Lawton v. Great Southwest Fire Ins. Co., 7876

CourtSupreme Court of New Hampshire
Writing for the CourtBROCK; LAMPRON, C. J., and DOUGLAS
Citation392 A.2d 576,118 N.H. 607
Docket NumberNo. 7876,7876
Decision Date27 September 1978

Page 576

392 A.2d 576
118 N.H. 607
No. 7876.
Supreme Court of New Hampshire.
Sept. 27, 1978.

Page 577

[118 N.H. 608] Cullity & Kelley, Manchester (William H. Kelley and George W. Roussos, Manchester, orally), for plaintiff.

[118 N.H. 609] Sheehan, Phinney, Bass & Green P.A., Manchester (James Q. Shirley, Manchester, orally), for defendant.

BROCK, Justice.

In this action the plaintiff seeks damages against his insurance company for its alleged failure to make payment of a fire loss pursuant to a fire insurance policy between the plaintiff and the defendant. After hearing, the trial court granted the defendant's motion to dismiss counts 1 and 2 of the plaintiff's declaration, which alleged an intentional failure and a negligent failure to make payment pursuant to the policy, and portions of count 3, which sought consequential damages in excess of the policy limits. Plaintiff's exceptions to these rulings were reserved and transferred by Flynn, J.

The plaintiff is the owner of a commercial building, located in Manchester, that was substantially damaged by fire on July

Page 578

31, 1975. At the time, a portion of the premises was insured against fire by the defendant. The policy provided coverage up to $250,000 and also contained a loss of rentals endorsement with a limit of $55,000. Over the course of three-and-a-half months following the fire, the plaintiff and the defendant engaged in various negotiations in an effort to determine and settle the loss, which need not be further detailed here other than to note that no agreement concerning the extent of loss was ever reached and that the plaintiff's claim was never settled.

On November 19, 1975, the plaintiff brought the current action against the insurance company. In count 1 of this declaration, plaintiff alleges that the defendant "willfully, intentionally or recklessly and wantonly" failed to make payment to him pursuant to the policy "in an effort to compel and coerce (him) to compromise a claim against the defendant for an amount far less than for value, and to accept far less than full performance of defendant's contractual obligations . . . ." Count 2 alleges negligent failure to make payment pursuant to the policy. Count 3 is a plea in assumpsit alleging that the defendant failed to perform its obligation under the policy "to make fair, prompt and equitable payment . . . ." In all three counts plaintiff seeks recovery for damages which he alleges resulted from the defendant's failure to effectuate a prompt and equitable settlement, "including but not limited to, irreparable damage to the plaintiff's business and credit reputation, pain, suffering and mental anguish, and severe emotional distress; loss of use of his property, loss of business opportunity, additional damage to the property occasioned by the defendant's delay, and other financial damages. . . ." all in the amount of $500,000. The trial court granted the defendant's motion to dismiss counts 1 and 2, on the ground that there is [118 N.H. 610] no recovery "Ex delicto for the wrongful or wilful or negligent refusal of an insurer to settle a first party insurance claim. . . .", and dismissed count 3 to the extent that it sought damages in excess of the insurance policy limits, on the ground that the damages available to the insured are limited to the contractual amount. For the reasons hereinafter stated, we affirm the court's ruling dismissing counts 1 and 2 of the plaintiff's declaration, and reverse its ruling relating to count 3.

In determining whether the defendant's motion to dismiss should be granted, all facts properly pleaded are assumed to be true and the reasonable inferences therefrom are construed most favorably to the plaintiff. Blake v. State, 115 N.H. 431, 433, 343 A.2d 223, 225 (1975); Green v. Shaw, 114 N.H. 289, 292, 319 A.2d 284, 285 (1974). If the plaintiff is entitled to recover upon any state of the facts findable under the pleadings, the motion to dismiss must be denied. Aldrich v. Beauregard & Sons, 105 N.H. 330, 331, 200 A.2d 14, 15 (1964); Nashua Iron and Steel Co. v. Worcester & N. R. Railroad Co., 62 N.H. 159, 161 (1882).

We first consider count 3 of the plaintiff's declaration, which alleges a breach of contract. The defendant advances three arguments in support of the court's ruling limiting the damages recoverable by the plaintiff to the policy limits: First, an insurance contract is merely an agreement to pay money, and that for breach of such an agreement the damages are limited to the money due, with interest; second, the contract itself restricts the insurer's liability to the policy limits; and third, the consequential damages plaintiff alleges to have suffered in his declaration could not have been foreseen at the time the parties executed the policy, and that therefore the defendant is not chargeable therewith.

It is true that generally the damages available for breach of a contractual obligation to pay money are the amount due, with interest. Smith v. Wetherell, 89 N.H. 106, 108, 193 A. 216, 218 (1937), Aff'd on rehearing 89 N.H. 106, 194 A. 129 (1937); Richards v. Whittle, 16 N.H. 259, 260 (1844). This rule has been applied to restrict damages for breach of an insurance contract to the contract amount, plus interest. 16 J. Appleman, Insurance Law and Practice § 8881,

Page 579

at 634 (1968) (and cases cited). The rule rests on the theory that money is always available in the market at the lawful rate of interest, and on the desirability of having a measure of damages of easy and certain application. 11 S. Williston, Contracts § 1410, at 606 (3d ed. 1968). We find these reasons unconvincing, however. First, money is not [118 N.H. 611] always available in the market at the lawful rate of interest. "Aside from the fact that the commercial rate of interest might be double the legal rate, it is highly unlikely that a claimant who has recently suffered economic disaster would be able to obtain a loan at all." Note, The Availability of Excess Damages for Wrongful Refusal to Honor First Party Insurance Claims An Emerging Trend, 45 Fordham L.Rev. 164, 169 (1976) (footnotes omitted). Second, the desirability of simplicity in determining the extent of damages is insufficient to justify the denial of damages that are capable of proof and otherwise compensable. See Note, Id.; Reichert v. Gen. Ins. Co. of America, Cal., 59 Cal.Rptr. 724, 730, 428 P.2d 860, 866 (1967), Vacated on other grounds, 68 Cal.2d 822, 69 Cal.Rptr. 321, 442 P.2d 377 (1968).

Defendant's argument that the insurance contract itself restricts the damages that are recoverable for breach of the contract to the policy limits is also unpersuasive. The policy limits restrict the amount the insurer may have to pay in the performance of the contract, not the damages that are recoverable for its breach. See, e. g., Home Indem. Co. v. Bush, 20 Ariz.App. 355, 513...

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