N.H. Ins. Guaranty Ass'n v. Pitco Frialator, Inc.

Decision Date20 January 1998
Docket NumberNo. 95–812.,95–812.
Citation142 N.H. 573,705 A.2d 1190
CourtNew Hampshire Supreme Court
Parties NEW HAMPSHIRE INSURANCE GUARANTY ASSOCIATION v. PITCO FRIALATOR, INC.

Orr & Reno, Concord (R. James Steiner, on the brief) and Hutchins, Wheeler & Dittmar, Boston, MA (Joseph C. Tanski, on the brief and orally, and Margaret A. Robbins, on the brief), for plaintiff.

Sulloway & Hollis, Concord (Jeffrey S. Cohen, on the brief), and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, MA (Paul D. Wilson, on the brief and orally, and Rosemary M. Allen, on the brief), for defendant.

HORTON, Justice.

The plaintiff, New Hampshire Insurance Guaranty Association (NHIGA), appeals a decision of the Superior Court (Arnold, J.) granting summary judgment to the defendant, Pitco Frialator, Inc. (Pitco), and denying NHIGA's cross-motion for summary judgment. The superior court interpreted the New Hampshire Insurance Guaranty Association Act, see RSA ch. 404–B (1983 & Supp.1997), as obligating NHIGA to pay Pitco $300,000 as reimbursement for Pitco's payment to third parties in settling a tort action after the insolvency of Pitco's liability insurer. We reverse.

The following facts are undisputed, except as noted. In 1984, William Lorkowski sustained serious injuries during the course of his employment at Lender's Bagel Bakery (Lender's Bagel) in Buffalo, New York. Following the accident, Lorkowski received over $300,000 in benefits from the workers' compensation insurers of Lender's Bagel. Alleging that equipment manufactured by Pitco caused the accident, Lorkowski and his wife commenced an action against Pitco in New York. The Lorkowskis' action sought approximately $15 million in damages, $5 million of which represented the wife's alleged losses. Pitco subsequently commenced a third-party action against Lender's Bagel in order to obtain contribution for any liability established against Pitco in the Lorkowskis' action. See Gonzales v. Armac Industries, Ltd., 81 N.Y.2d 1, 595 N.Y.S.2d 360, 363, 611 N.E.2d 261, 264 (1993) (discussing defendant manufacturer's right to seek contribution from plaintiff's employer despite general exclusivity of workers' compensation regime).

At the time of Lorkowski's accident, Pitco had liability insurance through a policy with Ideal Mutual Insurance Company (Ideal). During the pendency of the Lorkowskis' action, however, Ideal was declared insolvent. As a result of Ideal's insolvency, NHIGA became obligated to defend and pay certain claims under Ideal's policies to the extent provided by RSA chapter 404–B. See RSA 404–B:8, I (1983 & Supp.1997). Accordingly, NHIGA provided counsel for Pitco in the Lorkowskis' action against Pitco. NHIGA subsequently informed Pitco that it would deny coverage to Pitco to the extent that Lorkowski had received workers' compensation benefits.

In April 1992, Pitco settled the Lorkowskis' action for $500,000. Following Pitco's request for NHIGA's comments, NHIGA neither consented nor objected to the settlement. At approximately the same time that Pitco settled with the Lorkowskis, the Lorkowskis reached a settlement with Lender's Bagel through its workers' compensation and liability insurance carriers. This settlement with Lender's Bagel provided for $1.2 million to the Lorkowskis, the continuation of workers' compensation benefits, and a waiver by the workers' compensation insurers of any lien or offset resulting from past or future benefits, see generally N.Y. Work. Comp. Law § 29 (McKinney 1993). NHIGA and Pitco dispute the precise sequence of these two settlements, as well as the role played by Pitco in the Lorkowskis' settlement with Lender's Bagel.

In October 1992, Pitco and Lender's Bagel agreed to release each other from any and all claims arising from Lorkowski's accident. Neither party paid the other any money for the mutual releases.

In accordance with its settlement agreement, Pitco paid the Lorkowskis $500,000 from its own funds. When Pitco sought $300,000 from NHIGA as reimbursement for the settlement, NHIGA denied any obligation and refused to make any payments to Pitco. NHIGA then commenced this action seeking a declaration that it was not obligated to reimburse Pitco for the settlement with the Lorkowskis. Pitco filed a cross-petition for reimbursement of $300,000, and both parties moved for summary judgment. The superior court granted Pitco's motion and denied NHIGA's motion, ruling that: (1) the relevant "claim" under RSA chapter 404–B was Pitco's claim against NHIGA for reimbursement, not the Lorkowskis' underlying tort action against Pitco; (2) Pitco's claim constituted a "covered claim" under RSA 404–B:5, IV (1983); and (3) Pitco's "covered claim" obligated NHIGA to pay $300,000—NHIGA's statutory liability limit for "each covered claim," RSA 404–B:8, I(a) (Supp.1997).

On appeal, NHIGA argues that the superior court erred in its analysis of RSA chapter 404–B by focusing solely on Pitco's claim against NHIGA and thereby failing to consider the Lorkowskis' underlying action against Pitco, and by holding that Pitco had a "covered claim" for $300,000 despite: (1) the Lorkowskis' receipt of over $300,000 in workers' compensation benefits; (2) the asserted failure of Pitco and the Lorkowskis to exhaust their rights against solvent insurers; and (3) the allegedly ineffective lien waivers of the workers' compensation insurers on the Lorkowskis' recovery from Pitco. NHIGA also argues that it had no obligation to pay Pitco under the specific terms of the Ideal policy because Pitco voluntarily settled with the Lorkowskis before Pitco became "legally obligated to pay." Finally, NHIGA alternatively contends that, if it is not entitled to judgment as a matter of law based on the statute or the Ideal policy, genuine issues of material fact exist which preclude summary judgment. Because we find NHIGA's arguments regarding the significance of the Lorkowskis' underlying claims and their receipt of workers' compensation benefits dispositive, we need not address NHIGA's other arguments.

In reviewing the superior court's summary judgment rulings, we consider the evidence in the light most favorable to each party in its capacity as non-movant and, if no genuine issue of material fact exists, we determine whether either moving party is entitled to judgment as a matter of law. See New England Tel. & Tel. Co. v. City of Franklin, 141 N.H. 449, 452, 685 A.2d 913, 916 (1996) ; RSA 491:8–a, III (1983). "The interpretation of a statute is to be decided ultimately by this court." Petition of Walker, 138 N.H. 471, 474, 641 A.2d 1021, 1024 (1994).

The statute at issue here, the New Hampshire Insurance Guaranty Association Act, was enacted in part for the stated purpose of providing "a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer." RSA 404–B:2 (1983); see RSA 404–B:4 (1983). Central to the statute is the concept of a "covered claim," which is defined as

a net unpaid claim ... which arises out of and is within coverage and not in excess of the applicable limits of an insurance policy to which this chapter applies issued by an insurer, if such insurer after the effective date of this chapter is declared insolvent....

RSA 404–B:5, IV. NHIGA is obligated to pay certain covered claims, RSA 404–B:8, I(a), and is "deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent," RSA 404–B:8, I(b) (1983).

Despite its seemingly expansive purpose, the statute places several limitations on NHIGA's payment obligations. First, NHIGA's exposure per covered claim is capped at $300,000. See RSA 404–B:8, I(a). Second, the definition of "covered claim" specifically excludes "any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise." RSA 404–B:5, IV. Third, the statute provides:

Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim, including but not limited to the provisions of uninsured motorist coverage of any policy, shall be required to exhaust first his right under such policy. Any amount payable on a covered claim under this chapter shall be reduced by the amount of any recovery under such insurance policy.

RSA 404–B:12, I (1983).

Our statute is virtually identical in both purpose and language to statutes in numerous other States. See, e.g., Ventulett v. Maine Ins. Guar. Ass'n, 583 A.2d 1022, 1023 (Me.1990). See generally Note, Insurance Company Insolvencies and Insurance Guaranty Funds: A Look at the Nonduplication of Recovery Clause, 74 Iowa L.Rev. 927, 934 (1989). Confronted with disputes concerning their guaranty association's payment obligations, courts in other jurisdictions have commented on the ambiguities and apparent inconsistencies in their statutes, see Cimini v. Nevada Ins. Guar. Ass'n, 112 Nev. 442, 915 P.2d 279, 282 (1996) ; Int'l Coll. Serv. v. Vt. Prop. & Cas. Ins., 150 Vt. 630, 555 A.2d 978, 980 (1988), and on the disparate interpretations given similar statutory language, see Mosier v. Oklahoma Prop. and Cas. Ins., 890 P.2d 878, 880 (Okla.1994). RSA chapter 404–B is also "not a model of lucidity." Aztec Well Servicing Co. v. Prop. & Cas. Ins. Guar. Ass'n, 115 N.M. 475, 853 P.2d 726, 730 (1993). We proceed to interpret the statute by focusing first on its language, see Bohan v. Ritzo, 141 N.H. 210, 213, 679 A.2d 597, 600 (1996), by considering "the context of the overall statutory scheme," Appeal of Ashland Elec. Dept.,

141 N.H. 336, 340, 682 A.2d 710, 712 (1996) (quotation omitted), and lastly, by looking for guidance to other States' interpretations of similar statutes, see Roberts v. General Motors Corp.,...

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