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In re Liquidation of Home Insurance Co.

Supreme Court of New Hampshire

February 13, 2014

In the Matter of the Liquidation of the Home Insurance Company

Argued: October 16, 2013.

Page 166

[Copyrighted Material Omitted]

Page 167

Merrimack.

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

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

LYNN, J. DALIANIS, C.J., and HICKS, J., concurred.

OPINION

Page 168

[166 N.H. 86] Lynn, J.

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

I

This is the fifth opinion we have issued in connection with the liquidation of Home. See In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472, 913 A.2d 712 (2006) ( Home I ); In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543, 953 A.2d 443 (2008) ( Home II ); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 396, 965 A.2d 1143 (2009) ( Home III ); In the Matter of Liquidation of Home Ins. Co., 158 N.H. 677, 972 A.2d 1019 (2009) ( Home IV ). The following facts either are drawn from our prior opinions or are supported by the record in the instant appeal.

Home is an insurance company, organized under the laws of New Hampshire, which was declared insolvent and placed in liquidation in 2003. Home II, 157 N.H. at 544. The Liquidator is vested with title to and charged with administering and collecting Home's assets for distribution to Home's creditors. Home I, 154 N.H. at 475. CIC is an insurance company organized under the laws of Pennsylvania. Home II, 157 N.H. at 544-45. CIC and Home have a set of co-insurance and reinsurance relationships, which are fully described in our opinions in Home II and Home IV. See Home IV, 158 N.H. at 679-80; Home II, 157 N.H. at 544-46. In one aspect of the parties' relationship, CIC reinsures Home with respect to certain contracts between Home and other insurers. Home II, 157 N.H. at 545. CIC and Home are also co-insurers of certain companies, including Pacific Energy Company (PECO), meaning that both CIC and Home are primary insurers of PECO. Home IV, 158 N.H. at 680.

A number of documents govern aspects of the relationship between CIC and Home, and we deal with three here. The first, the Restated and Revised [166 N.H. 87] Order Establishing Procedures Regarding Claims Filed with the Home Insurance Company in Liquidation (Claims Procedures Order) applies generally to claims made against Home pursuant to the Insurers Rehabilitation and Liquidation Act, RSA chapter 402-C (2006 & Supp. 2013); its purpose is to achieve uniformity and provide procedures for the presentation, processing, determination, and classification of claims against Home. It became effective on January 19, 2005, and is a restated and revised version of an order originally entered

Page 169

in the Home liquidation on December 19, 2003. It applies to all " Claimants" in the Home liquidation, defining that term as " any policyholder, reinsured, reinsurer, general creditor, third-party, or guaranty association that has filed a Proof of Claim." The second document, the " Claims Protocol," is a letter agreement between CIC and Home that governs the handling by CIC, as reinsurer of Home, of a certain subset of claims against Home (the AFIA Liabilities) by certain entities in the United Kingdom (the AFIA Cedents) in connection with the American Foreign Insurance Association. See Home I, 154 N.H. at 474-75 (explaining the reinsurance relationship between CIC and Home with respect to the AFIA Liabilities). Of particular relevance here, Section 3 of the Claims Protocol provides that CIC shall make certain remittances to Home with respect to the AFIA Liabilities net of setoff as permitted by New Hampshire law, and will provide monthly reports as to those remittances and setoffs. The third document, the Joint Report, is another agreement between CIC and Home, and addresses contribution/subrogation claims filed by CIC in the Home liquidation under four particular Proofs of Claim. It sets forth the initial steps to be taken by the two parties after CIC asserts such a claim, including CIC's asserted PECO claim.

This appeal flows directly from the facts at issue in Home IV. In that appeal, we held that an asserted $8 million setoff claim by CIC, which had been waived and then reacquired by CIC in a pair of settlement agreements with PECO, was impermissible under New Hampshire law. Id. at 680, 684. We also explicitly declined, without prejudice, to decide the issue now before us: whether Home's estate was ...


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