Gonya v. Commissioner Ins. Dept., 2005-170.

Citation899 A.2d 278
Decision Date18 May 2006
Docket NumberNo. 2005-170.,2005-170.
PartiesVenise Theresa GONYA and another v. COMMISSIONER, NEW HAMPSHIRE INSURANCE DEPARTMENT.
CourtSupreme Court of New Hampshire

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899 A.2d 278
Venise Theresa GONYA and another
v.
COMMISSIONER, NEW HAMPSHIRE INSURANCE DEPARTMENT.
No. 2005-170.
Supreme Court of New Hampshire.
Argued: January 19, 2006.
Opinion Issued: May 18, 2006.

Page 279

Watson & Lemire, P.A., of Portsmouth (Thomas R. Watson and Jennifer A. Lemire on the brief), and Baron & Budd, P.C., of Dallas, Texas (Alan Rich and Stephen Blackburn on the brief, and Mr. Rich orally), for the petitioners.

Kelly A. Ayotte, attorney general (Suzanne M. Gorman, senior assistant attorney general, on the brief, and J. Christopher Marshall, attorney, orally), for the respondent.

DUGGAN, J.


The petitioners, Venise Theresa Gonya and Roxane S. Scaife, appeal an order of the Superior Court (McGuire, J.) denying their petition to declare RSA 402-C:40, I (1998) unconstitutional and enjoin its enforcement. We affirm.

The record reflects the following undisputed facts. Each petitioner represents the estate of a deceased tort claimant. Among the defendants in the tort cases are two corporations that were insured under excess liability policies issued by The Home Insurance Company (Home), a New Hampshire insurance company. On June 13, 2003, the Superior Court (McGuire, J.) placed Home in liquidation and appointed the defendant, the Commissioner of the New Hampshire Insurance Department (Commissioner), as liquidator of Home.

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The liquidation proceedings are being conducted pursuant to the New Hampshire Insurers Rehabilitation and Liquidation Act, RSA chapter 402-C (1998 & Supp. 2005). RSA 402-C:40, I, provides that the petitioners, as third parties asserting claims against an insured of Home, may file claims directly with the Commissioner, as the liquidator of Home. However, the statute conditions the filing of a claim in the liquidation proceeding upon the third party releasing the insured from a certain degree of liability on the claim. Id.

Neither petitioner has filed a claim with the Commissioner. Instead, the petitioners, purporting to represent all persons with existing or potential claims against Home, sought declaratory and injunctive relief in the superior court, requesting the court to rule that RSA 402-C:40, I, insofar as it "forces a claimant to give up a common-law cause of action without procedural safeguards or meaningful access to information," is unconstitutional on its face. After jointly filing a stipulation of facts, the parties moved for summary judgment on all claims. The trial court granted the Commissioner's motion and denied the petitioners' cross-motion.

On appeal, the petitioners first argue that RSA 402-C:40, I, violates the doctrine of unconstitutional conditions because it conditions the potential third party claimant's ability to file a claim in the liquidation upon the relinquishment of that claimant's cause of action against the insured, thus infringing upon the claimant's constitutional right to the redress of his actionable injuries, see N.H. CONST. pt. I, art. 14. Second, they argue that RSA 402-C:40, I, violates the equal protection rights of potential third party claimants by treating them differently from similarly situated potential plaintiffs. Finally, they argue that RSA 402-C:40, I, violates the due process rights of potential third party claimants by requiring them to choose between filing a claim in liquidation and pursuing their cause of action against the insured without allowing them "to obtain enough information to make a reasoned, intelligent and voluntary choice."

In reviewing a statute, we presume it to be constitutional and we will not declare it invalid except upon inescapable grounds. Baines v. N.H. Senate President, 152 N.H. 124, 133, 876 A.2d 768 (2005). "The constitutionality of a statute involves a question of law, which we review de novo." Hughes v. N.H. Div. of Aeronautics, 152 N.H. 30, 34, 871 A.2d 18 (2005). We address each of the petitioners' arguments in turn. Because the petitioners rely solely upon the State Constitution, we base our decision upon it alone, using federal cases only to aid in our analysis. See State v. Grey, 148 N.H. 666, 668, 813 A.2d 465 (2002).

I. The Doctrine of Unconstitutional Conditions

The New Hampshire Insurers Rehabilitation and Liquidation Act (the Act), RSA chapter 402-C, contains procedures for the liquidation of insolvent or otherwise financially troubled insurance companies. See RSA 402-C:20 (1998). Among its stated purposes are the "[e]nhanced efficiency and economy of liquidation" and the "[e]quitable apportionment of any unavoidable loss." RSA 402-C:1, IV(c)-(d) (1998). The Act is to be "liberally construed" to effect its stated purposes. RSA 402-C:1, III (1998).

RSA 402-C:40, I and II (1998) provide that when a cause of action is asserted by a third party against an insured of the insurance company in liquidation, both the third party and the insured have the option to file a claim with the liquidator on that cause of action. RSA 402-C:40, I,

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further provides, however, that the filing of a claim by the third party

shall release the insured's liability to the third party on that cause of action in the amount of the applicable policy limit, but the liquidator shall also insert in any form used for the filing of third party claims appropriate language to constitute such a release. The release shall be void if the insurance coverage is avoided by the liquidator.

The petitioners first argue that RSA 402-C:40, I, places an unconstitutional condition upon their ability to file claims directly against Home in liquidation by requiring them to relinquish their causes of action against the insureds, thus infringing upon their State constitutional right to the redress of their actionable injuries. See N.H. CONST. pt. I, art. 14.

Part I, Article 14 of the State Constitution states:

Every subject of this state is entitled to a certain remedy, by having recourse to the laws, for all injuries he may receive in his person, property, or character; to obtain right and justice freely, without being obliged to purchase it; completely, and without any denial; promptly, and without delay; conformably to the laws.

This provision provides that all citizens have a right to the redress of their actionable injuries. Gould v. Concord Hospital, 126 N.H. 405, 409, 493 A.2d 1193 (1985). It makes civil remedies readily available and guards against arbitrary and discriminatory infringements on access to the courts. City of Dover v. Imperial Cas. & Indemn. Co., 133 N.H. 109, 116, 575 A.2d 1280 (1990). Although the right to recover for one's injuries is not a fundamental right, id., it is "an important substantive right," Carson v. Maurer, 120 N.H. 925, 931-32, 424 A.2d 825 (1980), and is "accorded solicitous protection," Gould, 126 N.H. at 409, 493 A.2d 1193.

Had the legislature simply required that all tort claimants with claims against persons insured by an insolvent insurer release the insured of liability up to the applicable policy limits, rather than conditioning the right to file a claim in liquidation upon their agreeing to do so, we have no doubt that it would have been a violation of the claimants' constitutional rights. See Petition of Abbott, 139 N.H. 412, 416, 653 A.2d 1113 (1995) (to justify the complete abolition of the right of any class of persons to recover damages for their injuries, there must be a satisfactory substitute for the right). However, the issue presented in this case is whether a statute can condition the grant of a benefit—here, the ability to file a claim directly against the insurer in liquidation—upon the waiver of the right to recover damages from the insured to the extent of the applicable policy limits.

We first note that we are not convinced that the doctrine of unconstitutional conditions is applicable to this case. As Justice Stevens explained in his dissenting opinion in Dolan v. City of Tigard, 512 U.S. 374, 407 n. 12, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994) (citations omitted), "Although it has a long history, the `unconstitutional conditions' doctrine has for just as long suffered from notoriously inconsistent application; it has never been an overarching principle of constitutional law that operates with equal force regardless of the nature of the rights and powers in question." Furthermore, while we have applied a similar constitutional analysis in a context different from the one before us today, see J.E.D. Assoc's, Inc. v. Town of Atkinson, 121 N.H. 581, 584-85, 432 A.2d 12 (1981) (discussing "unconstitutional exactions and requirements" placed upon developers by municipalities), overruled on other grounds by Town of Auburn v. McEvoy,

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131 N.H. 383, 388, 553 A.2d 317 (1988), we have never expressly adopted the doctrine of unconstitutional conditions or applied it under the State Constitution. Nevertheless, we will assume, for the purposes of this case only, that the doctrine is applicable to this situation.

The doctrine of unconstitutional conditions "bars government from arbitrarily conditioning the grant of a benefit on the surrender of a constitutional right, regardless of the fact that the government appropriately might have refused to grant the benefit at all." National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 747 (1st Cir.1995), cert. denied, 515 U.S. 1103, 115 S.Ct. 2247, 132 L.Ed.2d 255 (1995). However, not all conditions are prohibited. Id. If a condition is "sufficiently related" to the benefit, then it may validly be imposed. Id.

The Commissioner does not dispute that the ability to file a claim in liquidation is the type of government benefit contemplated by the doctrine of unconstitutional conditions. Assuming, then, that the right to the redress of actionable injuries is a constitutional right that is afforded protection by the doctrine of unconstitutional conditions, but see Sullivan, Unconstitutional Conditions, 102 Harv. L.Rev. 1413, 1427 (1989) (indicating that the doctrine protects only "preferred...

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