Rousseau v. Eshleman , 128 N.H. 564 ( 1986 )

Brock, J.

In this case of first impression, we must determine whether attorneys in this State are exempt from the application of the consumer protection act, RSA chapter 358-A. The defendant attorney, Maris Eshleman, appeals from the Trial Court’s {C. Flynn, J.) denial of his post-trial motions to set aside the verdict, for remittitur, and to vacate judgment. The plaintiff cross appeals from the court’s disallowance of enhanced damages. Concluding that the trial court erred, we remand for a new trial.

During the fall of 1980, the plaintiff was considering the purchase of five residential duplexes and sought the advice of the defendant based on the recommendation of someone with whom the plaintiff had worked. The defendant recommended investment in commercial real estate, rather than residential real estate, and the plaintiff requested that the defendant gather information concerning potential commercial real estate investments. The defendant proposed a legal fee of one percent of the purchase price for the closing of a sale on any property, and one to two percent of the purchase price for assistance in securing financing. The defendant informed the plaintiff that the foregoing contingent fee was the usual and customary fee for attorneys practicing in the area of real estate law.

In December 1980, the plaintiff decided to purchase a small shopping center in Merrimack, at the suggestion of the defendant. At the time, two of the six stores in the center were vacant. The defendant prepared a letter of intent, and the plaintiff entered into a purchase and sale agreement. The defendant informed the plaintiff that the mortgage on the property was assumable by the buyer once the property was purchased; in addition, the seller eventually took back a second mortgage.

At trial, the defendant testified that at some point before the closing, he learned that the mortgage was not assumable, and that the note instead became a demand note due and payable at the option of the bank upon the plaintiff’s purchase of the property. The plaintiff did not discover this until after the April 1981 closing. The plaintiff owned the shopping center until the early fall of 1981, when he decided that he could no longer afford the monthly payments on the property. In February 1982, the former owner of the property agreed to take it back from the plaintiff, who sustained a substantial loss on his investment.

Later that year, the plaintiff filed suit against attorney Eshleman, alleging three causes of action: legal malpractice; negligent misrepresentation; arid unfair and deceptive trade practices, in violation of the consumer protection act, RSA chapter 358-A. The plaintiff sought damages in the sum of $200,000 and claimed that because the defendant willfully and knowingly violated the consumer protection act, the plaintiff was entitled to treble damages pursuant to RSA 358-A: 10.

At the close of the plaintiff’s case, the defendant moved for a non-suit on the consumer protection act count. The trial court denied the motion, expressing its uncertainty about whether the practice of law was exempt from the consumer protection act, and permitted the consumer protection act claim to go to the jury, acting in an advisory capacity. The jury found that (1) the defendant was negligent and his negligence proximately caused a loss to plaintiff; (2) the plaintiff was not negligent; (3) the defendant committed unfair and deceptive trade practices in violation of the consumer protection act; (4) the plaintiff was entitled to damages of $103,186.50; and (5) the defendant’s actions constituted a willful and knowing violation of the consumer protection act.

The defendant moved to set aside the verdict, to vacate judgment, and for remittitur; and the plaintiff moved for judgment and sought treble damages, attorney’s fees, expert witness fees, and compound interest. The trial court, in its rulings on these motions, ruled that the consumer protection act applied to an attorney who has advertised services to the public, and ruled that RSA 358-A:10, the provision of the act that concerns damages in private actions, applied as it existed prior to August 1981, when it was amended to provide for double or treble damages. See Laws 1981, 243:1. The trial court also ruled that the findings of the jury were reasonable, and hence denied all of the defendant’s motions. The plaintiff’s motions were granted, except to the extent of the request for treble damages. The trial court awarded damages based on the jury’s verdict, plus exemplary damages in the amount of $100 and attorney’s fees in the amount of $34,428.83.

In this appeal, the defendant contends that (1) attorneys practicing law in this State are not subject to the provisions of the consumer protection act; (2) even if attorneys are subject to liability under the consumer protection act, the defendant’s actions did not violate the act; (3) the submission to the jury of questions concerning the consumer protection act was prejudicial to the defendant and requires a new trial; (4) the trial court improperly excluded from evidence the plaintiff’s 1981 federal tax return; and (5) the jury’s finding of no comparative negligence on the part of the plaintiff was against the weight of the evidence. The plaintiff, in his cross appeal, asserts that he is entitled to treble damages under the current version of RSA 358-A:10.

We begin by considering whether the practice of law falls within the scope of the consumer protection act. The act “is a comprehensive statute designed to regulate business practices for consumer protection by making it unlawful for persons engaged in trade or commerce to use various methods of unfair competition and deceptive business practices.” Chase v. Dorais, 122 N.H. 600, 601, 448 A.2d 390, 391 (1982). It 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.” RSA 358-A:2.

The consumer protection act contains no language expressly exempting law, medicine or other learned professions from its reach. However, the act exempts “[t]rade or commerce otherwise permitted under laws as administered by any regulatory board or officer acting under statutory authority of this state or of the United States.” RSA 358-A:3, I. Presumably, physicians would be considered exempt from the act because they are subject to licensing and regulation by a board of registration under RSA 329:2 (1984, Supp. 1985, Laws 1986, 219:1). The same would be true of electricians, RSA 319-C:4 (1984 and Supp. 1985), and plumbers, RSA 329-A:3 (1984 and Supp. 1985). We must decide whether under RSA 358-A:3 attorneys enjoy a similar exemption from the provisions of the act or whether the legislature intended that they be subject to the act.

Admission to the practice of law and regulation of the conduct of attorneys in this State has been dealt with as an area of shared responsibility between the legislative and judicial branches of government. See RSA 490:4; RSA chapter 311; N.H. CONST, pt. II, art. 73-a (Supp 1985). Pursuant to its statutory and constitutional authority, this court not only has established an integrated bar association, membership in which is required as a condition of practicing law in this State, see In re Unified New Hampshire Bar, 112 N.H. 204, 291 A.2d 600 (1972), but also has established a professional conduct committee which has responsibility for regulating attorney conduct.

The professional conduct committee of this court is, in our view, a regulatory board acting under statutory (and constitutional) authority of this State within the meaning of RSA 358-A:3, I. In view of the practical problems that may attend application of the consumer protection act in this area of shared constitutional responsibility, we are, absent careful legislative consideration and a clearly expressed legislative intent, reluctant to interpret the statute before us otherwise.

The defendant next asserts that the submission to and consideration by the jury of questions concerning the consumer protection act requires a new trial. As a procedural matter, the plaintiff argues that the defendant failed to preserve this issue. However, our review of the transcript of the bench conference cited by both parties indicates that the general issue of whether a civil action under the consumer protection act could properly be put to a jury was both raised and excepted to. We read this objection as encompassing the sub-issue of whether the objectionable questions could themselves be put to the jury. On the merits, we agree with the defendant’s argument, in that their submission to the jury may very well have resulted in prejudice to the defendant, and thus did not constitute harmless error. See Winslow v. Dietlin, 100 N.H. 147, 121 A.2d 573 (1956) (court did not err in submitting issue to jury when such could not have affected verdict). On this basis, the defendant must be afforded a new trial on the legal malpractice and negligent misrepresentation claims against him. As we have held that the statute in its present form exempts attorneys from its application, we have no occasion to consider the plaintiff’s argument concerning enhanced damages.

The defendant also challenges the exclusion from evidence of the plaintiff’s income tax return, and the jury’s finding of no comparative negligence on the part of the plaintiff. Because we remand for a new trial, we need not consider these arguments. Accordingly, we remand the case for a new trial.

Reversed and remanded.

Johnson, J., with whom Batchelder, J., joined, dissented; the others concurred.