Metropolitan Property & Liability Ins. Co. v. Ralph

• Citation: 138 N.H. 378,640 A.2d 763
• Decision Date: 31 March 1994
• Docket Number: No. 92-250,92-250
• Parties: METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY v. Joyce K. and Wilbur RALPH.
• Court: Supreme Court of New Hampshire

Page 763

640 A.2d 763

138 N.H. 378

METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY v. Joyce K. and Wilbur RALPH.

No. 92-250.

Supreme Court of New Hampshire.

March 31, 1994.

Wiggin & Nourie, P.A., Manchester (Gordon A. Rehnborg, Jr., on the brief and orally, and Doreen F. Connor, on the brief), for plaintiff.

Engel, Gearreald & Gardner, P.A., Exeter (Mark S. Gearreald, on the brief and orally), for defendants.

HORTON, Justice.

The plaintiff, Metropolitan Property & Liability Insurance Company (Metropolitan), appeals an order of the Superior Court (Perkins, J.) requiring it to pay more than $48,000 in prejudgment interest to its insureds, Joyce K. and Wilbur Ralph. The Ralphs cross-appeal, arguing that the trial court erred in calculating prejudgment interest at a simple rate under RSA 336:1 (1984). We affirm.

In 1979, Joyce K. Ralph was injured when her car was struck by a vehicle driven by Raymond J. Clark. Clark was insured by National Grange Mutual Insurance Company (National Grange) under an automobile liability policy that provided $100,000 in coverage. Mrs. Ralph and her husband brought suit against Clark in 1983. The Ralphs were insured by Metropolitan under a policy that provided uninsured motorist coverage of $250,000 per person. In 1985, the Ralphs demanded arbitration against Metropolitan, but the parties agreed to delay arbitration until after the suit against Clark was resolved.

Because of delay in scheduling a trial date, the Ralphs, Clark, and National Grange agreed in 1989 to binding arbitration in the Ralphs' action against Clark. The Ralphs' attorney repeatedly asked Metropolitan to participate in the arbitration of the underlying liability action, but Metropolitan declined based on its determination that the Ralphs' damages would not exceed Clark's $100,000 policy limit. The Ralphs and National Grange discussed adding interest to the arbitration award from the date of the writ, as would have happened pursuant to RSA 524:1-b (1974) if the case had proceeded to a jury trial in superior court.

In early 1990, the three-member arbitration panel awarded judgment for the Ralphs "in the combined amount of NINETY THOUSAND DOLLARS ($90,000). Said judgment does not include any interest which shall be calculated and added to the judgment pursuant to R.S.A. 524:1-b, or as agreed to by counsel for the parties." Interest was calculated at $58,245. Metropolitan consented to the Ralphs' settlement with National Grange for the $100,000 liability limit of Clark's policy. The Ralphs then renewed their demand for arbitration against Metropolitan, seeking to recover the balance of the interest, $48,245.

Metropolitan filed a petition for declaratory judgment asking that the Ralphs' demand for uninsured motorist arbitration be rejected. Metropolitan argued that the Ralphs were bound by the liability arbitration, and because the Ralphs' damages were only $90,000, an amount within the tortfeasor's policy limits, the Ralphs could not make a claim against their uninsured motorist policy. Metropolitan also moved for summary judgment asserting that the Ralphs were bound by the underlying arbitration award, that they were precluded from asserting additional damages in further arbitration by the doctrine of collateral estoppel, and that they are entitled only to interest accruing since the date of the liability arbitrator's award.

On Metropolitan's motion for summary judgment, the Superior Court (McHugh, J.) ruled that the Ralphs "had a full and fair opportunity to litigate the amount of damages for which the tortfeasor was responsible and they are thus barred by the doctrine of collateral estoppel from relitigating that issue." With regard to the question of whether Metropolitan was liable for the $48,245 in prejudgment interest, the court found a dispute of material fact as to whether the Ralphs and National Grange agreed that interest on the arbitrator's award would run from the date of the writ. A hearing was held, and the Superior Court (Perkins, J.) ruled that the Ralphs and National Grange "did agree prior to entering into arbitration that interest on the arbitrator's award would run from the date of the writ."

Metropolitan argued that it was not bound by a private agreement between the Ralphs and National Grange because it was not a party to the agreement. The court ruled:

"Defendants note that [Metropolitan's] position is inconsistent: on the one hand, it seeks to bind defendants to the arbitration award, while on the other hand [Metropolitan] seeks to exclude prejudgment interest from that award, asserting that it is not bound by the agreement between defendants and National Grange.

The Court finds that [Metropolitan] is responsible for payment of prejudgment interest. [Metropolitan] cannot simultaneously accept the arbitration award and reject the agreement regarding interest upon which the award was premised."

The court also denied the Ralphs' motion to amend their requests to increase the balance of interest owed from $48,245 to $80,910.34 based on a claim of right to compound interest. Both parties appealed.

I. Prejudgment Interest

At the conclusion of the liability arbitration proceedings, Metropolitan was in a position to either accept the results of those proceedings, or reject them and move to fresh arbitration on liability and damages under the terms of its uninsured motorist coverage. This election existed because the Ralphs were bound by the factual findings of that award, including damages, by the doctrine of collateral estoppel. See Caouette v. Town of New Ipswich, 125 N.H. 547, 554, 484 A.2d 1106, 1111 (1984); Sanderson v. Balfour, 109 N.H. 213, 216, 247 A.2d 185, 187 (1968). On the other hand, Metropolitan was not bound by these findings since the liability arbitration proceedings were not "an action prosecuted by the insured or his legal representative with the written consent of METROPOLITAN," as required under part 3 of the Ralphs' policy, nor was Metropolitan otherwise asserted to be in privity with the Ralphs in those proceedings. Nat'l Grange Mut. Ins. Co. v. Smith, 133 N.H. 279, 280, 574 A.2d 1386, 1387 (1990); see also U.S. Fire Ins. Co. v. Millard, 847 S.W.2d 668, 674 (Tex.Ct.App.1993). Faced with this election, Metropolitan chose to assert the binding effect of the liability arbitration. This choice was made in the face of the Ralphs' demand for fresh arbitration on the uninsured motorist claim. Having made this election, Metropolitan has consented to be bound, after the fact, to the proceedings and to the award. Thus, as found by the trial court, "[Metropolitan] cannot simultaneously accept the arbitration award and reject the agreement regarding interest upon which the award was premised." Metropolitan's election was made with full knowledge of the award and the interest component thereof.

We have recognized that the time/money element may be proper for inclusion in an uninsured motorist arbitration award, both retrospectively and prospectively. See Leach v. O'Neill, 132 N.H. 665, 667, 568 A.2d 1189, 1190 (1990). In Leach, we could not determine whether the time/money element was included in the bulk award; we held that the provisions of RSA 524:1-b, regarding interest on verdicts, do not apply to such awards. Id. at 669, 568 A.2d at 1191-92. We have also recognized that the manner in which the time/money element is to be handled in arbitration may be established by the parties to the arbitration, including using RSA 524:1-b as the measuring stick. Major v. Acorn Investment Co., 134 N.H. 86, 90, 588 A.2d 811, 813 (1991). Since the parties agreed to use RSA 524:1-b as a measuring stick for the time/money element in the underlying liability arbitration, the interest calculated according thereto is properly considered part of the arbitration award. This holding does not affect the general rule that interest runs from the date of an arbitration award. Ellis v. Royal Ins. Co., 129 N.H. 326, 341, 530 A.2d 303, 312 (1987); Hackman v. American Mut. Liab. Ins. Co., 110 N.H. 87, 94, 261 A.2d 433, 438 (1970). We continue to presume that the time/money factor is included in an arbitration award, absent explicit indication of the contrary.

Metropolitan next argues that even if it is bound by the liability arbitration award, the award assessed damages and interest separately. Under the terms of its contractual insurance obligation, Metropolitan contends that it is liable only for damages, not pre-award interest. Since damages were assessed at $90,000, and that sum was paid by the liability carrier, there is no coverage on which to base an interest payment order. This argument is based on a recent decision of this court, National Grange Mutual Insurance Co. v. Smith, 133 N.H. 279, 281-82, 574 A.2d 1386, 1387-88 (1990). In National Grange, the court was faced with an uninsured motorist claim based on a superior court verdict that bound the uninsured motorist carrier. The carrier was relieved of the obligation to pay prejudgment interest by virtue of the terms of its coverage. The court analyzed the policy, finding that the uninsured motorist coverage provided payment for an "amount that 'the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury ... including death....' " Id. at 281, 574 A.2d at 1387. The court found no definition provided for "damages," but, reading the policy as a whole, found, in the context of the liability coverage section, a distinction between "damages" and "interest on the judgment." Finding no reason to ignore this distinction in its interpretation of "damages" under the uninsured motorist section, it found no contractual obligation to pay prejudgment interest. Nor did it find any obligation to pay prejudgment interest extraneous to the policy.

The policy language at issue in National Grange does not materially differ from the policy...