Appeal of Town of Salem & a. and Town of Salem & a. v. Local Government Center, Inc. & a., 133 A.3d 595

Background

Several Local Government Center entities (LGC) operated pooled risk management programs under RSA chapter 5-B; Health Trust, Inc. and Property Liability Trust were among those entities.
The Secretary of State’s Bureau of Securities Regulation (Bureau) brought administrative proceedings alleging LGC violated RSA chapter 5-B, including the requirement to return excess earnings and surplus to participating political subdivisions.
The presiding officer’s August 16, 2012 order found violations and required Health Trust and Property Liability Trust to return excess funds (originally directing distribution to current members unless an agreed plan covered former members).
LGC appealed; this Court in Appeal of Local Government Center affirmed in part and remanded. After further proceedings and a consent decree, the Bureau proceeded to distribute approximately $17.1 million in excess funds to current members.
Several towns (the Towns) and the City of Concord, former members who were not current as of August 16, 2012, sought: (a) in the administrative proceeding, to share in the $17.1 million distribution as former members; and (b) in superior court, monetary relief (breach of contract, implied contract, breach of fiduciary duty) against LGC for not returning surplus funds.
The presiding officer denied the Towns’ request to participate in the distribution; the superior court dismissed the plaintiffs’ civil complaint, concluding RSA 5-B:4-a vests exclusive jurisdiction and remedies in the Secretary of State.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether RSA 5-B:4-a precludes plaintiffs’ common-law and contract claims and vests exclusive remedial authority in the Secretary of State	RSA 5-B:4-a only grants the Secretary exclusive authority to bring administrative actions and impose penalties; it does not abrogate private common-law remedies	RSA 5-B:4-a’s plain language grants exclusive authority and jurisdiction to enforce chapter 5-B, including restitution/disgorgement, precluding parallel common-law claims	Held: RSA 5-B:4-a provides the exclusive remedy for claims that seek to enforce chapter 5-B obligations; plaintiffs’ statutory-based and implied-in-fact contract claims fall within secretary’s exclusive jurisdiction and must be pursued administratively.
Whether a common-law contract claim (for return of surplus under participation/membership agreements) survives despite RSA chapter 5-B	Contract claims are distinct and enforceable in court despite overlap with statutory provisions	Allowing contract suits would permit circumvention of the statutory exclusive administrative enforcement scheme	Held: Contract claim is ‘‘inextricably entwined’’ with RSA chapter 5-B and therefore remediable only through the administrative scheme in RSA 5-B:4-a.
Whether the presiding officer erred by refusing to order distribution of excess funds to former members (i.e., whether Secretary’s restitution/disgorgement power extends to former members)	Former members are entitled to surplus that was withheld while they were members; the Secretary’s remedies can reach former members as restitution/disgorgement	The statute’s distribution language ("participating political subdivisions") should be read as limited to current members, so former members need not be paid	Held: The presiding officer erred as a matter of law to the extent he concluded he lacked authority to order restitution/disgorgement to former members; his denial is vacated and the matter is remanded for further proceedings to determine proper remedy.
Whether LGC’s compliance with the administrative order immunizes it from plaintiffs’ civil claims	Compliance with the administrative distribution order bars plaintiffs’ civil action seeking the same funds	Administrative exclusivity and compliance foreclose alternate judicial relief	Held: Because RSA 5-B:4-a is exclusive, the court need not decide the alternate immunity-by-compliance argument; dismissal on exclusivity grounds is affirmed.

Key Cases Cited

Appeal of Local Gov’t Ctr., 165 N.H. 790 (2014) (prior appellate disposition and factual background for the administrative proceedings)
In re Estate of Mills, 167 N.H. 125 (2014) (standard of review for trial court grant of motion to dismiss)
Case v. St. Mary’s Bank, 164 N.H. 649 (2013) (statute abrogating common law requires clear expression of legislative intent)
JP Morgan Chase Bank v. Grimes, 167 N.H. 536 (2015) (when statutory language is plain, courts do not consult legislative history)
Pools by Murphy v. Dep’t of Consumer Pro., 841 A.2d 292 (Conn. Super. Ct. 2003) (discussing restitution as return of specific thing or disgorgement)
Frank Shop v. Crown Cent. Petroleum Corp., 564 S.E.2d 134 (Va. 2002) (disgorgement described as compelled surrender with award to injured party)