Brian J. Krol & a. v. Liberty Mutual Insurance Company

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2016-0607, Brian J. Krol & a. v. Liberty Mutual
Insurance Company, the court on August 11, 2017, issued the
following order:

The defendant’s motion to strike portions of the plaintiffs’ brief relating to
the parties’ participation in mediation is granted. Having considered the non-
stricken portions of the briefs and record submitted on appeal, we conclude
that oral argument is unnecessary in this case. See Sup. Ct. R. 18(1). We
affirm.

The plaintiffs, Brian Krol, Dorothy Krol, and their three children, appeal
the order of the Superior Court (Schulman, J.) granting summary judgment in
favor of the defendant, Liberty Mutual Insurance Company, on their claim for
underinsured motorist coverage, based upon their breach of the duty to
cooperate in the investigation and settlement of their claims. The plaintiffs
argue that the trial court erred because the defendant: (1) suffered no actual
prejudice; (2) failed to give prior notice of its intent to rely upon the policy’s
cooperation clause; (3) waived its rights to deny coverage; and (4) failed to plead
noncooperation as an affirmative defense. They also argue that the trial court
erred in failing to order the parties to participate in mediation.

The record shows that in 2006, the plaintiffs were injured in a motor
vehicle accident with an underinsured driver, who was at fault. In 2009,
shortly before settling their claims against the driver, the plaintiffs, through
their attorney, notified their insurer, the defendant, of their underinsured
motorist claims. The defendant promptly requested the medical records and
bills necessary to adjust the claims.

Over the next six years, the plaintiffs failed to provide the necessary
documents, despite the defendant’s numerous requests. The plaintiffs also
neglected to assist in the settlement of their claims. On February 27, 2015, the
defendant notified the plaintiffs that they were closing the claims of Brian Krol
and Dorothy Krol “[b]ased on the lack of communication.” Shortly thereafter,
the defendant closed the remaining plaintiffs’ claims. The plaintiffs filed their
petition for declaratory judgment within six months of the claims’ closing.

The policy requires the plaintiffs to cooperate with the defendant in its
investigation, settlement, or defense of any claim. The policy also requires the
plaintiffs to submit proof of loss and to authorize the defendant to obtain
medical reports and other pertinent records. The trial court found that the
plaintiffs, through their attorney, breached the duties set forth in these policy
provisions.

The plaintiffs first argue that the trial court erred in entering summary
judgment against them because there is a genuine issue of material fact as to
whether the defendant suffered actual prejudice as a result of their breach.
When reviewing a trial court’s grant of summary judgment, we consider the
affidavits and other evidence, and the inferences properly drawn from them, in
the light most favorable to the non-moving party. Sabinson v. Trustees of
Dartmouth College, 160 N.H. 452, 455 (2010). If this review does not reveal
any genuine issues of material fact, i.e., facts that would affect the outcome of
the litigation, and if the moving party is entitled to judgment as a matter of law,
we will affirm. Id. We review the trial court’s application of the law to the facts
de novo. Id.

Insurers are required to investigate and resolve claims promptly. See
RSA 417:14, XV(a)(3), (11) (2015); N.H. Admin. Rules, Ins 1001.02. The trial
court found that there was no genuine issue of material fact that the defendant
suffered actual prejudice, given the plaintiffs’ “six year history of obstructing its
claims investigation.” The court found that the plaintiffs, by failing to provide
complete medical records and bills, or authorizations allowing the insurer to
obtain the documents on its own, prevented the defendant from fully
evaluating and determining its coverage obligations. The court also found that
the plaintiffs, “by failing to participate in the adjustment process,” prevented
the defendant from resolving the claims “and caused it to expend significant
time and resources in attempting to do so.” The plaintiffs argue that the
court’s findings fall short of actual prejudice. We disagree. We conclude that
the plaintiffs have failed to raise a genuine issue of material fact as to whether
the defendant suffered actual prejudice. See, e.g., Pilgrim v. State Farm Fire &
Cas. Ins. Co., 89 Wash.App. 712, 725 (1997) (finding actual prejudice from
insureds’ refusal to disclose relevant documents, preventing insurer from
evaluating their claim).

The plaintiffs next argue that the defendant failed to give notice of its
intent to rely upon the policy’s cooperation clause before moving for summary
judgment on such grounds. However, they provide no authority for their
position that an insurer may not deny coverage for noncooperation without
prior notice. Nor are we aware of any such authority. The plaintiffs also argue
that the defendant waived its right to rely on the cooperation clause by
correspondence from its adjuster, after closing the claims, promising to review
any additional information and to “discuss [it] with our legal department.” To
establish waiver, the plaintiffs must show that the defendant intended to forgo
its coverage defenses. See Bartlett v. Commerce Ins. Co., 167 N.H. 521, 528
(2015). The record shows that the defendant reserved its right to deny
coverage. We conclude that the plaintiffs have raised no genuine issue of

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material fact as to whether the defendant intended to forgo its coverage
defenses. See id.

The plaintiffs also argue that the defendant failed to plead
noncooperation as an affirmative defense. Assuming, without deciding, that
the defendant’s coverage defense is an affirmative defense that must be set
forth in an answer to a declaratory judgment complaint, the trial court has
broad discretion to waive its rules. See Anna H. Cardone Revocable Trust v.
Cardone, 160 N.H. 521, 525 (2010). Because the trial court’s order does not
address this issue, we assume that it found grounds to waive the rule. See
Bergeron v. N.Y. Community Bank, 168 N.H. 63, 69 (2015) (we assume trial
court made all findings necessary to support its decision). Based upon this
record, we cannot conclude that the trial court unsustainably exercised its
discretion. See Cardone, 160 N.H. at 525.

Finally, the plaintiffs argue that the trial court, rather than granting the
defendant’s summary judgment motion, should have ordered the parties to
participate in mediation. It is a long-standing rule that parties may not have
judicial review of matters not raised in the trial court. Bean v. Red Oak Prop.
Mgmt., 151 N.H. 248, 250 (2004). It is the appellants’ burden to provide this
court with a record sufficient to decide their issues on appeal, as well as to
demonstrate that they raised their issues in the trial court. Id. The plaintiffs
have failed to demonstrate that they raised this issue in the trial court.
Accordingly, this issue is not preserved for review. See id.

We have considered the plaintiffs’ remaining arguments, and have
concluded that they do not warrant further discussion. See Vogel v. Vogel, 137
N.H. 321, 322 (1993).

Affirmed.

Dalianis, C.J., and Hicks, Lynn, and Bassett, JJ., concurred.

Eileen Fox,
Clerk

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