2007-179, GRAND CHINA, INC. & a. v. UNITED NATIONAL INSURANCE COMPANY

No. 2007-179

Rockingham

Kelly A. Ayotte

Sulloway & Hollis, P.L.L.C

Steven G. Shadallah

amicus curiae. general, on the brief), for the New Hampshire Insurance Department, as

orally), for the intervenor.

Gross on the brief, and Margaret H. Nelson orally), for the respondent.

THE SUPREME COURT OF NEW HAMPSHIRE Inc. and Mr. Woodbury on the brief, and Mr. Shadallah orally), for Grand China,

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as the evidence in the light most favorable to the non-moving party and, if no p. 2 In reviewing the superior court’s summary judgment rulings, we consider

Grand China’s favor, and this appeal followed. cancellation date, as required by RSA 417-C:2 (2006). The trial court ruled in policy was ineffective because it was not sent sixty days before the purported moved for partial summary judgment, arguing that UNIC’s cancellation of the determination that UNIC is obligated to defend and indemnify it. Grand China 13 accident. Grand China then filed a declaratory judgment petition seeking a denied coverage, claiming that it had cancelled the policy before the December Grand China provided timely notice of the suit to UNIC; however, UNIC

of a duty of care by serving alcohol to the patron. party and the estate of the deceased party sued Grand China, alleging a breach accident in which one person was killed and another injured. Both the injured On December 13, 2003, a patron of Grand China allegedly caused an

unused premium. cancellation endorsement, purporting to cancel the policy, and returned the “non-payment and underwriting reasons.” Thereafter, UNIC issued a China, stating its intent to cancel the policy effective December 1, 2003, for On November 12, 2003, UNIC sent a notice of cancellation to Grand

of cancellation. (UNIC), appeals from the order of the Superior Court (Morrill 2004, and the policy required UNIC to give Grand China ten days written notice DALIANIS, J. The respondent, United National Insurance Company liability policy. The relevant policy period was July 1, 2003, through June 30, (Michals). UNIC, a surplus lines insurer, provided Grand China’s liquor liability insurance through the intervenor, Michals Insurance Agency, Inc. Dharma Lim. For more than twenty-five years, the Lims have purchased owned and operated by petitioners William K.S. Lim, Yuen Sim N.G. Lim and The trial court found as follows: Grand China is a restaurant in Salem,

William K.S. Lim, Yuen Sim N.G. Lim and Dharma Lim filed no brief.

We affirm. Devine, Millimet & Branch, P.A. partial summary judgment to the petitioner Grand China, Inc. (Grand China). , J.) granting

America, as amicus curiae. Kilibarda on the brief), for The Property Casualty Insurers Association of

p. 3 lines insurer, it has a special status under insurance laws. “Surplus lines UNIC argues that it is exempt from RSA 417-C:2 because, as a surplus

that, unless otherwise exempted, all to the effective date of cancellation . . . . ” The plain meaning of this statute is . . . liability policy . . . shall be effective unless mailed . . . at least 60 days prior RSA 417-C:2, I, provides in pertinent part: “No notice of cancellation of a

risks assumed.” Id. substantial premium commensurate with the unusual or riskier nature of the state-authorized carriers. “Accordingly, the insured will generally be charged a risks that are outside of traditional markets and typically unavailable through Appleman on Insurance 2d § 2.17, at 325 (1996), covering liability for unusual

question a worker’s compensation policy. RSA chapter 417-A (2006) or RSA chapter 417-B (2006), nor is the policy in 13, 2003 incident. C:6. Neither party claims that surplus lines insurance is governed by either defend and indemnify Grand China against claims arising out of the December any policies provided and controlled by RSA 417-A or RSA 417-B.” RSA 417- Having failed to give sixty days notice of the policy cancellation, UNIC must insurance. The chapter specifically exempts “workers’ compensation policies or liability and, thus, was a liability policy within the meaning of the statute. RSA chapter 417-C (2006) governs the cancellation of commercial sixty-day notice provision. UNIC’s policy with Grand China covered liquor whole. Id liability insurers must comply with the legislature’s intent as expressed in the words of the statute considered as a In matters of statutory interpretation we are the final arbiter of the

Soraghan v. Mt. Cranmore Ski Resort, 152 N.H. 399, 405 (2005). reasonable results and effectuate the legislative purpose of the statutes. them so that they do not contradict each other, and so that they will lead to interpreting two statutes that deal with a similar subject matter, we construe purpose sought to be advanced by the statutory scheme. Id. When legislature's intent and to interpret statutory language in light of the policy or Gordonville Corp., 151 N.H. at 373. This enables us to better discern the in isolation, but rather within the context of the statute as a whole. Forest Prods., 155 N.H. 29, 33 (2007). We do not consider words and phrases ordinary meaning to the words used. Blagbrough Family Realty Trust v. A & T

. When examining the language of a statute, we ascribe the plain and

(2004). facts de novo. Gordonville Corp. v. LR1-A Ltd. P’ship, 151 N.H. 371, 373 Hosp., 154 N.H. 571, 574 (2006). We review a trial court’s application of law to entitled to judgment as a matter of law. N.H. Ins. Guaranty Assoc. v. Elliot genuine issue of material fact exists, we determine whether the moving party is p. 4 B:16, as long as the policies are “lawful[ly] transact[ed].” RSA 406-B:16; see the state, are exempted from the provisions of the chapter under RSA 406- Surplus lines insurers, even though they are not licensed to do business within chapter includes various provisions protecting New Hampshire residents. unauthorized insurers to New Hampshire laws. RSA 406-B:1. To that end, the persons and insurers not authorized to do business in this state” by subjecting the “many residents of this state hold[ing] policies of insurance issued by insurance regulations. The purpose of RSA chapter 406-B is, rather, to protect the legislature intended to exempt surplus lines insurers generally from Similarly, RSA chapter 406-B lends no support to UNIC’s assertion that

unregulated or that they are subject to a separate statutory scheme. state that unlicensed insurers, such as surplus lines insurers, are wholly to the rate-filing process and the New Hampshire guaranty fund. It does not RSA 405:24 (quotation omitted). This warning to potential insureds refers only

not be liable for any claims made against the policy. policy becomes insolvent, the New Hampshire guaranty fund shall

business with New Hampshire consumers. See Hampshire and licensed through the insurance commissioner to transact

of New Hampshire and the rates charged have not been approved The company issuing this policy has not been licensed by the state

stamped form given to insured parties before issuing a policy: obtain licenses and requires them to place the following disclaimer in a insurance largely unregulated. RSA 405:24 explains how producers may RSA 405:24 to demonstrate the legislature’s intention to leave surplus lines Generally, an insurance company must be incorporated in New regulatory provisions governing surplus lines insurers. It mistakenly points to UNIC argues that the provisions of RSA chapter 405 constitute the only

unavailable through an admitted insurer. See

upon satisfying the insurance commissioner that the needed coverage is RSA 406-B:16. These producers may only offer policies from foreign insurers licensed and properly appointed producers. See RSA 405:1-:12, :17-b, :24; surplus lines insurers, may become authorized to offer policies through 405:1. However, several types of foreign, unlicensed insurers, including

(2006). 405 (2006), and exempted from any other regulation by RSA chapter 406-B asserts that surplus lines insurers are governed exclusively by RSA chapter statutory framework from that which applies to other kinds of insurers. UNIC UNIC argues that surplus lines insurance is subject to a different have consistently reserved matters of public policy for the legislature.” State v. p. 5 RSA 417-C:2. It is not our function to reweigh these competing concerns. “We the competing policy interests favored including surplus lines insurers within The New Hampshire legislature reasonably could have concluded that

even within the sixty-day notice period. have difficulty procuring a replacement surplus lines policy after a cancellation because there are so few surplus lines insurers, New Hampshire residents may would be at liberty to cancel policies without providing any notice. Further, bargaining power. If surplus lines insurers are unregulated in this area, they of high risk policies places New Hampshire residents in a position of little must comply with the cancellation provision of RSA 417-C:2. The very scarcity We discern no absurd result in concluding that surplus lines insurers

not the only legislature to have done so. See, e.g., Conn. Gen. Stat. Ann. policy to regulate the cancellation requirements of surplus lines insurers, it is the extent that the New Hampshire legislature decided as a matter of public Kidder expressly included them. It relies upon Bianco Professional Association v., 150 N.H. 600, 604 (2004) (citation omitted). Moreover, we note that to

417-C:2. lines insurers will offer these high risk policies if they must comply with RSA will have a chilling effect upon the surplus lines market, because few surplus terms for this otherwise unavailable coverage. Thus, UNIC argues, our holding set the terms for such coverage and policyholders are willing to accept these existing balance in the marketplace, in which surplus lines insurers are free to asserts that applying RSA 417-C:2 to surplus lines policies will upset an policies is inconsistent with public policy and will produce an absurd result. It lines policies are subject to RSA 417-C:2 because the legislature never UNIC also argues that interpreting RSA 417-C:2 to govern surplus lines UNIC further argues that there is no basis for concluding that surplus

RSA 417-C:2, it could have done so. See RSA 417-C:6. 74. If the legislature had intended to exclude surplus lines insurance from the legislature did not see fit to include. Gordonville Corp., 151 N.H. at 373consider what the legislature might have said or add words to a statute that to liability policies, and the policy at issue is a liability policy. We will not RSA 417-C:2. To the contrary, RSA 417-C:2, I, expressly states that it applies there is no express statutory directive to include surplus lines policies under Home Insurance Co., 144 N.H. 288, 297 (1999), to support its assertion that

separate framework. discussed above, do we find that surplus lines insurers are governed by a concerning insurance contradicts our interpretation of RSA 417-C:2; nor, as “liability polic[ies]” in isolation. We disagree. No statutory provision governing surplus lines insurers by viewing the reference in RSA 417-C:2 to UNIC also argues that the trial court disregarded the statutory scheme p. 6 Affirmed

policy was ineffective, we need not address this issue. was its authorized agent. In light of our holding that the cancellation of the UNIC finally argues that the trial court erroneously found that Michals

BRODERICK, C.J.