2012-623, In the Matter of the Liquidation of The Home Insurance Company

to Home by CIC. We affirm. (Home) for an award of statutory prejudgment interest on certain monies owed Hampshire, as Liquidator (the L iquidator) of t he Home Insurance Company respondent, Roger A. Sevigny, Commissioner of Insurance of the State of New order of the Superior Court (Smukler, J.) granting the motion of the LYNN, J. The appellant, Century Indemnity Company (CIC), appeals an

orally), for the respondent. Massachusetts (J. David Leslie and Eric A. Smith on the brief, and Mr. Leslie on the brief), and Rackemann, Sawyer & Brewster P.C., of Boston, Michael A. Delaney, attorney general (J. Christopher Marshall, attorney,

(Harry P. Cohen and Ellen M. Farrell on the brief), for the appellant. and Crowell & Moring LLP, of New York, New York, and Washington, D.C. Orr & Reno, P.A., of Concord (Lisa Snow Wade on the brief and orally),

No. 2012 - 623 Merrimack

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, Concor d, 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 p. 2 22 as 2

remittances to Home with respect to the AFIA Liabilities net of setof f as here, Section 3 of the Claims Protocol provides that CIC shall make certain CIC and Home with respect to the AFIA Liabilities). Of particular relevance Home I, 154 N.H. at 474 - 75 (explaining the reinsurance relationship between Cedents) in connection with the American Foreign Insurance Association. See Home (the AFIA Liabilities) by certain entities in the United Kingdom (the AFIA handling by CIC, as reinsurer of Home, of a certain subset of claims against Protocol,” is a letter agreement between CIC and Home that governs the association that has filed a Proof of Claim.” The s econd document, t he “Claims po licyholder, reinsured, reinsurer, general creditor, third - party, or guaranty all “C laimants” in the Home liquidation, defining that term as “any originally entered in the Home liquidation on December 19, p. 2 2003. It applies to on January 19, 2005, and is a restated and revised version of an order determination, and classification of claims against Home. It became effective achieve uniformity and provide procedures for the presentation, processing, Liquidation Act, RSA chapter 402 - C (2006 & Supp. 2013); its purpose is to to claims made against Home pursuant to the Insurers Rehabilitation and Insurance Company in Liquidation (Claims Procedures Order) applies generally Order Establishing Procedures Regarding Claims Filed with the Home and Home, and we deal with three here. The first, t he Restated and Revised A number of documents govern aspects of t he re lationship between CIC

both CIC and Home are primary insurers of PECO. Home IV, 158 N.H. at 680. certain companies, including Pacific Energy Company (PECO), meaning that insurers. Home II, 157 N.H. at 545. CIC and Home are also co - insurer s of CIC reinsures Home with respec t to certain contracts between H ome and ot her 679 - 80; Home II, 157 N.H. at 544 - 46. In one aspect of the parties’ relationship, described in our opinions in Home II and Home IV. See Home IV, 158 N.H. at have a set of co - insurance and reinsurance relationships, which are f ully under the laws of Pennsylvania. Home II, 157 N.H. at 544 - 45. CIC and Home creditors. Home I, 154 N.H. at 475. CIC is an insurance company organized with administering and collecting Home’s assets for distribution to Home’s Home II, 157 N.H. at 544. The Liquidator is vested with title to and charged Hampshire, which was declared insolvent and placed in liquidation in p. 2 2003. Home is an insurance company, organized under the laws of New

or are supported by the record in the instant appeal. ( p. 2 2009) (Home IV). The following facts either are drawn from our prior opinions (2009) (Hom e III); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 677 (2008) (Home II); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 396 (2006) (Home I); In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543 of Home. See In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472 This is the fifth opinion we have issued in connection with the liquidation

give the language used by the parties its reasonable meaning, considering the novo.” Home II, 157 N.H. at 546. “When interpreting a written agreement, we “The interpretation of a contract is a question of law, which we review de

light of the policy sought to be adv anced by the entire statutory scheme.” Id. to apply statutes in light of the legislature’s intent in enacting them, and in ascribe the plain and ordinary meanings to the words used.” Id. “Our goal is whole.” Id. “We fir st examine the language of the statute, and, where possible, the legislature’s intent as expressed in the words of the statute considered as a we review de novo.” Home IV, 158 N.H. at 681. “We are the final arbiters of between the parties. “The interpretation of a statute is a question of law, which This appeal requires us to interpret statutes as well as the contracts

arguments. erred in determining the correct accrual date. We disagree with both prejudgment interest pursuant to RSA 524:1 - a, and that, in the alternative, it On appeal, CIC argues that the trial court erred in granting Home

determination to disallow the PECO setoff. This appeal followed. October 12, 2007, the date of the Liquidator’s letter notifying CIC of his prejudgment stat utory interest under RSA 524:1 - a (2007) accruing from order granting the motion on August p. 3 3, 2012, finding that Home was entitled to previously withheld $8 million to the Liquidator. The trial court entered an CIC removed the PECO setoff from its monthly statement to Home and paid the improper setoff, to which CIC objected on July 14, 2009. On August 3, 2009, on June 29, 2009, for interest on amounts withheld by CIC based up on June 10, 2009. After remand, t he L iquidator filed a motion in s uperior c ourt We denied CIC’s motion for reconsideration in the Home IV appeal on

CIC wrongfully withheld based upon setoff. Id. at 684. w hether Home’s estate was entitled to prejudgment interest on the payments also explicitly declined, without prejudice, to decide the issue now before us: with PECO, was im permissible under New Hampshire law. Id. at 680, 684. W e been waived and then reacquired by CIC in a pair of settlement agreements appeal, we held that an asserted $8 million setoff claim by CIC, which had This appeal flows directly from the facts at issue in Home IV. In that

asserts such a claim, including CIC’s asserted PECO claim. Claim. It sets forth the initial steps to be taken by the two parties after CIC claims filed by CIC in the H ome liquidation under four particular Proofs of agreement between CIC and Home, and addresses contribution/subrogation remittances and setoffs. The third document, t he Joint Report, is another permitted by New Hampshire law, and will provide monthly reports as to those p. 4 4

recognized, there shall be added. . . to the amount of damages reputation, for any other type of loss for which damages are consequential damages, for damage to property, business or party, whether for personal injuries, for wrongful death, for is rendered or a finding is made for pecuniary damages to any In all other civil proceedings at law or in equity in which a verdict

provides: from the ti me of the institution of suit.” RSA 52 p. 4 4:1 - a. RSA 524:1 - b further stated or where liquidated damages are sought, int erest shall commence to run demand prior to the institution of suit, in any act ion on a debt or account Inc., 111 N.H. 259, 262 (1971). RSA 524:1 - a provides: “In the absence of a interest is to be awarded as a part of all judgments.” State v. Peter Salvucci “Ordinarily, upon a verdict for damages and upon motion of a party,

results and effectuate the legislative purpose of the statute.” Id. that they do not contradict each other, and so t hat they will lead to reasonable two statutes which deal with a similar subject matter, we will construe them so should be construed as consistent with each other.” Id. “When interpreting interpreting any one of them. Id. at 38. “Where reasonably possible, statutes statutes dealing with the same subject - matt er are to be considered in prevailing parties.” Nault v. N & L Dev. Co., 1 p. 4 46 N.H. 35, 39 (2001). All RSA 524:1 - a and :1 - b were intended to provide the same protection to 524:1 - a. W e have previously indicated that “legislative history suggests that Here, the trial court granted the Liquidator’s motion based upon RSA

debt claim or contract dispute.” found that “the nature of this case is not one for setoff,” but is “more akin to a action on a debt or acc ount,” and CIC argues that the trial court erred when it trial court found that “there is a distinction between an action for setoff and an debt or account stated,” and thus RSA 52 p. 4 4:1 - a does not apply. In its order, the CIC first argues that the underlying proceeding was not an “action on a

disputed setoff claim. comprehensive protocol that does not allow for an award of interest on a the statute; and (2) the agreements between CIC and Home create a apply: (1) this was not an “action on a debt or account stated” as required by motion for interest. It makes two arguments as to why RSA 52 p. 4 4:1 - a should not CIC first asserts that the trial court erred in granting the Liquidator’s

contract.” Id. will be determined from the plain meaning of the language used in the reading the document as a whole.” Id. “Absent ambiguity, the parties’ intent circumstances and the context in which the agreement was negotiated, and p. 5 5

no consequence in terms of the interest statute. claim in the Home liquidation, rather than a lawsuit to collect on a debt, is of claimed setoff. Here, t he procedural posture of the case as that of a disputed whether CIC could withhold payment of a fixed debt of $8 million under a on a debt or account stated” under RSA p. 5 524:1 - a. In this case, the dispute was meaningful distinction between an action on this disputed setoff and an “act ion applies in action s for a fixed sum. Returning to CIC ’ s argument, we find no or where liquid ated damages are sought” in section 1 - a is that the statute Thus, the import of the language “any action on a debt or account stated

start of the case. actions in which the amount of damages to be awarded is un certain at the beyond the maximum liability imposed by law, a concern arising mainly in the addition of interest even if such interest would bring the judgment amount applied where the amount at issue is a liquidated sum. Section 1 - b permits ch arged pays the money into court.” Such a mechanism could only be sensibly contains a clause making its provisions “inapplicable wh ere the party to be A dditional clauses in each statute support this distinction. Section 1 - a

fixed sum, whereas section 1 - b applies to all other actions for damages. Stated more simply, sectio n 1 - a applies to certain actions for payment of a damages or for “any other type of loss for which damages are recognized.” pecuniary damages to any party,” whether for one of the listed categories of law or in equity in which a verdict is rendered or a finding is made for back to section 1 - a, providing that it applies to “all other civil proceeding s at or account stated or wher e liquidated damages are sought.” S ection 1 - b refers apply to different kinds of judgments. Section 1 - a applies to actions “on a debt The functional difference, then, between sections 1 - a and 1 - b is that they

such cases. See Hanchett, 107 N.H. at 241; N.H.S. Jour. 479 - 80 (1963). In doing so, it made clear its intent that prejudgment interest be awarded in Brezner Tanning Co., 107 N.H. 2 36, 241 (1966); N.H.S. Jour. 479 - 80 (1963). not entitle parties to prejudgment interest under the statute. See Hanchett v. 104 N.H. 472 (1963), in which we held that certain kinds of libel actions did p. 5 524:1 - b in 1963 in response to our holding in Chagnon v. Union - Leader Co., (1963) (statement of Sen. Samuel Green). Indeed, the legislature amended RSA interest at the legal rate is to be added to the award.” N.H.S. Jour. 478 - 79 where the trial court awarded money to the party entitled to be compensated, was “to clarify and simplify the existing law and to make plain that in all cases The purpose of the legislature in enacting RSA 524:1 - a and:1 - b in 1957

RSA p. 5 524:1 - b (2007).

petition to the date of judgment . . . . interest ther eon from the date of the writ or the filing of the p. 6 6

is silent as to interest, no interest accrues. To the contrary, that is exactly the But th ese cases do not support the proposition that where an agreement

under RSA 524:1 - a). applied only up to date of demand, after which statutory interest rate applied pay “all accrued finance charges to date” as providing that 24% finance charge N.H. 194, 197 (1985) (interpreting contractual clause providing for debtor to annum on unpaid balances); Mast R d. Grain & Bld g. Mat ’ s Co. v. Piet, 12 p. 6 6 statutory interest where contract provided for 15 - 18% finance charge per N.H. 582, 594 (2008) (holding that plaintiffs were entitled to at least 15% prejudgment interest rate rather than statutory rate); Lassonde v. Stanton, 157 274 (2009) (holding that plaintiffs were entitled to contractual 1.5% our interest statutes notwithstanding. See Tulley v. Sheldon, 159 N.H. 269, w here the parties’ contract inc ludes a provision for interest, we have applied it, City of Manchester, 156 N.H. 587, 590 (2007) (quotation omitted). To be sure, they were expressly referred to or incorporated in its terms.” Stankiewicz v. contract, and wh ere it is to be performed, enter into and form a part of it, as if “The laws which subsist at the time and place of the making of a

by imposing prejudgment interest under RSA 52 4:1 - a. We disagree. according to CIC, the trial court impermissibly rewrote the parties’ agreements parties’ intent that interest not be awarded on a disallowed setoff. Thus, parties and that the absence of language addressing interest demonstrates the asserts that the agreements form a “comprehensive” protocol between the interest. However, the parties disagree on how to interpret that silence. CIC setoffs. The parties agree that their agreements are silent as to the issue of parties were “comprehensive” and did not provide for interest on disputed We turn nex t to CIC’s second argument, that the agreements between the

case. no significance in this distinction, and hold that RSA 524:1 - a applies in this statute barred counterclaim). For the purposes of our interest statute, we find could assert setoff where failure to file a claim pursuant to Banking Law insolvency law); Long Beach Trust, 190 N.E. at p. 6 660 (holdin g that defendant bank to assert quasi - contract claim as setoff would violate state’s insurance the assertion of a setoff. See Koken, 900 A.2d at 429 (holding that allowing an “action” — in both cases, a co unterclaim — but would not have precluded involved the construction of statutes that would have precluded the bringing of inapposite to the question at issue here. Both Koken and Long Beach Trust equivalent.”). However, these cases made that distinction in a context that is (“[T]he right to sue on a debt and the right to use the debt as an offset are not setoff.”); Long Beach Trust Co. v. Warshaw, 190 N.E. 659, 660 (N.Y. 1934) (“Setoff is not an action, and an action on a debt is not the equivalent of debt. See Koken v. Legion Ins. Co., 900 A.2d 418, 429 (Pa. Commw. Ct. 2006) CIC cites two cases distinguishing between setoff and an action on a p. 7 7

that prejudgment interest should accrue from the date of the Liquidator’s In its alternative argument, CIC claims that the trial court e rred in ruling

agreements, then, CIC ’s argument that they are “comprehensive” fail s. stating as much. By the plain meaning of the language used in the statute not apply, they c ould have included a clause in one of the agreements that the parties did not include. Had the parties intended that the interest intent that there be none would require us to write into the contract a term To interpret the parties’ silence on the issue of interest as evincing an

agreements are silent. clear intent that New Hampshire statutory law be applied where the under the RSA and the Claims Procedures Order” (emphasis added), showing a that the matter be deemed a disputed claim proceeding and “treated as such partially disallowed claim, the parties will jointly seek an order from the Referee other.” In addition, the Joint Report provides that with respect to any fully or further provides that “CIC and the Liquidator reserve all rights as against each the obligation of CIC to make the same.” Paragraph p. 7 7 of the Joint Report its rights “in respect of any payments made, including as to amount and as to righ ts in relation to any offset asserted”; and the second in which CIC reserved reservations of rights: the first in which the Liquidator “fully reserve[d] all addressed. For example, Paragraph 3.3 of the Claims Protocol contains two Home demonstrate the parties’ intent to reserve their rights as to matters not “comprehensive” in nature. To the contrary, the agreement s between CIC and agreements supports CIC ’s claim that the agreements, as a whole, are on disputed amounts than the statutory rate. Further, nothing in the Procedure Order. None of these documents provides for a different interest rate Claims Protocol, and abided by a third applicable document, the Claims Here, the parties entered into two agreements, the Joint Report and the

the contrary, RSA 524:1 - a applies. for lost use of its money). Thus, unless an agreement specifically provides to and that interest as a component of damages compensates the prevailing party John A. Cookson Co., 14 p. 7 7 N.H at 362 (stating that “money has a ‘use value’” a creditor for the delay between when money is due and when it is paid. See RSA 524:1 - a and :1 - b, is to recognize the time value of money by compensating The very purpose of adding interest to an award or judgment, including under applied on amount owed after terms of interest called for by note had expired). R ailroad Co., 126 N.H. 176, 1 p. 8 81 (1985) (holding that statu tory interest rate arbitration agreement was silent on issue of interest); Albee v. Wolfeboro (2001) (holding that arbitrator could include interest in award where parties’ clearly. John A. Cookson Co. v. N.H. Ball Bearings, 147 N.H. 352, 361 - 62 circumstance where the default rule established by RSA 524:1 - a applies most 8

Claims Protocol] for the preceding month; (ii) the amount of funds payable by CIC to [Home] pursuant to [certain paragraphs of the sha ll (a) provide [Home] with a statement showing (i) all amounts Within thirty (30) business days after the end of each month, CIC

the PECO setoff. In full, Paragraph 3.3 states: was not obligated to pay Home until the resolution of the proceedings related to CIC argues further that, under Paragraph 3.3 of the Claims Protocol, it

the trial court correctly determined that interest should accrue from this date. October 12, 2007 letter constitutes a “demand” under RSA 524:1 - a, and that withh eld, the equivalent of a demand for payment. We thus hold that the PECO claim was that the Liquidator would seek to recover the monies so disputed claim proceeding. However, t he import of disallowing the asserted prepared to jointly seek an order from the Referee deeming the claimed setoff a inform CIC that the Liquidator was disallow ing the PECO claim and was portions that are in the record do not explicitly dema nd payment. They do Turning to the Liquidator’s October 12, 2007 letter, the un redacted

promiss ory note). (19 p. 8 82) (holding that interest accrued from date of demand of repayment on date of alleged “demand for payment”); Lipski v. Polonsky, 122 N.H. 528, 530 (2011) (analyzing whether interest ran from date plaintiff initiated lawsuit or suggests. See J & M Lumber and Const. Co. v. Smyjunas, 161 N.H. 714, 729 Under the statute, the “demand” need be for payment, not for interest as CIC Sons Dairy, Inc. v. H.P. Hood, Inc., 89 2 F. Supp. 325, 346 - 47 (D.N.H. 1995). the earlier of either the demand for pa yment or the institution of suit.” Lago & interest. “It is undisputed that under RSA 524:1 - a, interest shall accrue fro m be a demand pursuant to RSA 524:1 - a because the letter makes no request for CIC first ar gues that the Liquidator’s October 12, 2007 letter could not

the Referee on October 1 p. 8 8, 2007. PECO setoff a disputed claim proceeding. The parties submitted this request to that he was prepared to jointly request that the Referee deem the asserted advised CIC of his dete rmination to disallow CIC’s asserted PECO setoff and setoff. On October 12, 2007, pursuant to the Joint Report, the Liquidator under its July, August, and September 2007 statements based up on the PECO August 29, 2007. CIC withheld $8 million of payments in its remittances PECO setoff in its July 2007 statement, which was sent to the Liq uidator on Pursuant to Paragraph 3.3 of the Claims Protocol, CIC first asserted the

proceedings related to the PECO setoff. We again disagree. Protocol, CIC was not obligated to pay Home until the resolution of the not constitute a “demand” under RSA 524:1 - a; and (2) under the Claims October 12, 2007 letter. CIC claims that: (1) the October 12, 2007 letter did p. 9 9

Protocol that make it clear that the proviso does not apply in this case. other language in Section 3.3 as well as the other sections of the Claims (quotation omitted). CIC’s strained construction of a single sentence ignores reading the document as a whole.” Home II, 157 N.H. at 546 (emphasis added) circumstances and the context in which the agreement was negotiated, and language used by the parties its reasonable meaning, considering the Protocol in context. “When interpreting a written agreement, we give the The Liquidator counters, and we agree, that CIC fails to read the Claims

$8 million to Home on August 3, 200 p. 9 9. that interest could not begin to accrue until then, four days before it paid the month next following such settlement o r agreement.” As a result, CIC contends therefore not due until July 30, 2009, “thirty . . . business days after the denied CIC’s motion for reconsideration on June 10, 2009, and payment was withhe ld pursuant to the disputed PECO setoff was not triggered until we Liquidator.” Thus, CIC claims its obligation to remit payment of the monies and agreed between the claimant and CIC with the concurrence of the until the relevant proceedings settle the disputed amount or it is negotiated that it ha s no obligation to remit payment on a disputed claim “unless and CIC relies on the second sentence of the proviso to Section 3.3, claiming

such settlement or agreement. within thirty (30) business days after the month next fo llowing Liquidator, in which event remittance will be made in such amount agreed between the claimant and CIC with the concurrence of the proceedings settle the disputed amount or it is negotiated and respect of the disputed amount unless and until the re levant and the Claimant. CIC shall not be obliged to make remittance in any portions of the Claim allowed in full or agreed between CIC Claim or elements of it, CIC shall make remittance in respect of an Objection in respect of a Claim disputing the quantum of the THAT, where the Claimant has submitted a r equest for Review or and as to the obligation of CIC to make the same; PROVIDED rights in respect of any payments made, including as to amount reserves (and the Liquidator acknowledges that CIC so reserves) all fully reserves all rights in relation to any offset asserted. CIC for the balance. CIC agrees and acknowledges that the Liquidator account as may, from time to time, be designated by the Liquidator to the proviso to this paragraph, effect a wire transfer to suc h explanation as to the basis for the asserted offset; and (b) subject amounts due to [Home], together with sufficient detail and an claimed in offset in accordance with paragraph 3.4 against paid by CIC with respect to such payables; and (iii) any amoun ts p. 10 10

DALIANIS, C.J.