89 A.3d 165
N.H.2014Background
- Home Insurance Company (Home), a New Hampshire insurer, was liquidated in 2003; Roger A. Sevigny is Liquidator tasked with collecting Home’s assets for distribution to creditors.
- Century Indemnity Company (CIC), a Pennsylvania insurer, had co-insurance and reinsurance relationships with Home, including a claimed $8 million setoff (the PECO setoff).
- Parties’ governance documents included: the Claims Procedures Order (court order governing claims in the liquidation), the Claims Protocol (a CIC–Home letter agreement governing remittances and setoffs for certain AFIA-related claims), and the Joint Report (procedures for CIC’s contribution/subrogation claims).
- CIC asserted and withheld $8 million based on the PECO setoff; this setoff was held impermissible under New Hampshire law in Home IV.
- After denial of reconsideration, the Liquidator sought prejudgment interest on the withheld amounts under RSA 524:1-a; the superior court awarded statutory prejudgment interest commencing October 12, 2007 (date of Liquidator’s letter disallowing the setoff).
Issues
| Issue | Plaintiff's Argument (CIC) | Defendant's Argument (Liquidator) | Held |
|---|---|---|---|
| Whether RSA 524:1-a (prejudgment interest on actions "on a debt or account stated") applies to a disputed setoff withheld by CIC | Setoff is not an "action on a debt or account stated"; therefore RSA 524:1-a does not apply | The dispute concerned withholding of a fixed, liquidated sum ($8M); RSA 524:1-a applies to fixed-sum disputes including disputed setoffs | RSA 524:1-a applies; the setoff dispute is functionally an action on a fixed debt and statute governs |
| Whether the parties’ agreements (Claims Protocol, Joint Report, Claims Procedures Order) preclude statutory interest when silent on interest | The agreements form a comprehensive protocol; silence on interest shows parties intended no statutory interest | Where a contract is silent interest statutes supply the default; parties expressly reserved rights and incorporated statutory procedures | Contract silence does not displace statutory interest; RSA 524:1-a applies absent an express contractual contrary provision |
| Whether the Liquidator’s October 12, 2007 letter constituted a "demand" for payment under RSA 524:1-a, triggering accrual of interest | Letter did not explicitly demand payment or interest, so it cannot start accrual | Disallowance of the setoff and notice of intent to treat it as a disputed claim is equivalent to a demand for payment | October 12, 2007 letter was a sufficient demand; interest accrues from that date |
| Whether Claims Protocol Paragraph 3.3 deferred CIC’s payment obligation until settlement or final resolution, delaying interest accrual | The proviso requires CIC to pay disputed amounts only after settlement/resolution; thus payment was not due until July/August 2009 | Paragraph 3.3 governs inward AFIA cedent claims, not CIC’s own co-insurer/proof-of-claim setoff; the proviso therefore does not excuse payment earlier | Paragraph 3.3 proviso did not apply to CIC’s PECO setoff; CIC’s interpretation is rejected and accrual begins Oct. 12, 2007 |
Key Cases Cited
- In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472 (2006) (prior Home liquidation opinion providing background on reinsurance/AFIA relationships)
- In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543 (2008) (Home II) (discussing CIC–Home contractual relationships and claims procedures)
- In the Matter of Liquidation of Home Ins. Co., 158 N.H. 396 (2009) (Home III) (liquidation-related rulings)
- In the Matter of Liquidation of Home Ins. Co., 158 N.H. 677 (2009) (Home IV) (held CIC’s $8M PECO setoff impermissible and reserved the interest issue)
- Nault v. N & L Dev. Co., 146 N.H. 35 (2001) (statutory interpretation principle: related statutes construed consistently)
- John A. Cookson Co. v. N.H. Ball Bearings, 147 N.H. 352 (2001) (arbitration award may include interest where agreement is silent)
- Tulley v. Sheldon, 159 N.H. 269 (2009) (parties’ contractual interest term controls when specified)
- Mast Rd. Grain & Bldg. Mat’s Co. v. Piet, 126 N.H. 194 (1985) (contractual finance charge interpreted; statutory interest applied when contract term expired)
- Chagnon v. Union-Leader Co., 104 N.H. 472 (1963) (precedent prompting legislative amendment clarifying prejudgment interest availability)