101 Ocean Blvd., LLC v. Foy Ins. Grp., Inc.
| Decision Date | 19 March 2021 |
| Docket Number | No. 2019-0067,2019-0067 |
| Citation | 261 A.3d 250,174 N.H. 130 |
| Parties | 101 OCEAN BLVD., LLC v. FOY INSURANCE GROUP, INC. & a. |
| Court | New Hampshire Supreme Court |
Cronin, Bisson & Zalinsky, P.C., of Manchester (John G. Cronin, John F. Bisson, and Daniel D. Muller, Jr. on the brief, and Mr. Cronin orally), for the plaintiff.
Upton & Hatfield, LLP, of Portsmouth (Russell F. Hilliard on the brief and orally), and of Concord (Nathan C. Midolo on the brief), for defendant Foy Insurance Group, Inc.
Defendant Foy Insurance Group, Inc. (Foy) appeals a verdict rendered after a jury trial in Superior Court (Brown, J.) in favor of the plaintiff, 101 Ocean Blvd., LLC (Ocean), finding that Foy was negligent for failing to advise Ocean to purchase sufficient insurance coverage to rebuild a hotel, damaged in a 2015 fire, in compliance with the current building code and awarding damages to Ocean. We affirm.
The jury could have found the following facts. Ocean is owned by Albert J. Bellemore, Jr., a businessman and real estate developer. In 2006, Ocean purchased the Ocean Boulevard hotel in Hampton. The hotel had been constructed in the 1920s, and did not conform to contemporary building codes. The hotel had a convenience store on the ground level that sold "pretty much everything." The hotel also had a lobby floor, a second floor with an office and "a small two-bedroom apartment," and third and fourth floors with hotel rooms.
Since the early 2000s, Bellemore worked with Foy as his insurance agent for several properties. Shortly after purchasing the hotel in 2006, Ocean, through Foy, purchased a $1.3 million replacement cost policy for the structure. By 2015, Bellemore "had 14 or 15 different [insurance] policies in force with Foy." His annual premiums "were just shy of fifty thousand dollars."
In 2011, Bellemore's primary contact at Foy, Heidi SanSouci, expressed concerns about the limits of Ocean's coverage on the hotel property, and recommended that he increase it to approximately $2 million. Bellemore declined at that time because of the recession. SanSouci made the same recommendation in 2012 and 2013. In 2013, Bellemore took SanSouci's advice and purchased the additional coverage, which she placed with Lloyd's of London.
Bellemore frequently relied upon SanSouci's recommendations because he did not "know anything about insurance," he trusted her judgment and insurance experience, and he appreciated her attention to detail and good service. For instance, in 2013, SanSouci informed Bellemore that there were "several coverages" that she "fe[lt] should be addressed" as to the insurance for the hotel property. She noted that Ocean lacked flood insurance coverage and that the annual premium for such coverage was $2,702. She further observed that the current insurance policies did not cover liquor liability and that, although alcohol was not consumed inside the hotel convenience store, "the exposure for a lawsuit does exist" because it was sold there. She enclosed a quote for liquor liability coverage.
On occasion, Bellemore asked SanSouci to review policies that he had obtained from other insurance agents. SanSouci occasionally told Bellemore that he should "stay with a different carrier for coverage," even though doing so meant that she would "lose out on some business." For instance, in a 2015 e-mail to Bellemore, SanSouci said, In that e-mail, she advised Bellemore "to secure premises liability coverage" for that property "so that [he would be] fully covered."
In 2014, Lloyd's of London opted not to renew Ocean's policy. As a result, SanSouci asked Andrea Roux, a wholesale broker of "surplus lines" insurance, to find coverage. The "surplus lines" market is not as highly regulated as the standard insurance market, and, therefore, insurance underwriters have the flexibility to design and sell higher-risk policies than they would be able to sell in the standard market. Through the "surplus lines" market, Roux was able to find coverage for Ocean with AIX Specialty Insurance Company, a subsidiary of The Hanover Insurance Company.
In April 2014, Ocean purchased a $2 million replacement cost policy. In addition to the replacement cost coverage, the AIX policy provided for $10,000 in law and ordinance insurance coverage. Law and ordinance coverage is designed to pay for the increased costs associated with complying with current building codes and other laws and ordinances when rebuilding a structure after a loss. At no time did Foy recommend that Bellemore purchase additional law and ordinance coverage on behalf of Ocean.
In October 2015, a fire severely damaged the hotel. Bellemore hired an engineering firm to estimate the cost of rebuilding the hotel. The firm told Bellemore that the cost to replace the existing structure would be approximately $1.1 million, and that, in order to rebuild a structure that complied with the current building code, it would cost an additional $905,070. He decided to demolish the structure rather than rebuild it. After accounting for depreciation, Ocean's insurer paid Ocean $910,141 for the replacement cost of the structure — an amount that did not include the additional cost necessary to rebuild the structure in compliance with the building code.
Thereafter, Ocean sued Foy, alleging that, because the parties had a "special relationship," Foy had a duty to inform Ocean that it lacked sufficient law and ordinance coverage to pay for reconstruction in compliance with the current building code, and that Foy negligently failed to so inform Ocean. See Sintros v. Hamon, 148 N.H. 478, 481-82, 810 A.2d 553 (2002) (). The case was tried to a jury over the course of five days in November 2018. At the close of Ocean's case, Foy moved for a directed verdict, which the trial court denied. The jury returned a verdict in favor of Ocean and then apportioned 25% fault to Ocean and 75% fault to Foy. Foy filed a motion for judgment notwithstanding the verdict (JNOV), or alternatively, to set aside the jury verdict. The trial court denied the motion, and this appeal followed.
On appeal, Foy argues that the trial court erred by: (1) admitting a certain exhibit into evidence; (2) failing to take action in response to Ocean's allegedly improper closing argument; (3) giving the jury certain instructions; (4) giving the jury an incorrect special verdict form; and (5) denying Foy's motions for directed verdict and JNOV. We address each argument in turn.
On the fourth day of trial, counsel for Ocean cross-examined Foy's expert, Peter Milnes, about "Exhibit 27," which counsel represented was "a commercial lines checklist." Foy's counsel objected that he did not "like the way [the exhibit] was being presented" during cross-examination of Milnes instead of during Ocean's direct examination of its own expert, Franklin Seigel, and on the basis of relevance. The trial court ruled that the exhibit was relevant to the issue of whether Foy breached the applicable standard of care. Foy's counsel also objected on the ground that the checklist constituted inadmissible hearsay. The trial court determined that the exhibit was not being introduced for the truth of what it asserted and, therefore, that its admission did not violate the hearsay rule. See N.H. R. Ev. 801(c) ().
Milnes testified that the checklist was "a mechanism for discussion" of available coverages "if people want to have that," but he did not agree that the checklist "is a good way to go about examining specific coverages." On redirect examination, Milnes testified that the checklist was not something he used and that it is not "a requirement of the standard of care for insurance agents to maintain such a checklist."
Defense counsel also questioned Jeffrey Foy, one of Foy's owners, about the checklist, and he testified that he does not use similar forms with his clients because Over defense counsel's objection, the exhibit was admitted as a full exhibit.
On appeal, Foy argues that Exhibit 27 "was irrelevant, improper hearsay, and highly prejudicial." We review the trial court's rulings on admissibility of evidence under the unsustainable exercise of discretion standard. McLaughlin v. Fisher Eng'g, 150 N.H. 195, 197, 834 A.2d 258 (2003). We will not disturb the court's ruling unless a party establishes that it is clearly untenable or unreasonable to the prejudice of its case. Id. Here, Foy has failed to persuade us that the trial court unsustainably exercised its discretion by admitting the exhibit. Based upon our review of the record, we find that the trial court had an objective basis to determine that Exhibit 27 was relevant, was not improper hearsay, and was not "highly prejudicial."
Foy next argues that during Ocean's closing argument, counsel made certain "factually inaccurate and prejudicial statements to the jury," including:
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