Toy v. City of Rochester
Annotate this CaseDefendants, the City of Rochester (City) and Michael and Stacey Philbrook, appealed superior court orders : (1) requiring the City to reacquire title to a parcel of land it previously conveyed to the Philbrooks and transfer title to plaintiffs Donald and Bonnie Toy; and (2) awarding attorney’s fees to the Toys. In May 2015, the City took title to a 1.8-acre parcel of land located in Rochester (Lot 54). The Philbrooks owned a lot adjacent to Lot 54. The Toys owned a manufactured housing park known as “Addison Estates” and an additional, smaller lot located nearby. In 2015, the Toys purchased an additional lot, which shared boundaries with Addison Estates and Lot 54. Lot 54 was located in a zoning district in which the development or expansion of manufactured housing parks was prohibited. The Rochester City Council voted to sell Lot 54 through an advertised sealed bid process. The Toys submitted the highest bid and represented that they intended to “annex the property” to their adjacent property. The Philbrooks submitted the lowest bid stating that they intended to “[a]dd this abutting land to [their] land.” The city council reached a “‘consensus’” that the City would sell Lot 54 to the Toys, provided that they agreed to a restrictive covenant in the deed prohibiting the owner of Lot 54 from ever using the property for manufactured housing park development or to expand Addison Estates. The city council also agreed that, if the Toys did not accept the restrictive covenant, it would sell the lot to the Philbrooks. The Toys’ attorney declined purchase with the covenant. The City then sold the property to the Philbrooks with a warranty deed that did not contain any restrictive covenants. The Toys filed a complaint against the City and the Philbrooks, seeking damages, a declaration that the Toys were “lawfully entitled to the right of first refusal” on Lot 54, an order concluding that the City “breached the Conditions of Sale by transferring” Lot 54 to the Philbrooks and requiring the Philbrooks to convey Lot 54 to the Toys, and attorney’s fees. The defendants moved to dismiss. Although, ideally, the City should have included the restrictive covenant in the Notice of Sale or the Conditions of Sale, the New Hampshire Supreme Court disagreed with the trial court that the City could not subsequently revise the terms of sale to include the restrictive covenant. However, the Supreme Court agreed with the trial court that, in contravention of controlling case law, the City failed to treat the Toys “fairly and equally” when it did not require the Philbrooks to accept the same restrictive covenant demanded of the Toys. Therefore, the City's covenant requirement was “outside the bounds of fairness.” Accordingly, the Supreme Court affirmed the trial court’s conclusion that the City did not treat the Toys “fairly and equally” — but only to the limited extent that the City failed to require that other bidders, including the Philbrooks, accept the restrictive covenant. The attorney fee award was vacated and the matter remanded for further proceedings.
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