Morvay v. Hanover Ins. Companies

• Citation: 506 A.2d 333,127 N.H. 723
• Decision Date: 03 March 1986
• Docket Number: No. 85-077,85-077
• Parties: Alan MORVAY et al. v. HANOVER INSURANCE COMPANIES et al.
• Court: Supreme Court of New Hampshire

Page 333

506 A.2d 333

127 N.H. 723

Alan MORVAY et al. v. HANOVER INSURANCE COMPANIES et al.

No. 85-077.

Supreme Court of New Hampshire.

March 3, 1986.

Hall, Morse, Gallagher and Anderson, Concord (Charles T. Gallagher, on brief and G. Wells Anderson, orally), for plaintiffs.

Ransmeier & Spellman, Concord (Diane L. Perin, on brief and orally), for defendants, Norman D. Roberts and Verity Research Ltd.

JOHNSON, Justice.

The plaintiffs appeal from a ruling by the Superior Court (Dunn, J.) dismissing count IV of a four-count writ which plaintiffs brought against the defendants for non-payment of an insurance claim. We reverse.

The plaintiffs, Alan and Katherine Morvay, owned property in Loudon which was damaged by fire on December 26, 1982. The plaintiffs carried a fire insurance policy with Hanover Insurance Companies (Hanover). Hanover hired Verity Research Limited, (Verity), a Vermont corporation, to investigate the fire and received several reports from Norman D. Roberts, the employee who conducted the investigation of the fire. After Roberts filed reports indicating that the fire was of incendiary nature, Hanover refused payment on the Morvays' claim. Subsequently, in October 1983, the plaintiffs filed suit against Hanover, Verity and Roberts to recover under their insurance policy. They alleged in count IV of their writ, that defendants Verity and Roberts had negligently conducted the investigation and hence caused Hanover to deny recovery. Defendant investigators filed a motion to dismiss count IV, arguing that they were not in privity of contract with the plaintiffs and that they owed them no duty of care. Hence the count against them in negligence should be dismissed. The motion was granted and the plaintiffs appealed.

The only issue on appeal is whether the trial court erred in dismissing count IV of the writ, concluding that there was no cause of action against the defendant investigators. We hold that there was error and reverse.

First, we must articulate the standard by which we consider this appeal. "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." Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 610, 392 A.2d 576, 578 (1978) (citations omitted).

The primary purpose for entering into an insurance contract is to protect oneself against a specified peril or risk. R.H. Long, The Law of Liability Insurance § 5.04 (Rev. ed. 1985). In this instance, the plaintiffs purchased a fire policy, intended to protect them against destruction of their property by fire. "In every insurance policy there is [an] implied covenant of good faith and fair dealing." Gruenberg v. Aetna Insurance Company, 9 Cal.3d 566, 510 P.2d 1032, 108 Cal.Rptr. 480 (1973) (citations omitted). See Dumas v. State Mut. Auto Ins. Co., 111 N.H. 43, 274 A.2d 781 (1971). The issue we address in this case is whether investigative agents of an insurance company, hired to conduct an investigation of an occurrence, have a duty to the insured arising out of the company's duty of good faith and fair dealing.

It is clear that investigators are under a general duty to use due care in the performance of their work. Investigators are licensed by the State of New Hampshire and are thus subject to regulation of their activities. RSA chapter 106-F (Supp.1985). The case of Devlin v. Greiner, 147 N.J.Super. 446, 371 A.2d 380 (1977) involved an investigation which took place in the course of a divorce proceeding. While various issues were brought before the court, one issue specifically involved the conduct of the investigator. The court described the concept of "duty" as it relates to the cause of action in negligence. It explained that the duty of one to another arises out of a relation between parties and the protection against reasonably foreseeable harm. The court added that as a detective, the

"[d]efendant clearly had a duty to those he observed to report accurately on their activities ... It is his business, among other things, to supply his clients with information or factual data concerning the activities of others. Where the information gathered by him is of a delicate or sensitive nature, his duty to report that information accurately should extend not only to the person who hired him, but also to the subjects of his surveillance--people whose lives may be materially affected by the accuracy of his reports."

Id. at 466, 371 A.2d...