Gelinas v. Metropolitan Property & Liability Ins. Co.

Decision Date09 December 1988
Docket NumberNo. 87-053,87-053
PartiesJoseph O. GELINAS v. METROPOLITAN PROPERTY & LIABILITY INSURANCE CO.
CourtNew Hampshire Supreme Court

Thomas E. Craig, orally, and Elizabeth Cazden, on the brief, Manchester, for plaintiff.

McLane, Graf, Raulerson & Middleton P.A., Manchester (James R. Muirhead, orally, and Maria Holland Law on the brief), for defendant.

Stephen E. Merrill, Atty. Gen. (Amy L. Ignatius, Asst. Atty. Gen., on the brief), by brief for the State, as amicus curiae.

THAYER, Justice.

In this appeal from a ruling by the Superior Court (Dalianis, J.), we are asked to determine whether an insurance company should be held liable to the assignee of a policyholder for a jury verdict in excess of the coverage. We affirm the decision in favor of the defendant. The case before us arises from the underlying tort action which was the subject of our decision in Gelinas v. Mackey, 123 N.H. 690, 465 A.2d 498 (1983), in which we upheld a jury award of $200,000 for injuries received by Mr. Gelinas. In the case now before us, the plaintiff attempts to require the insurance company to pay the entire judgment, which is in excess of the policy limit. The plaintiff alleges violation of the New Hampshire Consumer Protection Act, RSA chapter 358-A, negligence in failing to settle the case within the policy limits, and ambiguity in the limiting language of the insurance policy.

This appeal arises out of the following fact situation. On March 22, 1978, Joseph Gelinas, the present plaintiff, was involved in a car accident with John Mackey, who later assigned his rights to Gelinas. Mackey, the defendant in the underlying case, was insured for $100,000 in liability by Metropolitan Property and Liability Insurance Company (MPL). MPL hired counsel and undertook Mackey's defense in accordance with terms of the insurance policy. Attorney William S. Orcutt represented Mr. Mackey, on behalf of MPL, during the tort trial. Attorney Thomas Craig represented the plaintiff. Before and during the tort trial, MPL made settlement offers ranging from $15,000 to $40,000. The parties could not reach a settlement, however, and the case went to the jury. The jury returned a verdict in favor of Gelinas in the amount of $200,000.

Mackey, who was liable for the damages in excess of his $100,000 policy coverage, assigned to Gelinas his rights to sue his insurance carrier, MPL, under the doctrine of Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484, 56 A.2d 57 (1947) (hereinafter Dumas II ) (policyholder against whom verdict is returned in excess of coverage may sue insurer for negligently failing to settle the case within the policy limits). In the Dumas action, Harry Leidke (presently an MPL casualty unit manager), who attended the tort trial, and Attorney Orcutt testified regarding the negotiation process in the tort case. Their testimony elicited the following facts. In 1979, prior to trial, MPL had evaluated the tort claim at $6800. MPL then sought to open negotiations with Craig, the plaintiff's attorney, but to no avail. MPL then made an offer of $5000 to settle and received no response. In 1981, at the time the case was originally scheduled for trial, MPL reassessed the case at $25,000 based on information received on special damages.

According to Leidke's testimony, at the time of the pretrial conference on April 2, 1982, the only demand MPL had received from the plaintiff was a combined $220,000 demand for the case-in-chief and a related claim for loss of consortium brought by Gelinas' wife. However, the plaintiff introduced into evidence a letter dated April 2, 1982, showing the plaintiff's willingness to settle for $99,400, within the policy limit. Although Orcutt did not remember receiving the letter, the trial court found as a fact that an authorized offer was made available to the insurer to settle within the policy limits.

At the pretrial conference, MPL extended an offer of $15,000 based partly on the depositions taken for trial. Craig then met with Orcutt over the weekend, and viewed the videotapes MPL had taken of the plaintiff, building an addition to his house. Leidke testified that after viewing the tapes, Craig made a demand of $60,000 reduced from $220,000.

On April 19, 1982, prior to jury selection, MPL learned that Justice Flynn had ruled that he would allow evidence of the insured's inebriated state and allow a claim for enhanced damages. Attorney Orcutt then evaluated the case at between $30,000 and $40,000. Leidke reevaluated the case at $50,000 but was granted the authority to settle for up to $35,000. Upon reevaluation, Leidke delivered a letter to the insured stating, in effect, that MPL would not provide any coverage or indemnification for an award based on the enhanced damages that Justice Flynn was going to allow. MPL then increased its offer to $25,000.

Gelinas was the first witness. According to Leidke, Gelinas was having a difficult time with the substance of the cross-examination and requested a recess to talk to his lawyer. After their discussion, Craig approached Leidke and Orcutt to discuss the possible settlement of the case. The plaintiff's attorney demanded $50,000. Leidke and Orcutt raised MPL's offer to $30,000. According to Leidke's trial notes, he had increased the offer to $30,000 "with the attendent [sic] assertion that Mr. Craig's client was coming across very poorly to the jury ... that his client had no out-of-pocket specials and that the loss of consortium claim was worthless." The plaintiff's attorney then reduced his demand to $40,000 although, according to Orcutt's testimony, Craig's demand was not firm. Leidke then increased MPL's final offer to $35,000. According to Orcutt, Craig then indicated that $35,000 "sounds pretty good" and that he would discuss it with his client. Both Leidke and Orcutt "felt the case would settle" at this point.

Mrs. Gelinas, who had a loss of consortium claim, declined the $35,000 offer, and Orcutt then asked if the plaintiff still wanted to settle for $40,000 and Craig said "no we can't settle it." Attorney Orcutt later received a letter from Attorney Craig dated April 23, 1982, with an offer to settle--a full release to the defendant if the case was settled within the applicable coverage before 12:00 noon on April 23, 1982.

At the close of the evidence, however, Orcutt and MPL reevaluated the case at a maximum of $40,000 and offered that sum to the plaintiff during the jury deliberations. The offer was not accepted. When asked about this end-of-evidence offer, Orcutt testified, they were still trying to settle and he thought that Leidke's offer was reasonable and that MPL was not unduly venturesome. Leidke also testified about the factors that went into the $40,000 offer. This assessment was based on: medical bills, lost wages, periods of total temporary disability and partial temporary disability, and the testimony of the four doctors. The offer was also based on the plaintiff's testimony concerning his running, weightlifting, house building, his ability to continue to play softball, increased earnings following the accident, as well as the advice of counsel, and Leidke's assessment that "the plaintiff had not made an impressive or credible witness." Leidke also noted that he considered the fact that Justice Flynn had indicated that he felt $40,000 was a reasonable figure for the case. Orcutt specifically testified that during trial he made an ongoing evaluation of the case, and that after cross-examination of the plaintiff and discussion with Craig he thought the case was going to be settled. The jury returned a verdict for the plaintiff in the amount of $200,000, but denied Mrs. Gelinas' claim for loss of consortium. MPL paid the policy limit of $100,000 plus interest from the date of the judgment to the date of payment.

As assignee of Mackey's claims against MPL, Gelinas filed suit on September 29, 1982, against MPL for negligently failing to settle the claim within the policy limits. Gelinas contends that MPL knew or should have known that a jury verdict would be in excess of the policy limit, that its failure to settle at or within the policy limit was negligent, and that MPL is therefore, under Dumas II supra, responsible for paying the verdict in excess of the policy limit. MPL contends that its evaluation of Gelinas' case was supported by the evidence and was thus reasonable. MPL, therefore, asserts that it is not responsible for the overage.

The superior court found that MPL's evaluation of the case had been reasonable and, ruled that it was not liable for the jury verdict in excess of the policy limit. Gelinas now challenges that ruling on appeal and raises the following issues: (1) whether the trial court erred in dismissing the plaintiff's claim under the Consumer Protection Act, RSA chapter 358-A; (2) whether the trial court applied the correct legal standard under the Dumas line of cases; (3) whether the trial court's ruling that the defendant had acted reasonably in attempting to settle is supported by the evidence; (4) whether the trial court erred in admitting evidence of settlement discussions and opinions of certain witnesses; and (5) whether the trial court erred in ruling that certain language in Gelinas' insurance policy effectively prohibited intra-policy stacking. We find no error in the trial court's rulings and affirm for the reasons stated below.

First, the plaintiff contends that the trial court erred in dismissing his claim under the New Hampshire Consumer Protection Act, RSA chapter 358-A. Specifically, the plaintiff contends that MPL had engaged in unfair trade practice by failing, in bad faith, to settle his claim within the policy limits and, in so doing violated the statute.

The trial court, relying on Rousseau v. Eshleman, 128 N.H. 564, 519 A.2d 243 (1986) (attorneys included within consumer protection statute exemption), dismissed the claim prior to trial, finding...

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