IN THE MATTER OF THE LIQUIDATION OF THE HOME INSURANCE COMPANY
No. 2012-623
Merrimack
February 13, 2014
Argued: October 16, 2013
tial, we conclude, beyond a reasonable doubt, that the admission of the challenged testimony was harmless and did not affect the verdict.
Affirmed.
DALIANIS, C.J., and HICKS, CONBOY and LYNN, JJ., concurred.
Michael A. Delaney, attorney general (J. Christopher Marshall, attorney, on the brief), and Rackemann, Sawyer & Brewster P.C., of Boston, Massachusetts (J. David Lеslie and Eric A. Smith on the brief, and Mr. Leslie orally), for the respondent.
LYNN, J. The appellant, Century Indemnity Company (CIC), appeals an order of the Superior Court (Smukler, J.) granting the motion of the respondent, Roger A. Sevigny, Commissioner of Insurance of the State of New Hampshire, as Liquidator (the Liquidator) of the Home Insurance Company (Home) for an award of statutory prejudgment interest on certain monies owed to Home by CIC. We affirm.
I
This is the fifth opinion we have issuеd in connection with the liquidation of Home. See In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472 (2006) (Home I); In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543 (2008) (Home II); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 396 (2009) (Home III); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 677 (2009) (Home IV). The following facts either are drawn from our prior opinions or are supported by the record in the instant appeal.
Home is an insurance company, organized under the laws of New Hampshire, which was declared insolvent and placed in liquidation in 2003. Home II, 157 N.H. at 544. The Liquidator is vested with title to and charged with administering and collecting Home‘s assets for distribution to Home‘s creditors. Home I, 154 N.H. at 475. CIC is an insurance comрany organized under the laws of Pennsylvania. Home II, 157 N.H. at 544-45. CIC and Home have a set of co-insurance and reinsurance relationships, which are fully described in our opinions in Home II and Home IV. See Home IV, 158 N.H. at 679-80; Home II, 157 N.H. at 544-46. In one aspect of the parties’ relationship, CIC reinsures Home with respect to certain contracts between Home and other insurers. Home II, 157 N.H. at 545. CIC and Home are also co-insurers of certain companies, including Pacific Energy Company (PECO), meaning that both CIC and Home are primary insurers of PECO. Home IV, 158 N.H. at 680.
A number of documents govern aspects of the relationship between CIC and Home, and we deal with three here. The first, the Restated and Revised Order Establishing Procedures Regarding Claims Filed with the Home Insurance Company in Liquidation (Claims Procedures Order) applies generally to claims made against Home pursuant to the Insurers Rehabilitation and Liquidation Act,
This appeal flows directly from the facts at issue in Home IV. In that appeal, we held that an asserted $8 million setoff claim by CIC, which had been waived and then reacquired by CIC in a pair of settlement agreements with PECO, was impermissible under New Hampshire law. Id. at 680, 684. We also explicitly declined, without prejudice, to decide the issue now before us: whether Home‘s estate was entitled to prejudgment interest on the payments CIC wrongfully withheld based upon setoff. Id. at 684.
We denied CIC‘s motion for reconsideration in the Home IV appeal on June 10, 2009. After remand, the Liquidator filed a motion in superior court on June 29, 2009, for interest on amounts withheld by CIC based upon improper setoff, to which CIC objected on July 14, 2009. On August 3, 2009, CIC removed the PECO setoff from its monthly statement to Home and paid the previously withheld $8 million to the Liquidator. The trial court entered an order granting the motion on August 3, 2012, finding that Home was entitled to prejudgment statutory interest under
II
On appeal, CIC argues that the trial court erred in granting Home prejudgment interest pursuant to
This appeal requires us to interpret statutes as well as the contracts between the parties. “The interpretation of a statute is a question of law, which we review de novo.” Home IV, 158 N.H. at 681. “We are the final arbiters of the legislature‘s intеnt as expressed in the words of the statute considered as a whole.” Id. “We first examine the language of the statute, and, where possible, ascribe the plain and ordinary meanings to the words used.” Id. “Our goal is to apply statutes in light of the legislature‘s intent in enacting them, and in light of the policy sought to be advanced by the entire statutory scheme.” Id.
CIC first asserts that the trial court erred in granting the Liquidator‘s motion for interest. It makes two arguments as to why
CIC first argues that the underlying proceeding was not an “action on a debt or account stated,” and thus
Here, the trial court granted the Liquidator‘s motion based upon
“Ordinarily, upon a verdict for damages and upon motion of a party, interest is to be awardеd as a part of all judgments.” State v. Peter Salvucci Inc., 111 N.H. 259, 262 (1971).
In all other civil proceedings at law or in equity in which a verdict is rendered or a finding is made for pecuniary damages to any party, whether for personal injuries, for wrongful death, for consequential damages, for damage to property, business or reputation, for any other type of loss for which damages are recognized, there shall be added ... to the amount of damages interest thereon from the date of the writ or the filing of the petition to the date of judgment....
The purpose of the legislature in enacting
The functional difference, then, between sections 1-a and 1-b is that they apply to different kinds of judgments. Section 1-a applies to actions “on a debt or account stated or where liquidated damages are sought.” Section 1-b refers back to section 1-a, providing that it applies to “all other civil proceedings at law or in equity in which a verdict is rendered or a finding is made for pecuniary damages to any party,” whether for one of the listed categories of damages or for “any other type of loss for which damages are recognized.” Stated more simply, section 1-a applies to certain actions for pаyment of a fixed sum, whereas section 1-b applies to all other actions for damages.
Additional clauses in each statute support this distinction. Section 1-a contains a clause making its provisions “inapplicable where the party to be charged pays the money into court.” Such a mechanism could only be sensibly applied where the amount at issue is a liquidated sum. Section 1-b permits the addition of interest even if such interest would bring the judgment amount beyond the maximum liability imposed by law, a concern arising mainly in actions in which the amount of damages to be awarded is uncertain at the start of the case.
Thus, the import of the language “any action on a debt or account stated or where liquidated damages are sought” in section 1-a is that the statute applies in actions for a fixed sum. Returning to CIC‘s argument, we find no meaningful distinction between an action on this disputed setoff and an “action on a debt or account stated” under
CIC cites two cases distinguishing between setoff and an action on a debt. See Koken v. Legion Ins. Co., 900 A.2d 418, 429 (Pa. Commw. Ct. 2006) (“Setoff is not an actiоn, and an action on a debt is not the equivalent of setoff.“); Long Beach Trust Co. v. Warshaw, 190 N.E. 659, 660 (N.Y. 1934) (“[T]he right to sue on a debt and the right to use the debt as an offset are not equivalent.“). However, these cases made that distinction in a context that is inapposite to the question at issue here. Both Koken and Long Beach Trust involved the construction of statutes that would have precluded the bringing of an “action” — in both cases, a counterclaim — but would not have precluded the assertion of a setoff. See Koken, 900 A.2d at 429 (hоlding that allowing bank to assert quasi-contract claim as setoff would violate state‘s insurance insolvency law); Long Beach Trust, 190 N.E. at 660 (holding that defendant could assert setoff where failure to file a claim pursuant to Banking Law statute barred counterclaim). For the purposes of our interest statute, we find no significance in this distinction, and hold that
We turn next to CIC‘s second argument, that the agreements between the parties were “comprehensive” and did not provide for intеrest on disputed setoffs. The parties agree that their agreements are silent as to the issue of interest. However, the parties disagree on how to interpret
“The laws which subsist at the time and place of the making of a contract, and where it is to be performed, enter into and form a part of it, as if they were expressly referred to or incorporated in its terms.” Stankiewicz v. City of Manchester, 156 N.H. 587, 590 (2007) (quotation omitted). To be sure, where the parties’ contract includes a provision for interest, we have applied it, our interest statutes notwithstanding. Seе Tulley v. Sheldon, 159 N.H. 269, 274 (2009) (holding that plaintiffs were entitled to contractual 1.5% prejudgment interest rate rather than statutory rate); Lassonde v. Stanton, 157 N.H. 582, 594 (2008) (holding that plaintiffs were entitled to at least 15% statutory interest where contract provided for 15-18% finance charge per annum on unpaid balances); Mast Rd. Grain & Bldg. Mat‘s Co. v. Piet, 126 N.H. 194, 197 (1985) (interpreting contractual clause providing for debtor to pay “all accrued finance charges to date” as providing that 24% finance charge applied only up to date of demand, after which statutory interest rate applied under
But these cases do not support the proposition that where an agreement is silent as to interest, no interest accrues. To the contrary, that is exactly the circumstance where the default rule established by
Here, the parties entered into two agreements, the Joint Report and the Claims Protocol, and abided by a third applicable document, the Claims Procedure Order. None of these documents provides for a different interest rate on disputed amounts than the statutory rate. Further, nothing in the agreements supports CIC‘s claim that the agreements, as a whole, are “comprehensive” in nature. To the contrary, the agreements between CIC and Home demonstrate the parties’ intent to reserve their rights as to matters not addressed. For example, Paragraph 3.3 of the Claims Protocol contains two reservations of rights: the first in which the Liquidator “fully reserve[d] all rights in relation to any offset asserted“; and the second in which CIC reserved its rights “in respect of any payments made, including as to amount and as to the obligation of CIC to make the same.” Paragraрh 7 of the Joint Report further provides that “CIC and the Liquidator reserve all rights as against each other.” In addition, the
To interpret the parties’ silence on the issue of interest as evincing an intent that there be none would require us to write into the contract a term that the parties did not include. Had the parties intended that the interest statute not apply, they could have included a clause in one of the agreements stating as much. By the plain meaning of the language used in the agreements, then, CIC‘s argument that they are “comprehensive” fails.
III
In its alternative argument, CIC claims that the trial court erred in ruling that prejudgment interest should accrue from the date of the Liquidator‘s October 12, 2007 letter. CIC claims that: (1) the October 12, 2007 letter did not constitute a “demand” under
Pursuant to Paragraph 3.3 of the Claims Protocol, CIC first assertеd the PECO setoff in its July 2007 statement, which was sent to the Liquidator on August 29, 2007. CIC withheld $8 million of payments in its remittances under its July, August, and September 2007 statements based upon the PECO setoff. On October 12, 2007, pursuant to the Joint Report, the Liquidator advised CIC of his determination to disallow CIC‘s asserted PECO setoff and that he was prepared to jointly request that the Referee deem the asserted PECO setoff a disputed claim proceeding. The parties submitted this request to the Referee on October 18, 2007. CIC first argues that the Liquidator‘s October 12, 2007 letter could not be a demand pursuant to
Turning to the Liquidator‘s October 12, 2007 letter, the unredacted portions that are in the record do not explicitly demand payment. They do inform CIC that the Liquidator was disallowing the PECO claim and was prepared to jointly seek an order from the Referee deeming the claimed setoff a disputed claim proceeding. However, the import of disallowing the asserted PECO claim was that the Liquidator would seek to recover the monies so withheld, the equivalent of a demand for payment. We thus hold that the October 12, 2007 letter constitutes a “demand” under
CIC argues further that, under Paragraph 3.3 of the Claims Protocol, it was not obligated to pay Home until the
Within thirty (30) business days after the end of each month, CIC shall (a) provide [Home] with a statement showing (i) all amounts payable by CIC to [Home] pursuant to [certain paragraphs of the Claims Protocol] for the preceding month; (ii) the amount of funds paid by CIC with respect to such payables; and (iii) any amounts claimed in offset in accordance with paragraph 3.4 against amounts due to [Home], together with sufficient detail and an explanation as to the basis for the asserted offset; and (b) subject to the proviso to this paragraph, effect a wire transfer to such account as may, from time to time, be designated by the Liquidator for the balance. CIC agrees and acknowledges that the Liquidator fully reserves all rights in relation to any offset asserted. CIC reserves (and the Liquidator acknowledges that CIC so reserves) all rights in respect of any payments made, including as to amount and as to the obligation of CIC to make the same; PROVIDED THAT, where the Claimant has submitted a request for Review or an Objection in respect of a Claim disputing the quantum of the Claim or elements of it, CIC shall make remittance in respect of any portions of the Claim allowed in full or agreed between CIC and the Claimant. CIC shall not be obliged to make remittance in respect of the disputed amount unless and until the relevant proceedings settle the disputed amount or it is negotiated and agreed between the claimant and CIC with the concurrence of the Liquidator, in which event remittance will be made in such amount within thirty (30) business days after the month next following such settlement or agreement.
CIC relies on the second sentence of the proviso to Section 3.3, claiming that it has no obligation to remit payment on a disputed claim “unless and until the relevant proceedings settle the disputed amount or it is negotiated and agreed between the claimant and CIC with the concurrence of the Liquidator.” Thus, CIC claims its obligation to remit payment of the monies withheld pursuant to the disputed PECO setoff was not triggered until we denied CIC‘s motion for reconsideration on June 10, 2009, and payment was therefore not due until July 30, 2009, “thirty ... business days after the month next following such settlement or agreement.” As a result, CIC contends that interest could not begin to accrue until then, four days before it paid the $8 million to Home on August 3, 2009.
The Liquidator counters, and we agree, that CIC fails to read the Claims Protоcol in context. “When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole.” Home II, 157 N.H. at 546 (emphasis added) (quotation omitted). CIC‘s strained construction of a single sentence ignores other language in Section 3.3 as well as the other sections of the Claims Protocol that make it clear that the proviso does not apply in this case.
The Claims Protocol defines the terms “Claimant” and “Claim,” and incorporates the definitions of “Request for Review” and “Objection” provided in the Claims Procedures Order by reference, as these terms are used in the first sentence of the proviso to Section 3.3. “Claim” is defined as “an inward reinsurance claim against [Home] in respect of an AFIA Liability presented in” a proof of claim filed in the Homе liquidation, where “AFIA Liability”
In sum, we affirm the trial court judgment as to both its granting of the Liquidator‘s motion and the date from which prejudgment interest accrued. Because of our holding, we need not reach the Liquidator‘s unjust enrichment claim.
Affirmed.
DALIANIS, C.J., and HICKS, J., concurred.
DALIANIS, C.J.