Measure Twice, Purchase Once: First World Problems on Lake Sunapee

TAM Development Corporation et al. v. Georges Mills Boat Club (New Hampshire Supreme Court Order, April 17, 2024)

Thomas and Mary Miller, who own a house near Lake Sunapee, joined the Georges Mills Boat Club (“Boat Club”) in 2011. The club assigned the Millers slip #4 on Dock C.  “Slip #4 permits docking of a boat no larger than 25 feet in length and 8 feet, 6 inches in width (beam).”

Initially, the Millers docked a 23-foot-long pontoon boat at the slip.  In March 2020, they replaced the pontoon boat with a tri-toon boat measuring 27 feet, 2 inches in length with all components included.

In June 2020, another member lodged a complaint about the size of the Millers' new boat. The Boat Club's Board of Directors inspected the boat, found it too large, and issued a violation letter to the Millers. In December 2020, the Boat Club amended its rules to require documentation of a boat’s make, model, width, and length before any purchase or modification. The new rules specified measuring the boat's length “‘from the farthest forward point of its bow to the farthest rearward point of the stern excluding readily detachable features.”

In March 2021, the Boat Club informed the Millers that they could not dock their boat in slip #4. The Millers filed a lawsuit in superior court seeking a declaratory judgment that the Board’s actions were inconsistent with its governing documents and alleging a breach of the contract-based covenant of good faith and fair dealing.

Superior Court

The superior court ruled in favor of the Boat Club via summary judgment. The court decided the Millers' boat, based on its overall dimensions including non-detachable parts, exceeded the size limitations set by the Boat Club's bylaws for their assigned slip. The court denied the Millers' motion for reconsideration, prompting them to appeal the decision.

Issues presented to the Supreme Court

1. Interpretation of "length." The court needed to determine the meaning of the term "length" as used in the Boat Club’s bylaws before the 2020 rule amendment, particularly whether it was ambiguous and how it should be applied to the Millers’ boat. While the Millers argued that the term was ambiguous due to the lack of a defined measurement method, the Boat Club maintained it was not ambiguous.

2. Application of bylaws and measurement standards. The issue was whether the trial court correctly interpreted the bylaws and the applicable measurement standards. This included an assessment of how the Boat Club historically measured boat lengths and whether its interpretation excluding detachable items was correct.

3. Good faith and fair dealing.  Given the bylaws are a contract, the court considered whether the Boat Club violated the covenant of good faith and fair dealing in enforcing the slip size limitations against the Millers. The Millers argued that the Boat Club’s actions were inconsistent with the agreed-upon common purpose and justified expectations.

The Supreme Court’s rulings

1. The Supreme Court sided with the Millers in finding the term "length" in the Boat Club’s bylaws ambiguous, as it could be subject to multiple reasonable interpretations.  When a term is ambiguous, the court determines “what the parties mutually understood the ambiguous language to mean under an objective standard.”  The trial court did this by considering the rules, regulations, and bylaws as a whole in light of their intended purposes. The Supreme Court ruled the evidence supported the trial court's interpretation that "length" should be measured from the farthest forward point of the boat to its farthest rearward point excluding detachable items. This interpretation aligned with the bylaws' goals of managing visual appearance, docking multiple boats, and avoiding strain on the dock slips.

2. The Court confirmed the trial court's decision that the Boat Club’s interpretation of boat length was consistent and that measuring the overall length excluding detachable parts was reasonable. The court found no genuine issues of material fact concerning the Boat Club's measurement method and confirmed that this standard serves the intended purposes of the slip size limitations.

3. The Supreme Court concluded that the Boat Club did not breach the covenant of good faith and fair dealing. It found that the Boat Club treated the Millers fairly according to the bylaws and justified expectations. Evidence showed that the Boat Club consistently applied the length measurement to ensure boats fit properly in their assigned slips and allowed for the safe transit of other boats around them.

Ultimately, the Supreme Court affirmed the lower court's rulings in all respects, supporting the Boat Club's actions and interpretations of its rules and bylaws, including its enforcement actions against the Millers.

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