Coverage Analysis
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NEW HAMPSHIRE

  ACCIDENTS OR OCCURRENCES
 

  The New Hampshire Supreme Court has declared that "the touchstone of interpretation is the definition of 'accident' as a cause of injury, as distinct from the injury itself," and selected the following definition: "[A]n accident is an undesigned contingency, . . . a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected." Vermont Mut. Ins. Co. v. Malcolm, 517 A.2d 800, 802 (1986).

  In two 3-2 votes in 1993, the Supreme Court of New Hampshire has reaffirmed its use of a subjective test but has also found that certain types of inherently injurious conduct may bar coverage even if the insured denies intent to harm.  Providence Mut. Fire Ins. Co. v. Scanlon, 138 N.H. 301, 638 A.2d 1246 (1994)(shooting of BB gun from a distance was an "occurrence") and Green Mountain Fire Ins. Co. v. Foreman, 138 N.H. 440, 641 A.2d 230 (1994)(intentional assault not covered). See also Mackinnon v. Hanover Ins. Co., 124 N.H. 456 (1984)(sexual molestation claims held covered under subjective standard.  But see Fisher v. Fitchburg Mutual Ins. Co., 131 N.H. 769, 560 A.2d 630 (1989)(misrepresentations in sale of real estate) and Jespersen v. U.S.F.&G., 131 N.H. 257, 551 A.2d 530, 532 (1988)(wrongful termination); Vermont Mut. Ins. Co. v. Malcolm, 128 N.H. 521, 524, 517 A.2d 800 (1986)(sexual assault). Accord, Pennsylvania Millers Mut. Ins. Co. v. Doe, 882 F.Supp. 195 (D.N.H. 1994)(sexual relations with minor).  In such situations, the actions will not constitute an "accident" even if the insured denies any intent to injure.   See also Seminole Point Hospital Corp. v. Aetna Cas. & Surety Co., 675 F.Supp. 44 (D.N.H. 1987)(sexual harassment) and King v. Prudential Property & Cas. Ins. Co., 684 F.Supp. 347 (D.N.H. 1988)(kidnapping).  

  Conduct will be deemed "inherently injurious" if "it cannot be performed without a certainty that some injury will result."   Scanlon, 638 A.2d at 1249 and A.B.C. Builders, Inc. v. American Mut. Ins. Co., 139 N.H. 745, 661 A.2d 1187 (1995)(trespass onto property not inherently injurious).  However, "an insured's intentional acts may be considered accidental if the insured did not intend to inflict injury and the insured's intentional acts were not inherently injurious."  661 A.2d at 1190.  Similarly, even acts that are plainly injurious, such as an intentional trespass, will be deemed “accidental” if the insured believed that he was authorized to carry them out.   Lumber Ins. Co. v. Allen, 820 F.Supp. 33 (D.N.H. 1993)(tree cutting). 

  The New Hampshire Supreme Court reaffirmed its view that the degree of injury does not determine whether intentional conduct constitutes an “accident” or “occurrence” so long as some injury was intended.  In Martin v. Maine Mutual Fire Insurance Company, No. 99-137 (N.H. December 8, 2000), the court ruled that injuries suffered by the plaintiff when the insured grabbed him around the neck and attempted to choke him were “inherently injurious” and therefore outside the scope of “occurrence” coverage.
 
  An "accident" is "an undesigned contingency, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated and not naturally to be expected."  Vermont Mutual Ins. Co. v. Malcom, 128 N.H. 521, 523 (1986), cited in Allen, 820 F.Supp. at 34.  

  In March 2001, the Supreme Court of New Hampshire affirmed a lower court’s ruling that under an objective “inherently injurious” analysis, soil and water contamination resulting from a gas utility’s discharge of coal tar waste over a period of decades was not an “accident” or “occurrence.”  In EnergyNorth Natural Gas, Inc. v. Continental Insurance Company, No. 98-735 (N.H. March 21, 2001), the court ruled that although a subjective analysis was relevant to the separate issue of whether bodily injury or property damage was expected or intended from the standpoint of the insured,“ the Superior Court had not erred in relying upon evidence of the custom and practice of the manufactured gas industry during the period of time that this plant was in operation in concluding that a reasonable company in the insured’s position would have known that its intentional dumping of tar and other by-products contained in its waste stream was certain to result in some injury to property, even if not the particular injury to groundwater, surface water and sediment.  The court also rejected insured’s argument that it could not have understood that such discharges were causing “environmental” injury, declaring that “the industry’s awareness that its waste would contaminate water to the detriment of its neighbors is sufficient under this test, even if the industry did not understand the term ‘environment’ as it is used today.”  The court concluded that “although ENGI’s acts may well have been lawful and socially acceptable at the time they were taken, they were not accidents as our cases have defined that term, and that term is the one on which coverage hinges.”

  The Supreme Court of New Hampshire has refused to hold that gradual property damage resulting from a builder’s defective performance of his contractual duties was not  an "occurrence."  In High Country Associates v. New Hampshire Ins. Co., 139 N.H. 39, 648 A.2d 474 (1994), the court noted that the term “occurrence” was ambiguous in such cases and was broader than older "accident" policies, which had limited coverage to damage from an event identifiable in time and place.

  The Supreme Court of New Hampshire has also ruled that the intentional acts of one insured will preclude coverage for other insureds where the policy states that it does not apply to "bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which in fact are intended by an insured person."  Allstate Ins. Co. v. Stamp, 134 N.H. 59, 588 A.2d 363 (1991). 

  In Mottolo v. Fireman's Fund Ins. Co., 830 F.Supp. 658 (D.N.H. 1993), reversed, 43 F.3d 723 (1st Cir. 1995), the First Circuit affirmed Judge McAuliffe's ruling that the insured's routine disposal and burial of drums of hazardous waste on his pig farm were not an "occurrence."   However, the court ruled that the lower court had improperly adopted the Morton "exceptional circumstances" standard, holding instead that the standard to be used in such cases is whether a reasonable person in the shoes of the insured would foresee that his dumping of waste was certain to cause some degree of injury to property.  Accord, New Hampshire Ball Bearings v. Aetna Casualty & Surety Company, 43 F.3d 749 (1st Cir. 1995) (where insured intentionally dumped wastes onto land but denied intent to pollute groundwater, conduct was "inherently injurious" and not an "occurrence").

  On the other hand, even the intentional destruction of property was deemed to constitute an "occurrence" if the conduct was undertaken under the mistaken belief that the acts were authorized. Lumber Ins. Co. v. Allen, 820 F.Supp. 33, 34 (D.N.H. 1993).  

  The Supreme Court of New Hampshire agreed in late 1993 to hear an appeal of EKCO Group, Inc. v. Liberty Mut. Ins. Co., Hillsborough No. 92C-936 (N.H. Super. July 21, 1993), in which  a trial court ruled that waste solvents and other liquids that drained out of a waste dumpster on the insured's property were the result of an "accident" since the insured had not wanted to have a dumpster with a drainage system and had previously requested its waste hauler to replace it with one that did not leak. However, the Superior Court ruled that Liberty had no duty to defend or indemnify claims of trespass, since they were based on intentional acts that were not an "accident."  At issue on appeal was whether such conduct was inherently injurious and not an "accident" and whether "expected or intended" should be evaluated from an objective or subjective viewpoint.  The case settled in early 1995.

  The federal district court ruled in Seminole Point Hospital Corp. v. Aetna Cas. & Surety Co., 675 F.Supp. 44 (D.N.H. 1987) that the acts of employees should not be imputed to a corporate insured. 

  In Pennsylvania Millers Mut. Ins. Co. v. Doe, 882 F.Supp. 195 (D.N.H. 1994), Judge DiClerico rejected arguments that a duty to defend might arise in a sexual assault case based upon counts in the complaint asserting that the insured had been negligent in not seeking medical treatment for his pedophilia.  The court ruled that such allegations had not caused any bodily injury to the plaintiff.

  Whereas an "assault and battery" exclusion would have barred coverage for claims against a bar arising out of a brawl in the insured's tavern, it was held not to apply to injuries that a patron suffered after a bouncer fell on him while trying to break up the brawl.  In such circumstances, the First Circuit ruled in United National Ins. Co. v. Penuche's, No. 97-1476 (1st Cir. November 6, 1997) that the bouncer's negligence was an independent causative act and did not "arise out of" the original assault.  Further, the court refused to find that the bouncer's efforts to subdue the patron and break up the fight were themselves an "assault."
 

  ALLOCATION AND SCOPE

  State trial court ruled in Conductron Corp. v. American Employers Ins. Co., Hillsborough No. 93-E-149 (N.H. Super. March 4, 1997)  that coverage should be allocated horizontally among its primary policies in accordance with the amount of damage in each year that pollutants were discharged.  However, recognizing the difficulty of establishing the amount of injury in each year, the Superior Court adopted a modified "time on the risk" approach.  Consistent with his July 29, 1996 ruling on "trigger of coverage," the court ruled that Conductron must show "that it is reasonably likely that some damage occurred during each coverage period."  However, the court also ruled that Conductron "need not show the precise amount of damage that occurred" in each year for which it was claiming coverage.  Insurers may avoid liability by showing that it is reasonably likely that no significant damage occurred during their policy periods.

 Addressing the issue of Conductron's responsibility for a share of such costs, the court rejecting the insured's claim that it could pick and choose on a theory of "joint and several" liability.  Rather, the court held that Conductron should pay a share corresponding to periods when it was uninsured or that occurred after the loss became known to it (and thus uninsurable).  However, the court ruled that Conductron was only responsible for damage occurring during these periods that was the result of new discharges.  Pollution occurring during the uninsured period that resulted from discharges during periods when the insurers were on the risk were still the responsibility of the insurers.  In this regard, Judge Arnold drew a distinction between periods of conscious "self insurance" and the mere absence of coverage due to coverage defenses, such as "known loss."
 

  APPELLATE PROCEDURES

  All appeals are heard directly by the New Hampshire Supreme Court.
 

BAD FAITH

  New Hampshire has refused to recognize the tort of bad faith in the first-party insurance context.  In Bell v. Liberty Mutual Insurance Company, No. 98-460 (N.H. March 26, 2001), reaffirming Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 392 A.2d 576 (N.H. 1978).

  Further, the Supreme Court ruled in Bell that insurers may not be sued under New Hampshire’s Consumer Protection Act,  RSA 358-A, as insurance is already a closely regulated industry. 

  An insurer may be liable for all consequential damages that are causally related to the insurer’s wrongful denial of coverage and that were foreseeable to the insurer at the time.  In Bell, the court ruled that a first-party claimant was not entitled to recover consequential damages involving the loss of her job or for emotional distress as such damages were the result of her employer downsizing the business and were not causally related to the insurer’s failure to arbitrate her UM claim.  
 

"BODILY INJURY"

  Mental distress is not a "bodily injury."  Artcraft of N.J., Inc. v. Lumbermens Mutual Cas. Co., 126 N.H. 844, 497 A.2d 1195 (1985).  In Artcraft, the Supreme Court of New Hampshire found that allegations that the plaintiff had suffered physical discomfort, emotional pain and suffering, aggravation and embarrassment as the result of the insured's negligent design of the vapor barrier in their mobile home that produced a cold dampness, clamminess and musty smell claimed to allege a claim for "bodily injury."  the court took particular note of the fact that the plaintiffs had not sought medical treatment nor have they alleged that they had suffered loss of sleep, appetite, weight or other physical consequence of their alleged emotional injuries.

  BREACH OF POLICY CONDITIONS

  New Hampshire is not a strict "prejudice" jurisdiction.  Rather, the court's determination of whether or not the insured has complied depends on factors such as the prejudice to the insurer precipitated by the delay as well as the length of the delay and the reasons for it.  Commercial Union Assur. Co. v. Monadnock Regional School District, 121 N.H. 275, 428 A.2d 894 (1981).

  Under an “occurrence” policy, an insurer must show prejudice as a consequence of the insured’s untimely notice to deny coverage.   Bianco Professional Association v. The Home Ins. Co., No. 95-589 (N.H. April 13, 1999).  The same rule does not apply for “claims made” policies, as to which prejudice is presumed where an insured gives notice after the policy has expired. 

  The New Hampshire Supreme Court has ruled in Dover Mills Partnership v. Commercial Union Insurance Companies, 740 A.2d 1064 (N.H. 1999) that the burden of proving prejudice as a consequence of the insured’s untimely notice of an occurrence falls on the insurer, and that a trial court, therefore, erred in granting summary judgment to Commercial Union based on the insured’s failure to show that its delay was reasonable or otherwise justified.  Further, the insurer’s proof of prejudice must be specific and cannot be based solely on the length of the delay or conjecture that the delay dimmed the memories of witnesses or otherwise impaired its ability to investigate the underlying circumstances.
 

  "BROAD FORM COVERAGES"

  Supreme Court has ruled that infringement of property rights may be an "invasion of the right of private occupancy."  Town of Epping v. St. Paul Fire & Marine Ins. Co., 122 N.H. 248 252 (N.H. 1980).  But see, Town of Goshen v. Grange Mut. Ins. Co., 122 N.H. 915, 918 (1980)(no coverage for civil rights claims where insured had specifically declined to purchase endorsement that would have added coverage for such claims).  First Circuit relied on this authority in ruling that "absolute" pollution exclusion does not apply to claims of trespass and nuisance in Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 261 (1st Cir. 1990).  

  A federal district court has ruled in EKCO Group v. Travelers Indemnity Company, No. CV-99-236 (D. N.H. November 29, 2000) that allegations that a kitchenware manufacturer had committed trade dress infringement, unfair competition and patent infringement through its sale of metal tea kettles at K-Mart stores fell within the scope of Travelers’ coverage for “advertising injury” as involving an action for “misappropriation of advertising ideas or style of doing business.” The court also ruled that because trade dress and trademark infringement claims require proof of consumer confusion, “advertising” is inherent in a Lanham Act claim.  
 

BURDEN OF PROOF

  Prior to 1969, New Hampshire followed the common law rule that insured must establish its claim for coverage.  Hardware Mutual Cas. Co. v. Hopkins, 213 A.2d 692, 106 N.H. 412 (1965).  However, amendments to RSA 491:22-b in that year established a presumption of coverage for any claim brought pursuant to the N.H. Declaratory Judgment Act, RSA 491:22.  Andrews v. Nationwide Mutual Ins. Co., 467 A.2d 254, 124 N.H. 148 (1983).    
  As a result, "the burden of establishing non-coverage is upon the insurer."  USF&G v. Johnson Shoes, Inc., 461 A.2d 85, 87 (1983).  This includes the extent of damages.  Coakley v. Maine Bonding & Cas. Co., 136 N.H. 402, 618 A.2d 777, 781 (1992).  This is particularly so where the insurer has failed to defend.  A.B.C. Builders, Inc. v. American Mut. Ins. Co., 139 N.H. 745, 661 A.2d 1197 (1995).  In such circumstances, the insurer may not be heard to complain about the manner in which its policyholder has chosen to settle the underlying claim. White Mountain Construction Co. v. Transamerica Ins. Co., 137 N.H. 478, 631 A.2d 907, 911 (1993).
  
  In 1999, the New Hampshire Supreme Court further ruled that the insurer had the burden of establishing prejudice from an insured’s untimely notice. Dover Mills Partnership v. Commercial Union Insurance Companies, 740 A.2d 1064 (N.H. 1999).   Earlier rulings of the court had declared that it was the insured that must show that notice was given “as soon as practicable.”  See  Lumbermens Mut. Cas. Co. v. Oliver, 115 N.H. 141, 144 (1975); Town of Allenstown v. National Cas. Co., Civil No. 90-501-B (D.N.H. July 16, 1993), aff'd, 36 F.3d 229 1st Cir. 1994). 

  It appears that the insured must establish the existence and terms of a missing policy. Town of Peterborough v. The Hartford Fire Ins. Co., 824 F.Supp. 1102 (D.N.H. 1993).  
  Even though the insured received a NHDES claim letter in 1992, its 1996 DJ was not deemed to be outside the 6 month limitation period required by RSA 491:22.  In EnergyNorth Natural Gas, Inc.  v.  AEGIS, 21 F.Supp.2d 89 (D.N.H. 1998), the District Court ruled that the legislative history of the statute made clear that it was meant as a “court clearing” device and was not intended to preclude the rights of insureds to bring Djs, especially where no underlying suit was pending.
 

  CHOICE OF LAWS

  New Hampshire looks to the principal location of the insured risk. Glowski v. Allstate Ins. Co., 589 A.2d 593 (N.H. 1991).  If the policy insures facilities, vehicles or operations in several states, the location of the particular instrumentality at issue will govern, even if that is not where the policy was issued.    Ellis v. Royal Ins. Co., 129 N.H. 326, 331, 530 A.2d 303, 306 (1987) and Diamond International Corp. v. Allstate Ins. Co., 712 F.2d 1498, 1502 (1st Cir. 1983).  

  In contrast to the general rule that an automobile liability policy will be construed in accordance with the state where the insured vehicle is garaged, the New Hampshire Supreme Court has ruled in Cecere v. Aetna Insurance Company, No. 97-882 (N.H. January 16, 2001) that a Massachusetts Motor Vehicle Garage policy issued to a used car dealer in Lawrence, Massachusetts and insuring numerous different vehicles would be construed in accordance with Massachusetts law even though the specific vehicle involved in the accident was garaged in New Hampshire at the time of the accident.  The court placed particular emphasis on the “unique nature of garage insurance policies,” commenting that if the policy at issue had been a “multiple risk” policy or an individual automobile policy, it would have been less inclined to conclude that the “principal location of the insured risk” was in Massachusetts.
 

  "CLAIMS MADE" ISSUES

  While holding that a true "claims made" policy would not insure a hospital for medical incidents that were reported to the insurer during the policy period but which did not result in claims until afterwards, the Supreme Court of New Hampshire held that coverage could be obtained under a hybrid policy form that deemed a claim "first made" when the insurer received written notice of the "claim" or "occurrence."  Concord Hospital v. New Hampshire Medical Malpractice Joint Underwriting Assoc., 633 A.2d 1384 (N.H. 1993).
 

  CONFLICTS OF INTEREST

  In Metropolitan Property and Liability Ins. Co. v. Kirkwood, 729 F.2d 61 (1st Cir. 1984), the First Circuit discussed the conflict concerning control of the defense between insurer and insured in cases where no coverage may exist.  It noted that a conflict existed where insurer who wished to disclaim coverage wanted to manage defense of its insured in an underlying tort suit.  Although it did not specifically state so, this backdrop, i.e., conflict, is present in most cases holding that the insurer must either relinquish its reservation of rights or provide the insured with independent counsel. 
 

  "DAMAGES"

  The Supreme Court of New Hampshire ruled in Coakley v. Maine Bonding & Cas. Co., 136 N.H. 402, 618 A.2d 777 (1992) that remedial costs incurred by a landfill operator to remediate existing injury to groundwater are "damages."  The court held that preventative measures, such as the installation of a clay cap on the landfill, would not be covered, however.  The case was subsequently reversed by the First Circuit on the "occurrence" issue. New Hampshire Ball Bearings v. Aetna Casualty & Surety Company, 848 F.Supp. 1082 (D.N.H. April 1, 1994), reversed on other grounds, 43 F.3d 749 (1st Cir. 1995).

  The cost of restoring damaged property to its pre-tort condition has been held to be recoverable, even if the costs exceed the property's value, if "there is a reason personal to the owner for restoring the original condition."  A.B.C. Builders, Inc. v. American Mut. Ins. Co., 139 N.H. 745, 661 A.2d 1187, 1191 (1995).

 Allegations that municipalities were forced to pay more for police protection, emergency services, medical care, social services and court costs due to increased criminal activity due to the insured’s marketing of dangerous firearms have been held to set forth a claim for “damages” because of bodily injury.  In SIG Arms, Inc. v. Employers Insurance of Wausau, 2000 WL 1781335 (D. N.H. December 5, 2000), the District Court, applying New Hampshire law, ruled that the underlying claims at least potentially alleged an action for “damages claimed by any person or organization for care, loss of services or death resulting at any time from the bodily injury.”  The court rejected Zurich’s contention that such claims are subject to Illinois law or that Illinois courts have precluded coverage for economic losses incurred because of bodily injury to a third party.
 

  DECLARATORY JUDGMENT ACTIONS

  Insureds may recover attorneys fees in any claim brought under RSA 491:22.  However, the declaratory judgment action must be filed within 6 months of the underlying suit giving rise to the coverage issue.  Mottolo v. USF&G, 127 N.H. 279, 498 A.2d 760 (1985).  There is no common law right to attorneys fees for other types of coverage suits, however. Town of Peterborough v. The Hartford Fire Ins. Co., 824 F.Supp. 1102 (D.N.H. 1993).  

  The Supreme Court of New Hampshire has ruled that actions may only be filed under RSA 491:22 if the underlying suit giving rise to the coverage question is pending in a New Hampshire court.  Scully's Auto-Marine Upholstery, Inc. v. Peerless Ins. Co., 611 A.2d 635 (N.H. 1992).  Note that this statute was amended several years ago to encompass suits that are filed in the U.S. District Court.  However, RSA 491:22-c has been held to limit this right of action to claims that, had they been filed in state court, would have been within the scope of RSA 491:22-a.  Town of Peterborough v. The Hartford Fire Ins. Co., 824 F.Supp. 1102 (D.N.H. 1993).   Similarly, Judge Barbadoro has held that the burden shifting provisions of RSA 491:22-b do not apply if the underlying suit is filed in federal court.  Town of Allenstown v. National Cas. Co., Civil No. 90-501-B (D.N.H. July 16, 1993), aff'd, 36 F.3d 229 (1st Cir. 1994).  

  An action under RSA 491:22 must be brought within 6 months of the date that “the facts giving rise to such coverage dispute” become known.  Such facts may become “known” by reason of the issues raised in an insurer’s reservation of rights letter.  See  Binda v. Royal Insurance Company, No. 97-688 (N.H. January 31, 2000)(even though action was brought within 6 months of denial, action still untimely as RoR put insured on notice).  On the other hand, a new limitations period will be created if new claims are added  to the underlying suit that present coverage isssues not raised in the original proceeding.  The court declared in Binda, however, that in such circumstances, only the new claims can be considered in the declaratory judgment action.

  The New Hampshire Supreme Court is presently considering the issue of whether RSA 491:22 entitles an insured to reimbursement for coverage-related costs incurred prior to the date that the action for declaratory relief is filed.  Crane v. Peerless Insurance Company, No. 98-543 (N.H. 2000).

  Despite the Supreme Court's ruling in Coakley that a PRP letter is a "suit," a state trial court ruled in Conductron Corp. v. American Employers Ins. Co., Hillsborough No. 93-E-149 (N.H. Super. August 30, 1993) that an insured's failure to bring a DJ within 6 months of being served with a "suit" did not bar its claim under RSA 491:22 since the "court-cleaning" docket function of the statute had no application to claims that were not pending in a court of law.
  In response to such rulings, the New Hampshire legislature enacted a further amendment to RSA 491:22 in April 1994 declaring that, effective January 1995, the declaratory judgment remedy would be available to all litigants without regard to whether the underlying suit was pending in state or federal court.  The Supreme Court has since ruled that this amendment was retroactive in effect. Workplace Systems, Inc. v. CIGNA Property & Casualty Ins. Co., No. 96-366 (N.H. February 6, 1999).
 

  DISCOVERY ISSUES

   --Claims Manuals

   --Drafting History
 

   --Other Policyholder Claims
 

   --Reinsurance Information
 

   --Reserves
 

  DUTY TO DEFEND

  In Mooney v. USF&G, 618 A.2d 793 (N.H. 1992) the Supreme Court ruled that unless a writ unequivocally alleges facts that are outside the scope of coverage, an insurer must look to the actual facts to determine whether there was a duty to defend.  What is important is the facts alleged: "the legal nomenclature the plaintiff uses to frame the suit is relatively unimportant."  Pennsylvania Millers Mut. Ins. Co. v. Doe, 882 F.Supp. 195, 198 (D.N.H. 1994).

  The Supreme Court ruled in Coakley, supra, that PRP letters may be a "suit" in the context of environmental claims.

  Even though suits for negligent supervision against a school district failed to specify that the claims were actually based on Pamela Smart's conspiracy to murder her husband, a liability insurer acted properly in considering the actual facts and refusing to afford coverage in light of a policy exclusion for claims "arising out of" the assault of any person.  Winnacunnet Coop. School District v. National Union Fire Ins. Co., 84 F.3d 32 (1st Cir. 1996).
The court ruled that the insurer should b e permitted to look beyond bare allegations of "conspiracy" in civil suit in concluding that insured's plot to kill husband was within policy exclusion for claims "arising out of" the assault of any person.   

  An insurer has no further obligation to defend a case once the applicable limit of liability is exhausted.  Travelers Indemnity Company v. New England Box Company, 102 N.H. 380, 157 A.2d 765 (1960).  
  If an insured has given notice of a claim, it need not convey an express tender of defense.  However, failure to tender a defense will relieve an insurer of any obligation to reimburse defense costs if there is no notice or if the insured otherwise acts in a manner inconsistent with an intent to seek a defense. White Mountain Construction Co. v. Transamerica Ins. Co., 137 N.H. 478, 631 A.2d 907 (1993).
 

  ESTOPPEL AND WAIVER

  To establish waiver, a claimant must show explicit language indicating the defendant’s intent to forego a known right, or conduct from which it may be inferred that the defendant abandoned this right.  Forbes Farm Partnership v. Farm Family Mutual Insurance Company, No. 99-136 (N.H. March 26, 2001); see also Renovest v. Hodges Development Corporation, 135 N.H. 72, 79 (1991) and Bowen v. Casualty Company, 99 N.H. 107, 112 (1954).  The Supreme Court has twice ruled that an investigation carried out pursuant to a non-waiver agreement may not form the basis for later claiming waiver or estoppel. Forbes Farm Partnership v. Farm Family Mutual Insurance Company, 2001 N.H. Lexis 52 (N.H. March 26, 2001) and Therrien v. Maryland Casualty Company, 97 N.H. 180, 183 (1951).

  An allegation of estoppel requires proof of (1) representation or concealment of material facts made with knowledge of those facts; (2) that the party to whom the representation was made must have been ignorant of the truth of the matter; (3) that the representation was made with the intention of inducing the other to rely upon it; and (4) that the other party was indeed induced to rely on the representation because of her injury.  Healey v. Town of New Durham, 665 A.2d 360, 367 (N.H. 1995).  In A.J. Cameron Sod Farms, Inc. v. Continental Ins. Co., 700 A.2d 290 (N.H. 1997), the New Hampshire Supreme Court refused to find estoppel where Continental had agreed to provide a defense under a reservation of rights but had never expressly advised the insured that it was defending under the automobile liability policy or the CGL policy, for which it had later disclaimed coverage.  

  An insurer's breach of the duty to defend will not create an indemnity obligation beyond what was originally bargained for.  Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 265, 269 (1st Cir. 1990).   Rather, the relief afforded must bear a reasonable relationship to the coverage afforded and the damages indemnified.   A.B.C. Builders, Inc. v. American Mut. Ins. Co., 139 N.H. 745, 661 A.2d 1187, 1191 (1995).
 

  EXCESS INSURERS

  In determining whether a justiciable controversy exists as to an excess liability policy, a court must consider the “practical likelihood” that the excess carrier’s layer of insurance will be triggered.  SIG Arms, Inc. v. Employers Insurance of Wausau, No. 99-466 (D. N.H. April 26, 2000)(denying excess insurer’s motion to dismiss in view of the large number of significant cases still pending against policyholder.).
 

  INDEMNITY

 Where a case settles prior to trial, the duty to indemnify depends on the basis for the settlement.  EKCO Group v. Travelers Indemnity Company, No. CV-99-236 (D. N.H. November 29, 2000).
 

  KNOWN LOSS

  Landfill operator could not secure coverage under policy purchased after state ordered him to clean up pollution on his property. Mottolo v. USF&G, Rockingham No. E 332-82 (N.H. Super. July 11, 1983), affirmed on other grounds, 127 N.H. 279, 498 A.2d 760 (1985).  See also  Turnkey Landfill of Danbury, Inc. v. CIGNA Property and Cas. Ins. Co., Merrimack No. 85-E-98 (N.H. Super. November 12, 1992 and August 6, 1993).

  However, Judge Arnold declined to grant summary judgment on this basis in Conductron Corp. v. American Employers Insurance Company, No. 93-E-149 (N.H. Super. November 16, 1996) where the insured denied being the source of contamination and where there were question of fact as to whether a reasonable insured would have understood that it was "virtually certain" that a loss would occur.
 

  NUMBER OF OCCURRENCES

  Disparate elements of damage that all flow from the same “cause” should be treated as a single "occurrence."  Travelers Indemnity Co v. New England Box Co., 102 N.H. 380, 386, 157 A.2d 765, 769 (1960)(fire victims); Southwick v. Kazakis, C.A. No. 87-1028-Z (D. Mass. January 8, 1988)(New Hampshire law)(car that separately collided with three motorcycles involves one "occurrence") and City of Portsmouth v. Colonial Penn Ins. Co., 767 F.Supp. 424 (D.N.H. 1990)(separate victims of employment discrimination). 
 

  POLLUTION EXCLUSION

  New Hampshire law with respect to the exclusion is confusing and conflicting.  Much of the confusion stems from the fact that the exclusion could not be used for policies issued in New Hampshire for much of the time that the "sudden and accidental" exclusion was in use elsewhere.

  Until 1985, the Insurance Department mandated the inclusion of an endorsement deleting the pollution exclusion in all primary policies issued in New Hampshire.  Although this practice was abandoned after the Mottolo and Great Lakes decisions overruled it, the exclusion has since only been considered in Great Lakes Container Corp. v. National Union Fire Ins. Co., 727 F.2d 30 (1st Cir. 1984), in which the First Circuit upheld it in the context of the operator of a barrel reconditioning plant, holding that pollution that occurred as a "concomitant" of the insured's regular business activities was not covered.  Judge Loughlin also ruled in a case arising under Massachusetts law that the disposal of an insured generator's waste over a period of years was not "sudden and accidental."  K.J. Quinn v. Continental Cas. Co., 806 F.Supp. 1037 (D.N.H. 1992).

  Following the New Hampshire Supreme Court's ruling in Mottolo, RSA 412:4 was amended by the New Hampshire General Court in 1985 to permit the Insurance Commissioner to declare any offending policy provision null and void.  The Commissioner has never used this authority with respect to pollution exclusions, however.  Judge Arnold declared in Conductron Corp. v. American Employers Insurance Company, No. 93-E-149 (N.H. Super. November 16, 1996 and May 30, 1997) that this provision might invalidate the exclusion, even for policies issued out of state.

  The Supreme Court of New Hampshire has ruled that a first-party policy that insured against "sudden and accidental damage from artificially generated electrical current" was ambiguous and must be interpreted in favor of a farmer's claim for the death and dehydration of a dairy herd that stopped drinking water due to electrical shocks caused by stray voltage from nearby power lines.  In Hudson v. Farm Family Mutual Ins. Co., 142 N.H. 144, 697 A.2d 501 (1997), the court reversed a lower court's finding that the discharges, having occurred over a period of time, were not "sudden."  Relying on the nationwide conflict in case law interpreting the meaning of "sudden and accidental" in the context of the pollution exclusion, Justice Broderick concluded that the language should be interpreted as meaning "unexpected and unintended."  In any event, he noted that even if the word "sudden" was given a temporal connotation, the policy was not clear as to whether it was the "onset of damages" that must be sudden or whether the totality of the damage must occur suddenly."  
 
  Earlier, several trial courts had upheld the exclusion in landfill cases on the basis that pollution resulting from daily discharges occurring over a period of years is not "sudden." See,  City of Portsmouth v. New Hampshire Guaranty Association, Docket No. 88-E-759 (N.H. Super. September 22, 1993), appeal dismissed (N.H. 1995) and Turnkey Landfill of Danbury, Inc. v. CIGNA Property and Cas. Ins. Co., Merrimack No. 85-E-98 (N.H. April 17, 1995).

  Judge McAuliffe ruled in Suburban Construction Co. v. Hartford Fire Ins. Co., 1994 WL 263789 (D.N.H. March 21, 1994) that it is the insured's burden to prove that a discharge happened "abruptly, fortuitously and unexpectantly."  While noting the absence of governing precedent in New Hampshire, the District Court adopted the First Circuit's view of "sudden and accidental," noting in particular that it is the discharge of a pollutant that matters, not its behavior after the discharge has occurred.   While noting that the First Circuit had ruled that there should not be coverage for pollution prone facilities, the court found that leaks from an underground tank were facially distinguishable from "an on-going operation which discharges pollutants in the ordinary course of business." 

  In an unrelated context, the term "arising out of" has been interpreted as "a very broad, general and comprehensive term...meaning 'originating from or growing out of or flowing from.'" Merrimack School Dist. v. National School Bus Service, 661 A.2d 1197, 1199 (N.H. 1995).

  The New Hampshire Supreme Court has ruled that the "absolute" pollution exclusion does not apply to lead poisoning that a painter's child suffered as a result of coming into contact with lead dust on his father's clothes and in his father's paint truck.  Under such circumstances, the court ruled in Weaver v. Royal Ins. Co., 674 A.2d 975 (N.H. 1996) that the exclusion's requirement that there be an "escape" of a pollutant was ambiguous.

  Gasoline that leaked out of an underground storage tank at the insured's service station has been found to be a "pollutant" within the scope of an "absolute" pollution exclusion.  Union Mut. Fire Ins. Co. v. Hatch, 853 F.Supp. 59 (D.N.H. 1993).  Applying Massachusetts law, Judge Loughlin ruled in U.S. v. Clean Harbors of Natick, C-89-109 (D.N.H. January 17, 1995) that an "absolute" exclusion barred coverage for the insured's CERCLA liabilities.

  The claims must involve a discharge of a pollutant to be excluded.  In Purity Spring Resort v. TIG Insurance Company, 2000 U.S. Dist. LEXIS 10918 (D.N.H. July 18, 2000), Judge DiClerico ruled that bacterial contaminationof the plaintiff’s spring caused by the insured’s discharge of dammed waters from upstream was not excluded inasmuch as the underlying allegation was not that the insured had discharged contaminated water, but that its discharge of dammed waters onto the plaintiff’s property had then permitted coliform bacteria to develop, contaminating the spring. 

  Earlier, the First Circuit ruled that claims based on excessive light and noise do not involve any discharge of pollutants and that claims of trespass and nuisance allege a "personal injury" outside the scope of the exclusion. Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 261 (1st Cir. 1990).
 

  PROPERTY DAMAGE

  Inability to sell or convey a parcel of real property was held to be an interference with inchoate interest in property and was not "tangible property" so as to constitute "property damage."  Fisher v. Fitchburg Mutual Ins. Co., 560 A.2d 630 (N.H. 1989).  

  Claims for economic loss were held not covered in Liberty Mutual Ins. Co. v. Consolidated Milk Producers, 354 F.Supp. 879, 882 (D.N.H. 1973)(under Connecticut law, business losses, including claims for lost profits and good will, are not "property damage").  
 

  PUNITIVE DAMAGES

  Public policy favors making insurance proceeds available to compensate the victims of intentional acts.  American Home Assur. Co. v. Fish, 122 N.H. 711, 451 A.2d 358 (1982)(refusing to disallow coverage for award of punitive damages on public policy grounds).  See also Weeks v. St. Paul Fire & Marine Ins. Co., 673 A.2d 772 (N.H. 1996).
 

  STANDARDS FOR POLICY INTERPRETATION

  As a general rule, New Hampshire courts interpret insurance policies with the purpose of honoring the reasonable expectations of the policyholder.  Town of Epping v. St. Paul Fire & Marine Ins. Co., 122 N.H. 248, 252, 444 A.2d 496, 498 (1982).  If policy language is unambiguous, it will be given its natural and ordinary meaning, "as would a reasonable person in the position of the insured based on a more than casual reading of the policy as a whole."  Haley v. Allstate Ins. Co., 129 N.H. 512, 514, 529 A.2d 394, 396 (1987).  However, if the language is ambiguous, it will be interpreted in favor of coverage.  Trombly v. Blue Cross/Blue Shield, 120 N.H. 764, 771-772, 423 A.2d 980, 984 (1980). 
 

 While courts are to view policy provisions from the perspective of a lay person of average intelligence, the Supreme Court noted in Prudential Property & Cas. Co. v. Raymond, 138 N.H. 17, 634 A.2d 1015 (1993) that "it would be a sad indictment of our populace" if, after a more than casual reading of the policy, ambiguity had to be assumed in every instance.

  As general rule, New Hampshire courts construe insurance policy language with the purpose of honoring the reasonable expectations of the policy holder.  Green Mountain Insurance Company v. George, 138 N. H. 10, 634 A. 2d 1011, 1014 (1993).  Where judicial precedent clearly defines a term at issue, the court need look no further than that definition.  Coakley v. Maine Bonding & Casualty Company, 136 N.H. 402, 618 A. 2d 777, 781 (1992).  
  New Hampshire courts will construe the terms of a policy as would a reasonable person in the position of the insured based on more than a casual reading of the policy as a whole.  Deyette v. Liberty Mutual Insurance Company, 142 N. H. 560, 703 A. 2d 661, 662 (1997).

  Where an express exclusion is implicated by a factual situation, the question is whether the ordinary layman in the position of the insured could reasonably be expected to understand that certain exclusions qualify the policy's grants of coverage.  New Hampshire Ins. Co. v. Schofield, 406 A.2d 715, 717 (N.H. 1997), quoted in A.J. Cameron Sod Farms, Inc. v. Continental Ins. Co., 700 A.2d 290 (N.H. 1997).

  The rule of contra proferentum has been adopted in New Hampshire to recognize the unequal bargaining strength and superior sophistication of the insurer and to resolve coverage in cases where policy terms are ambiguous.  Hoepp v. St. Farm Ins. Co., 1997 WL 400335 (N.H. July 18, 1997) (doctrine that ambiguities must be construed against the insurer "is rooted in the fact that insurers have superior understanding of the terms they employ").  

  Language is ambiguous if "reasonable disagreement between the contracting parties is possible" (State Farm Mutual Automobile Co. v. Cookinham, 135 N.H. 427, 604 A.2d 563 (1992)) or if the policy provisions at issue are reasonably susceptible of two different interpretations, one of which favors coverage (Coakley v. Maine Bonding, 136 N.H. 402, 410, 618 A.2d 777, 781 (1992)). See also Hoepp v. State Farm Ins. Co., No. 95-755 (N.H. July 18, 1997).

 Although the Supreme Court has used dictionaries in cases such as Coakley (“suit”) to divine the meaning of words in an insurance policy, it has more recently stated in Bergeron v. State Farm Fire & Cas. Co., No. 98-257 (N.H. November 15, 2000) that it will not engage in “amazing feats of linguistic gymnastics” to find ambiguity in a policy and “the range of definitions” of some words in a dictionary cause the court to “question the usefulness of dictionaries in interpreting terms.” 
  
  Absent ambiguity, the court has said that "our search for the parties' intent here is limited to the words of the policies."  Concord Hospital v. New Hampshire Medical Malpractice Joint Underwriting Assoc., 137 N.H. 680, 633 A.2d 1384 (1993).  See also Richey v. Leighton, 137 N.H. 661, 632 A.2d 1215 (1993) (parol evidence rule precludes evidence of oral dealings that directly contradict express written terms of contract).

  Reformation of a policy is permitted when the contract fails to express the parties' intention.  Absent fraud, reformation requires a mutual mistake of fact.  Midway Excavators, Inc. v. Chandler, 522 A.2d 982, 984 (N.H. 1986) and A.J. Cameron Sod Farms, Inc., supra.  The plaintiff's burden of proof in a reformation action is a heavy one.  Hellis Family Restaurants, Inc. v. G&P Family Restaurants, Inc., 423 A.2d 613, 614 (N.H. 1980).  
 

  THEORIES OF ALTERNATIVE LIABILITY

  None adopted.
 

  TRIGGER OF COVERAGE

  New Hampshire follows the majority rule that coverage is triggered when the claimant sustains actual damage and not when the act or omission that caused such damage was committed.  Peerless Ins. Co. v. Clough, 193 A.2d 744, 105 N.H. 76 (1963)(no coverage for fire that occurred after expiration of policy as the result of a defectively installed fireplace during the policy). 

  In early 2001, a federal district court declared that the New Hampshire Supreme Court has never clearly determined what trigger of coverage should be applied for long-tail claims and therefore proposes to certify a question to the court.  Partially granting the plaintiff’s motion for rehearing of an earlier order declaring that the successor to a manufactured gas plant operator could not obtain coverage from Lloyd’s under “accident” policies, since the events giving rise to the contamination pre-dated the policies, Judge McAuliffe has now ruled in EnergyNorth Natural Gas, Inc. v. AEGIS, No. 97-64-M (D. N.H. January 31, 2001), that certification of this issue to the state Supreme Court is appropriate and even mandated.

  Pending a possible ruling from the New Hampshire Supreme Court, lower courts have reached conflicting conlusions as the proper “trigger” for  latent injury claims.

  Earlier state and federal trial courts had suggested that a "manifestation" trigger should be followed. New Hampshire Ball Bearings v. Aetna Cas. & Sur. Co., 848 F.Supp. 1082 (D.N.H. 1994), reversed on other grounds, 43 F.3d 749 (1st Cir. 1995); Imperial Casualty & Indemnity Co. v. Kingsbury Machine Tool Corp., No. C-92-348 (D.N.H. December 13, 1993);  Suburban Construction Co., Inc. v. Hartford Acc. & Ind. Co., 1992 WL 714940 (D.N.H. July 28, 1992); Hanover Ins. Co. v. Judy M. Tinkham, No. C-86-539-L (D.N.H. April 7, 1988); New Hampshire Plating Co., Inc. v. Covenant Mutual Ins. Co., Hillsborough No. E 230-84 (N.H. Super. July 2, 1990) and Moore v. Great Southwest Ins. Co., Hillsborough No. 89-E-215 (N.H. Super. October 15, 1990).   Moore, however, suggested that the rule was not "first discovery" and that coverage might still arise in earlier policy years if pollution could reasonably have been discovered then. 

  Since the early 1990s, however, the federal courts have focused more on the actual date of injury. For instance, the author of Suburban Construction, Judge Shane Devine, has since had a change of heart and concluded in Town of Peterborough v. The Hartford Fire Ins. Co., 824 F.Supp. 1102 (D.N.H. 1993) that his earlier decision was in error and that coverage for pollution claims is triggered at the time of the wrongful conduct that results in pollution.  Similarly, the trial court ruling in EKCO Group, Inc. v. Liberty Mut. Ins. Co., Hillsborough County Super. Ct. 92C-936 (N.H. July 21, 1993) suggests that "property damage" occurs at time that hazardous substances are released.  

  The leading New Hampshire “trigger” is EnergyNorth Natural Gas, Inc.  v.  AEGIS,21 F.Supp.2d 89 (D.N.H. 1998) in which Judge Paul Barbadoro declared that New Hampshire would not follow a “manifestation” trigger for long-tail pollution liability claims.  Rather, the court adopted a “continuous injury in fact” trigger, declaring that where damage occurs in multiple policy periods, coverage is triggered under every  policy active when the damage occurs, as long as new damage occurs during each relevant policy period.  The court declined to enter judgment for the insured, however, owing to the need for further briefing and the development of a better factual record as to whether additional “property damage” had occurred in the years after the MGP plant had ceased operation.  The court also deferred ruling as to certain “event” policies.  Although he found that the “event” language could also reasonably interpreted as only including fortuitous injury during the policy and did not necessarily require that both the polluting discharge and injury occur during the policy period, the court declined to find coverage on the basis of this potential ambiguity until further discovery could establish whether the insured had been involved in drafting the “event language.”

  Judge Barbadoro subsequently ruled in EnergyNorth Natural Gas, Inc. v. AEGIS, C-95-591 (D.N.H. July 1, 1999) that “occurrence” language in American Home’s policy that limited coverage to “one happening or series of happenings, arising out of or due to one event taking place during the term of this contract” restricted coverage to discrete events during the policy period and therefore did not cover pollution occurred as the result of the insured’s coal gas manufacturing operations.  While agreeing with the insured that this “event” language was ambiguous, as it could also mean just an unintended act, the District Court refused to interpret this ambiguity in favor of coverage since the language in question had been added at the insistence of the insured.  In light of extrinsic evidence that the insured knew and understood that this “event” language would limit coverage to acts that began and resulted in injury during the policy, Judge Barbadoro entered summary judgment for American Home.

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