Release Did Not Protect State Farm From Second Suit

            On March 10, 2010, the New Hampshire Supreme Court issued a decision which I am sure was a disappointment to the folks at State Farm Insurance. However, how far reaching that decision actually is remains an open question as far as I am concerned.

            The appeal in Balamotis v. Hyland d/b/a State Farm Agent concerned a homeowner’s ability to recover damages suffered to her reasonably new home which was badly damaged by a fire. She initially was in a dispute with State Farm over the amount of loss she had suffered and that led to a battle over how much she was entitled to recover from State Farm. But that dispute was negotiated to successful conclusion and settled with the money being paid by State Farm in exchange for her signed release of all claims against State Farm.

            However, once that claim was over the homeowner brought a second claim, this time against her insurance broker for his failure to provide her with adequate insurance coverage for the home. State Farm cried “foul” and said that because the insurance agent was exclusively a State Farm insurance agent, he was immune from the suit due to the earlier executed release. The homeowner said not so fast and the New Hampshire Supreme Court agreed.

            Essentially the Court found that the earlier action against the insurance carrier was different and separate from the suit against the agent, and that even if he was an exclusive agent that did not bring him within the terms of the release. More importantly, the release did not include him by its terms, either specifically or generally.

It is for that reason I doubt the decision will have any long term impact. The releases I use always are long and tedious, but they work and do exactly what they were structured to do. Standard good practice has dictated for some time that a release include the released party as well as, at least generally, its agents and employees. The fact that State Farm’s did not do so is what gave rise to this interesting appellate decision. And this decision is something that should be kept in mind by those both writing or reviewing releases.

Timothy G. Kerrigan is a director at Hamblett & Kerrigan, P.A. His present practice focuses on complex legal situations both in the litigation and in the ADR context. He is available as a litigator, client advocate or as an ADR neutral. Mr. Kerrigan is certified by the State Office of Mediation and Arbitration both as a mediator and as an arbitrator. You can reach Attorney Kerrigan by e-mail at tkerrigan@nashualaw.com.

To read additional Business Litigation Articles, Click Here.

To return to the Legal Articles Home Page, Click Here.

To return to the Hamblett & Kerrigan Home Page, Click Here.