Gulf Ins. Co. v. AMSCO, Inc.

• Decision Date: 28 December 2005
• Docket Number: No. 2004–354.,2004–354.
• Citation: 153 N.H. 28,889 A.2d 1040
• Court: New Hampshire Supreme Court
• Parties: GULF INSURANCE COMPANY v. AMSCO, INC. and another.

153 N.H. 28

889 A.2d 1040

GULF INSURANCE COMPANY

v.AMSCO, INC. and another.

No. 2004–354.

Supreme Court of New Hampshire.

Argued: Sept. 15, 2005.

Opinion Issued: Dec. 28, 2005.

Duncan J. MacCallum, of Portsmouth, on the brief, and Louis Movitz, of Boston, Massachusetts, orally, for the plaintiff.

Hinckley, Allen & Snyder, LLP, of Concord (Christopher H.M. Carter on the brief and orally), for defendant AMSCO, Inc.

BRODERICK, C.J.

The plaintiff, Gulf Insurance Company (Gulf), appeals the decision of the Superior Court (Coffey , J.): (1) permitting defense expert Peter Hermes to testify; (2) ruling that attorney's fees and other expenses incurred by Gulf on certain bond claims were not recoverable under the parties' indemnity agreement; and (3) rejecting Gulf's request for attorney's fees under the indemnity agreement with its principal for its pursuit of the present case. The defendants are AMSCO, Inc., English Wood Associates, Inc., Sara L. Clark, William D. Clark, Fernande Clark, Anthony C. Clark, Mark S. Clark and Laura D. Clark (collectively referred to as "AMSCO"). AMSCO cross-appeals, arguing that the trial court erred by: (1) ruling that it had agreed to pay Gulf over $14,000 in attorney's fees and expenses Gulf incurred on two bond claims; and (2) refusing to allow it to amend its pleadings to pursue counterclaims for Gulf's alleged breach of contract and violation of the Consumer Protection Act, RSA chapter 358–A. We affirm.

The following facts either were found by the trial court or are otherwise not disputed by the parties. In January 1997, Gulf, as surety, and AMSCO, as principal, entered into a general agreement of indemnity (GAI) in connection with a series of performance bonds issued by Gulf guaranteeing AMSCO's performance on various construction projects. At different times, claims were made against three bonds involving disputes between AMSCO and three companies: Beacon Properties, Panciocco Builders, Inc., and Brita Corporation. These disputes have since been resolved, and the present matter involves a lawsuit Gulf brought against AMSCO seeking recovery under the GAI for costs and expenses it incurred related to the three bond claims.

In the fall of 1999, Beacon Properties made a claim against a performance bond issued by Gulf for AMSCO's alleged failure to complete a construction project. Gulf assented to AMSCO handling the Beacon defense, and AMSCO retained legal counsel to represent them both. The dispute was ultimately settled without Beacon filing suit and without Gulf making any payments under the bond. Gulf then sought indemnification from AMSCO for $1,443.23 it allegedly incurred in loss adjustment expenses generated by Contract Operations Planning, Inc. (COP), a company hired by Gulf to investigate and adjust bond claims.

Panciocco Builders also made a claim against a bond Gulf had issued to AMSCO for the contract between AMSCO and Panciocco, and in 1999, Panciocco brought suit against Gulf and AMSCO. Again, Gulf permitted AMSCO to handle the defense, and AMSCO promptly retained legal counsel to represent them both. Ultimately, AMSCO and Panciocco settled the suit without Gulf making any payments under the bond. Subsequently, Gulf demanded indemnification from AMSCO for legal fees and adjustment expenses in excess of $20,000 it allegedly incurred. The amount sought included fees charged by three different law firms, an independent engineering consultant, and COP.

Finally, in June 2000, Brita Corporation made a claim against a Gulf performance bond for damages allegedly associated with AMSCO's substandard performance on a construction project. Gulf denied the claim, and Brita filed suit against Gulf and AMSCO. AMSCO retained legal counsel who initially appeared for both Gulf and AMSCO. Thereafter, Gulf hired its own attorney, who appeared on its behalf, and demanded that AMSCO pay Gulf $84,131.06 before it would allow AMSCO to assume Gulf's defense in the Brita action. The amount sought by Gulf included over $21,000 in expenses Gulf allegedly incurred in the Beacon and Panciocco matters, over $3,000 in expenses in the Brita case, and $60,000 for collateral, representing Brita's settlement demand. Gulf's subsequent correspondence conditioned its willingness to allow AMSCO to assume Gulf's defense upon AMSCO's payment of the fees and adjustment expenses allegedly associated with the Beacon and Panciocco matters, without mention of the demand for collateral. AMSCO did not make payment to Gulf, and the parties continued their defense to the underlying action with separate counsel.

In January 2001, Gulf filed suit against AMSCO to recover attorney's fees and adjustment expenses allegedly incurred in the Beacon, Panciocco and Brita matters, as well as to recover attorney's fees under the GAI for pursuing its right to indemnity.

The expenses, which totaled $143,714.43, included $1,443.23 in the Beacon matter, $20,502.83 in the Panciocco matter, and $121,768.37 in the Brita matter and the indemnity action. In September 2003, AMSCO and Brita settled Brita's claim for $50,000; the dispute continued, however, between AMSCO and Gulf for indemnity payments under the GAI.

The trial court conducted a multi-day trial on the indemnity action. Gulf appeals, challenging the trial court's admission of defense expert testimony, its rejection of certain claimed attorney's fees and loss adjustment expenses in the Panciocco and Brita matters, and its failure to award it attorney's fees under the GAI. AMSCO cross appeals, arguing that the trial court erred by ruling it had entered into a contract to pay Gulf in excess of $14,000 for legal fees and loss adjustment expenses in the Beacon and Panciocco matters, and by refusing to permit it to pursue certain counterclaims.

I

Gulf first argues that the trial court erred in permitting AMSCO's expert witness, Peter Hermes, to testify because he was disclosed only one week before trial. Gulf contends that AMSCO's pretrial statement, which was filed about eighteen months prior to trial, did not list any expert witness or otherwise disclose an intent to rely upon expert testimony. According to Gulf, AMSCO never offered any good cause to excuse its late disclosure, and the trial court's finding that AMSCO's expert disclosure did not come as "any surprise" to Gulf is not supported by the record.

"In superior court, a party is entitled to disclosure of the opposing party's experts, the substance of the facts and opinions about which they are expected to testify and the basis of [their] opinions." Porter v. City of Manchester, 151 N.H. 30, 54, 849 A.2d 103 (2004) ; see Super. Ct. R. 35(b)(3), (f), 62. While Gulf makes no claim that it specifically requested expert disclosure under Superior Court Rule 35, AMSCO filed a pretrial statement in which it was required to list all witnesses expected to testify at trial pursuant to Superior Court Rule 62. Under that rule, "only witnesses listed in the Pre- trial Statement [are] allowed to testify" absent good cause. Further, under the Preface to the Superior Court Rules, the trial court may waive the application of any rule "[a]s good cause appears and as justice may require." The policy of disclosure of expert witnesses rests upon the premise that "justice is best served by a system that reduces surprise at trial by giving both parties the maximum amount of information." Wong v. Ekberg, 148 N.H. 369, 372, 807 A.2d 1266 (2002) (quotation omitted). Because the trial court retains discretion to admit expert testimony, In the Matter of Letendre & Letendre , 149 N.H. 31, 37, 815 A.2d 938 (2002), we review its decision in order to determine whether it unsustainably exercised its discretion, see State v. Lambert, 147 N.H. 295, 296, 787 A.2d 175 (2001) (explaining unsustainable exercise of discretion standard). Under the unsustainable exercise of discretion standard, Gulf must show that the trial court's ruling was "clearly untenable or unreasonable to the prejudice of [its] case." Id.

The trial court ruled that AMSCO's late disclosure of its intent to present expert testimony through Peter Hermes came as no surprise to Gulf. At trial, the parties engaged in a colloquy with the court concerning the merits of Gulf's motion to preclude Hermes' testimony. While AMSCO's pretrial statement does not list Hermes as a witness, the court recalled that during a pretrial conference it had discussed with the parties AMSCO's intended reliance upon expert testimony as well as the subject area of the expected testimony. While Gulf acknowledged the discussion, it denied that they had discussed the specific facts related to its claim about which AMSCO's expert would testify. It contended that, due to the late disclosure of the specific nature of the expected testimony, it was unable to depose Hermes or obtain a rebuttal expert. In reply, however, AMSCO contended that it had provided Gulf with Hermes' curriculum vitae in September 2002, a year prior to trial. Given this record and the deference we accord to the trial court in the exercise of its discretion, we cannot conclude that it was error to permit AMSCO's defense expert to testify at trial. See id.

II

Gulf next argues that the trial court erred by failing to apply the express terms of the GAI when it denied Gulf's request for indemnity. Gulf contends that AMSCO may only avoid its obligation to indemnify Gulf for its loss adjustment expenses and associated attorney's fees by establishing that Gulf acted in "bad faith" in incurring them. According to Gulf, even under some lesser standard such as subjective or objective reasonableness, the evidence compelled recovery of its claimed fees and expenses under the GAI. We hold that the trial court's decision is legally sound and supported by the evidence.

The trial court ruled that the plain language of the GAI required AMSCO to indemnify Gulf only for "reasonable" expenses, and that the GAI contained a burden-shifting provision requiring AMSCO to prove that...