Seacoast paper files suit against Union Leader, Concord Monitor over printing contract dispute

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Union Leader Corporation on Holt Avenue. Photo/Carol Robidoux

MANCHESTER, NHA Rockingham Superior Court judge will not grant a temporary restraining order or injunction against the New Hampshire Union Leader (NHUL) to stop the company from having its newspapers printed by the Concord Monitor instead of by Seacoast Newspapers Inc. of Dover.

Seacoast (or Seacoast Media Group) filed a civil lawsuit against the Union Leader saying the company was in breach of contract because it owes the printer more than $1.5 million and because it gave seven days’ notice (in an email) that it was terminating the contract as of March 24.  The contract calls for a 90-day notice of termination.

The Union Leader says it took that action due to “Seacoast’s material breach,” according to a court order dated March 25 by Judge Andrew R. Schulman, a reference to the print quality of the newspaper.

According to a story published by Seacoast media, the Union Leader’s Attorney, Gregory Sullivan, said in court that the Union Leader sought termination of the contract because it failed to produce “Industry standard” print quality.” That claim was refuted in court by SMG attorney Craig Nolan.

Seacoast is also suing Newspapers of New Hampshire Inc. (or Concord Monitor) because of the Concord Monitor’s “knowing interference in the contractual relations between Seacoast Media Group and NHUL, and its encouragement of NHUL’s breach.”

Schulman’s order summarizes a hearing held Monday at the Brentwood courthouse.

The Union Leader and Seacoast entered into a contract in June 2013 to have the Union Leader’s newspapers printed at the Dover plant.  The contract ran until July 2, 2018, but Seacoast exercised an option to renew it through July 1, 2019.

The Union Leader terminated that contract on March 24, 2019, saying it was because of Seacoast’s material breach.  Seacoast denies the allegation and “the court assumes the truth of Seacoast’s offer of proof. By extrapolation, the court assumes — without deciding or opining — that the Union Leader’s termination of the contract was itself a material breach,” the judge wrote.

The judge wrote that the contract calls for 90 days’ notice of termination and that “the Union Leader all but formally concedes that it acted beyond its contractual rights by giving less” than that.

After the termination, the Union Leader entered into a contract with Newspapers of New Hampshire Inc. which, according to Seacoast’s lawsuit, intentionally charged 40 percent less than Seacoast “to encourage and solicit NHUL to replace SMG (Seacoast Media Group) with the Concord Monitor for printing and printing-related services.”

Seacoast charges the Union Leader $61,400 each week to print its publications, according to Seacoast’s lawsuit.  It says by ending its contract early, Seacoast will suffer a revenue loss of about $859,000.

It also said losing the income will result in 42 of its 47 employees at the Dover plant being let go.

The Union Leader agreed it owes about $1.5 million on its contractual payment obligations and intends to pay that arrearage over time, the judge said.

“The amount of its payments will not increase (short of a court order, and none has been sought) if it is forced to continue using Seacoast as its printer.  Therefore, Seacoast will not gain any cash flow if the contract is enforced by specific performance. Indeed, it will be better off from a cash flow perspective, because the Union Leader’s payments will continue to roll in, but the expense of operating the plant will be gone,” the judge wrote.

Schulman, in his order, said Seacoast has no new customer lined up for July 2019 when its contract with the Union Leader would have naturally terminated.  It has had no discussion with any prospective customer about price terms or other terms. Although Seacoast is marketing itself, it has not found any identifiable prospective customer that has expressed an interest in using its New Hampshire plant.

It has a hope, not an expectancy of attracting new business in a declining industry (i.e. newsprint), the judge wrote.

Seacoast, he said, has an adequate remedy of law for the alleged breach of contract.  If it prevails, it will receive its full expectancy damages, plus interest, and contractual attorneys’ fees.

“Therefore, from an evidentiary point of view, the court must find that the plant would likely close by July 2, 2019, in any event,” Schulman wrote.