When Courts Change Their Minds - Revisiting a Dramatic Reversal

“Stare decisis” is the legal principle that today’s court should stand by yesterday’s decisions when deciding cases. In New Hampshire, as in other jurisdictions, this doctrine promotes consistency, predictability, and stability. By following prior decisions, courts ensure that similar cases yield similar results, fostering public confidence in the judicial system; however, stare decisis is not an absolute rule, and courts may depart from precedent when circumstances warrant.  A notable example is the United State Supreme Court’s decision in United States v. Briggs, reversing its prior decision in Roe v. Wade.

Public Policy behind stare decisis

The principle of stare decisis serves several important public policy objectives:

1. Consistency and predictability – It allows individuals and businesses to plan their affairs with reasonable certainty about how the law will be applied.

2. Judicial efficiency – Courts can resolve disputes more efficiently by relying on established legal principles rather than re-litigating foundational issues in every case.

3. Legitimacy and stability – The doctrine promotes public trust in the judiciary by preventing abrupt changes in the law based on shifting judicial opinions.

4. Fairness and equal treatment – Adhering to precedent ensures that litigants in similar situations receive similar legal treatment.

Despite these advantages, the New Hampshire Supreme Court recognizes that adherence to precedent should not come at the expense of justice or the evolution of the law. The Court has articulated a structured approach for determining whether to overturn precedent.

The NH Supreme Court’s approach to overruling precedent

When deciding whether to reverse a prior decision, the question the Court asks is not whether it would decide the issue differently today, but whether the ruling has come to be seen so clearly as error that its enforcement was for that very reason doomed.  In making this determination, the Court considers four factors:

1. Workability.  Whether the rule has proven to be intolerable simply by defying practical workability.

2. Reliance. Whether the rule is subject to a kind of reliance that would lend a special hardship to the consequence of overruling.

3. Development of related legal principles. Whether related principles of law have so far developed as to have left the old rule no more than a remnant of abandoned doctrine.

4. Societal, economic, or factual changes.  Whether facts have so changed, or come to be seen so differently, as to have robbed the old rule of significant application or justification.

In Pheasant Lane Realty Trust v. City of Nashua, No. 2023-0198 (N.H. Supreme Ct. February 12, 2025) (non-precedential), the City of Nashua asked the Court to reverse its decision in Appeal of City of Nashua, 138 N.H. 261 (1994), which stands for the proposition that a municipality must disclose its preferred equalization ratio in tax abatement cases and, if it uses its own uniform ratio to discount properties' fair market values to assessed values, it must provide a good faith explanation of the ratio and its methodology.

The Court declined to do so, holding the principle established in Appeal of City of Nashua remains relevant and necessary to ensure proportional taxation, as required by the New Hampshire Constitution; however, the Court has not hesitated to reverse itself when precedent is no longer sound. A prime example is Lempke v. Dagenais, 130 N.H. 782 (1988) which overruled Ellis v. Morris, 128 N.H. 358 (1986), an opinion the Court gave just two years earlier.

A dramatic reversal

In Ellis, the Court held a subsequent purchaser of real estate could not sue the builder for implied warranty of workmanlike quality, reasoning that there was no contractual relationship (privity) between the two parties. This ruling followed the traditional common law principle that implied warranties in construction applied only to the original purchaser, not to subsequent buyers.

Just two years later, in Lempke, the Court reconsidered the issue and explicitly overruled Ellis, representing perhaps the most dramatic reversal in New Hampshire legal history, given the proximity in time. The plaintiff, Lempke, had purchased a home from a third party with a garage built by the defendant, Dagenais. After discovering structural defects, Lempke sued for breach of the implied warranty of workmanlike quality. Under Ellis, his claim would have failed because he was a subsequent purchaser; however, the Court reversed course and ruled that privity of contract was not necessary to bring a claim for breach of an implied warranty of workmanlike quality.

Rather than mechanically run through the four factors listed above, the Court attacked the concept of privity in this context for the following reasons (among others):

1. Public Policy Considerations – The Court recognized that builders should be held accountable for poor workmanship, even if defects become apparent only after the original purchaser has sold the property. Denying subsequent buyers a remedy left innocent homeowners with no recourse for latent defects.

2. Trend in Other Jurisdictions – Many other states had moved away from the strict privity requirement, recognizing the unfairness of shielding builders from liability when defects manifest after a resale.

3. Workability of the Ellis Rule – The Ellis rule led to arbitrary results, where liability depended not on the builder’s conduct but on the timing of a home sale. The Court found this unworkable and unjust.

4. Changes in Expectations – The Court acknowledged that modern homebuyers reasonably expect that a home will be free of structural defects, regardless of whether they purchased it from the original owner or a subsequent one.

By rejecting Ellis, the Court aligned New Hampshire law with the growing national consensus and modern expectations of homebuyers.

While stare decisis is a foundational principle in New Hampshire law, ensuring legal stability and consistency, it is not an inflexible rule, and the Supreme Court will overrule precedent when it proves unworkable, outdated, or unjust.

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