Vatche Manoukian v. U.S. Bank Trust National Association, as Trustee of Dwelling Series IV Trust

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2023-0409, Vatche Manoukian v. U.S. Bank
Trust National Association, as Trustee of Dwelling Series IV
Trust, the court on February 11, 2025, issued the following
order:

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

I. Background

The plaintiff, Vatche Manoukian, appeals an order of the Superior Court
(Temple, J.) denying his motion to enforce a settlement agreement to discharge
a mortgage and related loan obligation with the defendant, U.S. Bank Trust
National Association, as Trustee of Dwelling Series IV Trust (U.S. Bank).
Although the defendant did not raise the statute of frauds as a defense to the
motion, in denying the motion the trial court, sua sponte, reasoned that the
purported settlement agreement was subject to the statute of frauds, see RSA
506:1 (2010), and, because “there [was] nothing to suggest that the parties
reduced their agreement to writing,” the agreement was unenforceable. The
plaintiff unsuccessfully moved for reconsideration. This appeal followed.

II. Analysis

On appeal, the plaintiff argues that the trial court erred as a matter of
law by raising the statute of frauds sua sponte, and by failing to inform him
that “the issue of the Statute of Frauds would be addressed at the final
hearing.” The defendant asserts that the trial court had the authority to raise
the affirmative defense, citing Exeter Hospital v. Hall, 137 N.H. 397 (1993), and
Superior Court Rule 1(d).

The statute of frauds is an affirmative defense on which the party seeking
to enforce it bears the burden of both pleading and proof. See Riso v. Riso, 172
N.H. 173, 178 (2019). A failure to timely plead an affirmative defense,
including the statute of frauds, ordinarily constitutes a waiver of the defense.
See Super. Ct. R. 9(d).

Although in Exeter Hospital we determined that the trial court did not err
by raising an affirmative defense sua sponte, that case was decided under the
language of former New Hampshire District and Municipal Court Rule 3.10(A),
a rule that is no longer in effect and which differed substantially from the
language of Superior Court Rule 9(d). See Exeter Hospital, 137 N.H. at 399-
400 (explaining that because Rule 3.10(A) established an exception — “by leave
of court for good cause shown and upon such terms as justice may require” —
to the requirement that “special pleas” had to be filed within thirty days
following the return day of the writ, the court’s decision to raise sua sponte the
affirmative defense of the statute of limitations was not erroneous (quotation
omitted)); Super. Ct. R. 9(d)(16) (“[f]ailure to plead” the affirmative defense of
the statute of frauds within the time allowed in section 9(b) “will constitute
waiver of such defense[]”). The defendant cites no authority from this court
that the trial court may sua sponte raise an affirmative defense under the
Superior Court Rules.

Moreover, although we concluded in Exeter Hospital that the trial court
did not err by raising the statute of limitations sua sponte under the then-
applicable court rules, we held that the court did err by denying the plaintiff an
opportunity to rebut the affirmative defense once the trial court had raised it
sua sponte. See Exeter Hospital, 137 N.H. at 400. Accordingly, even if the trial
court had authority to raise the statute of frauds sua sponte in this case, it
could not deprive the plaintiff of an opportunity to rebut the defense — a
defense that the defendant bore the burden of proving.

Neither the trial court’s narrative order nor its margin order denying the
plaintiff’s motion for reconsideration explains the basis for the court’s decision
to, sua sponte, raise and decide the affirmative defense of the statute of frauds.
As such, neither order allows an opportunity for adequate review in this court.
Moreover, any application of Superior Court Rule 1(d) would require a factual
finding by the trial court that “good cause” and “justice” require the court to
raise — and determine the merits of — the affirmative defense of the statute of
frauds sua sponte. Under these circumstances, we vacate the trial court’s
order and remand for further proceedings consistent with this order. On
remand, the trial court shall first determine whether it has authority to raise
the statute of frauds sua sponte. We express no opinion as to this question. If
the trial court determines that it has such authority, it shall then hold a
hearing to provide the plaintiff an opportunity to rebut the defense. See id.

Vacated and remanded.

MACDONALD, C.J., and BASSETT, DONOVAN, and COUNTWAY, JJ.,
concurred.

Timothy A. Gudas,
Clerk

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