Hate to Paint, LLC v. Ambrose Development, LLC & a.

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2023-0076, Hate to Paint, LLC v. Ambrose
Development, LLC & a., the court on November 13, 2024, issued
the following order:

The court has reviewed the written arguments and the record submitted
on appeal, has considered the oral arguments of the parties, and has
determined to resolve the case by way of this order. See Sup. Ct. R. 20(2).

The defendants, Ambrose Development, LLC and John Flatley, appeal an
order of the Superior Court (Honigberg, J.) granting partial summary judgment
to the plaintiff, Hate to Paint, LLC, and a final order following a bench trial in
Superior Court (Attorri, J.) granting judgment and damages to Hate to Paint on
its breach of contract claim. We reverse and remand.

The trial court found the following facts. Hate to Paint is a painting
contractor that concentrates on multi-residential projects. In August 2019,
Hate to Paint entered into a painting contract with Ambrose for an apartment
project in Somersworth. Flatley owned the project and Ambrose was the
developer (hereinafter, Ambrose and Flatley will be collectively referred to as
Ambrose). Work was expected to commence in late 2019.

A year prior to contracting for the Somersworth project, the parties had
contracted for painting a similar project in Merrimack. The plans and
specifications for the two projects were almost identical other than their size:
the Merrimack project consisted of four 48-unit buildings while the
Somersworth project consisted of three. In addition, the per-unit cost in the
Somersworth project contract was “significantly higher” than that for the
Merrimack project.

In early January 2020, before Hate to Paint received notice to proceed
with any work on the Somersworth project, Ambrose informed Hate to Paint
that it was terminating the contract “for convenience” after an internal audit
noted the higher price for that project compared to the Merrimack project.
Ambrose invoked a provision of the contract that provided:

Termination for Convenience: The General Contractor may
terminate the Contract for convenience upon three (3) days prior
written notice. In the event of such termination, the Contractor
shall be entitled to receive payment for labor and materials
 furnished through the date of termination. Contractor shall not be
entitled to receive payment for any lost profits.

Stating that the contract required rebidding, Ambrose invited Hate to Paint to
submit a new bid by January 17. Hate to Paint submitted three successively
lower bids, each of which Ambrose rejected. Ultimately, Ambrose hired another
contractor for the project. Ambrose reimbursed Hate to Paint $1,360 for paint
that it had purchased for the project.

In May, Hate to Paint brought the instant action alleging, inter alia,
breach of contract. Hate to Paint moved for summary judgment on the liability
portion of its breach of contract claim, which the trial court granted. Following
a bench trial, the court found that Hate to Paint had proved damages in the
amount of $219,200. Ambrose now appeals.

“A breach of contract occurs when there is a failure without legal excuse
to perform any promise which forms the whole or part of a contract.” Audette
v. Cummings, 165 N.H. 763, 767 (2013) (quotation omitted). “We will uphold a
trial court’s ruling in an action for breach of contract unless the decision was
made without evidentiary support or was an unsustainable exercise of
discretion.” Id. (quotation omitted).

Ambrose first argues that the trial court erred in failing to enforce the
contract’s termination for convenience provision. The trial court ruled that to
prevent the contract from being illusory, Ambrose’s discretion under that
provision must be limited by the implied covenant of good faith and fair
dealing. It then ruled that Ambrose “breached the contract by invoking the
termination for convenience clause in order to obtain a better bargain.”

“In every agreement there exists an implied covenant that each of the
parties will act in good faith and deal fairly with the other. The obligation of
good faith performance is better understood simply as excluding behavior
inconsistent with common standards of decency, fairness and reasonableness,
and with the parties’ agreed-upon common purposes and justified
expectations.” Richard v. Good Luck Trailer Court, 157 N.H. 65, 70 (2008)
(quotations and brackets omitted). Hate to Paint contends, as the trial court
ruled, that Ambrose’s discretion under the termination for convenience
provision “must be bridled by the implied obligation of good faith and fair
dealing.” We will assume, without deciding, that Ambrose’s discretion under
the “Termination for Convenience” provision was limited by that implied
covenant.1

1 The trial court relied upon Hobin v. Coldwell Banker Residential Affiliates, 144 N.H. 626

(2000), in concluding that the implied covenant of good faith and fair dealing would apply to
contradict an express contractual grant of discretion only when necessary to protect an
agreement which otherwise would be rendered illusory and unenforceable. Hobin was decided,

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 The trial court determined that Ambrose “breached the contract by
invoking the termination for convenience clause in order to obtain a better
bargain.” Ambrose challenges that conclusion, arguing that “finding a better
price is not by itself bad faith that avoids the enforceability of a termination-
for-convenience clause.” On the facts of this case, we agree.

We have stated that “courts cannot make better agreements than the
parties themselves have entered into or rewrite contracts merely because they
might operate harshly or inequitably.” Moore v. Grau, 171 N.H. 190, 201
(2018) (quotation omitted). Here, the plain language of the contract expressly
provides for termination for convenience upon three days’ notice.
“Convenience” is defined as the quality of being convenient. Random House
Webster’s Unabridged Dictionary at 443 (2d ed. 2001). “Convenient,” in turn,
is defined as “suitable or agreeable to the needs or purpose.” Id.; see A.L.
Prime Energy Consultant v. Mass. Bay Transp. Auth., 95 N.E.3d 547, 558
(Mass. 2018) (“‘convenience’ means the quality of being suitable to one’s
comfort, purposes, or needs” (quotation omitted)). Plainly, obtaining a better
price is suitable to one’s needs or purpose. See A.L. Prime Energy Consultant,
95 N.E.3d at 558 (conserving resources meets an important need). Given the
plain, unambiguous language of the termination for convenience clause, it is
not apparent to us how Ambrose’s decision to exercise the termination for
convenience provision to obtain the services for a better price is contrary to the
parties’ “justified expectations.” Richard, 157 N.H. at 70; see Vila & Son
Landscaping Corp. v. Posen Constr., Inc., 99 So. 3d 563, 568 (Fla. App. Ct.
(2012).

We acknowledge that courts in other jurisdictions have concluded that
exercising a termination for convenience clause to obtain a better price violates
the implied covenant of good faith and fair dealing. See, e.g., Questar Builders,
Inc. v. CB Flooring, LLC, 978 A.2d 651, 675 (Md. 2009) (stating that obligation
to act in good faith and deal fairly prohibits party from terminating contract to
recapture an opportunity that it lost upon entering the contract); Greer
Properties, Inc. v. LaSalle Nat. Bank, 874 F.2d 457, 461 (7th Cir. 1989) (noting
that if defendants exercised their discretion to terminate contract for the sale of
real property “to obtain a better price from [another buyer], their action would
have been in bad faith”). On the facts of this case, we are not persuaded.
Here, the plain language of the termination for convenience clause put Hate to
Paint on notice that Ambrose could terminate the contract upon three days’
notice for its convenience, which in turn put Hate to Paint on notice that
Ambrose could terminate the contract to conserve its resources. The burden of
proving a breach of the implied covenant of good faith and fair dealing lay with
Hate to Paint. The trial court made no findings suggesting, for example, that
Ambrose acted in bad faith by entertaining an undisclosed intent to lock Hate

however, under California law. Hobin, 144 N.H. at 629. We need not decide today whether
New Hampshire law accords with California law.

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to Paint’s price in place while they continued to seek other bids. Furthermore,
as Ambrose argues in its reply brief, by exercising its contractual right to
terminate before Hate to Paint had invested substantial time and money,
Ambrose minimized the amount of resources Hate to Paint devoted to the
contract.2 We conclude that, on the record before us, by ruling that Ambrose
violated an implied duty of good faith and fair dealing, the trial court in essence
rewrote the parties’ contract on the ground that it might operate harshly or
inequitably. This the court cannot do. See Moore v. Grau, 171 N.H. at 190.
We conclude that the trial court erred in granting partial summary judgment
on the ground that Ambrose violated an implied duty of good faith and fair
dealing. Accordingly, we reverse and remand.

Reversed and remanded.

MACDONALD, C.J., and COUNTWAY, J., concurred; BASSETT, J.,
concurred in the result only.

Timothy A. Gudas,
Clerk

2 As noted above, Ambrose reimbursed Hate to Paint $1,360 for paint it had purchased for the

project.

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