THE STATE OF NEW HAMPSHIRE

MERRIMACK, SS. SUPERIOR COURT

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JAMES CAREW AND ALFRED J.T.
RUBEGA
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V. 91-E-532-B
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STATE OF NEW HAMPSHIRE
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ORDER

The State has filed a motion to dismiss the above-captioned

equity action for failure to state a claim. The plaintiffs object

to this motion and have filed a motion for summary judgment. The

State concedes that there are no issues of material fact in dispute,

but asserts that if the Court does 'not dismiss this action, summary

judgment should be entered for the State, not the plaintiffs. A

hearing on this matter was held on January 2, 1992. The undisputed

facts are as follows:

Plaintiff Al Rubega was commissioned to serve as Director of

the Office of Securities Regulation for a term ending March 31,

1994. Likewise, plaintiff James Carew was commissioned to serve as

Chief Investigator for the Office of Securities Regulation with a

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term of office ending March 31, 1992. Effective July 1, 1991

Chapter 355 of the Laws of 1991 eliminated the plaintiffs' positions

many months prior to the termination date of their respective

commissions by abolishing the Office of Securities Regulaticn

and shifting the duties of that office to other state agencies.

The parties concur that pursuant to Part II, Article 5 of the

State Constitution, the legislature may recognize or even abolish

certain government positions. However, the parties disagree as to

whether during such reorganization, commissioned employees may be

terminated from their offices without pay.

The State maintains that no contract existed between the State

and the plaintiffs, and therefore, the plaintiffs have failed to

state a claim upon which relief may be granted. Additionally, the

State asserts that it has not violated the wage-claim statute,

RSA 275:42 et seq., because the State is not an employer within

the meaning of that statute. Finally, the State claims that this

action is barred by sovereign immunity.

On the other hand, the plaintiffs maintain that a contractual

relationship between parties was created under RSA 400-A:43,:I and

:46. The plaintiffs contend that pursuant to RSA 4:1 commissioned

officers of the State may only be removed for cause. Thus, the

plaintiffs claim that they each have a due process property interest
 3

in their respective job positions and a vested right to compensation

therefrom. The plaintiffs assert that providing procedural safeguards

"commensurate with the extent of [their] reliance on the express

terms of [their] commission[s] comports with the important policy

of attracting and retaining qualified individuals in the service

of this State." Blake v. State, 115 N.H. 431, 434 (1975); see also

King v. Thomson, 119 N.H. 219, 221 (1979). Additionally, the plain-

tiffs claim that Chapter 355 of the Laws of 1991 which abolishes

the Office of Securities Regulation cannot be retroactively applied

because it affects substantive rights.

In ruling upon the motion to dismiss, "all facts properly

pleaded are assumed to be true, and the reasonable inferences there-

from are construed most favorably to the plaintiff." Morvay v.

Hanover Ins. Cos., 127 N.H. 723, 724-25 (1986) (quoting Lawton v.

Great Southwest Fire Ins. Co., 118 N.H. 607, 610 (1978)). The

Court will deny the motion if "the [plaintiff's] allegations are

reasonably susceptible of a construction that would permit recovery."

Rounds v. Standex International, 131 N.H. 71, 74 (1988) (quoting

Collectramatic, Inc. v. Kentucky Fried Chicken Corp., 127 N.H.

318, 320 (1985)). Construing the facts as pleaded in the light most

favorable to the plaintiff, the Court finds that based on the

plaintiffs' allegations, recovery may be possible. Therefore,

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dismissal is inappropriate.

However, as the parties concur on all of the material facts,

the Court must apply the applicable law and render summary judgment

for the appropriate party. As a threshold matter, the Court must

determine whether the employment relationship between the plaintiffs

and the State gave the plaintiffs a due process property interest

in their respective positions. The State denies that any contractual

relationship exists between it and the plaintiffs and claims that

the plaintiffs, therefore, have no property interest and no entitle-

ment to compensation. The State's position would essentially treat

commissioned officers as employees at will who can be stripped of

their offices any time the legislature decides to reorganize.

Although public employment per se does not give the employee

a protected property right, Burrage v. New Hampshire Police Standards

Council, 127 N.H. 742, 744 (1986), public employment coupled with

a commission of office is a different matter. In King v. Thomson,

119 N.H. 219 (1979), a case involving the wrongful removal of John

King, the director of the State board of probation, the State

conceded that:

RSA 4:1 (1970) (amended Cum. Supp. 1978)

provided Mr. King with a constitutionally
created property interest; he was given an
entitlement by the State and an expectation
of the continuance of that entitlement.
Board of Regents v. Roth, 408 U.S. 564, 577
(1972). King, supra at 221.
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The Court finds that theplaintiffs possess a due process property

interest in their positions with the Office of Securities Regulation

for the tenure set forth in their respective commissions. The

specifics of this employment relationship between the plaintiffs

and the State were set forth in former RSA 400-A:43 and :46 and

RSA 94:1-a,I which were repealed or amended by Chapter 355:92 and

:93 of the Laws of 1991. The existence of an entitlement of the

plaintiffs to their commissions implies the existence of an

appropriate remedy to enforce these rights. See State Employee's

Association of N.H. v. Belknap County, 122 N.H. 614, 621 (1982).

Consequently, the doctrine of sovereign immunity does not shield

the State in the instant action. See id. at 621-22.

Having determined that the plaintiffs do have a property

interest at stake, the Court now turns to the question of whether

the State violated those property interests when its reorganization

scheme pursuant to Part II, Article 5 of the State Constitution

eliminated the plaintiffs' positions with the Office of Securities

Regulation. The State cites. Bastian v. Kennedy, 829 F.2d 1 (1st

Cir. 1987) in support of its contention that an unclassified,

commissioned officer may be removed from her position as the result

of a government reorganization scheme.

The Bastian case, however, is distinguishable from the case at

hand. When Ms. Bastian accepted her commission pursuant to the terms
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of RSA 98:9, she had prospective notice that RSA 98:9 was scheduled

for repeal under the terms of the State's sunset law. Bastian, 829

F.2d at 2. The plaintiffs' commissions were not subject to any

such sunset review. Moreover, when Ms. Bastian's original commission

expired along with the expiration of her agency, pursuant to the

preexisting sunset law, Ms. Bastian accepted a new position with a

one-year commission. Id. Ms. Bastian filed her suit when the State

failed to renew her second commission after its term expired. Id.

The situation—involving the plaintiffs is quite different. Rather

than simply failing to renew the commissions, a viable option for

removal pursuant to Part II, Articles 46 and 47 of the New Hampshire

Constitution, the legislature has abolished the plaintiffs' positions

during the tenure of their commissions.

The Court finds that in order to strip the plaintiffs of their

property interests in the tenure set forth in their commissions,

the State would have to utilize one of the constitutionally or

statutorily provided methods, namely not reappointing them (N.H.

Const. Pt. II, Art. 46 and 47), impeachment (N.H. Const. Pt. II,

Art. 38), address for cause (N.H. Const. Pt. II, Art. 73), removal

by Governor and Council for cause (RSA 4:1), or abolishment of their

positions prospectively (N.H. Const. Pt. II, Art. 5 and Pt. I,

Art. 23). The legislature did not use one of the permissible means

in removing the plaintiffs from their offices. Instead, the legislature's

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reorganization scheme retrospectively stripped the plaintiffs of

the tenure created by their respective commissions. A law cannot

be applied retrospectively when it affects substantive rights.

Riesenberq v. State, 115 N.H. 12, 13 (1975); see also Norton v.

Patten, 125 N.H. 413 (1984). A retrospective law includes "every

statute which takes away or impairs vested rights, acquired under

existing laws." Norton, supra at 415 (quoting Woart v. Winnick,

3 N.H. 473, 479 (1826)). To the extent that Chapter 355 of the

Laws of 1991 takes away the plaintiffs' vested property rights in

the tenure of office specified in their commissions, that law is

clearly retrospective in its application. In eliminating the

plaintiffs' offices prior to the expiration of their commissions,

the legislature improperly impaired the property rights the plaintiffs

had in the tenure stated in their respective positions.

The Court is not suggesting that the legislature has no power

to remove a commissioned employee from office. However, the Court

emphasizes that when the legislature denies a commissioned employee

the full tenure of his office, the legislature must do so in accordance

with one of the constitutionally or statutorily prescribed means

enumerated above. The legislature may not retrospectively deprive

the plaintiffs of their commissions.

The Court finds that the plaintiffs have a property interest

in their commissions which has been violated by the retrospective

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application of Chapter 355 of the Laws of 1991. As this violation

is a sufficient basis upon which to render summary judgment for

the plaintiffs, the Court need not reach the plaintiffs' claims

under the wage claims act and the state and federal contracts

clauses.

Accordingly, the State's Motion to Dismiss is DENIED, and

the plaintiffs' Motion for Summary Judgment is GRANTED. A hearing

on the issue of damages shall be scheduled by the Clerk.

So Order ed.

Dated: January 27, 1992 7 /

George L. Manias
Presiding Justice