Dylan O’Malley-Joyce et al. v. Travelers Home and Marine Insurance Company

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Good morning, attorney Steiner. Morning, your Honor. I'll remove my mask for argument because of a kidney transplant two years ago. I generally travel with the mask on, but may please the court. My name is James Steiner. I represent, uh, Dylan O'Malley, Joyce and Ellen Nash. The appellees before this court, the appellees are entitled to reversal of the summary judgment that was granted on two principal grounds. The first is that the appraisal clause, uh, that is included in the insurance contract, doesn't use the term binding. It also uses the term that the agreement of the appraisers will determine, not shall determine, which is a distinction between the cases cited by travelers. In the cases that, uh, I have relied on in the brief before this court, and the failure to include the term binding fails to allow for an inference, if you will, that it should be binding because as this court and the trial court are obligated to do, you have to stay within the four corners of the insurance contract. How do You respond to the respondent's preservation arguments? Um, so what I would refer you to, it's not cited in my brief, but I'd refer you to the case of, uh, Redco versus Marine Midland, which is at 81 F 3 2 95. It's a decision of the Second Circuit, again, Redco versus Maureen Midland, 81 F third 2 95, at page 3 0 2 of that decision, uh, the court concluded and it's been relied on hundreds of times, um, that issues not raised before the appeal, where it's purely a legal argument should be considered on the merits, um, in New Hampshire. Why, why wasn't there a motion for reconsideration at least Here? Um, so I can tell you, your Honor, uh, when I got into this case, there was a, um, uh,

an error in calendaring, both the, uh, the objection. And I contacted Attorney Connor when I filed my appearance, which is of the record, was filed on February five. And I said, I need your, uh, a word copy of your statement of material facts. She said, Jim, the deadline's already passed. And, um, uh, a motion for reconsideration was, uh, drafted. There was a filing error. It didn't get filed in time, and that's why it was, uh, filed simply as a notice of appeal. Um, so the only New Hampshire, so You were in the case on February 5th when the summary judgment order was issued? I, I was in the case, your Honor. Yes. Um, and so the only New Hampshire Supreme Court case I could really find that would be by, um, analogy, uh, your Honor, would be the, um, uh, Eck wrote Bregy case at one 70 New Hampshire, 2 47, um, at page 2 49, which addressed that if an issue has been presented before the trial court, um, it should be heard on appeal. And, uh, the court should not elevate form over substance. Um, it is not directly on point, but, uh, I think the Redco case is the, uh, most helpful. So, so just, there is a significant procedural hurdle here. I think you'll, you'll recognize that and, and summary judgment is a function of statute in our state. And, um, if, if we were to adopt your view that essentially what is before us is a question of law and an entirely de novo review, obviously, right. Aren't We creating incentives for litigants to avoid summary judgment, uh, opposing summary judgment, and just, um, taking this matter up with the Supreme Court and thereby deserving, uh, the superior Court in terms of resolving the case and, and really truly getting to the right answer on the legal question? Well, so lemme take the latter part of your, um, question first, your Honor, because getting to the right result is really at the heart of, of this appeal. Um, 'cause the second point of of appeal is that, um, travelers had the duty where the complaint raises, um, allegations about hidden damages or the lack of use of, uh, local contractors. And that's covered by New Hampshire administrative rules for, uh, insurance 1 0 0 2 16 A and 1 0 0 2, uh, 16.

Um, those are in the complaint, 1 0 0 2. Attorney Steiner, just focus on my question. Okay. How, What, so, so the latter, the latter part has to do with, um, getting to the right result that under, uh, the, the summary judgment statute, you're only entitled as a party to summary judgment. If it's a matter of law, um, there really is no issue that would kind of sidestep that. But the procedural question you ask as the earlier part of your question, um, I don't think you making a ruling on this court that essentially would rely on, uh, something like the redco, uh, decision sets some kind of different precedent. Um, uh, and I would urge the court to look at the Redco, uh, case. But, um, uh, in the end, Well, if, if, if we, if you're absolutely right, paragraph three of the statute says you need to establish that you're entitled to judgment as a matter of law. But shouldn't the Superior Court have a chance to weigh in on that issue, recognizing ultimately it would be reviewed up here de novo and, and here that just did not happen. It did not happen. Uh, that is absolutely correct. Um, and normally, uh, I would agree that it should happen. And I think that the court looking at, uh, the issue, and again, as it was, it's addressed in Redco that, you know, if it's first place before the court on appeal, and it's purely a legal question. And I think that is probably the most significant distinction, uh, here because it, it, um, uh, it is analogous to our state Supreme Court, our, our RSA rather on summary judgment that ultimately, ultimately the issue is as a matter of law, is the proponent of the motion entitled to judgment. And in this case, the proponent is not entitled. So I don't think it creates a, um, uh, a major deviation because, uh, again, um, you know, as this court is well aware, a lot of summary judgment cases turn more on material differences, in fact, than they do on purely legal issues. So, I, So another, another legal issue that can be raised at any time, including Sue Ponti, is one of standing. Yes. How do your clients have standing to enforce administrative rules from the Department of Insurance? I'm, I'm sorry. Couldn't go. How do your clients have standing to enforce administrative rules from the Department of Insurance? Um, be well, because they, they raised it in their complaint. Uh, the, the hidden damages are raised at paragraphs 33, 47, 49 and 62 in the appendix. Those are at pages 1 0 1, 1 0 3, and 1 0 5. They raise the, uh, local contractor issue at paragraphs 26, 31 and 45 to 46 in the appendix at pages one hundred and one oh two. So they have the, the right to enforce the fact that those were not, um, those steps were not followed. The question is what gives them that? Right. Um, Aren't there administrative procedures that they go through the department to enforce those rights? I, so I think the one option is to pursue it through the, uh, uh, insurance department, but I, I read nothing in the administrative rules because 1 0 0 2 0 1 B says, uh, the rules apply as a matter of law to all property and casualty insurers. So the standing really comes out of that administrative rule that as New Hampshire residents, uh, and the insurance company as a New Hampshire insurer who has an obligation to follow the rules, uh, that a private party may go ahead and pursue it, I think, in either venue. And that is to say, uh, we alleged it in our complaint, it forms a part of our legal claim before the, uh, court. Is your argument on the turning to the merits with respect to the, uh, language of the policy, is your argument that under the plain reading of the policy, right, the use of the wi word will as opposed to shall, um, that the, the appraisal is not binding? Or are you arguing that, that there's ambiguity there? I I didn't catch the last part of it. Or Are you arguing that the, the appraisal language or that section of the policy discussing the appraisal, setting forth the appraisal process is ambiguous. So, um, uh, if I understand you correctly, so I, I'm, I am sure you'll correct me if I'm wrong, not gathering the scope of it. Um, there is, for example, the Jupiter case that, um, is relied on by, uh, travelers. Uh, in that case, the court was dealing with a different clause. Uh, all of the cases I've cited in my brief all have the identical clause to the clause and issue here that an appraiser will determine. But in Jupiter, the language was among other differences shall determine. So my question is really we are, you're not arguing that we'll determine is ambiguous. We should just interpret, we'll determine, Yes. That you should interpret, um, will determine to indicate that, uh, under New Hampshire law, which would in include the town of Nottingham case, which distinguishes shall and will it shall is obligatory, will, is not. And, uh, when they use the term, will it, uh, indeed, I, again, not cited in my brief, but at 28 Journal, national Association of Administrative Law, judiciary, page 4 21, it defines will as it means, uh, a likelihood, a willingness, an intention, a probability. It is not an obligatory statement. And indeed the Jupiter case turns on that, that it, because the insurance language said shall it would be considered binding. I, I agree with that. And I, and, and the further thing that is said, um, um, you know, I've cited Justice Bradley's dissent in, in the Farmer's Auto insurance, uh, case in my brief at page 12, there's a simple solution for an insurance carrier. If they want the appraisal to be binding, you just put a dependent clause on the end of it that says, this shall be binding. They didn't do that. Many other insurers include that language. Um, and indeed it is found to be binding, or they use the term shall the court courts have included it to be binding you, You're focusing on, uh,

paragraph seven entitled appraisal. But I think Ms. Connor raises the point that this should be read in the context of paragraph six as well, that lays out loss of payment and three ways of achieving an endpoint. And that, uh, once you do that, read them together that it supports the insurance company's position. And I, I mean, respectfully, I, I disagree with that, that reading for the reason that if you look at the cases, the cases, um, both that, um, uh, attorney Connor cites and that eyesight, even with differences in the appraisal language, they focus on the appraisal paragraph, um, in terms of making a determination of whether, uh, something should be considered binding, uh, or non-binding. And indeed, the other case that is cited by Travelers, the, uh, state Farm case, um, uh, indicates at page 8 95 of that decision, we are not deciding if this appraisal clause is binding. So the two principle cases that are relied on by travelers don't lead to the result that, that she's arguing, uh, before this case, uh, this court, or nor do they support, um, uh, that argument. So We can, no, sorry, last question. Do they, the cases that you rely on have an equivalent of paragraph six in them? Um, I, I can't tell you that as I stand here right now, your Honor, um, I, I know that, uh, when I reviewed them, and in, in fact, one reason I can't tell you is because not one of those cases, uh, included the entire policy. I wouldn't expect it to, nor do they include excerpts such as a paragraph six, these cases. And, you know, that's, uh, in addition to, um, the Louisiana case, Lewis case, the Hill case, the Merrimack case, uh, they all focus on the appraisal paragraph alone. And so I can't answer your question because it's not included in the, uh, decision, but that's why I urge this court to look with the same scope that these other courts have looked. It's also interesting that the, the Merrimack, um, mutual case versus bats that I cite in the brief at 11 and 12, that's the insurer taking on the battle of saying, this is not a binding clause, and the court agreed. So it works both Ways. The court decided that on the basis of some procedural flaws that it wasn't, uh, done correctly. Uh, signatures weren't obtained, things like that. Yes. It didn't go to the core issue That initially that that is correct. I mean, tangentially, it, it, it, it addressed it. But you are correct that That raises what I wanted to ask was the actual, Uh, Process set forth in the policy followed, in other words, did the two appraisers conduct separate separate appraisals and was an umpire appointed? Uh, I understand it. The answer is yes. Okay. And did they, did each of those appraisers pick up these extra costs that you're seeking now, or did they both ignore them? Um, to, to my understanding, the answer to that is no. That's why it is part of the Legal plan. They did not pick them Up. Right. Which, So what then in the process is to prevent an interpretation that only part of the damage was resolved by the appraisal process leaving the rest of these damages outside of the appraisal process? Well, I mean, that would require reversal of summary judgment, because that would need to be an issue that needs to be addressed. W where your client supported the, a ability to provide information to the appraisers, I can't answer that question for you, your Honor. So is it your position that in order for a, uh, provision like this regarding appraisal to be binding, the word binding has to be there? Well, either binding or as the, uh, Jupiter case said, um, this appraisal clause uses the term shall, and like I said, I, I would agree that if travelers used shall determine that New Hampshire, in fact, when, when you do a search of the interpretation of shall and and will, uh, across the country, it's amazing that there are more New Hampshire cases because it's been addressed more frequently by this court, then it appears virtually any other state court. So when I cite you to the town of Nottingham, I mean there are, um, you know, a dozen cases or so decided by your predecessors, uh, who have all made that distinction that Shell is obligatory. So if it used the term, shell determine, your Honor, wouldn't be here and it wouldn't be. I I do want to clarify two, your Time is up. If I may clarify two points to withdraw so the court understands, because there's also an a, an issue, um, in the brief, uh, about, uh, New Hampshire admin Rule 1 0 0 2 0 9 unique aspects of the house. I, I agree with attorney Connor that only deals with a total loss, so we're withdrawing that. And the other thing I just wanted to share with you is that, um, the main Supreme Court three weeks ago decided the musto, uh, court, um, and under main law, it did grant summary judgment binding the, uh, uh, appraisal clause, uh, binding. And, uh, I just wanted, I believe that was the US District Court. Was it di it was the federal court in Maine?

Uh, I think that was the main Supreme Court, your Honor. Okay. Anyway, thank you. Thank You. Ms. Steiner, May it please the court.

I'm Doreen Connor and I represent Travelers Home and Marine Insurance Company. I'll refer to them as travelers, and I will take questions at any time. What was the Decision out of Maine? Can you clarify that for us? Uh, I was unaware that the main court issued a decision yesterday, much like I'm unaware of many of the sites that are being raised for the very first time today, which leads to the major preservation issue. In this case, not only were none of these arguments raised before the trial court, they weren't even raised in the plaintiff's complaint. The plaintiff's complaint, which is in the plaintiff's appendix at about a, uh, page 100, brings a breach of contract claim and a declaratory judgment claim. Not once is there an allegation that the appraisal language is ambiguous. And the only administrative rules, uh, raised was with regard to whether there were contractors in the area and the administrative rules. As this court has noted, probably the plaintiff does not have standing to enforce some, but they also became moot. But By, but whether the appraisal process was binding or not was squarely before the Superior Court. It was in the first, as the plaintiffs point out, it was in the first paragraph of paragraph of your motion. Correct, your Honor. But there was no allegation that the language itself was ambiguous. I'm not sure how the court is supposed To. Well, it's a, it's a question of law, whether it's binding, I mean that it's the whole theory of your motion to dismiss or your motion for summary judgment that any, any claims are precluded because the appraisal process was binding. It was final. Your Honor, I believe that both the parties in the court are entitled to understand the basis of any objection, uh, to that language. And as Justice Bass Bassett noted, there are three ways under the policy that a loss can be adjudicated agreement entry of final judgment or filing of an appraisal award. I Think it, are you referring to paragraph six? Yes. Let me ask you this question, and I know I'm interrupting, but if, if one has two clauses, seven and six, and if seven has its own rules of interpretation, regardless of what they are, if one has to go to another paragraph for a definition, isn't the language in seven inherently ambiguous? No, your Honor, I would refer this case to CL Dunn versus paving, which is at one 40 New Hampshire. In that case, this court was construing an indemnity clause. Uh, there was an allegation raised that it was ambiguous or not, uh, uh, an indemnity clause because it didn't use the magic word negligence. And this court referred to the longstanding rules with regard to how you are to interpret contracts based upon the contract as a whole subject matter situation of the parties an objective. And if you look at clause six and clause seven as a whole, you understand what the purpose is, how we're gonna resolve a first party claim. It's pretty darn clear. Why would parties go to our appraisal if it wasn't binding? They're trying to seek a resolution. And furthermore, if the plaintiffs have a problem with that, they need to raise what that problem is. Uh, with regard to the hidden damage argument, we're not talking about, uh, the case, uh, that was cited where there was a supplement post arbitration award or post post appraisal award. In this case, the plaintiff's complained that the travelers' adjuster was not picking up on things and they had to keep reminding them of particular attributes that the home had. Okay, it's up to the parties to raise that in front of the appraisal panel, and the appraisal panel makes its decision. There was no suggestion of hidden damage that was found. Post appraisal Is, is your preservation argument based on butland and the sort of common law preservation, uh, holdings of this court or, um, and does a different result, uh, is there a potential different result under our summary judgment statute? It's based upon the case law of this court, um, pursuant to Welch v Nik, which was a situation where a new defense was raised at trial that wasn't in any of the pleadings. It's at 1 28 New Hampshire. This court said you need to put it in the pleadings. You can't just spring it up at trial or here, spring it up at oral argument. There have been a number of cases where this court has decided that it will not consider legal challenges raised for the first time on appeal because it's unfair to refer. Are those summary judgment cases? I mean, my question is, does the summary judgment statute cause a different analysis than are common law, if you will, uh, law on preservation, because the summary judgment statute says that if you fail to file an objection, then the, the moving party is entitled to judgment, uh, in accordance with the facts. Um, but that there, there the, um, obligation of the moving party to establish that they're entitled to judgment as a matter of law is a question of law and one that is re reviewed de novo here. And that's, you know, it's a procedure that's very specific and it's set forth by, obviously by the legislature and statute, and we have to follow that. I believe it's the common law. Um, the cases that were, I was about to cite to you, um, where this court said that it would not look at an issue raised for the first time on appeal. It's a mecca versus zinc at one 30 New Hampshire. That was a permissive operator clause. My office handled it, I believe it was decided on summary judgment. Um, the other is Cogswell versus Tower 1 67 New Hampshire. That was brought up to you with regard to a ruling that was changed on a, on a motion for reconsideration or even Under the common law though. How can you, uh, how can we think of this as a new issue? I mean, it was the issue. It wa it was the issue you relied on. It was the issue that was the basis for the trial court's order adopting your arguments. So how could it not be an issue joined below? They might not have made specific case citations. They didn't make any, but, but we know what the issue is. The trial court knew what the issue is. You knew what the issue was. So why aren't, why shouldn't we decide? The issue that was adjudicated at the trial court was whether the decision, uh, of the appraisers setting the amount foreclosed the suit. In other words, there was nothing left to decide. There was no argument about whether there was a technical failure with regard to the use of the word will versus shall. But regardless of that, on the merits, there is no distinction. When you read this contract as a whole, You, I mean, you argued below that the, an appraisal process is akin to arbitration. I mean, it's final, it's binding. You, you're not disputing that. I mean, that was, that was absolutely argued below. It was argued below in terms of enforcing the appraisal award. Uh, I don't think it's appropriate for the opposing side to file nothing in any of their pleadings and then for the first time raise it on appeal. Well, Certainly the hidden damage claims is a disputed fact that they can no longer dispute. Right. That's a factual issue that they didn't raise. But it seems to me that's not a question of law. That's correct, your Honor. And in the brief at page four, they indicate that all questions of fact are that, that they waive them. So we're dealing solely with issues of law On the, um, on the, on the merits of interpreting the appraisal provision that travels has put forth. You, you referenced chapter 4 0 7, which sets forth a standard form for, uh, policies. And in, in the standard form that the legislature has put forward, it does use the phrase, shall determine the amount of actual cash value and loss. And travelers' policy is materially different. Why is that? I don't believe that they're materially different. It does use the word will. I disagree that that is a material difference, especially when you look at the contract as a whole. The form is on an HO three, that's an ISO approved form, they're national forms. Uh, the plaintiffs were not able to cite a single case outside of the one in Louisiana that found that the use of the word will was a problem. Well, you know, that may may well be, and it, um, my favorite word, however, in this clause is the word may and may implies permissive and not binding and blanche for the parties to pursue whatever remedy they want. Haven't other jurisdictions agreed with that? No, your Honor. At least not that was cited in the plaintiff's brief. And again, how do you, any potential, how Do you, how do you square the word may without referring to another clause in the policy? Well, that's how we construe contracts is by looking at the contract. As a Paul, you're Telling me that you can't, Excuse me, You're telling me you can't Construe may that as permission without looking permissive, without looking at other clauses in the policy. Right. The, it says a decision agreed to by any two will set the amount of loss And, and there's absolutely no review of that. None. I think the only review of that would be pursuant to the statute, similar to, um, arbitration if there was some type of, uh, error, uh, with same Mistake, fraud, corruption. Correct. And I, I have certainly have seen cases where the questions, uh, have been, challenges have been raised to the qualifications or the impartiality of the appraisal panel. And that I think certainly would allow for an appeal and review. But otherwise the amount is final because that's the whole reason for going for, to appraisal. And that's what paragraph six, which you get to before you even read paragraph seven. So it's not like you have to go a hundred pages into this policy to find section six. It precedes section seven with regard to appraisal and clarifies that this is a way to finally adjudicate the loss. So when chapter 4 0 7 talks about if upon trial the insured recovers more than the amount determined by the insurers, he shall have judgment and execution immediately. Therefore, is there, is there no way to challenge the appraisal under that section of the law? You're talking about under the fire policy? Yeah. I mean, you, you referred us to that chapter, and I'm assuming you think it's, you're suggesting it's binding Absent a fraud or, uh, procedural due process type argument? I believe that appraisal under the fire contract is binding, yes. Just as in this case, appraisal under the traveler's process is binding because it is one of three ways to adjudicate a loss.

Ms. Connor, as, uh, I discussed with Mr. Steiner, the Merrimack case from Tennessee is a case where the insurer tried, uh, took the position, it wasn't bound by the appraisal. And uh, I think it, the court went off on a technical analysis, but are you aware of travelers ever taking the position that it wasn't bound by an appraisal? I am not, your honor. My light is on. I have no further comments to make. We can I, can I just ask in a completely, absolutely, completely irrelevant question, does that clause in traveler's policy remain the same today? Do you happen to know? And I said it's irrelevant. I apologize for That. Yeah, I don't, and I, I wouldn't say that it's just the traveler's policy, right? It's an iso HO three. I don't know if this version of the HO three has been amended. Thank you. And why doesn't it use the word binding? Why? Why doesn't the policy just use the word binding then? We wouldn't be here. I don't know why the policy doesn't use the word binding. But again, I referring to the Dunn case where in the indemnity agreement didn't use the word negligence. I don't think you need a particular word that you don't need that word to infer from the totality of the policy itself, that the reason you go to appraisal is to get a final adjudication. We would ask that your firm Thank you. Thank you. Cases submitted. Thank you, counsel. Court will stand in brief.