Balamotis v. Hyland

• Decision Date: 10 March 2010
• Docket Number: No. 2009–169.,2009–169.
• Citation: 159 N.H. 803,992 A.2d 548
• Court: New Hampshire Supreme Court
• Parties: Kimberly BALAMOTIS v. H. Dexter HYLAND, II d/b/a State Farm Agent.

159 N.H. 803

992 A.2d 548

Kimberly BALAMOTIS

v.H. Dexter HYLAND, II d/b/a State Farm Agent.

No. 2009–169.

Supreme Court of New Hampshire.

Argued: Nov. 4, 2009.

Opinion Issued: March 10, 2010.

Thomas Morgan, of Salem, on the brief and orally, for the plaintiff.

Bouchard, Kleinman & Wright, P.A., of Hampton (Sabin R. Maxwell and Kenneth G. Bouchard on the brief, and Mr. Maxwell orally), for the defendant.

HICKS, J.

The plaintiff, Kimberly Balamotis, appeals a decision of the Superior Court (McHugh, J.) granting summary judgment to the defendant, H. Dexter Hyland, II d/b/a State Farm Agent, in this action alleging that he underinsured the plaintiff's home. We reverse and remand.

The following facts are either recited in the trial court's order or are supported by the record. The plaintiff's home suffered extensive damage in a fire that occurred on July 27, 2005. The plaintiff had a homeowner's insurance policy through State Farm Fire and Casualty Company (State Farm). The policy's stated limits of liability included coverage on the dwelling of up to $343,000 with a "Dwelling Extension" of up to $34,340.

On November 22, 2005, the plaintiff executed a proof of loss making a claim for, inter alia, $675,000 for damage to the building. In July 2006, the plaintiff sued State Farm for failing to pay under the policy. The plaintiff and State Farm eventually settled, and on January 19, 2007, the plaintiff executed a second proof of loss and a release. The proof of loss stated that both the actual cash value and the replacement cost of the building at the time of loss were $357,839.20. The total amount claimed in the proof of loss was $447,340.90, which included the cash value of the building's contents and a specified amount for loss of use, in addition to the claimed value of the building. The release provided:

IN CONSIDERATION of the sum of Four Hundred Forty seven Thousand Three Hundred Forty and 90/ 100 Dollars ($447,340.90) and other good and valuable considerations to me paid, the receipt whereof is hereby acknowledged, I, Kim Balamotis (being of lawful age) do hereby release and forever discharge State Farm Insurance Companies, its heirs, administrators, executors, successors and assigns, from any and all action, causes of action, claims and demands whatsoever for, upon or by reason of any damage, loss or injury and all consequential damage, which heretofore have been or which hereafter may be sustained by me in consequence of a fire loss which occurred on July 27, 2005.

IT BEING FURTHER AGREED AND UNDERSTOOD, that the payment of said amount is not to be construed as an admission of liability, but is a compromise of a disputed claim and that this release is executed in full settlement and satisfaction of rights of the undersigned under policy number 29–J022–618 arising out of said claim above referenced.

In July 2008, the plaintiff instituted this action against the defendant, asserting claims in contract and in tort. Cf. University Nurs. Home v. R.B. Brown & Assoc., 67 Md.App. 48, 506 A.2d 268, 271 (Md.Ct.Spec.App.) (noting that "[a]lthough essentially contractual because the tort is derived from a contractual relation, the claim against an insurance agent for failure to procure requested coverage is a hybrid of both tort and contract principles"), cert. denied, 306 Md. 514, 510 A.2d 260 (1986). We note that on appeal, however, the plaintiff refers to her action solely as one in tort. The writ averred, in essence, that the plaintiff purchased the insurance on her property through the defendant to cover a new residence then being constructed; that the plaintiff arranged through the defendant to purchase an appropriate amount of insurance; that during construction, the plaintiff "specifically questioned the defendant about the adequacy of insurance coverage and was advised by the defendant that the insurance coverage was adequate"; that the defendant advised the plaintiff that "he would review the premises and make appropriate insurance adjustments so that the plaintiff would be fully insured"; and, that despite such assurances, "the defendant did not review or otherwise correct what the plaintiff recognized as being underinsured."

The defendant moved for summary judgment, arguing essentially that: (1) as an exclusive agent of State Farm, he was covered under the release or proof of loss filed by the plaintiff; and (2) the plaintiff's submission of a proof of loss for an amount less than the available coverage precludes her recovery in this action. The trial court found both grounds "meritorious," concluding:

If the plaintiff truly believed that the amount that she was settling for was inadequate, then she had an affirmative obligation to exclude from any release or proof of loss any future claim that she might make against her agent.... It would in fact now be disingenuous to attempt to obtain more money from State Farm through its exclusive agent for this fire loss.

On appeal, the plaintiff argues that the trial court erred in granting summary judgment for the defendant based upon the release because her tort action against the defendant "is a separate and distinct action from the [prior] contract action" against State Farm, and because the defendant is not named in the release. The plaintiff also argues that the trial court erred in granting summary judgment for the defendant based upon the proof of loss because, inter alia: (1) the court did not allow for explanation of an evidentiary admission; and (2) introduction of settlement evidence is prohibited by New Hampshire Rule of Evidence 408.

In an appeal of a grant of summary judgment, we employ the following standard of review:

[W]e consider the affidavits, and all inferences properly drawn from them, in the light most favorable to the non-moving party. If there is no genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, the grant of summary judgment is proper. We review the trial court's application of the law to the facts de novo.

Bates v. Vt. Mut. Ins. Co., 157 N.H. 391, 394, 950 A.2d 186 (2008) (citations omitted).

We first address the release. The plaintiff's initial contention, that her suit against the defendant is "a separate and distinct action" from her prior contract action against State Farm, does not appear to be disputed, as the defendant states in his brief that "it is unquestioned that [the plaintiff] alleges a distinct cause of action against" him. Nevertheless, we address this issue as it is relevant to our discussion of whether the release operates as a matter of law to bar this action.

We agree with the cases cited by the plaintiff, University Nursing Home and Clear–Vu Packaging v. National Union Fire Insurance Co., 105 Ill.App.3d 671, 61 Ill.Dec. 212, 434 N.E.2d 365 (1982), that a claim against an insurance agent for failure to procure insurance as instructed by the insured is separate and distinct from a claim against the insurer for payment under the policy. As stated in University Nursing Home: "Two separate wrongs were alleged ...: [the insurer's] failure to pay the damages claimed under the inadequate insurance contract as written and [the agent's] failure to procure insurance adequate to cover the entire loss.... Clearly, these would give rise to two separate damage claims." University Nurs. Home, 506 A.2d at 276. To the same effect is Clear–Vu Packaging:

A suit for failure to pay under a policy of insurance is one founded on breach of contract. The alleged failure of [the insurer] to pay on the insurance policy caused injury to plaintiffs that was separate and distinct from the injury which resulted in [the broker's] alleged failure to procure a policy in conformance with plaintiffs' request.

Clear–Vu Packaging, 61 Ill.Dec. 212, 434 N.E.2d at 368 (citation omitted).

One implication of the insurer and agent causing separate and distinct injuries is that they cannot be considered joint tortfeasors, as their conduct did not cause a "single, indivisible harm." Tiberghein v. B.R. Jones Roofing Co., 156 N.H. 110, 116, 931 A.2d 1223 (2007) (quotation omitted); see Clear–Vu Packaging, 61 Ill.Dec. 212, 434 N.E.2d at 368 (insurer and agent not joint tortfeasors on claims related to inadequate insurance policy). While the defendant repeatedly points out that all of the plaintiff's damages arise from the same fire loss, distinct portions of those damages are attributable to State Farm's and the defendant's separate alleged wrongs. In other words, State Farm's liability for failure to pay under the policy extends only to the policy limits, and the plaintiff avers that she settled for those limits as she understood them to be. The defendant's alleged liability for failure to adequately insure the property theoretically encompasses the portion of the plaintiff's damages from the fire loss that were not covered under the policy; in other words, assuming that the plaintiff's actual damages exceed her insurance coverage, the defendant is allegedly liable for some or all of the plaintiff's uninsured loss.

We have addressed only the theoretical bases for and extent of the defendant's and State Farm's respective liability for purposes of our analysis of the issues presented herein. Whether State Farm could be held liable for, or has been released from liability for, any negligence judgment that may be rendered against the defendant, is not before us and, in any event, does not affect our decision. See University Nurs. Home, 506 A.2d at 277 (noting that case that "may be the basis for [the insurer] being ultimately liable for any judgment against [the agent] ... did not support the conclusion that where there are two wrongs giving rise to two separate damages, a release of the insurance company releases the agent").

We now turn to the plaintiff's assertion that the release does not cover the defendant because he is not named therein. "[G]enerally speaking and subject to exception, a party is not released unless...