NEWSLETTER ANNOUNCEMENT. Getman, Schulthess, Steere & Poulin, P.A. FIRM NAME CHANGE

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1 Getman, Schulthess, Steere & Poulin, P.A Elm Street Manchester, NH NEWSLETTER New Hampshire, Massachusetts, Maine & Vermont March 2015 Dear Michael, This newsletter discusses updates and changes in the law. Should you have questions, please contact Larry Getman at or (603) Larry Getman's V-Card ANNOUNCEMENT FIRM NAME CHANGE Massachusetts Licensed Attorneys: Laurence W. Getman Christopher J. Poulin Debbie L. Makris Tracy L. McGraw Clara E. Lyons Vermont Licensed Attorneys: Stephen J. Schulthess and Debbie L. Makris Maine Licensed Attorneys: Douglas N. Steere and Edwinna Vanderzanden

2 New Hampshire Licensed Attorneys: Laurence W. Getman Stephen J. Schulthess Douglas N. Steere Christopher J. Poulin Jill A. DeMello Naomi L. Getman Elizabeth L. Hurley Clara E. Lyons Debbie L. Makris Tracy L. McGraw Edwinna Vanderzanden Michael W. Wallenius GETMAN, SCHULTHESS, STEERE & POULIN, P.A. Laurence W. Getman Getman, Schulthess, Steere & Poulin, P.A Elm Street Manchester, NH (603) FAX (603) Website: New Number for ALL New Hampshire Courts New Hampshire Courts NEW HAMPSHIRE SUPREME COURT Insurance Coverage for Defective Construction Claims - Applicability of Business Risk Exclusions Cogswell Farm Condominium Association v. Tower Group, Inc., et al (January 13, 2015) Lemery Building Company, Inc., was responsible for the construction and development of residential condominium units between 2000 and In 2001 Lemery began selling the units. The current unit owners are members of the Cogswell Farm Condominium Association. They filed the underlying lawsuit against Lemery alleging that the "weather barrier" components of the units were defectively constructed resulting in damage to the units due to water leaks. Lemery was insured under a commercial general liability insurance policy issued by Acadia from March 2000 to August Tower issued an identical policy to Lemery with coverage from August 2002 to November The insurers argued that the claims did not constitute an "occurrence" under the policies and, even if coverage was triggered, two exclusions in the policies precluded coverage. Exclusion J(1) excluded coverage for property damage to property that Lemery "own[s], rent[s] or occup[ies]" and Exclusion J(6) excluded coverage for property damage to "that particular part of any property that must be restored, repaired or replaced because '[Lemery's] work' was incorrectly performed on it." Under the policy the term "your work" refered to any "[w]ork or operations performed by [Lemery] or on [Lemery's] behalf" and any "[m]aterials, parts or equipment furnished in connection with such work or operations," but does not apply to property damage included in the "products-completed operations hazard." The trial court ruled that the negligence alleged by Cogswell, if proven, would constitute an "occurrence" thus triggering coverage, but concluded that both exclusions applied and, therefore, the insurers did not owe a duty to defend or indemnify Lemery. The Supreme Court reversed the decision on appeal as to the applicability of the exclusions. Exclusion J(1) excludes coverage for property damage that occurred while Lemery owned the units, prior to their sale beginning in 2001, but did not excluded coverage for damages sustained after the sale and while the policies were in effect. The Court found that Exclusion J(6) could be construed two ways. It could be construed broadly to exclude coverage for all damage to the insured's work product caused by the insured's defective work, thereby precluding coverage for all damage resulting from the work, including damage to the non-defectively constructed parts of the units. Or, it could be construed as excluding coverage only for those parts of the property on which the defective work was done. The latter interpretation would

3 Join Our List preclude coverage for the defective weather barriers but would allow coverage for the non-defective parts of the units that were damaged as a result of the defective construction. The Court adopted the latter interpretation in order to construe the policy in favor of coverage. The Court declined to address whether the claims involved an "occurrence." ruling that the insurers did not preserve the issue for appeal. UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE Motor Vehicle Accident Negligence Per Se Lufkin d/b/a Lufkin's Service Center v. John S. Reed, Inc., et al (February 4, 2015) The plaintiffs are owners of a gas station and automotive repair shop located at the intersection of Route 116 and Route 3 in Whitefield. On December 20, 2011, a flatbed tractor trailer truck transporting a load of steel girders was traveling on Route 116, intending to make a left turn onto Route 3. The truck descended an incline as it headed toward the intersection and failed to execute the left turn onto Route 3. It crashed into the service center and came to rest in a nearby ravine. The truck was owned by John S. Reed, Inc. and operated by its employee, Keith Butts, who sustained fatal injuries in the accident. The plaintiffs brought a negligence action against the truck owner and the driver's estate and filed a motion for partial summary judgment. They claimed that security camera footage established that the driver was negligent as a matter of law. In the alternative, they alleged that the driver was negligent per se because he violated both RSA 265:31, II, which requires drivers to stop at stop signs and RSA 265:44, which provides that no person shall make a turn unless able to do so with reasonable safety. The Court ruled that the issue of the driver's negligence presented a question of fact for the jury and could not be decided as a matter of law. Loss of control of a vehicle, particularly when there is evidence of poor road conditions, is not dispositive evidence of negligence. In this case, eyewitnesses, including a state trooper, described the road as "slippery" and "ice covered." The steep downgrade and road conditions created issues of fact as to whether the truck driver was operating the truck negligently. Plaintiff's motion for partial summary judgment was denied. The Court also rejected the plaintiff's negligence per se arguments. There were factual issues as to whether the driver was

4 exercising due care at the time of the accident and whether he lost lost control solely as the result of poor driving conditions. Citing the Restatement (Third) of Torts 15b, the Court stated that violation of a statute may be excused and not negligent if the actor exercises reasonable care in attempting to comply with the statute. NEW HAMPSHIRE AMENDS DEFINITION OF UNINSURED MOTOR VEHICLE Effective January 1, 2015, RSA 259:117 was amended to define "uninsured motor vehicle" for the purposes of the New Hampshire Financial Responsibility Statute, RSA 264:15. Now, the definition includes an insured motor vehicle if and to the extent that, at the time of the accident: (1) the applicable liability limits are less than the limits of the uninsured motorist coverage applicable to the insured; or (2) the available liability insurance has been reduced as the result of payments to others injured in the accident to an amount less than the limits of the uninsured motorist coverage applicable to the insured. MAINE SUPREME JUDICIAL COURT Bicyclist/Motorist Accident Semian v. Ledgemere Transportation, Inc. (December 16, 2014) The plaintiff, a 20 year-old student from Romania, was riding a bicycle on Route 1 in Ogunquit when she was passed by a school bus owned by Ledgemere and operated by its employee. The plaintiff caught up with the bus at the intersection of Route 1 and Berwick Road. The bus, which was straddling the straight and right-turn lanes, began to move forward and then paused. Believing that the bus was going straight, the plaintiff continued riding and passed the bus on the right. However, the bus turned right onto Berwick Road. The plaintiff was unable to stop, struck the side of the bus, and was run over resulting in severe injuries. During the trial, Ledgemere moved for judgment as a matter of law, arguing that pursuant to 29-A M.R.S. 2070(6) the plaintiff assumed the risk when she passed the bus on the right, but the trial court denied the motion. Ledgemere also sought a jury instruction, based on 29-A M.R.S. 2063(2), that a bicyclist must drive on the right portion of the roadway as far as practicable. The jury found that Ledgemere was 75% at fault and the plaintiff was 25% at fault, resulting in a net verdict for the plaintiff in the amount of $750,000. On appeal Ledgemere argued that the trial court erred in denying

5 its motion for judgment as a matter of law under 29-A M.R.S. 2070(6) which provides that a bicyclist may pass a vehicle on the right "at the bicyclist's... own risk" and, therefore, immunizes the vehicle operator from liability. The Court rejected this argument, however, noting that Section 2070(6) must be read in a manner that is consistent with Section 2060(1-A), which prohibits a motorist who is passing a cyclist from turning right unless the turn can be made safely. The Court held that Section 2070(6) recognizes the risk that a bicyclist creates to her own safety when she passes a motorist on the right and leaves for the fact-finder the issue of the bicyclist's comparative negligence in relation to the motorist's negligence. Ledgemere also argued that the trial court erred in denying its request for a jury instruction under Section 2063(2), which requires a bicyclist who is riding at a speed less than the normal speed of moving traffic to drive on the right side of the road as far as practicable except when it is unsafe to do so, unless one of the enumerated exceptions applies. One of those exceptions arises when the bicyclist is proceeding straight in a place where right turns are permitted. The Court held that since that statutory exception applied in this case, Section 2063(2)'s requirements were not applicable at all and the trial court did not err in refusing to instruct the jury. Affirmed. Umbrella Insurance Policy - Uninsured Motorist Coverage Dickau v. Vermont Mutual Insurance Co. (December 31, 2014) The plaintiff was injured while riding his motorcycle in Maine. He settled his claims with the other driver for her $100,000 policy limits and received an additional $150,000 in underinsured motorist benefits under his own policy. He then sought additional underinsured motorist coverage under an umbrella insurance policy issued by Vermont Mutual,which provided liability coverage above any qualifying minimum primary insurance for up to $1 million per occurrence. Vermont Mutual denied any obligation to provide uninsured motorist coverage under its policy and the plaintiff filed a declaratory judgment action arguing that: 1) the umbrella policy provides for uninsured motorist coverage; and 2) even if the policy does not provide uninsured motorist coverage by its terms, such coverage was statutorily mandated. Pursuant to 24-A M.R.S. 2902(2), automobile policies subject to the Maine Automobile Insurance Cancellation Control Act (MAICCA) must provide uninsured motorist coverage equal to the amount of liability coverage provided for under the policy unless the insured rejects such coverage in writing. In no case may uninsured motorist coverage be less than the minimum limits for

6 bodily injury liability in the amount of $50,000 per person and $100,000 per accident. For policies not subject to the MAICCA, uninsured motorist coverage is required only up to the statutory minimums. The Court first examined the terms of the umbrella policy and concluded that the unambiguous language of the policy as a whole did not provide for uninsured motorist coverage. The policy specifically stated that it is a "liability policy" and that it "covers your legal liability for claims made against you by someone else." It also stated that it pays "damages on behalf of the insured" and defined "damages" as "sums the insured must pay." The policy also specifically excluded from coverage any personal injury to the insured or resident relative and any claim for uninsured motorists coverage. Next, the Court considered whether umbrella policies were statutorily required to provide uninsured motorist coverage and concluded that, for purposes of the uninsured motorist coverage provision, umbrella policies are not "motor vehicle policies" and, therefore, the uninsured motorist requirements of Section 2902 do not apply to the plaintiff's umbrella policy. The Court held that Section 2902 applies only to "motor vehicle insurance policies" - those policies insuring specific vehicles registered or principally garaged in Maine - and was not intended to place mandatory uninsured motorist coverage requirements on umbrella policies which are a completely voluntary form of insurance. In a dissenting opinion, Justice Silver, joined by Justices Alexander and Jabar, concluded that Section 2902 unambiguously applies to an umbrella policy that is linked to a primary automobile policy. FIRST CIRCUIT COURT OF APPEALS Liability Insurance - Employment-Related Exclusion Ruksznis v. Argonaut Insurance Company (December 18, 2014) Ruksznis was the appointed plumbing inspector for the Town of Sangerville. He described himself as an independent contractor. He set his own hours and provided his own tools. He also paid for all of his own expenses including any schooling to updated his license. At a public meeting of the Town Board of Selectman, Selectman Burgess stated that Ruksznis had made "less than quality decisions" while serving as plumbing inspector and noted that there were some issues concerning his job performance and actions outside of work. At the following Selectmen's meeting, Burgess took action that resulted in the removal of Ruksznis from his position as plumbing inspector. Although the Maine Municipal Association informed the Board that Ruksznis's removal did not

7 comply with required legal procedures, Burgess blocked Ruksznis's reinstatement. The Town held two insurance policies issued by Argonaut, a Commercial General Liability ("CGL") and a Public Officials Liability Policy ("POL"). Ruksznis filed a lawsuit asserting claims based on slander and violation of his constitutional rights under Section Burgess filed an offer of judgment in the amount of $100,000 which Ruksznis accepted. The offer of judgment did not allocate the payment between the slander and Section 1983 claims. After judgment was entered, Ruksznis filed a reach and apply action against Argonaut seeking to recover for the slander count under the CGL policy and the Section 1983 claims under the POL policy. Argonaut moved for summary judgment arguing that exclusions in both policies precluded recovery. It invoked an exclusion in the CGL policy for "Governmental Errors and Omissions" and exclusions for "employment-related practices" in both policies. Ruksznis filed a cross-motion arguing that the employment-related exclusion did not apply because he was an independent contractor and, at a minimum, the policy was ambiguous. The Maine federal district court granted summary judgment in favor of Argonaut, finding that exclusions in the insurance contract for "employmentrelated" practices barred the plaintiff's recovery. Ruksznis appealed arguing that the policy language was ambiguous as related to the circumstances of his case. On appeal, Ruksznis argued that the CGL policy covered his slander claims as a "personal and advertising injury" and the civil rights claims fell within the POL policy's "wrongful act" coverage. Argonaut did not dispute that the claims would fall within these coverage provisions but relied on an "employment-related" practices exclusion within each policy. Ruksznis argued that the exclusions did not apply because he was an independent contractor. Since the policies did not define "employment" or "employmentrelated", the Court considered dictionary definitions. The Court found that the definition of "employ" includes a number of arrangements between two parties in which one party performs duties or services for another. The Court concluded that the "ordinary meaning" of "employment" encompassed Ruksznis's relationship with the town within the meaning of the policies. Since Ruksznis's claims arose out of the performance of his plumbing inspector office it was an employment-related claim subject to the exclusions. Affirmed. APPEALS COURT OF MASSACHUSETTS

8 Unfair Claims Settlement Practices Under M.G.L. Chapter 93A and 175D Based on Delay in Payment of PIP Benefits Hartunian v. Pilgrim Insurance Company (November 24, 2014) Pilgrim Insurance Company appealed from a decision of the Appellate Division of the District Court affirming a District Court judgment in favor of Byron Hartunian, M.D. on his claim that Pilgrim unfairly delayed payment for orthopedic treatment he rendered to his patient following a motor vehicle accident. At the time of the accident, the patient was occupying an automobile covered by a standard Massachusetts automobile insurance policy issued by Pilgrim. Dr. Harunian's bills were submitted to Pilgrim for personal injury protection (PIP) benefits. Pilgrim determined that the charges exceeded an amount that was reasonable in comparison to other medical providers in the same geographic region. As a result, Pilgrim intentionally paid $990 less than the amount billed by Dr. Hartunian. Pilgrim did not notify Dr. Hartunian or his patient of its intention to not pay the $990 within ten days of the submission of the bills as required by Chapters 93A and 176D. After approximately one year of unsuccessfully demanding payment, Dr. Hartunian filed suit against Pilgrim under G.L. c. 93A and G.L. c. 176D. Faced with the lawsuit, Pilgrim paid the $990 balance, however, following a bench trial Pilgrim was found liable for violating Chapters 93A and 176D resulting in an award of $25, in favor of Dr. Hartunian. On appeal, Pilgrim argued that it disputed the reasonableness of the charges in good faith following an independent medical examination (IME) conducted on its behalf by a physical therapist. Pilgrim assent that under G.L. c. 90, 34M an insurer can refuse to pay a medical bill based on an IME (as opposed to a refusal to pay based solely on a medical review of the bill) conducted by a physician who need not necessarily be licensed under the same section of G.L. c. 112 as the physician submitting the bill. Since both physical therapists and orthopedists are licensed under G.L. c. 112, Pilgrim argued that it relied in good faith on the physical therapist's assessment. The Court, however, rejected Pilgrim's assertion that compliance with 34M automatically insulates an insurer from a claim of unfair settlement practices under Chapter 93A. An insurer's reliance on a different specialty raises a factual question as to the insurer's good faith, especially where the reviewer's area of practice requires less training and education than that of the physician submitting the bills. The Court also rejected Pilgrim's claim that its determination that the billings were unreasonable was supported by a review of the billings by a computer program,

9 ruling instead that use of a computer program does not excuse failure to comply with the clear requirements of G.L. c M. The Court affirmed the district court's ruling that Pilgrim's delay in payment did not comply with the requirements of 34M and was not in good faith. The Court also ruled that the district court properly tripled the award of lost interest resulting from the delay and properly awarded attorney's fees. In addition the Court also invited Dr. Hartunian to submit a claim for attorney's fees incurred in connection with the appeal. MASSACHUSETTS CERTIFICATES OF INSURANCE LAW On January 7, 2015, the Massachusetts legislature passed Senate Bill 2402 governing certificates of insurance. The new law prohibits any person from knowingly preparing, issuing, requesting or requiring a certificate of insurance that contains false or misleading information concerning the underlying policy, or that purports to alter, amend or extend the coverage provided by the underlying policy. The law also provides that a certificate of insurance may not be represented to be an insurance policy, may not amend, extend or alter the coverage afforded by the policy, and shall not confer any rights beyond those expressly provided for in the policy. A certificate of insurance may not warrant that the policy complies with the insurance or indemnification requirements of a contract. A person is entitled to notice of cancellation, nonrenewal or any material change only if that person has such notice rights under the terms of the policy. This law applies to all certificates of insurance issued in connection with property, operations or risks located in Massachusetts regardless of where the policyholder, insurer, insurance producer or person requesting the certificate is located. Violations of the law may result in a fine of up to $500 per violation. The law takes effect on April 7, 2015.