In re Liquidation of the Home Ins. Co.

• Decision Date: 13 February 2014
• Docket Number: No. 2012–623,2012–623
• Parties: In the MATTER OF the LIQUIDATION OF the HOME INSURANCE COMPANY
• Court: New Hampshire Supreme Court

166 N.H. 84

89 A.3d 165

In the MATTER OF the LIQUIDATION OF the HOME INSURANCE COMPANY

No. 2012–623

Supreme Court of New Hampshire.

Argued: October 16, 2013

Opinion Issued: February 13, 2014

Orr & Reno, P.A., of Concord (Lisa Snow Wade on the brief and orally), and Crowell & Moring LLP, of New York, New York, and Washington, D.C. (Harry P. Cohen and Ellen M. Farrell on the brief), for the appellant.

Michael A. Delaney, attorney general (J. Christopher Marshall, attorney, on the brief), and Rackemann, Sawyer & Brewster P.C., of Boston, Massachusetts (J. David Leslie and Eric A. Smith on the brief, and Mr. Leslie orally), for the respondent.

LYNN, J.

The appellant, Century Indemnity Company (CIC), appeals an order of the Superior Court (Smukler, J.) granting the motion of the respondent, Roger A. Sevigny, Commissioner of Insurance of the State of New Hampshire, as Liquidator (the Liquidator) of the Home Insurance Company (Home) for an award of statutory prejudgment interest on certain monies owed to Home by CIC. We affirm.

I

This is the fifth opinion we have issued in connection with the liquidation of Home. See In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472, 913 A.2d 712 (2006) (Home I); In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543, 953 A.2d 443 (2008)( Home II ); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 396, 965 A.2d 1143 (2009) (Home III ); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 677, 972 A.2d 1019 (2009) (Home IV). The following facts either are drawn from our prior opinions or are supported by the record in the instant appeal.

Home is an insurance company, organized under the laws of New Hampshire, which was declared insolvent and placed in liquidation in 2003. Home II, 157 N.H. at 544, 953 A.2d 443. The Liquidator is vested with title to and charged with administering and collecting Home's assets for distribution to Home's creditors. Home I, 154 N.H. at 475, 913 A.2d 712. CIC is an insurance company organized under the laws of Pennsylvania. Home II, 157 N.H. at 544–45, 953 A.2d 443. CIC and Home have a set of co-insurance and reinsurance relationships, which are fully described in our opinions in Home II and Home IV. See Home IV, 158 N.H. at 679–80, 972 A.2d 1019 ; Home II, 157 N.H. at 544–46, 953 A.2d 443. In one aspect of the parties' relationship, CIC reinsures Home with respect to certain contracts between Home and other insurers. Home II, 157 N.H. at 545, 953 A.2d 443. CIC and Home are also co-insurers of certain companies, including Pacific Energy Company (PECO), meaning that both CIC and Home are primary insurers of PECO. Home IV, 158 N.H. at 680, 972 A.2d 1019.

A number of documents govern aspects of the relationship between CIC and Home, and we deal with three here. The first, the Restated and Revised Order Establishing Procedures Regarding Claims Filed with the Home Insurance Company in Liquidation (Claims Procedures Order) applies generally to claims made against Home pursuant to the Insurers Rehabilitation and Liquidation Act, RSA chapter 402–C (2006 & Supp. 2013); its purpose is to achieve uniformity and provide procedures for the presentation, processing, determination, and classification of claims against Home. It became effective on January 19, 2005, and is a restated and revised version of an order originally entered in the Home liquidation on December 19, 2003. It applies to all "Claimants" in the Home liquidation, defining that term as "any policyholder, reinsured, reinsurer, general creditor, third-party, or guaranty association that has filed a Proof of Claim." The second document, the "Claims Protocol," is a letter agreement between CIC and Home that governs the handling by CIC, as reinsurer of Home, of a certain subset of claims against Home (the AFIA Liabilities) by certain entities in the United Kingdom (the AFIA Cedents) in connection with the American Foreign Insurance Association. See Home I, 154 N.H. at 474–75, 913 A.2d 712 (explaining the reinsurance relationship between CIC and Home with respect to the AFIA Liabilities). Of particular relevance here, Section 3 of the Claims Protocol provides that CIC shall make certain remittances to Home with respect to the AFIA Liabilities net of setoff as permitted by New Hampshire law, and will provide monthly reports as to those remittances and setoffs. The third document, the Joint Report, is another agreement between CIC and Home, and addresses contribution/subrogation claims filed by CIC in the Home liquidation under four particular Proofs of Claim. It sets forth the initial steps to be taken by the two parties after CIC asserts such a claim, including CIC's asserted PECO claim.

This appeal flows directly from the facts at issue in Home IV. In that appeal, we held that an asserted $8 million setoff claim by CIC, which had been waived and then reacquired by CIC in a pair of settlement agreements with PECO, was impermissible under New Hampshire law. Id. at 680, 684, 972 A.2d 1019. We also explicitly declined, without prejudice, to decide the issue now before us: whether Home's estate was entitled to prejudgment interest on the payments CIC wrongfully withheld based upon setoff. Id. at 684, 972 A.2d 1019.

We denied CIC's motion for reconsideration in the Home IV appeal on June 10, 2009. After remand, the Liquidator filed a motion in superior court on June 29, 2009, for interest on amounts withheld by CIC based upon improper setoff, to which CIC objected on July 14, 2009. On August 3, 2009, CIC removed the PECO setoff from its monthly statement to Home and paid the previously withheld $8 million to the Liquidator. The trial court entered an order granting the motion on August 3, 2012, finding that Home was entitled to prejudgment statutory interest under RSA 524:1–a (2007) accruing from October 12, 2007, the date of the Liquidator's letter notifying CIC of his determination to disallow the PECO setoff. This appeal followed.

II

On appeal, CIC argues that the trial court erred in granting Home prejudgment interest pursuant to RSA 524:1–a, and that, in the alternative, it erred in determining the correct accrual date. We disagree with both arguments.

This appeal requires us to interpret statutes as well as the contracts between the parties. "The interpretation of a statute is a question of law, which we review de novo ." Home IV, 158 N.H. at 681, 972 A.2d 1019. "We are the final arbiters of the legislature's intent as expressed in the words of the statute considered as a whole." Id. "We first examine the language of the statute, and, where possible, ascribe the plain and ordinary meanings to the words used." Id. "Our goal is to apply statutes in light of the legislature's intent in enacting them, and in light of the policy sought to be advanced by the entire statutory scheme." Id.

"The interpretation of a contract is a question of law, which we review de novo ." Home II, 157 N.H. at 546, 953 A.2d 443. "When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole." Id. "Absent ambiguity, the parties' intent will be determined from the plain meaning of the language used in the contract." Id.

CIC first asserts that the trial court erred in granting the Liquidator's motion for interest. It makes two arguments as to why RSA 524:1–a should not apply: (1) this was not an "action on a debt or account stated" as required by the statute; and (2) the agreements between CIC and Home create a comprehensive protocol that does not allow for an award of interest on a disputed setoff claim.

CIC first argues that the underlying proceeding was not an "action on a debt or account stated," and thus RSA 524:1–a does not apply. In its order, the trial court found that "there is a distinction between an action for setoff and an action on a debt or account," and CIC argues that the trial court erred when it found that "the nature of this case is not one for setoff," but is "more akin to a debt claim or contract dispute."

Here, the trial court granted the Liquidator's motion based upon RSA 524:1–a. We have previously indicated that "legislative history suggests that RSA 524:1–a and :1–b were intended to provide the same protection to prevailing parties." Nault v. N & L Dev. Co., 146 N.H. 35, 39, 767 A.2d 406 (2001). All statutes dealing with the same subject-matter are to be considered in interpreting any one of them. Id. at 38, 767 A.2d 406. "Where reasonably possible, statutes should be construed as consistent with each other." Id. "When interpreting two statutes which deal with a similar subject matter, we will construe them so that they do not contradict each other, and so that they will lead to reasonable results and effectuate the legislative purpose of the statute." Id.

"Ordinarily, upon a verdict for damages and upon motion of a party, interest is to be awarded as a part of all judgments." State v. Peter Salvucci Inc. , 111 N.H. 259, 262, 281 A.2d 164 (1971). RSA 524:1–a provides: "In the absence of a demand prior to the institution of suit, in any action on a debt or account stated or where liquidated damages are sought, interest shall commence to run from the time of the institution of suit." RSA 524:1–a. RSA 524:1–b further provides:

In all other civil proceedings at law or in equity in which a verdict is rendered or a finding is made for pecuniary damages to any party, whether for personal injuries, for wrongful death, for consequential damages, for damage to property, business or reputation, for any other type of loss for which damages are recognized, there shall be added ... to the amount of damages interest thereon from the date of the writ or the filing of the petition to the date of judgment....

RSA 524:1–b (2007).

The purpose of the legislature in enacting RSA 524:1–a and :1–b in 1957 was "to clarify and simplify the existing law and to...