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A Successful Defense by Gary M. Burt & Brendan D. O'Brien

June, 2018
Tags: Insurance,

Gary M. Burt and Brendan D. O’Brien successfully convinced the New Hampshire Supreme Court to reverse completely the determination of the trial court that Allstate’s de novo provision in its uninsured motorist policy violated New Hampshire law. The decision, Rizzo v. Allstate Insurance Company, handed down on May 1, 2018, rejected the claim that the policy provision offended any state’s public policy regarding binding arbitration, or that the policy provision was unconscionable. The court also rejected the claim that the language of the policy was ambiguous, and remanded the matter back for jury trial on the merits.

The matter arose from a motor vehicle accident on September 9, 2009, the in Quincy, Massachusetts. Rizzo was a passenger in a vehicle operated by Linda; the Allstate named insured. Her vehicle was struck from behind. Rizzo claimed injury to his shoulder, and with Allstate’s permission settled the claim against the tortfeasor for the policy limit of $20,000. He then pursued an underinsured motorist’s claim against Allstate, which had a policy on the Matz vehicle for $100,000. Allstate denied the claim, maintaining that the settlement of $20,000 fully compensated Rizzo.

Arbitration subsequently followed, and an award of $63,000 was rendered by the three-person panel. Shortly thereafter, Allstate advised Rizzo that it would exercise its right under the policy (available to both the insured and Allstate) to “trial on all issues in a court of competent jurisdiction” as the award exceeded the Financial Responsibility limits in the State of New Hampshire—$25,000. Suit was filed, and after discovery undertaken, cross-motions for summary judgment filed on the enforceability of the de novo clause.

The trial court found the de novo provision violated the public policy of New Hampshire as the state favored finality in arbitrated matters. In that regard, the trial court cited twelve other state court decisions that had struck down the policy provision. The trial court also concluded that the clause was unconscionable, as the contract was a contract of adhesion and the insured had no bargaining power. The court further ruled that the language was ambiguous as it conflicted with other language in the policy regarding resolution by arbitration. Finally, the trial court concluded that the provision violated New Hampshire’s uninsured motorist statute.

In reversing, the New Hampshire Supreme Court noted that the state favored the right of parties to make their own contracts, and that issues of public policy were better left to legislative bodies to decide. The court stated that public policy favoring arbitration could not override the right of the parties to shape their arbitration agreement. In that regard, the court noted that New Hampshire’s Superior Court rule on alternative dispute resolution permitted non­binding arbitration.

The court also rejected the claim that the policy provision was unconscionable. The court noted that to sustain his burden, the appellee had to establish that there were no meaningful choices in the marketplace, which he did not due. In fact, the record was silent as to whether other insurance policies without a de novo were available.