Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Pageff- 1SURArNCE of 17 DEPT
THE STATE OF NWHAMPSHI 4 FEB 2o 2014
JUDICIAL BRANCH . SUPERIOR COURT Grafton Superior Court Telephone: 1-855-212-1234 3785 D.C. Highway TTYITDD Relay: (800) 735-2964 North Haverhill NH 03774 http://www.courts.state.nh.us
SUMMONS IN A CIVIL ACTION
Case Name: Cardigan Mountain School v New Hampshire Insurance Company Case Number: 215-2014-CV-00007
Date Complaint Filed: January 13, 2014 A Complaint has been filed against New Hampshire Insurance Company in this Court. A copy of the Complaint is attached.
The Court ORDERS that ON OR BEFORE: March 09, 2014 Cardigan Mountain School shall have this Summons and the attached Complaint served upon New Hampshire Insurance Company by in hand or by leaving a copy at his/her abode, or by such other service as is allowed by law. March 31, 2014 Cardigan Mountain School shall file the return(s) of service with this Court. Failure to do so may result in this action being dismissed without further notice. 30 days after Defendant New Hampshire Insurance Company must file an Appearance and Answer is served or other responsive pleading form with this Court. A copy of the Appearance and Answer or other responsive pleading must be sent to the party listed below and any other party who has filed an Appearance in this matter.
Notice to New Hampshire Insurance Company: If you do not comply with these requirements you will be considered in default and the Court may issue orders that affect you without your input.
Send copies to: Scott H. Harris, ESQ McLane Graf Raulerson & Middleton PA PO Box 326 Manchester NH 03105-0326 BY ORDER OF THE COURT
January 23, 20,14 David P. Carison Clerk of Court
(468)
NHJB-2678-S (10/23/2013) Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 2 of 17
THE STATE OF NEW HAMPSHIRE
GRAFTON, 55 SUPERIOR COURT
Docket No.______
Cardigan Mountain School 62 Alumni Drive Canaan, New Hampshire 03741
V.
New Hampshire Insurance Company 175 Water Street, 18 thFloor New York, New York 10038
COMPLAINT FOR DECLARATORY JUDGMENT
The Plaintiff, Cardigan Mountain School ("Plaintiff' or "Cardigan"), by and through its attorneys, McLane, Graf, Raulerson & Middleton, Professional Association, pursuant to RSA
491:22, seeks declaratory judgment determining that the Defendant New Hampshire Insurance
Company ("NHIC") owes Cardigan coverage with respect to a claim that arose in the 1967-1968 school year, and states as follows:
INTRODUCTION
1. In the spring of 2013, Cardigan received notice of a claim against it arising from events that were alleged to have occurred in the 1967-68 school year. Cardigan searched its records and those of its outside accountants to find the policy of insurance it believed it had covering the claims asserted, without success. Unfortunately, Cardigan has been unable to locate a copy of the policy. Cardigan has, however, assembled substantial circumstantial evidence that supports the conclusion that it had a Special Multi-Peril Policy with NH IC for the 1967-1968 school year. Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 3 of 17
2. In late July 2013, Cardigan provided the results of its research to NFIIC's parent,
American International Group ("AIG"). Cardigan recounts the information it shared with AIG below.
3. In response to Cardigan's inquiry, AIG represented that it would search its records for the NHIC policy. AIG responded to the undersigned's several calls and electronic mail inquiries, stating it had not found the policy of insurance covering Cardigan during the time period in question. On each occasion, however, AIG promised to continue its search. At this point, with the claim still pending, Cardigan has elected to commence this action seeking a declaration as to the policy's existence.
PARTIES
4. Plaintiff Cardigan Mountain School is a New Hampshire non-profit corporation with a principal place of business at 62 Alumni Drive, Canaan, New Hampshire 03741.
5. Defendant New Hampshire Insurance Company is, on information and belief, the wholly owned subsidiary of AIG, licensed to do business in New Hampshire, with a principal place of business at 175 Water Street, 18'h Floor, New York, New York 10038. NHIC's registered agent in New Hampshire is George P. Lagos, of 1750 Elm Street, Manchester, New
Hampshire 03107.
VENUE AND JURISDICTION
6. This Court has subject-matter jurisdiction over this matter pursuant to RSA
491:22 and the general legal and equitable jurisdiction of the Superior Court pursuant to RSA
498:1 and RSA 491:7.
7. This Court has personal jurisdiction over NHIC because it is, upon information and belief: (a) admitted to do business by the New Hampshire Insurance Department and is
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doing business in New Hampshire, (b) does business with sufficient minimum contacts in New
Hampshire, and/or (c) otherwise has availed itself of the benefits and protections of New
Hampshire law through the sale of insurance policies covering entities such as Cardigan with a significant presence and operations in New Hampshire, in a manner so as to render the exercise of jurisdiction over NHIC by the New Hampshire courts consistent with traditional notions of fair play and substantial justice.
8. Venue is proper in Grafton County Superior Court because the Plaintiff is located in Grafton and the actions giving rise to this cause of action occurred in Grafton County.
FACTS COMMON TO ALL COUNTS
9. In the spring of 2013, Cardigan received a demand letter threatening legal action arising from events that were alleged to have occurred in 1967 and 1968.
10. Cardigan has been unable to verify the allegations in the demand letter, and, in any event, believes the statute of limitations has run on the underlying claim. Nonetheless, the putative plaintiff has made a substantial demand and defense of the claim could be expensive even if the case is disposed of based on the expiration of the statute of limitations.
11. Upon receipt of the demand letter, Cardigan searched its files for the policy of insurance. It was unable to find that policy.
12. It then searched its accounting records for evidence of payment for the policy or any other helpful information. It discovered, however, that it had not retained records from that time period.
13. One of the documents that Cardigan found that evidences its coverage with NHIC for the events complained of is the Financial Statement and Auditors' Report for the fiscal year ending June 30, 1971, prepared by its accountants, a partial copy of which is attached as Exh. A.
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14. On page 5 of the Auditor's report, it notcs that the firm "reviewed [Cardigan's] insurance coverage with [its] insurance agent and found the following coverages in effect: New
Hampshire Insurance Co. - Special Multi-Peril. Term - September 15, 1970 - September 15,
1971. ... $1,000,000 General Liability."
1 5. Although the audit records reference a policy that was in place two years after the events at issue, Cornelius Bakker, Cardigan's business manager between 1967 and 1970, is certain the school had insurance during his tenure.
16. Mr. Bakker does not believe Cardigan changed carriers while he was business manager.
17. Phillip Wheeler, a retired accountant from Norwich, Vermont, was one of the two principals in the firm that prepared the audit referenced above.
18. Mr. Wheeler recalls that although the audited period began July 1, 1970, and ended in June 30, 1971, the firm also reviewed for comparison purposes Cardigan's operations for the short fiscal year beginning September 1, 1969, and ending June 30, 1970.
19. Mr. Wheeler believes that had the school changed carriers between comparison period and the audited period then the auditors would have noted the change.
20. Mr. Bakker worked with A.B. Gile, Inc., a local insurance brokerage, to secure
Cardigan's insurance coverage.
21. Upon information and belief, A.B. Cule, Inc. had a close association with NHIC such that it advised most of its commercial clients like Cardigan to place their commercial lines of insurance with NH IC.
22. On or about July 30, 2013, Cardigan demanded that AIG provide a defense and coverage for the putative plaintiff's claims against it.
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23. Cardigan has since worked with representatives of AIG to locate a copy of the relevant policy, determine if there was coverage, and determine the scope of any coverage.
24. MIG informed Cardigan that it was investigating the matter, but has reported that it cannot confirm that there was coverage in place.
25. As noted above, AIG's representative has noted that she has searched for the policy and been unable to find it, but has assured the undersigned that her search continues.
26. Unfortunately, the delay in affirming coverage is, under the circumstances, effectively a denial of coverage since Cardigan has a pending claim from a potential litigant that must be addressed.
27. The issue of whether Cardigan has liability insurance coverage for the alleged events is an essential element of any settlement discussions with the putative plaintiff, and more generally, will affect Cardigan's decision to even engage in settlement discussions with the putative plaintiff given the possibility that any such discussions undertaken without the insurance company's agreement could potentially prejudice coverage.
28. Accordingly, there is a dispute between Cardigan and N-HIC over whether there was liability insurance coverage for the relevant time period, and Cardigan seeks leave of this
Court to determine the existence and scope of such coverage.
COUNT I
(Declaratory Judgment - RSA 491:22)
29. Plaintiff repeats and realleges the allegations contained hereinabove as if fully set forth herein.
30. A legitimate dispute exists as to the nature and extent of the rights and obligations of NIIIC to provide liability insurance coverage to Plaintiff with respect to claims arising out of
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alleged events that took place in 1967 and 1968. Plaintiff is entitled to a declaration pursuant to
RSA 491:22 et seq. adjudicating and decreeing the existence of, and Cardigan's rights under, any policy issued by NUIC.
31. Pursuant to RSA 491:22-a, NHIC has the burden to prove that coverage does not exist under the policy.
32. Pursuant to RSA 491:22-b, Plaintiff herein claims that, upon prevailing in this action, it is entitled to reasonable attorneys' fees and court costs from NHIC.
WHEREFORE, Plaintiff Cardigan Mountain School respectfully requests that the Court:
A. Declare that the Defendant insurance company is obligated to provide liability coverage arising out of the putative plaintiff s claim, for all sums that Plaintiff is legally entitled to under the applicable policy;
B. Award reasonable attorneys' fees and costs to Plaintiff in conjunction with the filing and prosecution of this action; and
C. Award such other relief in law and in equity that the Court deems just and proper.
Respectfully Submitted,
CARDIGAN MOUNTAIN SCHOOL
By its attorneys,
MeLANE, GRf , RAULERSON & MIDDLETON PROFEYSSLOYAL A 20 ATION
Dated: January 10, 2014 By:_ ScottA ' Hp sH Bar No. 6840 [email protected] 900 Elm Street, P.O. Box 326 Manchester, NE 03 105-0326 Telephone (603) 628-1351
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EXHIBIT A Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 9 of 17 X)CHARD R,. REARiqQ~
SEP. 2 81971
CARDIGAN MOUNTAIN SCHOOL.
FINANCIAL STATEMENTS
JUNE 30, 1971
AND
AUDITORS' REPORT
VALLEY ACCOUNTANTS 20 MAIN STRtEET 0 WEST LEBANON, N.H. 03784 TELEPHONE: (603) 298.8146 Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 10 of 17
CARDIGAN MOUNTAIN.SCHOOL
CONTENTS Pages Organization Accountants' Report 1 Summary of Operations 2 Summary Financial Conditions3 Insurance Coverage 5 General Fund Comparative Statement of Operations 8 Comparative Statement of Summer School Operations 10 Statement of Changes in General Fund Balance 11 Balance Sheet - General Fund 12 Plant Fund Statement of Changes in Plant Fund Balance 1 Balance Sheet - Plant Fund 15 Endowment Fund Statement of Changes in Endowment Fund 17 Balance Sheet - Endowment Fund 18 Annual Giving Fund Statement of Changes in Annual Giving Fund Balance 20 Balance Sheet - Annual Giving Fund 21 Funds Balance Sheet 22-23 Notes to Financial Statements 24-26 Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 11 of 17
CARDIGAN MOUNTAIN SCHOOL
CANAAN, NEW HAMPSHIRE
ORGANI ZATION
The Cardigan Mountain School was organized in 1945 as a New Hampshire corporation for the purpose of furnishing non-sectarian education to its scholars and for promoting their spiritual, mental and physical well being and for such other purposes as are set forth in the Articles of Agreement and Association. In general the educational subjects to be taught will be similar to those taught in the leading public and private schools in the United States for the instruction of boys and young men.
MEMBERS OF THE CORPORATION Mr. William R. Brewster East Waterford, Maine Mr. Charles E. Cotting Boston, Massachusetts Mr. Robert S. Gillette Barre,, Vermont Mr. Edward T. Hall Southboro, Massachusetts Mr. Edward B. Hinman New York, New York Mr. John H. Hinman Pelham, New York Mr. Charles H. Hood Brookline, Massachusetts Mr. Harvey P. Hood, 11 Manchester, Massachusetts Mr. F. Corning Kenly, Jr. Manchester, Massachusetts Mr. Donold B. Lourie Chicago,, Illinois Mr. Jerold B. Newton West Lebanon, New Hampshire Mr. Fred C. Scribner, Jr. Portland, Maine Mr. Robert W. Stoddard Worcester, Massachusetts Mr. Erskine N. White Center Sandwich, New Hampshire Mr. J. Walker Wiggin Manchester, New Hampshire
TRUSTE ES Mr. J. Walker Wiggin, President Manchester, New Hampshre Mr. Robert S. Gillette, Vice President Barre, Vermont Mr. Jerold B. Newton, Treasurer West Lebanon, New Hampshire Dr. Crawford H. Hinman,, Secretary Jamaica Plain, Massachusetts Mr. John B. Coffin Woods Hole, Massachusetts Mr. John B. Kenerson Wellesley Hills, Massachusetts Dr. Robert B. Kenerson Winchester, Massachusetts Mr. B. Anthony King Southboro, Massachusetts Dr. Richard D. Morrison Essex Junction, Vermont Dr. G. Winthrop Sands Danbury, New'Hampshire Mr. Walter P. Smith South Hadley, Massachusetts Mr. Rand N. Stowell/ Jr. Dixfield, Maine Mr. John L. Tower New York, New York Mr. Fred A. White Hanover, New Hampshire Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 12 of 17
VALLEY ACCOUNTAN]TS 20 MAIN STREET - WEST LEBANON, N.H. 03784 T1;LtHONII; (603) 298.1148
PHILIP H. WHIOELER,.JR. EDMIJND 1. ROBICHJAUD,OR. September 17, 1971
To the Board of Trustees Cardigan Mountain School Canaan,- New Hampshire
We have examined the balance sheet of Cardigan Mountain School as of June 30, 1971 and the related statement of income and expenses for the year then ended. Our examination was made in accordance with generally accepted audiring standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the accompanying balance sheets, statement of operations and changes in fund balances present fairly the financial position of Cardigan Mountain School at June 30, 1971, and the results of its operations for the year then ended, in conformity with generally accepted accounting principals applied on a basis consistent with that of the preceding year.
Sincerely, Case 1:14-cv-00116-LM Document 1-1 Filed 03/20/14 Page 13 of 17
CARDIGAN MOUNTAIN SCHOOL
SUMMARY OF OPERATIONS
Operating Income and Expenses. The condensed comparative statement presented below
shos anetexcess of expenses over income of $24, 163 for the year ended June 30, 1971,
-befo deducting depreciation of $78,619, as compared with an excess of expenses over 8 income of ,6 -a for the ten months ended June 30, 1970, before deducting depreciation of $63, 1-26. On a twelve month July'], 1969 to June 30, 1970 basis Income would have exceeded expenses by approximately $4,073 before deducting depreciation of $75,760.
12 Months 10 Months Ended Ended June 30 Increase Oprtn noe1971 1970 (Decrease)
Student Fees - Tuition $544,690 $534,650 $10,040 - Other .47,880 62,957 (15,077) 597,607 Operating (5,037) Expenses Nprtc, 1V~ 758, 742 700,407 58,335
Excess of Operating Expenses , OverOperating Income (D c1'(166,172) (102,800) 63,372 Other Income
Summer School, Bookstore, etc. (net) 20,759 ~ 4,378 16,381 Income from Endowment 8,272 7, 177 1,095 Gifts for Current Purposes 34,359 19,506 14, 853 63,39 31,061 T-- Excess ofExpenses Over Income Deducted From General Fund Baa-nce .($102,782) ($71,739) $31,043
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CARDIGAN MOUNTAIN SCHOOL SUMMARY FINANCIAL CONDITIONS
General Funds. The condensed comparative statement of General Fund assets and liabilities, shown below, summarizes the changes during the period under review.
June 30 Increase 1971 1970 (Decrease) General Fund Assets $105 ,8 A $141,329~ General Fund Liabilities 1 ($35,515) 209,777' ~ 189r394- 20,383 General Fund Deficit ( 13 963) ~ (48,065)~ 55,898
The increase in the General Fund deficit arose as follows: Current Funds Received: Depreciation (a Plant Fund charge, deducted from income) 78,619 tz Current Funds Applied: Excess of expenses over income (IeL; 1) 102,782" Expended for buildings and equipment 23,553 ~ Expended for reduction of Plant Fund indebtedness (Wt iy. A~t' 81,182 v 134,517 Net Increase in General Fund Deficit $55,898
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CARDIGAN MOUNTAIN SCHOOL
PER STUDENT OPERATION
A comparative analysis of the operations for the ten months ended June 30, 1970 and the twelve months ended June 30, 1971,in terms of number of students, follows:
12 Months 10 Months Increase Ended Ended (Decrease) June 30, 1971 June 30, 1970
4PNumber of Students /166 182 (16)
9 L)t-on-od-Fe)$3,570'"~ $3,284--- V~ $286 Operating Expenses 4,7 3-4- Yiik 722
Excess of Operating Expenses over Fees (1,1001) K~o~ (565) ~ 436
Other Income Summer School, Bookstore, etc. (net) 125 iiY 24 ~7101 Income from Endowments 50 5X2 39 Yj3 I1I Gifts for Current Purposes 207 27.,7. 107 100 Total Other Income 382 q0917 T
Excess of Expenses over Income ($619) (61, ) ($395) N~~ $224
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INSURANCE COVERAGE
We reviewed your insurance coverage with your insurance agent and found the following coverages in effect!
New Hampshire Insurance Co. Special Multi-Peril. Term - September 15, 1970 - September 15, 1971. 100% Co-Insurance
1,000 Deductible on Buildings and Personal Property $2,952,000 Blanket on Buildings and Personal Property 7,500 Musical Instrument Floater 36,255 Fine Arts Floater 5,000 Mercantile Open Stock Burglary 1,.000, 000 General Liability 1,000 Credit Card Forgery 3,000 Elliott Clock located in Clark-Morgan Hall 3,000 "The Open Field" painting 23,000 Electrically Power Ski Lift 6, 000 Canoes, Rowboats, Sailboats, Motors, etc. $1,r000 limit on each
New Hampshire Insurance Co. Comprehensive Automobile Liability. Term September 1, 1970 - September 1, 1971 $500,000 Bodily Injury Each Person 1,000,000 Bodily Injury Each Occurrence 15/30 Uninsured Motorists ACV Fire and Theft ACV Collision
Vehicles covered: 1967 Farmall Body Style F140 1964 Scout Boat Trailer Canoe Trailer 1960 Chevrot~t 40 Passenger School Bus 1968 International I Ton Tractor 1968 International :1/2 Ton Tractor 1968 International C&b Cadet W/Att, 1967 Ford Country Squire Station Wagon 1953 Jeep 1971 Ford Club Wagon School Bus
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New Hampshire Insurance Co. Workmens' Compensation. Term September 3, 1970 - September 3, 1971. Statutory limits of the State of New Hampshire
Hartford Steam Boller Inspection and Insurance Co. Steam Boilers - Term,, January 15,, 1971 - January 15, 1972 100,000 each accident - premises at Back Bay Road 25,000 each accident - boilers at- Headmaster's House Assistant Headmaster's House Clancy House Fifleld House HInmcn - Foley House Stowell House Ovila House Howe House Newton House
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