judgment is twenty years. See Norwood Group, Inc. v.

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Phillips, 149 N.H. 722 (2003). The Writ of Summons was filed on or about March 24,

2008, within three years of the 2005 decisions in the Equity matter quantifying the amount

owed following this Court’s decision on the first appeal. Essentially, Mr. Smyjunas argues

in his Motion to Dismiss the Plaintiff should have known what Judge Smith would order

and assumed GS, LLC would act in bad faith by violating its obligations under New

Hampshire to pay the judgment as ordered. Mr. Smyjunas also contends Plaintiff had a duty

to know of the dissolution of Defendants during the course of the litigation, but assumes no

responsibility to notify the Trial Court or the other parties to the litigation of these events.

Indeed, in all pleadings filed in the Equity Matter GS, LLC continued representing itself to

the other parties and the Court as a business organization in good standing by using the

“LLC” acronym.

The facts in this case are similar to those in Blair v. Robinson, 178 N.C. App. 357

(2006). In Blair the plaintiffs originally filed suit against R&M Homes to recover a deposit

related to the purchase of a manufactured home. Plaintiffs obtained a judgment against

R&M Homes. When they attempted to enforce that judgment Plaintiffs learned the

Robinsons, as sole shareholders, directors, and officers of R&M Homes, had ceased

operations and sold all assets. Plaintiffs then filed suit against the Robinsons individually.

The defendants moved to dismiss arguing the claims were barred by the doctrine of res

judicata. The North Carolina court found that “Defendants’ untenable position would

require every person seeking recovery against a corporation to attempt to pierce the

corporate veil and name as defendants every officer and director of the company in order to

ensure collection of any favorable judgment.” Id. at 359-360. This is an unreasonable

burden to place on the Plaintiff in this matter as well, especially because there were several

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corporate defendants in the original litigation, the underlying suit was primarily a suit in

equity, the award of damages by way of attorney’s fees and costs was uncertain and the

Defendants were in the best position to know their status and so advise the other parties and

the Court. Plaintiff filed suit to enforce its judgment less than three years after the final

quantified judgment had issued and well within the twenty year statute of limitations.

Accordingly, the Trial Court’s decision to deny the Motion to Dismiss was correct.

III. The Trial Court’s decision not to dismiss the Plaintiff’s unjust enrichment

claims as barred by the statute of limitations and the doctrine of laches was not error.

Once again the Defendant argues Plaintiff’s claim is barred by the statute of limitations

because it was brought more than three years after the plaintiff knew, or could have known,

about the unjust enrichment of Mr. Smyjunas. More specifically, the Defendant contends,

once again, because it learned of the existence of corporate members to GS, LLC it,

therefore, should have known they were also dissolved improperly and Mr. Smyjunas had

received all assets of all three entities. See Appellant’s Brief, p. 15. Again, Defendant

assumes no responsibility for notifying the other parties or the Court of the dissolutions and,

once again, Defendant continued to represent GS, LLC as a limited liability company to the

Court and the other parties.

Defendant also contends because Plaintiff knew the identity of the members of GS,

LLC, it must also have known of Mr. Smyjunas’ unjust enrichment. See Appellant’s Brief,

p. 15. This assertion is not supported by any cited authority or explanation of how

knowledge of one thing necessarily follows the other. Essentially, the argument stands for

the proposition once members or shareholders are known, a Plaintiff has a duty to assume

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misconduct and conduct discovery as to the management of the affairs of the business

organizations and the distribution of their assets before any resolution of the claims at issue.

It is questionable whether the Trial Court would have allowed such discovery and it adds an

additional burden and expense to commercial litigation in New Hampshire.

In New Hampshire, the statute of limitations for personal actions is three years from

the time the plaintiff discovers, “or in the exercise of reasonable diligence should have

discovered, the injury and its causal relationship to the act or omission complained of.”

N.H. Rev. Stat. Ann. § 508:4, I. However, the claim of unjust enrichment is an equitable

claim in this case specifically related to Plaintiff’s efforts to collect on a judgment which

was not fully rendered and quantified until November 2005. The “enrichment” did not and

could not occur until Judge Smith issued two orders quantifying the amount of the award.

Therefore, the statute of limitations does not bar Plaintiff’s claim for unjust enrichment.

As previously stated, this case involved multiple Defendants. Plaintiff could not

have foreseen the Court’s ordering only GS, LLC to pay attorneys fees and costs. Nor could

Plaintiff have known GS, LLC would fail to pay the ordered judgment until after the

judgment had been issued. The fact Plaintiff learned of the Bitsy and TRP entities’

existence and relationship to GS, LLC in 2002 does not mean Plaintiff had a further duty

and should have incurred the expense to investigate the financial condition of any of the

entities in 2002, especially in light of GS, LLC’s active participation in the defense of the

pending litigation and clear knowledge of the claims pending against it. At the time, the

litigation involved several corporate entities and involved primarily equitable claims

concerning the blocking of Plaintiff’s easement. The monetary award was discretionary and

dependent on the manner in which the Court resolved the impairment of J&M’s easement.

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As previously suggested, it is not certain the Court would have ordered such discovery into a

defendant’s financial condition pending a final judgment. To require such due diligence

would be unduly burdensome to Plaintiffs generally. In addition, Mr. Smyjunas is arguing

the statute of limitations ran as of January 2005, prior to the Court’s decisions quantifying

the amounts awarded to Plaintiff.

Defendant also argues further Plaintiff slept on his rights. See Appellant’s Brief, p. 15.

To the contrary, Plaintiff has pursued this litigation through trial in the Superior Court, a

hearing before the Wetlands Board, an appeal of that Board’s decision to the Superior Court,

an appeal to this Court, a further trial in the Superior Court and now another appeal to this

Court. During and between this various actions Plaintiff also attempted negotiated

resolutions. It is unreasonable for Defendant to contend Plaintiff has slept on its rights.

Defendant’s argument the statute of limitation had run was correctly decided by Judge

Vaughn and should not be overturned by this Court.

IV. There was no error when the Trial Court did not dismiss the Plaintiff’s implied duty of good faith and fair dealing claim.

The appellant alleges the Trial Court erred when it did not dismiss the Defendants’

Motion to Dismiss Count V of the Plaintiff’s Writ of Summons alleging an implied duty of

good faith and fair dealing. While it is generally applicable in the contract setting, there is

an implied duty of good faith and fair dealing in most business relationships. Defendant’s

argument ignores Judge Smith’s finding Mr. Smyjunas had acted in bad faith. This

finding is implicit in the award of attorney’s fees and Court’s citation of Taber v. Town of

Westmoreland, 140 N.H. 613 (1996) which requires bad faith as one of the conditions to

such an award. As noted above, the Defendants GS, LLC and Smyjunas participated fully

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in the underlying Equity Matter as described above. GS, LLC, despite no longer having an

ownership interest in the underlying property, vehemently opposed any remedy in that

action that would benefit J&M as evidenced by the litigation spanning more than five years

and including appeals by Gorham Supermarket and other defendants to the New Hampshire

Department of Environmental Services Wetlands Council and the New Hampshire Supreme

Court. J&M was ultimately successful in the Equity Matter in obtaining a judgment for its

attorney’s fees and costs incurred to “secure a clearly defined right.” J&M Lumber and

Construction Company, Inc. v. Gorham Supermarket, LLC, et al., Docket No.: 00-E-72,

Order on the Merits, page 5, citing Taber v. Town of Westmoreland, 140 N.H. 613, 616

(1996), Appendix of Appellant, p. 22-23. Once the judgment was quantified, GS, LLC and

Smyjunas refused to make payment. The good faith and fair dealing Count was part of and

analogous to the corporate veil-piercing claim in that the Defendants should not now be able

to avoid a judgment due to their own wrongdoing. Mr. Smyjunas’ defense to the failure to

pay was all the monies had already been distributed out of the Defendant limited liability

company by the time the Trial Court issued its Order.

In New Hampshire, there is not merely one rule of an implied duty of good faith, but

a series of doctrines, each of which serves different functions. Great Lakes Aircraft Co. v.

City of Claremont, 135 N.H. 270, 293, (1992). The various implied good-faith

obligations fall into three general categories: (1) contract formation; (2) termination of at-

will employment agreements; and (3) limitation of discretion in contractual performance.

Id. Smyjunas argues the implied duty of good faith and fair dealing has “no

applicability” absent any agreement or contract between the parties. Good faith and fair

dealing is generally applicable in contract disputes, but these are also obligations of good

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faith and fair dealing parties have in their business dealings. To assume otherwise would

condone the kind of conduct which resulted in the Judge’s decision in the Equity Matter

and the jury verdict in this case.

Supporting this conclusion is the employment at will situation where no contract

exists, but an employer nonetheless has an obligation to act in good faith and deal fairly

with employees. Parties sharing an interest in land have the same common interest that

exists in an employment at will or contract situation. There is a shared interest that

requires a standard of conduct which at a minimum includes good faith and fairness. This

Court has also upheld findings of bad faith in other situations. See Irwin Marine v.

Blizzard, 126 N.H. 271 (1985). It is also important to keep in mind the conduct at issue.

First is ignoring the existence of a deeded easement by constructing a road, retaining

walls, fencing and guardrails over a known easement. Second is the relocation of a curb

cut benefiting that easement without notice to the easement-holder. Third is ignoring the

warnings or cautions of the easement- holder. Fourth is engaging in protracted litigation

before the Superior Court, Wetlands Board and this Court. Finally, there is the failure to

pay the ordered award requiring a further round of litigation. For the reasons set forth

herein, the Trial Court’s denial of Defendant’s Motion to Dismiss Count IV should be

upheld.

V. There was no error nor prejudice to the Defendant in the Trial Court’s admission of the Defendant’s joint tax return into evidence.

Pursuant to N.H. Rule of Evidence 401 relevant evidence is defined as “evidence

having any tendency to make the existence of any fact that is of consequence to the

determination of the action more probable or less probable than it would be without the

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evidence.” N.H. R. Evid. 401 (2010). There are instances in which relevant evidence

may be excluded such as when its probative value is substantially outweighed by the

danger of unfair prejudice. See N.H. R. Evid. 403 (2010); Marcotte v.

Timberlane/Hampstead School Dist., 143 N.H. 331 (1999).

The Defendant argues the Trial Court erred when it allowed Defendant Smyjunas’

joint tax return into evidence. This Court reviews a trial court’s rulings on admissibility

of evidence under an unsustainable exercise of discretion standard. See State v. Pelletier,

149 N.H. 243, 249 (2003). “[A] trial judge is granted broad discretion when balancing

the probative value of evidence against the possible prejudice resulting from its

admission. We will uphold the trial court’s determination unless the ruling was clearly

untenable or unreasonable to the prejudice of the [the plaintiff’s] case.” McLaughlin v.

Fisher Engineering, 150 N.H. 195, 199 (2003)(citations omitted).

As Mr. Smyjunas cites in his brief, he admitted GS, LLC’s funds were ultimately

distributed to him and those funds were in excess of the judgment awarded to the

plaintiff. Defendant’s Brief at 19. Defendant then opines, without citing legal authority,

the admission of the joint tax return was “wholly unnecessary”. The fact the Defendant

may not have liked the admission of this evidence does not make the evidence

exclusionable. The inquiry is whether the evidence is relevant. The Trial Court

specifically found the joint tax return was relevant to the plaintiff’s case as it showed

income received by the Defendant during the year of the sale of the property owned by

GS, LLC and distribution by the various entities to Mr. Smyjunas. The tax return was

also the best available evidence as to the distribution of the assets of the Defendant

entities and the amount involved was reasonably related to the sale of the property for

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which no objection was raised regarding its prejudicial effect. In addition, Mr. Smyjunas

could have chosen to testify if the income shown on the 1998 tax return was earned by

his wife rather than himself. He chose not to so testify.

Finally, any alleged prejudice against the defendant due to the amount of the

income shown on the return (just over $2 million) is merely speculative especially in light

of other testimony by Mr. Smyjunas, for which there was no objection raised, concerning

the sale price of the property in question and the costs associated with developing the

property. Trial Transcript, p. 39-42. The case cited in Defendant brief from the United

States Court of Appeals, District of Columbia Circuit in not binding nor analogous since

the facts of that case involved testimony concerning various corporate defendants owning

around $9 billion in assets. See Miller v. Bill Harbert Intern. Const. Inc., 608 F. 3rd 871,

897 (2010) and the prejudicial comments made in the Government’s closing argument

about excess money that “could have [been] used for less fortunate people in other

countries”. Id.

VI. The Trial Court did not err in allowing Plaintiff’s expert accountant to testify in this matter consistent with the expert disclosure. .

As noted by the Appellant, this Court reviews a trial court’s decisions concerning

management of discovery and the admissibility of evidence under an unsustainable

exercise of discretion standard. To meet this standard, the defendant “must demonstrate

that the trial court’s ruling was clearly untenable or unreasonable to the prejudice of his

case.” Figlioli v. R.J. Moreau Companies, Inc., 151 N.H. 618, 626 (2005). Defendants

acknowledge the Plaintiff disclosed its expert, Richard A. Brauel, Jr., CPA by letter dated

December 31, 2008. Plaintiff’s original expert disclosure is attached to Defendant’s

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Motion in Limine. Appendix at 57. Defendants never raised any issue or objection to the

December 2008 disclosure until their Motion in Limine dated March 18, 2010 filed just

prior to trial.

In general, the Defendants failed to cooperate with discovery as outlined in

Plaintiff’s Objection to Defendants Motion in Limine (Appendix at p. 95) and Plaintiff

was forced to file the following motions with the trial court in an effort to obtain financial

discovery in this matter in addition to paying for records to be obtained from the Internal

Revenue Service and making repeated requests to Defendant’s counsel for the requested

information and documents:

• Motion for Conditional Default was filed after Defendants failed to timely

answer interrogatories;

• Motion to Compel filed on or about May 8, 2009 requesting the

Defendants be ordered to execute authorizations so the Plaintiff could

obtain tax records directly from the Internal Revenue Service since

Defendants alleged they did not have copies and Defendants’ accountant

destroyed other records just week prior to receiving a written request for

the documents from Plaintiff’s counsel;

• Motion for Contempt filed on or about October 22, 2009 because

Defendants failed to sign authorizations for their successor accountant or

provide the name of their successor accountant.

At the time of Plaintiff’s initial disclosure in 2008, there was limited financial

information available to Plaintiff’s expert to review due to Defendants failure to produce

any of the discovery requested in this matter by interrogatories propounded in October

2008. As noted in Plaintiff’s expert disclosure, the Defendants’ lack of compliance with

Plaintiff’s discovery requests was causing delays in the case and preventing its expert

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from conducting his review of the financial documents and formulate his opinion. After

an exhaustive but largely unsuccessful attempt to obtain Defendants’ financial records,

the Plaintiff ultimately supplemented its expert disclosure on March 17, 2010. The

Trial Court allowed Mr. Brauel to testify on the subjects disclosed in Plaintiff’s expert

disclosure dated December 31, 2008 but granted the Defendant’s Motion in Limine as to

the disclosure dated March 17, 2010. Trial Transcript at 25-26.

The issue in Figlioli is distinguishable from the facts in this matter. In Figlioli, at

issue was whether the trial court had erred by allowing plaintiff’s vocational

rehabilitation consultant to testify concerning a supplement to his original report filed

after the discovery deadline had passed which included specific detail as to lost future

earnings that was not included in his original report. This Court ruled, “The plaintiffs

have not shown good cause why Clarke’s supplemental report was disclosed past the

discovery deadline. Allowing Clarke to testify as to the subject matter disclosed in the

supplement report was an unsustainable exercise of discretion by the trial court.” Figlioli

at 627. Plaintiff’s expert disclosure dated December 31, 2008 was well before the close

of discovery in this matter. In addition, Defendant’s failure to complain about the 2008

disclosure until the eve of trial and over fourteen months later is disingenuous at best.

Defendant also failed to conduct any discovery of its own in this matter. Trial Transcript

at 24.

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CONCLUSION

For the reasons set forth above, your Plaintiff respectfully requests this Court

affirm the Trial Court’s ruling on the Motion to Dismiss and the jury’s verdict.

Respectfully submitted,

J&M Lumber and Construction Company, Inc.

By Its Attorneys, Date: December____, 2010 By: __________________________ Jack P. Crisp, Jr., Esquire

NH Bar No. 193 The Crisp Law Firm, PLLC 15 North Main Street, Suite 208 P.O. Box 3397 Concord, NH 03302-3397 (603) 225-5252

By: ___________________________ Andrea Q. Labonte, Esquire NH Bar No. 12898 Wiggin & Nourie, PA

670 N. Commercial Street, Suite 305 P.O. Box 808 Manchester, NH 03105 (603) 669-2211

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CERTIFICATE OF SERVICE

I hereby certify on this day two copies of the foregoing have been mailed, postage

prepaid, to William B. Pribis, Esquire

__________________________ Andrea Q. Labonte, Esquire

REQUEST FOR ORAL ARGUMENT J&M Lumber and Construction Company, Inc. respectfully request orals

argument not to exceed fifteen minutes. Jack P. Crisp, Jr., Esquire will represent J&M

Lumber and Construction Company, Inc. at oral argument.

__________________________ Andrea Q. Labonte, Esquire 01185484.DOCX