Elizabeth Skrekas & a. v. State Farm Fire and Casualty Company & a.

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2015-0368, Elizabeth Skrekas & a. v. State
Farm Fire and Casualty Company & a., the court on May 12,
2017, issued the following order:

Having considered the briefs and oral arguments of the parties, the court
concludes that a formal written opinion is unnecessary in this case. The
plaintiffs, Elizabeth Skrekas, Thomas Skrekas, and the Estate of Virginia
Martin, appeal two decisions of the superior court dismissing their action
against the defendants, State Farm Fire and Casualty Company (State Farm)
and New England Fire Cause & Origin, Inc. (NEFCO), alleging various causes of
action related to their insurance claim and the handling of a fire investigation
at a residence, co-owned at the time by Elizabeth, Thomas, and Virginia
Martin. NEFCO cross-appeals the trial court’s decision to apply an objective
standard when it determined that NEFCO had a “reason to suspect” that a fire
at the subject residence was not accidentally caused. RSA 153:13-a, II (2014).
We affirm in part, reverse in part, and remand.

I. Facts

The record reflects the following facts. The residence was insured by
State Farm against fire loss. In less than a week, two fires occurred in the
kitchen. On September 29, 2010, the first fire damaged the refrigerator.
Several days later, on October 4, 2010, before the refrigerator could be
replaced, a second fire ignited in the kitchen.

State Farm hired NEFCO to investigate the second fire. NEFCO, in turn,
sent its employee, David Wheeler, an expert in determining the cause and
origin of fires, to investigate. After a two-day investigation at the scene,
Wheeler produced a report concluding that the fire had been intentionally set.
Thereafter, he conveyed his findings to the Hudson fire prevention officer, the
state fire marshal’s office, and State Farm. The Hudson police conducted a
criminal investigation and charged Elizabeth with felony arson. The State
subsequently entered a nolle prosequi on the charge.

In February 2012, the plaintiffs brought an action claiming breach of
contract, breach of implied covenant of good faith and fair dealing, negligence,
and vicarious liability against State Farm, and claiming negligence against
NEFCO.
 State Farm moved to dismiss, arguing that all of the plaintiffs’ claims
were time-barred by the relevant 12-month limitations period. Alternatively,
they argued that the plaintiffs’ tort claims were impermissible in the context of
disputes between insureds and their insurer. The Superior Court (Nicolosi, J.)
granted the motion on the pleadings and dismissed all claims against State
Farm. NEFCO filed a separate motion to dismiss arguing that it was entitled to
immunity. After an evidentiary hearing, the Superior Court (Temple, J.)
dismissed the negligence claim against NEFCO. The plaintiffs appealed, and
NEFCO cross-appealed.

II. Claims Against State Farm

We first address the parties’ arguments with respect to the dismissal of
the plaintiffs’ claims against State Farm. In reviewing the trial court’s grant of
a motion to dismiss, we determine whether the allegations in the plaintiffs’
pleadings are reasonably susceptible of a construction that would permit
recovery. Kilnwood on Kanasatka Condo. Unit Assoc. v. Smith, 163 N.H. 751,
752 (2012). We assume the plaintiffs’ pleadings to be true and construe all
reasonable inferences in the light most favorable to them. Id. We then engage
in a threshold inquiry that tests the facts in the petition against the applicable
law, and if the allegations constitute a basis for legal relief, we must hold that it
was improper to grant the motion to dismiss. Id.

A. Contract Claims

The plaintiffs first argue that the trial court erred when it found that,
under RSA 407:15 (2006) (amended 2014) and RSA 407:22 (Supp. 2016), their
contract claims against State Farm are time-barred. The standard policy form
required by RSA 407:22 provides, in pertinent part: “No suit or action on this
policy for the recovery of any claim shall be sustainable in any court of law or
equity unless the requirements of this policy shall have been complied with,
and unless commenced within 12 months next after inception of the loss.”
RSA 407:15 provides: “Unless the [insurance] company shall notify the insured
that any action will be forever barred by law if his writ is not served on the
company within 12 months next after such notification, he may bring his
action at any time.” (Emphasis added.) We have construed RSA 407:22 as
setting forth a 12-month limitations period and have construed RSA 407:15 as
requiring an insurer to give notice of this period before it may rely upon it.
Kierstead v. State Farm Fire & Cas. Co., 160 N.H. 681, 686 (2010). We have
explained that the “obvious purpose of RSA 407:15 is to allow the insurer to
place a twelve[-]month limitation on actions against it only if it gives the
insured specific notice of the limitation.” Id. (quotation and ellipsis omitted).
We have also held that the 12-month period begins to run from the date of
notice, and not from the date of the insured’s loss as set forth in RSA 407:22.
Id. The issue, here, is whether the plaintiffs were so notified.

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 In its reply to the plaintiffs’ objection to its motion to dismiss, State Farm
attached an October 11, 2010 notice, which it represented had complied with
RSA 407:15. The plaintiffs countered that State Farm was estopped from
relying upon that notice because it subsequently sent a conflicting notice on
July 25, 2011. The trial court rejected the plaintiffs’ estoppel argument
concluding, based upon the October 11 notice, that “State Farm properly
notified plaintiffs of the twelve-month limitations period.”

The plaintiffs asked the trial court to clarify and reconsider. In its
objection, State Farm acknowledged, for the first time, that, actually, it had not
sent the October 11 notice:

In fact, it appears that the copy of the [October 11] notice attached
to State Farm’s earlier filing was a file copy, and not the actual
letter sent. The actual letter sent was dated October 15, 2010 and
was sent to Virginia Martin, “C/o Elizabeth Skrekas as Power of
Attorney” by certified mail.

The trial court denied the plaintiffs’ motion to reconsider without discussion.

Because we accept State Farm’s representation to the trial court that the
October 11 notice was not sent, we need not address the parties’ arguments
regarding that notice. Instead, we limit our analysis to the October 15 notice,
which stated:

No suit or action on this policy for the recovery of any claim shall
be sustainable in any court of law or equity unless all the
requirements of this policy shall have been complied with, and
unless commenced within twelve months next after inception of
the loss.

(Emphasis added.) The plaintiffs argue that the October 15 notice did not
comply with RSA 407:15 and, therefore, that the 12-month limitations period
set forth in RSA 407:22 never began to run.

Before addressing the merits of the parties’ arguments, we consider State
Farm’s contention that the plaintiffs’ arguments regarding the October 15
notice are not preserved. “[P]reservation is a limitation on the parties to an
appeal and not the reviewing court.” Camire v. Gunstock Area Comm’n, 166
N.H. 374, 377 (2014). In this case, because State Farm did not inform the trial
court that the October 15 notice was the operative notice until it objected to the
plaintiffs’ motion to clarify and for reconsideration, we will address the
plaintiffs’ arguments on their merits.

The plaintiffs argue that the October 15 notice did not comply with RSA
407:15 because it “contains the same language this court held to be not in

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compliance with the statute” in Maguire v. Merrimack Mutual Fire Insurance
Co., 125 N.H. 269 (1984). In Maguire, we held that a notice that informed the
insured that the insured had “one year from the date of this denial to
commence suit against the insurance carrier, or be forever barred from such
claim” was insufficient “to activate the one-year statute of limitations” in RSA
407:22. Maguire, 125 N.H. at 271 (quotations omitted). We explained that the
notice “was not the notice” described in RSA 407:15, because “commencement
and service are not identical.” Id. at 272.

We agree with the plaintiffs that the October 15 notice, like the notice in
Maguire, is deficient. The October 15 notice, like the notice in Maguire,
informed the insureds that their lawsuit had to be “commenced” within a 12-
month period; it did not inform them that their lawsuit had to be “served”
within that period. See RSA 407:15. Although State Farm attempts to
distinguish Maguire from the instant case by relying upon the language of the
October 11 notice, its reliance upon that notice is misplaced given that State
Farm informed the trial court that the October 11 notice was “not the actual
letter sent.”

The October 15 notice is deficient for another reason as well. Unlike the
notice required by RSA 407:15, the October 15 notice informed the insureds
that the 12-month period began running when the loss occurred, instead of
when the notice was given. See id. Thus, the October 15 notice “was not
sufficient to activate” the 12-month limitations period in RSA 407:22. Maguire,
125 N.H. at 271. Therefore, we conclude that the trial court erred when it
ruled that the plaintiffs’ contract claims against State Farm are barred by RSA
407:22.

B. Tort Claims

We next address the plaintiffs’ argument that the trial court erred when
it dismissed their negligence and vicarious liability claims against State Farm.
The trial court dismissed those claims based upon our decision in Lawton v.
Great Southwest Fire Insurance Co., 118 N.H. 607, 613 (1978), in which we
explained that, in New Hampshire, “a breach of contract standing alone does
not give rise to a tort action,” but, if “the facts constituting the breach of the
contract also constitute a breach of a duty owed by the defendant to the
plaintiff independent of the contract, a separate claim for tort will lie.” The trial
court determined that State Farm retained NEFCO and investigated the fire so
as to determine whether its insurance contract with the plaintiffs required it to
pay for the loss. Under those circumstances, the trial court concluded that the
plaintiffs had not alleged that State Farm breached a duty that existed
independently of the insurance contract.

On appeal, the plaintiffs assert that this case is similar to Bennett v. ITT
Hartford Group, Inc., 150 N.H. 753, 758 (2004). We disagree. In Bennett, we

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reversed summary judgment because the facts, when viewed in the light most
favorable to the insured, could have supported a finding that the insurer owed
the insured a duty independent of the policy. Bennett, 150 N.H. at 758. In
that case, the insured contended that the insurer had promised to pursue a
claim on behalf of the insured against the individual who had started the fire.
Id. at 756. Both parties conceded that the insurer “did not have an obligation
under the insurance contract to investigate the cause of the fire for purposes of
subrogation.” Id. The insured asserted that the insurer told him that it was
actively conducting an investigation, even though it had abandoned the
investigation, and that it forbade him from conducting any investigation of his
own. Id. We concluded that the insured would have a “cause of action in tort”
if the insurer owed a “duty of good faith to exercise reasonable care in its
investigation into the cause of the fire” that was “independent of the contract.”
Id. at 758.

Here, State Farm did not owe a duty to the plaintiffs independent of the
insurance contract. As the trial court supportably found, the purpose of
NEFCO’s investigation was to “determine whether the terms of the insurance
contract required State Farm to pay for the loss.” Accordingly, we hold that the
trial court did not err in dismissing the plaintiffs’ tort claims against State
Farm. We have reviewed the plaintiffs’ remaining arguments on this issue and
conclude that they warrant no further discussion. See Vogel v. Vogel, 137 N.H.
321, 322 (1993).

III. Claims Against NEFCO

The plaintiffs argue that the trial court erred when it dismissed all claims
against NEFCO because NEFCO is immune from liability. RSA 153:13-a, IV
(2014) provides immunity to an “insurance company or person who furnishes
information on its behalf” for statements or actions taken that are “necessary
to supply information required pursuant to this section.” (Emphases added.)
RSA 153:13-a, II requires an insurance company to notify the state fire
marshal if it has “reason to suspect that a fire loss in the amount of $1000 or
more . . . was caused by other than accidental means.” (Emphasis added.)
Following an evidentiary hearing, the trial court concluded that NEFCO was
immune under these provisions after finding that NEFCO’s employee, Wheeler,
had a reason to suspect that the second fire was not an accident, that his
suspicion was based upon objective and particularized facts, and that in
investigating the fire and reporting his findings to the state fire marshal’s office,
he acted on State Farm’s behalf.

The plaintiffs first contend that the trial court’s statutory interpretation
was flawed. We review the trial court’s statutory interpretation de novo.
Appeal of Local Gov’t Ctr., 165 N.H. 790, 804 (2014). “We first look to the
language of the statute itself, and, if possible, construe that language according
to its plain and ordinary meaning.” Id. Immunity statutes, such as RSA

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153:13-a, IV, which are in derogation of the common law, must be interpreted
strictly. See Estate of Gordon-Couture v. Brown, 152 N.H. 265, 266 (2005).

The plaintiffs argue that NEFCO did not act “on . . . behalf” of State
Farm. RSA 153:13-a, IV. According to the plaintiffs, “on behalf of” means “for
the benefit of,” and here, they assert, the report that NEFCO’s employee,
Wheeler, made to State Farm and others “was not in the interest of” or “for the
benefit of” State Farm. (Quotations omitted.) Contrary to the plaintiffs’
assertions, the plain meaning of the phrase “on behalf of” is “in the name of, on
the part of, as the agent or representative of.” Black’s Law Dictionary 184
(10th ed. 2014) (italics omitted). Under the facts found by the trial court,
NEFCO, having been hired by State Farm to investigate the second fire, acted
“on behalf of” State Farm in so doing.

The plaintiffs further argue that Wheeler’s report was neither “necessary”
nor “required” within the meaning of RSA 153:13-a, IV. They contend that, to
determine whether a report is “necessary” or “required” within the meaning of
RSA 153:13-a, IV, one must examine RSA 153:13-a, II. They argue that,
because RSA 153:13-a, II requires an “insurance company” to notify the state
fire marshal’s office if that company has “reason to suspect” that a fire was not
accidentally set, only reports by insurance companies are “necessary” and
“required” within the meaning of RSA 153:13-a, IV. However, nothing in RSA
153:13-a, II precludes an insurance company from acting through its agents
and subagents. Accordingly, we disagree with the plaintiffs that, because the
report in this case was made by State Farm’s agent, NEFCO, acting through its
employee, Wheeler, the report was neither “necessary” nor “required” within the
meaning of RSA 153:13-a, IV.

The plaintiffs next challenge various of the trial court’s factual findings.
We will uphold the trial court’s factual findings unless the evidence does not
support them or they are erroneous as a matter of law. Rabbia v. Rocha, 162
N.H. 734, 738 (2011).

The plaintiffs contend that there was no testimony or evidence to support
a finding that Wheeler acted as State Farm’s representative when he reported
his findings to the authorities. The plaintiffs observe that “Wheeler testified
that he notified the authorities of his suspicions based on his understanding of
his personal obligations, and not under the direction of State Farm.” They
further observe that “Wheeler had no contact with State Farm until . . . he
made his report to the authorities not affording State Farm an opportunity to
consider or critically examine his opinions.” Given these circumstances, the
plaintiffs contend that “there was no evidence by which the trial court could
conclude that Wheeler acted ‘on behalf of’ State Farm” when he reported his
findings to the state fire marshal’s office.

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 Based upon our review of the record, we disagree with the plaintiffs that
the trial court was compelled to find that Wheeler acted outside of the scope of
his agency when he reported his suspicions to the authorities. As the trial
court found, and as the record supports, Wheeler was State Farm’s agent with
regard to determining the cause and origin of the second fire. As the trial court
found, and as the record supports, in that capacity, Wheeler completed his
investigation and notified the state fire marshal’s office, the Hudson police
department, and State Farm of his findings. Based upon the record, the trial
court reasonably found that Wheeler acted within the scope of his agency
relationship with State Farm when he reported his suspicions to the
authorities. Because none of the evidence upon which the plaintiff relies
establishes, as a matter of law, that Wheeler failed to act as State Farm’s agent
when he reported his suspicions, we uphold the trial court’s determination.

Additionally, the plaintiffs argue that the trial court’s finding that
Wheeler had a “reason to suspect” that the fire was not accidental is “against
the weight of the evidence when viewed with an objective standard and in light
of the absence of specific articulable facts supported by scientific methodology.”
We construe this argument to be a challenge to the sufficiency of the evidence.
We review sufficiency of the evidence claims as a matter of law and uphold the
findings and rulings of the trial court unless they are lacking in evidentiary
support or tainted by error of law. Walker v. Walker, 158 N.H. 602, 608 (2009).
We accord considerable weight to the trial court’s judgments on the credibility
of witnesses and the weight to be given testimony. Id. We view the evidence in
the light most favorable to the prevailing party, in this case, NEFCO. See id.

Viewing the evidence in the light most favorable to NEFCO, we conclude
that it is sufficient to support the trial court’s finding that Wheeler’s suspicion
was objectively reasonable. The trial court found, and the record supports its
finding, that Wheeler’s suspicion that the second fire was not accidental was
based upon the following objective and particularized facts: (1) he ruled out an
electrical or mechanical cause of the fire by talking with a forensic electrical
engineer employed by NEFCO; (2) he observed burn patterns in the refrigerator;
(3) he was aware that the first fire had occurred in the kitchen approximately
one week before the second fire; (4) he discovered, in a nearby trash can, a
rolled-up piece of paper that was burned on both ends; (5) he discovered
cigarettes in a nearby trash can and knew that the Skrekases did not smoke in
the house; (6) he learned that Elizabeth had made inconsistent statements
about her activity on the day of the fire; and (7) he was aware that the Hudson
fire prevention officer had concluded that the second fire constituted a crime
scene.

To the extent that the plaintiffs argue that their expert’s contrary opinion
about the origin of the second fire renders Wheeler’s suspicion unreasonable as
a matter of law, we disagree. As the trial court found, though their expert’s
“review of the evidence, supplemented with months of research, analysis, and

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testing, indicates that . . . Wheeler’s hypothesis may have been misplaced, it
was objectively reasonable at that time.” Although the plaintiffs fault the trial
court for giving insufficient weight to the testimony of their expert, “it is not our
role to calculate how much weight a trial court should accord specific
evidence.” In the Matter of Choy & Choy, 154 N.H. 707, 714 (2007).

In its cross-appeal, NEFCO challenges the trial court’s use of an objective
standard to determine whether Wheeler had a “reason to suspect” that the
second fire was not accidental. RSA 153:13-a, II. Because we conclude that
the trial court did not err in finding that NEFCO was immune under the more
stringent objective standard, we need not decide whether the court should have
applied a subjective standard. Therefore, we leave for another day the issue of
whether a subjective or objective standard applies when determining whether
an insurer (or its agent) had a “reason to suspect that a fire loss in the amount
of $1000 or more to its insured’s real or personal property was caused by other
than accidental means.” Id.

To the extent that the parties raise any additional arguments, we
conclude that they do not warrant further discussion. See Vogel, 137 N.H. at
322.

Affirmed in part; reversed
in part; and remanded.

DALIANIS, C.J., and HICKS, CONBOY, LYNN, and BASSETT, JJ.,
concurred.

Eileen Fox,
Clerk

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