NEWSLETTER. Getman, Schulthess, Steere & Poulin, P.A. Underinsured Motorist Coverage. Bartlett v. Commerce Insurance Company, et al (April 3, 2015)

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1 Getman, Schulthess, Steere & Poulin, P.A. NEWSLETTER New Hampshire, Massachusetts, Maine & Vermont June 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 NEW HAMPSHIRE SUPREME COURT 1838 Elm Street Manchester, NH Massachusetts Laurence W. Getman Christopher J. Poulin Debbie L. Makris Tracy L. McGraw Clara E. Lyons Vermont Stephen J. Schulthess and Debbie L. Makris Maine Douglas N. Steere and Edwinna Vanderzanden Underinsured Motorist Coverage Bartlett v. Commerce Insurance Company, et al (April 3, 2015) The plaintiff was injured in a motor vehicle accident in New York in August of 2004 while riding as a passenger on a motorcycle owned by Jeffrey Vilagos. The motorcycle was registered and garaged in New Jersey, and insured under a policy issued by Foremost Insurance Company to Vilagos in New Jersey with underinsured motorist (UIM) coverage limits in the amount of $250,000 per person. The driver of the other vehicle involved in the accident was insured by Allstate with liability limits in the amount of $100,000 per person. The plaintiff also owned a motorcycle which she registered and garaged in New Hampshire. The motorcycle was insured by Progressive Insurance Company and provided UIM coverage in the amount of $250,000 per person. The plaintiff's other vehicles, which were also registered and garaged in New Hampshire, were insured under a policy issued by Commerce Insurance Company with UIM limits of $250,000 per person. The plaintiff was also insured under a personal umbrella policy issued by Commerce with UIM coverage limits of $1,000,000. On March 25, 2009, Allstate offered its policy limits of $100,000. On March 27th, the plaintiff's attorney sent a letter to Foremost, Progressive and Commerce seeking their consent to settle the liability claims with Allstate and advising them that pursuant to New York law they had 30 days to respond. However, New York law did not apply to any of the UIM policies. Only Commerce responded and granted permission to settle the claims. The plaintiff executed a release on April 14th and her attorney mailed the

2 New Hampshire 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 release to Allstate on April 28th. She received her net settlement proceeds on July 2nd. The plaintiff filed suit against Foremost, Progressive and Commerce in New York in January of 2011, more than six years after the accident. That lawsuit was dismissed and the plaintiff brought a declaratory judgment action in New Hampshire. The plaintiff and the three insurers moved for summary judgment. The parties did not dispute the applicability of the three policies to the accident, and also agreed that (1) coverage under the Foremost policy was primary; (2) the Progressive and Commerce auto policies provided "excess" or secondary coverage; and (3) the Commerce umbrella policy applied last. The trial court ruled that: (1) the plaintiff's UIM claims against Foremost were barred by New Jersey's statute of limitations; (2) the plaintiff forfeited her UIM claim against Progressive when she settled her liability claims with Allstate without first obtaining Progressive's consent; (3) although Commerce was an excess insurer, it was required to "drop down" and provide primary coverage; and (4) Commerce's umbrella coverage applied once the plaintiff's damages exceed the limits of all underlying coverage that is actually available. The plaintiff appealed and Commerce filed a cross appeal. The Supreme Court affirmed the trial court's rulings as to the plaintiff's forfeiture of coverage under the Foremost and Progressive policies, but reversed the trial court's ruling that Commerce must "drop down" to provide primary coverage. Foremost: The plaintiff argued that the trial court erred in applying New Jersey's six year statute of limitations, which begins to run from the date of the accident, and instead should have applied New Hampshire's three year statute of limitations which begins to run from the date the insurer denies the claim. The Court explained that in order to decide which state's law to apply, it must first determine whether the law is substantive or procedural. Statutes of limitation are procedural when either party is a New Hampshire resident or when the cause of action arose in New Hampshire, otherwise, they are substantive. Because the cause of action did not arise in New Hampshire and Foremost is not a New Hampshire resident, whether the statute of limitations is substantive or procedural was dependent on the plaintiff's residency. The controlling date for determining residence is "the date the cause of action arose." In New Hampshire, an insurance policy is breached when the insurer denies the claim. At the time Foremost denied the claim in March of 2012, the plaintiff was not a New Hampshire resident. As a result, the statute of limitations was substantive and the trial court correctly applied the New Jersey statute of limitations, therefore, the Court affirmed the trial court's ruling that the claims against Foremost were barred.

3 Join Our List Progressive: The plaintiff argued that because Progressive did not respond to her attorney's March 27th letter and expressly convey its intent to deny her permission to settle within a "reasonable period of time", it had waived its right to rely on its consent-tosettle provision. The Court disagreed and upheld the trial court's ruling that the plaintiff forfeited her coverage when she settled with Allstate without obtaining Progressive's consent. The plaintiff failed to meet her burden of proving that Progressive waived its right to rely on its consent-to-settle provision through either explicit language or conduct from which a waiver could be inferred. Progressive's mere failure to respond to the March 27th letter was not a waiver of its policy requirement. Commerce: Commerce argued that the trial court erred in ruling that it was obligated to "drop down" to provide primary coverage to the plaintiff following her forfeiture of coverage under the Foremost policy. The Supreme Court agreed and reversed the decision. The Commerce policy's "other insurance" provisions state that where there is "other applicable insurance available", Commerce's coverage is "excess over any collectible insurance providing such coverage on a primary basis." The plaintiff argued that the terms "available" and "collectible" were ambiguous and should be construed in her favor. She argued that since primary coverage under the Foremost policy was not "actually available" and "actually collectible", Commerce must "drop down" and fill the gap created by the loss of Foremost's $250,000 in coverage. Commerce argued that since the primary coverage was "reasonably available" and "reasonably collectible", but was forfeited by the plaintiff, Commerce's coverage was not required to "drop down" and, instead, only applied after the plaintiff's damages exceed the $250,000 limit under Foremost's policy. The Court agreed with Commerce and ruled that the terms "available" and "collectible" were not ambiguous. Coverage under the Foremost policy was "available" and "collectible", but was forfeited by the plaintiff's failure to file suit within the statute of limitations. The Court concluded that Commerce has no obligation to pay UIM benefits under the plaintiff's damages exceed $250,000, and remanded the case for a determination as to how the plaintiff's forfeiture of coverage under the Progressive policy affected Commerce's obligations under its auto and umbrella policies. Naomi L. Getman, Esq. and Jill A. DeMello, Esq. represented Progressive Insurance Company before the trial court and New Hampshire Supreme Court.

4 Workers' Compensation Appeal of Brandon Kelly (March 20, 2015) The petitioner was employed in a job that involved traveling to job sites in a company truck. After working at a job site in Massachusetts, the petitioner departed for the company shop in Hudson where he intended to unload the truck. He fell asleep while driving and struck a utility pole, resulting in the amputation of his lower leg. The petitioner applied for worker's compensation benefits and received a favorable decision from the Department of Labor, however, the respondent appealed. The Compensation Appeals Board (CAB) denied the claim, finding that although the petitioner was acting in the course of his employment at the time of the accident, the injuries did not arise out of the employment. The CAB ruled that the injury was caused by a "mixed risk", but that the petitioner failed to prove that his tiredness was caused by his employment. The petitioner appealed. The sole issue on appeal was whether the injury "arose out of" the petitioner's employment. The phrase "arising out of" employment refers to the causal connection between the injury and the risks of employment and requires proof that the injury "resulted from a risk created by the employment." The Court assumed, without deciding, that being tired and then falling asleep on the job involved a "mixed risk". A mixed risk occurs when a personal risk and an employment risk combine to produce an injury. The fact that a personal risk contributes to cause an injury does not necessarily defeat compensability as long as the employment was also a "substantial contributing factor to the injury." The Court held that the CAB erred in not recognizing that the employment can supply a hazard which, when added to the employee's act of driving while tired and falling asleep, produces the ultimate injury. The effects of an employee's tiredness and falling asleep can be attributed to the employment as long as the conditions of the job gave rise to a hazard that contributed to the injury. Here, the petitioner's job required him to drive to various job sites in a company truck, so that the injurious effects of falling asleep were increased by the fact that he was behind the wheel of a moving truck. As a result, the petitioner's employment was a substantial contributing factor to his injury. The Court reversed the CAB's ruling that the injury did not arise out of employment and remanded for further proceedings.

5 Consumer Protection Act/Breach of Implied Warranty of Habitability Murray v. McNamara (March 20, 2015) The defendants, owners of a construction business, built a house in The plaintiffs purchased the house in Although the plaintiffs had the house inspected, no mold was detected until several months after they moved in. The mold problem became so severe that remediation was not feasible and it was necessary to demolish and reconstruct the home. The plaintiffs filed suit against the defendants alleging claims based on violation of the Consumer Protection Act (CPA), RSA 358-A and breach of the implied warranty of habitability. The defendants moved to dismiss the CPA claims based on an exemption under RSA 358-A:3, IV-a, which provides that "transactions entered into more than 3 years prior to the time the plaintiff knew, or reasonably should have known, of the conduct alleged to be in violation" of the CPA are exempt from the CPA. The trial court denied the motion. A jury returned a $70,000 verdict for the plaintiffs on the implied warranty claim. The court then found in favor of the plaintiffs on the CPA claim, ruling that because the jury found against the defendants on the breach of warranty claims, the defendants had also knowingly violated RSA 358-A:2, VII by "representing to the world in general" that the house was constructed in a workmanlike manner. The court awarded double damages in the amount of $348,116.74, plus costs and attorney's fees. The defendants appealed. The Supreme Court held that if the transaction at issue occurred more than three years before the plaintiffs "knew or reasonably should have known" of the violation, it is exempt. The person claiming the exemption has the burden of proving that it applies. The transaction at issue was the defendants' construction of the house with latent structural defects, not any representations made by the defendants during or after the construction. The construction was completed in 2004 and purchased by the plaintiffs in 2009, five years later. Since the transaction occurred more than three years before the plaintiffs "knew or reasonably should have known" of it, the Court held that it was an exempt transaction under the CPA and reversed the trial court's decision. However, the Court affirmed the jury's verdict on the breach of implied warranty of habitability claim. The Court rejected the defendants' argument that the claims were barred by the three year statute of limitations under RSA 508:4, I. The Court ruled that

6 because there was evidence that the defects were latent, they would not necessarily have been seen by the original owner and, therefore, the discovery rule applied. The Court also ruled that the jury could have reasonably inferred from the evidence presented that the construction defects probably caused the mold growth. The Court also rejected the defendants' argument that they were insulated from liability because the house was constructed according to the original owner's specifications because there was no evidence that the original owner had furnished a plan and specifications. Finally, the Court upheld the trial court's decision to allow the plaintiffs to claim consequential damages related to the breach of implied warranty. UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE Intentional Infliction of Emotional Distress Maynard v. Meggitt-USA, Inc. (April 7, 2015) The plaintiff was a former employee of the defendant, Meggitt- USA, Inc. After being diagnosed with degenerative disc disease, arthritis and Lyme disease, the plaintiff obtained a medical leave for back surgery. He underwent back surgery in April of 2013 and, after receiving an extension of his medical leave, returned to work in late May. Soon after returning, the plaintiff was informed that his position was being eliminated. The defendant had also informed other employees that their positions were being eliminated as part of a previously announced consolidation process. Shortly thereafter, the defendant suspected that its welding equipment had been stolen and, assuming that the plaintiff was responsible, placed him on administrative leave. Although the defendant subsequently found the missing equipment, it kept the plaintiff on administrative leave. The plaintiff also alleged that the defendant spread false allegations to other employees that he was responsible for the missing equipment. The defendant terminated the plaintiff in October. The plaintiff filed suit against the defendant, alleging violation of the Americans with Disabilities Act, intentional infliction of emotional distress and defamation. The defendant moved to dismiss the claims for intentional infliction of emotional distress ("IIED"), arguing that: (1) the plaintiff failed to allege the requisite emotional injury; and (2) the alleged conduct was not sufficiently extreme and outrageous to give rise to a viable claim for IIED. The Court ruled that because the plaintiff failed to allege in his Complaint that he suffered any emotional distress, the defendant was entitled to dismissal of the IIED claims. Although the plaintiff

7 claimed in his objection to the motion to dismiss that he suffered severe emotional distress, including loss of sleep, depression, loss of appetite and anxiety, the Court ruled that he could not insert new facts into his Complaint via an objection. The Court also ruled that the allegations that the defendant spread false claims, kept him on administrative leave and refused to communicate with him, even if driven by malice, were not sufficiently "atrocious" to sustain a claim for IIED. The Court noted that in the workplace, "false accusations, inadequate investigations, humiliating treatment, and abuse of authority generally do not amount to outrageous or atrocious conduct sufficient to state a plausible IIED claim." Although the defendant's alleged conduct "could certainly be characterized as offensive" it did not rise to the requisite level of outrageousness.