Bourne v . Stewart Title et a l . CV-09-270-PB 2/16/11 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Samuel J. Bourne, Individually and as Trustee of Bedrock Realty Trust

v. Case N o . 09-cv-00270-PB Opinion N o .

Stewart Title Guaranty Company And Laconia Savings Bank

MEMORANDUM AND ORDER

Samuel Bourne has sued Laconia Savings Bank (“Laconia”) and

Stewart Title Guaranty Company of Northern New England, Inc.

(“Stewart Title”) in his individual capacity and as a trustee of

the Bedrock Realty Trust (“Bedrock”). The case concerns a

Madison, New Hampshire vacation property that Bedrock purchased

in 2002. Bourne obtained title insurance through Stewart Title

and refinanced the property multiple times with Laconia.

Although Bourne asserts a number of different claims against

each defendant, his core claims against Laconia are that it

fraudulently induced him to borrow more than the property is

worth and misrepresented essential loan terms. His principal

argument against Stewart Title is that it failed to defend his

title as it was obligated to do under his title insurance policy. Laconia has filed a motion for judgment on the

pleadings pursuant to Fed. R. Civ. P. 12(c) and Stewart Title

has filed a motion to dismiss for failure to state a claim

pursuant to Fed. R. Civ. P. 12(b)(6). In this Memorandum and

Order, I grant Laconia's motion for judgment on the pleadings in

its entirety and grant Stewart Title's motion to dismiss in part

and deny it in part.

I. BACKGROUND

Bedrock purchased a vacation home in Madison, New Hampshire

for $92,000 in September 2002. Bourne obtained a mortgage loan

from Laconia, and the loan was secured by a $50,000 mortgage.

Laconia had the property appraised before agreeing to the

mortgage, valuing the property at $94,350. Over the next

several years Bourne refinanced the loan twice through Laconia,

once in January 2005 and a second time in October 2005. The

October 2005 refinancing left Bourne with a $175,000 loan

secured by the mortgage against the property. Laconia

commissioned appraisals for each refinancing and asked Bourne to

wait for the appraisals before determining how much to borrow.

The appraisal for the January 2005 refinancing valued the

property at $155,000, and the October 2005 appraisal valued the

2 property at $223,000. In August 2008, the town of Madison

performed a tax assessment that valued the property at

approximately $76,000.

Bourne was required to purchase a lender s title insurance

policy for the Madison property from Stewart Title pursuant to

the original mortgage agreement with Laconia. Bourne paid for

two policies, one for himself (the “owner policy”) and one for

Laconia (the “lender policy”). Bourne is listed as an insured

party in his capacity as a trustee of Bedrock on the owner

policy. “Covered risks” under the policy include, among others,

risks that arise when “[s]omeone else has an easement on the

land” and “[s]omeone else has a right to limit Your use of the

land.” Pl s Ex. H , Doc. N o . 67-8, 3-4. The lender policy

contains additional assurances regarding easements on the

property but it lists the insured party as “Laconia Savings

Bank, its successors, and/or assigns.” Pl s Ex. G, Doc. N o . 67-

7 , 1 0 . Both policies promise to defend the insured party from

any “covered risk” that is not excepted or excluded from

coverage.

After Bedrock purchased the property, a dispute arose

between Bourne and the town of Madison regarding the scope of an

easement across Bourne s property (the “Kelsey Easement”). Town

3 officials claimed that the Kelsey Easement granted it the right

to allow the public to use snowmobiles and recreational vehicles

on a portion of the property. Bourne denied those claims. The

disputes led to litigation between Bourne and the town. In

2007, the Carroll County Superior Court ruled in favor of

Bourne. That decision was affirmed by the New Hampshire Supreme

Court in 2009.

In a separate dispute, Bourne also claimed that town

officials interfered with maintenance of access to his property,

prevented installation of electric service, and improperly

denied lot subdivision and building permit requests. Those

issues were litigated in a federal court action which resulted

in dismissal of all of Bourne s claims. Finally, one of

Bourne s neighbors also made an adverse claim to the property.

That claim was settled out of court, with the neighbor agreeing

to pay Bourne $8,450. In 2008, yet another dispute arose over

whether the town had properly accepted the Kelsey Easement when

it was first granted. It is unclear from the complaint whether

this disagreement has been resolved.

Each time a legal dispute regarding his property arose,

Bourne gave notice to Stewart Title of the claims and requested

that Stewart defend against the claims. In each instance,

4 Stewart Title refused to defend citing various exceptions and

exclusions in the owner policy that prevented the disputes from

qualifying as covered risks. Partly as a result of legal costs

incurred in resolving the title disputes, Bourne defaulted on

his mortgage and Laconia has notified Bourne of its intention to

institute foreclosure proceedings. Acting pro se, Bourne filed

this action in August 2009 alleging various statutory and common

law violations. Bourne amended his complaint in December 2009.

In February 2010, I held a hearing regarding the sufficiency of

Bourne's pleadings. After that hearing I granted Bourne leave

to amend his complaint a third and final time in an attempt to

clarify the pleadings.

In response to Bourne's third amended complaint, Laconia

filed an answer and a motion for judgment on the pleadings

seeking dismissal of all the claims that apply to it. Stewart

Title later filed a motion to dismiss for failure to state a

claim.1

1 Bourne argues that Stewart Title is in default for failing to file a timely answer. Serving a motion to dismiss, however, extends the deadline to file an answer until 14 days after the motion is resolved. See Fed. R. Civ. P. 12(a)(4)(A). As I have not yet ruled on Stewart Title s motion to dismiss, the deadline to file an answer has not yet passed and Stewart Title is not in default. 5 II. STANDARD OF REVIEW

The Supreme Court s decisions in Bell Atl. Corp. v .

Twombly,

(2007), and Ashcroft v . Iqbal, 129 S . C t .

1937 (2009), establish the appropriate structure for analyzing

the sufficiency of pleadings. Those cases describe a “two-

pronged approach” that first identifies “pleadings that, because

they are no more than conclusions, are not entitled to the

assumption of truth.” Iqbal, 129 S . C t . at 1950. The second

step then requires courts to look at the remaining well-pleaded

factual allegations, assume their veracity, and “determine

whether they plausibly give rise to an entitlement to relief.”

A claim is facially plausible when it pleads “factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged. The

plausibility standard is not akin to a „probability

requirement, but it asks me for more than a sheer possibility

that a defendant has acted unlawfully.” Id. at 1949 (citations

omitted). In deciding a motion to dismiss, I must accept all

well-pleaded factual allegations in the complaint as true,

drawing all reasonable inferences in the plaintiff s favor.

6 Alt. Energy, Inc. v . S t . Paul Fire & Marine Ins. Co.,

0 , 33 (1st Cir. 2001).

The Federal Rules of Civil Procedure also require that

“[i]n alleging fraud or mistake, a party must state with

particularity the circumstances constituting fraud or mistake.”

Fed. R. Civ. P. 9 ( b ) . Claims subject to this requirement must

identify the “time, place, and content of the misrepresentation

with specificity.” S.E.C. v . Tambone,

(1st

Cir. 2010) (quoting Greebel v . FTP Software, Inc.,

(1st Cir. 1999)). Although “malice, intent, knowledge, and

other conditions of a person s mind may be alleged generally,”

Fed. R. Civ. P. 9 ( b ) , allegations of intent must satisfy the

above-described plausibility standard to survive a motion to

dismiss. Iqbal, 129 S . C t . at 1954. The heightened pleading

requirements apply not just to allegations of fraud, but also to

“associated claims where the core allegations effectively charge

fraud.” N . Am. Catholic Educ. Programming Found., Inc. v .

Cardinale,

, 15 (1st Cir. 2009).

“The standard for evaluating a Rule 12(c) motion for

judgment on the pleadings is essentially the same as that for

deciding a Rule 12(b)(6) motion.” Pasdon v . City of Peabody,

(1st Cir. 2005). The court again views the

7 facts contained in the pleadings in the light most favorable to

the nonmovant and draws all reasonable inferences in his favor.

Zipperer v . Raytheon Co.,

0 , 53 (1st Cir. 2007), cert.

denied, 128 S . C t . 1248 (2008). Judgment on the pleadings is

proper “only if the uncontested and properly contested facts

conclusively establish the movant s entitlement to a favorable

judgment.”

(quoting Aponte-Torres v . Univ. of P.R.,

0 , 54 (1st Cir. 2006)).

III. ANALYSIS

Bourne s third amended complaint lists sixteen claims, some

that apply only to Laconia and some that apply to both

defendants. Of those claims, several have been withdrawn by

Bourne and I will not consider them in this order.2 I will

address the remaining claims against Laconia and Stewart Title

separately because they are based on largely different sets of

facts.

A. Claims Against Laconia

Bourne argues in Count 8 of his complaint that Laconia

fraudulently induced him to refinance the Madison property in

2 Bourne has withdrawn counts 3 , 4 , 5 , 7 , 1 1 , and 1 4 . There is no count 10 in the complaint. For ease of reference I will use the original numbers for each count before they were withdrawn, as Bourne has done in his amended complaint.

8 two ways. First, he alleges Laconia caused appraisal reports to

be prepared in connection with the refinancings that

fraudulently overstated the true value of the property. Second,

he alleges that Laconia intentionally misstated unspecified loan

terms. Bourne repeats these allegations in Count 2 , his good

faith and fair dealing claim; Count 9, his unconscionability

claim; Counts 6 and 1 3 , his consumer protection act claims;

Count 1 5 , his predatory pricing claim; and Count 1 6 , his unjust

enrichment claim. Bourne alternatively asserts in Count 12 that

the false appraisals and misstatements also support a negligent

misrepresentation claim against Laconia. Finally, Bourne

asserts a series of contract-related claims. I address each

category of claims in turn.

1. Fraud-related claims

a. Appraisals

Bourne claims that Laconia fraudulently misrepresented the

value of the Madison property when it appraised his property in

2005. Bourne has not pleaded sufficient facts showing that the

appraisal values were incorrect, and, in any event, he has

failed to properly plead that Laconia acted with an intention to

defraud.

9 The vast majority of Bourne s allegations surrounding

Laconia s claimed misrepresentations are exactly the kind of

bare “legal conclusions” that the Supreme Court has declared

insufficient for pleading purposes. See Twombly,

; Iqbal, 129 S . C t . at 1950. In Iqbal, for example, the

plaintiff s allegations of unconstitutional discrimination were

deemed insufficient where he pleaded that the defendants “knew

o f , condoned, and willfully and maliciously agreed to subject

[him]” to harsh conditions. Iqbal, 129 S . C t . at 1951. The

Court noted that these allegations were “nothing more than a

„formulaic recitation of the elements ” and as such were not

entitled to be assumed true.

(quoting Twombly,

).

Here, as in Iqbal, Bourne s allegations of wrongdoing

surrounding Laconia s appraisal of his property are almost all

bare legal conclusions. Bourne alleges, for example, that

Laconia “unconscionably induced Plaintiff . . . into borrowing

additional funds under fraudulent appraisals.” See Pl s

Verified Pet. For Prelim. I n j . And Equitable Relief Under Common

Law (“Am. Compl.”), Doc. N o . 6 7 . , ¶ 1 0 . Allegations such as

these amount to nothing more than a “formulaic recitation” of

10 legal conclusions, and are not entitled to an assumption of

truth. See Iqbal, 129 S . C t . at 1951.

Turning to the second prong of the analysis laid out in

Iqbal and Twombly, the only non-conclusory facts Bourne alleges

are that the property was appraised at $94,350 in 2002, $155,000

in January of 2005, and $223,000 in October of 2005. Bourne

also notes that an August, 2008 tax assessment valued the

property at approximately $76,000. While the appraisals he

relies on vary significantly, such variations are not enough on

their own to establish that Laconia overstated the value of the

property. See In re Pub. Serv. C o . of N.H.,

(1st Cir. 1995) (noting that where a complaint merely asserted

inconsistencies between a company s financial projections, it

did “not even begin to show that they were wrong, let alone

fraudulent”).

Even if Bourne had sufficiently pleaded that Laconia

misrepresented appraisal values, he cannot establish a viable

fraud claim without properly alleging that Laconia acted with

fraudulent intent. See Patch v . Arsenault,

, 1083-

84 (N.H. 1995). Mere “general averments” of scienter are not

enough, and the plaintiff must offer some factual basis for

inferring that a defendant knew or should have known that

11 statements were inaccurate. See Serabian v . Amoskeag Bank

Shares, Inc.,

5 7 , 361 (1st Cir. 1994).

Bourne offers no facts to support his conclusion that

Laconia acted with fraudulent intent. Accordingly, Laconia is

entitled to judgment on the pleadings with respect to all of

Bourne s fraud-related claims that Laconia misstated the value

of his property.

b. Mortgage Terms

Bourne also claims that Laconia fraudulently misrepresented

unspecified lending practices and various mortgage terms such as

the applicable interest rate. He provides no factual

allegations to support this claim, however, relying entirely on

legal conclusions couched as factual allegations. For example,

he claims that Laconia “misrepresented . . . that it engaged in

prudent and commercially responsible lending practices” and

“charged excessive interest fees up front without notice.” Am.

Compl., Doc. N o . 6 7 , ¶ 5 7 . Once again, the abundance of

conclusory terms such as “prudent,” “commercially responsible,”

and “excessive” without any supporting facts explaining the

basis of those claims prevents me from being able to credit the

bulk of Bourne s allegations for the purposes of this motion.

Iqbal, 129 S . C t . at 1949.

12 Bourne's remaining non-conclusory allegations regarding

Laconia's lending practices are also insufficient. Bourne does

not describe the interest rates he claims were excessive and he

does not identify the lending practices that Laconia misstated.

He also fails to provide any facts showing that Laconia acted

with the required scienter. See Patch,

.

These allegations, like Bourne's claims regarding the

appraisals, are certainly insufficient under the heightened

pleading standard that applies to fraud claims. Because Bourne

has failed to properly plead that Laconia fraudulently misstated

its lending practices or any essential loan terms, Laconia is

entitled to judgment on the pleadings with respect to these

claims.

2. Negligent Misrepresentation Claim

Bourne attempts to repackage his fraud-related claims as a

negligent misrepresentation claim. He also asserts that Laconia

is liable because it negligently failed to disclose that it had

purchased a lender's title insurance policy from Stewart Title.

Negligent misrepresentation, like fraudulent

misrepresentation, must be pleaded with particularity. N. Am.

Catholic Educ. Programming Found., Inc.,

. Thus,

to the extent that Bourne premises his negligent

13 misrepresentation claim on the same conduct that he cited in

support of his fraud-related claims, his negligent

misrepresentation claim fails for the same reasons that his

fraud-related claims fail.

To the extent that Bourne faults Laconia for its alleged

failure to disclose the fact that it had purchased a title

insurance policy from Stewart Title, his claim is deficient both

because he has failed to explain why Laconia had a duty to

disclose this information and because, in any event, he has

failed to explain how he was damaged by Laconia's failure to

disclose its purchase of the title policy. Accordingly, Laconia

is entitled to judgment on the pleadings with respect to

Bourne's negligence claim.

3. Contract-Related Claims

a. Count 2: Breach of Contract

In New Hampshire, “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.” Bronstein v. GZA

GeoEnvironmental, Inc.,

(N.H. 1995) (internal

quotation marks omitted). The only contracts that existed

between Bourne and Laconia are the loan agreements. Bourne does

not cite any provisions in the loan agreements that Laconia

14 allegedly breached. Therefore, he provides no factual support

for his breach of contract claim and the claim must be

dismissed.

b. Count 9: Unconscionability

In addition to his breach of contract claim, Bourne argues

that the loan agreements are unenforceable because they are

unconscionable. When seeking to void a contract for

unconscionability, a plaintiff must show both that he had an

“absence of meaningful choice” when entering the contract, and

that the contract terms are “unreasonably favorable” to the

other party. Pittsfield Weaving C o . v . Grove Textiles, Inc.,

3 8 , 639 (N.H. 1981).

Bourne alleges that the mortgage agreement is

unconscionable because: (1) the bank loaned him more than his

property was worth; (2) the bank used an incorrect calculation

for Bourne s income; (3) title issues were being litigated when

the Bank allowed Bourne to refinance and (4) the bank restricted

Bourne s ability to collect rental income and obtain homestead

protection. Am. Compl., Doc. N o . 6 7 , ¶ 6 6 . I have already

explained that Bourne has failed to plead a viable claim that

Laconia is liable because it lent him more than his property was

worth. The second and third arguments fail because Bourne does

15 not allege that he was prevented from having any meaningful

choice as to whether to enter the contract. As for the fourth

argument, while it does allege that Laconia restricted his

rights with respect to the property, Bourne again fails to

explain how the bank forced him to enter the contract. Because

the complaint fails to allege sufficient facts to allow an

inference that Bourne lacked meaningful choice, a required

element of unconscionability, Laconia is entitled to judgment on

the pleadings with respect to Bourne s unconscionability claim.

c. Count 1 6 : Unjust Enrichment

The final claim Bourne alleges against Laconia is for

unjust enrichment and quantum meruit.3 “Unjust enrichment is an

equitable remedy, found where an individual receives a benefit

which would be unconscionable for him to retain.” Clapp v .

Goffstown School Dist.,

(N.H. 2009)

(internal quotation marks omitted). One limitation on the

doctrine is that “unjust enrichment shall not supplant the terms

of an agreement.”

. The court rejected an unjust

3 New Hampshire law does not appear to distinguish between unjust enrichment and quantum meruit theories. See, e.g., Nat l Emp t Serv. Corp. v . Olsten Staffing Serv., Inc.,

0 1 , 406 (N.H. 2000) (reversing judgment on plaintiff's “quantum meruit” claim, stating: “[a] plaintiff is entitled to restitution for unjust enrichment if the defendant received a benefit and it would be unconscionable for the defendant to retain that benefit.”) 16 enrichment claim in Clapp based on this “general rule,” noting

that a valid and enforceable contract precluded consideration of

an unjust enrichment claim where there was a contract that

controlled the parties relationship. Id. at 1025-26. Here, I

have already concluded that Bourne has failed to properly allege

that the mortgage agreement between Bourne and Laconia was

unconscionable, that it was breached by Laconia, or that it was

otherwise unenforceable. Because Bourne may not plead unjust

enrichment to supplant the terms of his agreement with Laconia,

his unjust enrichment and quantum meruit claim necessarily

fails.4

B. Claims Against Stewart Title

Bourne asserts a variety of claims against Stewart Title

that may be grouped into two categories: (1) breach of contract

claims based on insurance policies issued by Stewart Title, and

(2) alternative legal theories that derive from the breach of

contract claims. I address each category of claims in turn.

4 Bourne also seeks an injunction preventing Laconia from instituting foreclosure proceedings against his property. Bourne s request for an injunction is based on the theory that he has a viable claim against Laconia. Because I have dismissed all of Bourne s claims against Laconia, he no longer has a viable theory to prevent Laconia from foreclosing. Therefore, Bourne s request for an injunction is denied.

17 1. Contract Claims

a. Count 2 : Breach of Contract and the Implied Covenant of Good Faith and Fair Dealing

Bourne s claims against Stewart Title arise out of a

different set of facts than his claims against Laconia.

Essentially, Bourne claims that Stewart Title breached the

lender and the owner title insurance policies when it refused to

defend the Madison property in the various title disputes.

As a threshold matter, Bourne s claims arising out of the

lender policy fail because he is not an insured party under the

policy. Absent any evidence that a person was intended to be a

third-party beneficiary of a contract, that person may only

recover if he is one of the parties to the contract that the

defendant allegedly breached. See Plourde Sand & Gravel v . JGI

E . , Inc.,

(N.H. 2007). A third-party

beneficiary relationship exists only where “the contract is so

expressed as to give the promisor reason to know that a benefit

to a third party is contemplated by the promise as one of the

motivating causes of his making the contract.”

(quoting

Spherex, Inc. v . Alexander Grant & Co.,

(N.H. 1982)); see also Audler v . CBC Innovis, Inc.,

(5th Cir. 2008) (holding that the plaintiff could not

recover on a flood insurance contract between an insurance

18 company and his lender where he “ha[d] not presented any

evidence that [the bank and insurance company] intended him as a

beneficiary of the contract”).

Bourne does not allege that he was a party to the lender

policy. Nor does he sufficiently allege that he was an intended

beneficiary of the policy. The policy which Bourne attached to

his amended complaint lists “Laconia Savings Bank, its

successors, and/or assigns” as the insured parties, and makes no

mention of Bourne. Pi's Ex. G, Doc. No. 67-7. Bourne does not

allege that any promises were made to him that he would benefit

from the lender policy. While Bourne does allege that he was

required to pay for the policy, that allegation alone does not

establish that he was an intended beneficiary, particularly in

light of the omission of his name as an insured party.

Accordingly, Bourne's claims under the lender policy must be

dismissed.5

5 Because Bourne has failed to plead sufficient facts to show that he received any protection under the lender policy or that it was represented to him that he would receive such protection, all other claims that stem from Stewart Title s alleged duties under that policy also fail. Thus I need not discuss separately Bourne s allegations that Stewart Title made fraudulent representations (count eight), acted unconscionably (count nine), was negligent (count twelve), or made use of any unfair or deceptive practices (counts six and thirteen) with regards to the lender policy. 19 As for the owner policy, there is no question that Bourne

is an insured party under that policy. Bourne identifies four

matters that support his claim for coverage under the owner

policy: (1) litigation with the town of Madison regarding the

scope of the Kelsey easement and whether a class VI road existed

or could be laid out over the property, (2) litigation over

whether town officials interfered with Bourne's property

maintenance and building requests, (3) an adverse claim by one

of Bourne's neighbors, and (4) litigation over whether the town

properly accepted the Kelsey easement.

The owner policy covers the risk that “[s]omeone else has

an easement on the land” and the risk that “[s]omeone else has a

right to limit your use of the land.” Am. Compl., Doc. No. 67,

¶ 30 (emphasis omitted). Bourne's first, second, and fourth

disputes all relate either to the town's claimed easement across

the Madison property or a claimed right by the town to limit

Bourne's use of the property. Bourne's factual allegations

establish a plausible claim that the owner policy required

Stewart Title to defend against these disputes, and that its

failure to do so constituted a breach of its obligation under

the policy. Bourne does not provide any facts as to the nature

of the third dispute, however, which he describes simply as an

20 “adverse claim” from a neighbor. Bourne s single allegation

regarding that dispute is so vague that it fails to set out

facts that could plausibly demonstrate that it falls under the

policy. Iqbal, 129 S . C t . at 1950. As a result, that

particular claim must be dismissed.

As for the three remaining coverage claims, Stewart Title

responds by arguing that various exceptions under the policy

negated any obligation it may have had to provide coverage.

“The insurer asserting an exclusion of coverage . . . bears the

burden of proving that the exclusion applies.” Progressive N .

Ins. C o . v . Concord Gen. Mut. Ins. Co.,

6 8 , 372 (N.H.

2005). Stewart Title does not point to — and the complaint does

not contain — factual information that would allow Stewart Title

to carry this burden. For example, Stewart Title argues that

coverage regarding the Kelsey Easement is excluded by “Special

Exception 3.” That exception eliminates from coverage

“[r]ights, rights of way and easements in instruments recorded

in the Carroll County Registry of Deeds in Book 7 3 4 , Page 078.”

Pl s Ex. H , Doc. N o . 67-8, 1 0 . Stewart Title does not state

whether the Kelsey Easement was in fact recorded, however, and

there is no information in Bourne s complaint that could either

confirm or deny such an allegation.

21 The same problem exists for each exception Stewart Title

points to as a justification for denying coverage. At no point

does Stewart Title explain how the facts alleged in this case

require the application of any policy exceptions. Instead, it

relies on blanket assertions devoid of any factual support.

Bourne has adequately pleaded a plausible claim for breach of

contract, and Stewart Title has failed at this stage to meet its

burden of establishing that policy exclusions negated its

contractual obligations under the owner policy. Therefore,

Bourne may proceed with his breach of contract claim under the

owner policy with respect to all of the disputes surrounding the

Madison property except the adverse claim made by his neighbor.

b. Count 9: Unconscionability

Anticipating Stewart Title s argument that it had no

obligations under the policy because of various exclusions and

exceptions, Bourne argues that those exceptions and exclusions

are unconscionable because they are “ambiguous” and “confusing.”

Am. Compl., Doc. N o . 6 7 , ¶ 6 7 . He seeks to void those

provisions of the title insurance contract, leaving the

remainder of the policy intact and enforceable.

Bourne fails to plead sufficient facts to support a claim

that the exclusion and exception provisions are unconscionable.

22 As was discussed earlier, he must allege facts showing that

there was an “absence of meaningful choice” when the contract

was formed, and that the terms in dispute are “unreasonably

favorable.” Pittsfield Weaving Co., 430 A.2d at 639.

Exclusions are included in most insurance contracts and, even

when they are ambiguous, the proper remedy is to construe the

ambiguity in favor of the insured, not to declare them

unconscionable. See Progressive N . Ins. Co., 864 A.2d at 372

(“Insurers are free to contractually limit the extent of their

liability through use of a policy exclusion”); Hoepp v . State

Farm Ins. Co.,

(N.H. 1997) (noting the rule

that requires “interpreting the language in favor of the

insured. . . when ambiguities are found in an exclusionary

clause”).

Here, Bourne notes that the exceptions and exclusions

repeatedly reference each other and argues that they are

ambiguous and confusing. Even if the provisions were ambiguous,

however, which I need not decide at this time, that would simply

mean that the provisions should be construed against Stewart

Title and would not justify voiding the provisions as

unconscionable. Moreover, nowhere in his complaint does Bourne

allege that he had no choice as to whether to enter the contract

23 under those terms, or even that the terms are unreasonably

favorable to Stewart Title. Because Bourne pleads facts

alleging that, at most, the terms of the contract were confusing

and ambiguous, his claim that the policy terms are

unconscionable is dismissed.

2. Remaining Claims

a. Count 8 : Fraudulent Representation

Bourne alleges that Stewart Title fraudulently represented

that it was not required to cover the various title disputes

concerning the Madison property. As I discussed with regard to

the fraud claims against Laconia, a fraud claim is subject to a

heightened pleading standard, Fed. R. Civ. Pro. 9 ( b ) , and must

allege that the representation was made “with knowledge of its

falsity or with conscious indifference to its truth,” Patch,

. Here, Bourne s only references to scienter in

the amended complaint come in the form of conclusory statements,

which are not entitled to an assumption of truth. Iqbal, 129 S .

C t . at 1951. For example, Bourne states that Stewart Title

“fraudulently induced and or fraudulently persuaded Plaintiff

into believing that the policy did not allow coverage,” that it

“made fraudulent representations that it knew to be false,” and

24 that it “intended that the Plaintiff act upon the fraudulent

representations.” Am. Compl., Doc. N o . 6 7 , ¶ 6 1 . Because these

allegations are simply formulaic recitations of the elements of

fraud, they are insufficient to plead a viable fraud claim.

b . Count 1 2 : Negligence

Bourne repackages his allegations as a negligence claim,

claiming Stewart Title negligently failed to defend his

property. Under New Hampshire law, a rule known as the

“economic-loss doctrine” prevents a contracting party from

seeking tort damages “for purely economic or commercial losses

associated with the contract relationship.” See Plourde Sand &

Gravel Co.,

. This rule recognizes that

imposing tort duties onto existing contractual obligations

“would disrupt the contractual relationships between and among

the various parties.”

.

Here, all of the duties that Bourne alleges Stewart Title

negligently breached stem from a failure to defend against

adverse claims to the property, and thus are associated with the

contract relationship between Bourne and Stewart Title. The

damages he seeks are also squarely within the economic-loss

doctrine. See

. Because Bourne seeks economic

25 damages that are associated with the contractual relationship he

had with Stewart Title, his negligence claim is precluded by the

economic loss-doctrine and must be dismissed.

c. Count 13: Violation of RSA 358-A

Bourne alleges that the same conduct underlying his other

claims against Stewart Title constituted a violation of New

Hampshire's consumer protection statute. The New Hampshire

Supreme Court has determined, however, that “the insurance trade

is exempt from the Consumer Protection Act.” Bell v. Liberty

Mut. Ins. Co.,

(N.H. 2001). In light of

this rule, Bourne's consumer protection claim is dismissed

because the act does not apply to Stewart Title.6

6 In Count 6 Bourne also alleges that Stewart Title violated the Massachusetts Consumer Protection statute, again basing this claim on the allegations that underlie his breach of contract arguments. Recovery under Ch. 93A is available only when the misconduct occurred “primarily and substantially” in Massachusetts. Mass. Gen. Laws Ann. ch. 93A § 11. As was the case with Bourne's claims against Laconia, the “center of gravity” of Bourne's claims against Stewart Title is in New Hampshire. See Kuwaiti Danish Computer Co. v. Digital Equip. Corp.,

(Mass. 2003). Almost all of the factual circumstances surrounding Stewart Title's allegedly wrongful conduct took place in New Hampshire, including the property disputes which Bourne alleges should have been covered by the title insurance. Because the available facts establish the inevitable success of Stewart Title's defense against Bourne's Ch. 93A claim, that count is dismissed.

26 d. Count 15: Predatory Lending and Unfair and Deceptive Trade Practices

Bourne's predatory lending and unfair and deceptive trade

practices claim against Stewart Title fails to “give the

defendant fair notice of what the . . . claim is.” Twombly,

. Like his complaint against Laconia, Bourne bases

his claim broadly in the Federal Trade Commission Act. While he

does attempt to allege that it was Stewart Title's “failure to

warn of a defective or dangerous condition” that violated the

act, that standard applies to product liability actions and has

no bearing on Stewart Title's conduct in this matter. See

Maillet v. ATF-Davidson Co., Inc.,

(Mass.

1990). Because Bourne fails to allege a viable cause of action

related to predatory lending and deceptive trade practices, this

count is dismissed.

IV. CONCLUSION

For the reasons stated above, I conclude that Bourne has

inadequately pleaded each of the claims in his complaint, with

the exception of his breach of contract claim (Count 2) against

Stewart Title. I grant Laconia's motion for judgment on the

pleadings (Doc. No. 77) in its entirety and grant Stewart

Title's motion to dismiss (Doc. No. 69) in part. The only

27 remaining claim in this case is Bourne's breach of contract

claim against Stewart Title.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

February 1 6 , 2011

cc: Samuel Bourne, pro se Edmond J. Ford, Esq. R. Matthew Cairns, Esq.

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