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                 THE SUPREME COURT OF NEW HAMPSHIRE

                           ___________________________


Hillsborough
No. 2016-0592


                                JOSEPH RIZZO

                                        v.

                       ALLSTATE INSURANCE COMPANY

                         Argued: September 14, 2017
                         Opinion Issued: May 1, 2018

      Boynton, Waldron, Doleac, Woodman & Scott, P.A., of Portsmouth
(Francis X. Quinn, Jr. on the brief and orally), and McDowell & Osburn, P.A. of
Manchester (Gordon A. Rehnborg, Jr. on the brief), for the plaintiff.


      Primmer Piper Eggleston & Cramer PC, of Manchester (Gary M. Burt and
Brendan D. O’Brien on the brief, and Mr. Burt orally), for the defendant.


       BASSETT, J. The defendant, Allstate Insurance Company, appeals an
order of the Superior Court (Colburn, J.) granting the motion for partial
summary judgment filed by the plaintiff, Joseph Rizzo, and denying the cross-
motion for partial summary judgment filed by Allstate. Rizzo alleged he was
injured in an automobile accident while a passenger in a car insured by
Allstate. Rizzo sought uninsured motorist coverage under the Allstate policy,
and, after Allstate denied his claim, the claim went to arbitration. The
uninsured motorist provision in the Allstate policy provides that if the
arbitration award exceeds $25,000, the financial responsibility limits in New
Hampshire, see RSA 259:61, I (2014), the insured and Allstate have the right to
elect a trial de novo following arbitration. Allstate rejected the arbitration
award, which exceeded the financial responsibility limits, and requested a trial
de novo. The trial court ruled that the trial de novo provision in the policy is
not enforceable because it is unconscionable, ambiguous, and violates public
policy, and confirmed the arbitration award. We reverse and remand.

       The relevant facts are not in dispute. On September 9, 2009, Rizzo was a
passenger in a car operated by Linda Matz. The car was struck from behind by
a car that had been rear-ended by another vehicle driven by Genci Naum.
Matz was insured by Allstate under a policy that provided $100,000 of
uninsured/underinsured motorist coverage. Naum was insured by Liberty
Mutual under a policy that had a $20,000 policy limit. The accident was
Naum’s fault. Rizzo alleged that he was injured in the collision.

      Rizzo settled his personal injury claim against Naum for the $20,000
policy limit in Naum’s Liberty Mutual policy. Because Rizzo claimed that his
damages exceeded $20,000, he sought underinsured motorist coverage under
Matz’s Allstate policy. Allstate denied Rizzo’s claim, asserting that his injuries
were pre-existing, that any “related exacerbation of [his] alleged pre-existing
condition would have been short lived,” and that he had been fully
compensated by the Liberty Mutual settlement. (Quotation omitted.) Rizzo
demanded arbitration under the Allstate policy, which stated in part:

      If the insured person or we don’t agree on that person’s right to
      receive any damages or the amount, then at the written request of
      either the disagreement will be settled by arbitration.
      ....

      Regardless of the method of arbitration, any award not exceeding
      the limits of the Financial Responsibility law of New Hampshire will
      be binding and may be entered as a judgment in a proper court.

The arbitration panel awarded Rizzo $63,000, with a $20,000 offset for the
Liberty Mutual settlement.

      Shortly thereafter, Allstate informed Rizzo that it was rejecting the
arbitration award, and that it was invoking its right to trial pursuant to a
provision in the policy that provided:

      Regardless of the method of arbitration, when any arbitration
      award exceeds the Financial Responsibility limits in the State of
      New Hampshire, either party has a right to trial on all issues in a



                                         2
      court of competent jurisdiction. . . . Costs, including attorney fees,
      are to be paid by the party incurring them.

       In response, Rizzo filed suit in superior court claiming breach of
contract, and seeking to have the arbitration award confirmed, because the
trial de novo provision in the Allstate policy was “unenforceable, ambiguous
and void for violation of public policy.” The parties filed cross-motions for
partial summary judgment. The trial court granted Rizzo’s motion for
summary judgment, denied Allstate’s motion, and confirmed the arbitration
award. This appeal followed.

        “A moving party is entitled to summary judgment if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with
the affidavits filed, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.” Jeffery v.
City of Nashua, 163 N.H. 683, 685 (2012) (quotation omitted). “In reviewing
the trial court’s grant of summary judgment, we consider the affidavits and
other evidence, and all inferences properly drawn from them, in the light most
favorable to the non-moving party.” Id. “If our review of that evidence
discloses no genuine issue of material fact, and if the moving party is entitled
to judgment as a matter of law, we will affirm the grant of summary judgment.”
Id. “We review the trial court’s application of the law to the facts de novo.” Id.
at 686. The enforceability of a trial de novo provision in an automobile
insurance contract is an issue of first impression for this court.

       Allstate first argues that the trial court erred when it concluded that the
trial de novo provision contravenes New Hampshire public policy that favors
the use and finality of arbitration. It asserts that the “general policy favoring
arbitration does not render a contractual provision making arbitration non-
binding unenforceable.” It further contends that, because neither state nor
federal arbitration statutes prohibit parties from agreeing to non-binding
arbitration, and Superior Court Civil Rule 30(b) specifically allows parties to
elect non-binding arbitration as a means of solving disputes, the trial de novo
provision is enforceable.

       Rizzo counters that an “‘arbitration’ that does not resolve a dispute with
finality is not really an ‘arbitration.’” He contends that New Hampshire public
policy, as expressed by statute, favors the finality of arbitration awards by
limiting a court’s ability to vacate an arbitration award to situations involving
“fraud, corruption, or misconduct by the parties or by the arbitrators,” RSA
542:8 (2007), none of which are present in this instance. He further asserts
that allowing trial de novo after arbitration “nullif[ies] the entire ‘arbitration,’”
and turns it into a “meaningless and unproductive waste of time and money.”
He also argues that the trial de novo provision is inconsistent with public policy




                                         3
that favors arbitration. We agree with Allstate that the trial de novo provision
does not violate public policy regarding arbitration.

        As a threshold matter, we note that under the trial de novo provision at
issue, if an arbitration award does not exceed the financial responsibility limits,
it is binding and can be modified or vacated only for the specific reasons set
forth in RSA 542:8 (allowing a superior court to correct or modify an arbitration
award for “plain mistake,” or to vacate an award for “fraud, corruption, or
misconduct”). However, if, as here, an arbitration award is greater than the
financial responsibility limits, and a party exercises its contractual right to a
trial de novo, there is no binding award for the trial court to confirm or vacate.
Therefore, the trial de novo provision does not violate RSA 542:8.

      Turning to the parties’ public policy arguments, we recognize that, in
general, parties to a contract “are bound by the terms of an agreement freely
and openly entered into, and courts cannot make better agreements than the
parties themselves have entered into or rewrite contracts merely because they
might operate harshly or inequitably.” Mills v. Nashua Fed. Sav’s and Loan
Assoc., 121 N.H. 722, 726 (1981). However, “we will not enforce a contract or
contract term that contravenes public policy.” Harper v. Healthsource New
Hampshire, 140 N.H. 770, 775 (1996).

      An agreement is against public policy if it is injurious to the
      interests of the public, contravenes some established interest of
      society, violates some public statute, is against good morals, tends
      to interfere with the public welfare or safety, or, as it is sometimes
      put, if it is at war with the interests of society and is in conflict
      with the morals of the time.

Id. (quotation omitted). “Declaration of public policy with reference to a given
subject is regarded as a matter primarily for legislative action.” Welzenbach v.
Powers, 139 N.H. 688, 690 (1995) (quotation omitted).

       It is notable that the New Hampshire Legislature has not made an
explicit decision as to whether a trial de novo provision must — or cannot be —
included in uninsured motorist policies. Other state legislatures have made an
explicit policy choice. For example, California law requires that parties resolve
uninsured motorist disputes by binding arbitration, and California courts have
not enforced trial de novo provisions. See Chrisman v. Superior Court, 236
Cal. Rptr. 703, 704-05 (Ct. App. 1987) (holding that a trial de novo provision is
unenforceable because Cal. Ins. Code § 11580.2(f) (2006) requires that
uninsured motorist disputes be settled by binding arbitration). In contrast,
Illinois law requires that uninsured motorist policies include trial de novo
provisions. See Phoenix Ins. Co. v. Rosen, 949 N.E.2d 639, 652, 654 (Ill. 2011)
(holding that “if an insurance policy does not contain a trial de novo provision



                                        4
in its uninsured-motorist coverage, it is contrary to [215 Ill. Comp. Stat. Ann.
5/143a (1) (2006)]”).

      In the absence of a clear legislative directive, courts in a number of states
have concluded that trial de novo provisions are inconsistent with public policy
favoring arbitration, and are, therefore, unenforceable. See, e.g., Worldwide
Ins. Group v. Klopp, 603 A.2d 788, 791 (Del. 1992); Schmidt v. Midwest Family
Mut. Ins. Co., 426 N.W.2d 870, 874 (Minn. 1988). Courts in other jurisdictions
have reached the opposite conclusion. See, e.g., Hayden v. Allstate Ins. Co., 5
F. Supp. 2d 649, 653 (N.D. Ind. 1998) (“[The] court is not required to favor
arbitration over the unambiguous term of the contract. The public policy of
Indiana does not require such an outcome . . . .”); Phoenix Ins. Co., 949 N.E.2d
at 656 (holding that “allowing either party to reject an award over the statutory
minimum for liability coverage does not violate public policy”); Zappia v. St.
Paul Fire and Marine Ins. Co., 847 N.E.2d 597, 601 (Ill. App. Ct. 2006) (holding
that a “trial de novo provision does not contravene the policy of binding
arbitration, as [our state] encourages arbitration even when it is nonbinding”).

       We have recognized that arbitration provides parties with a “speedy and
inexpensive resolution of a dispute,” Demers Nursing Home, Inc. v. R. C. Foss
& Son, Inc., 122 N.H. 757, 761 (1982), while saving “scarce and valuable legal
and judicial time and talent,” Pittsfield Weaving Co., Inc. v. Grove Textiles, Inc.,
121 N.H. 344, 348 (1981). Although, as a general proposition, arbitration
benefits the parties and the public, the “principle that doubt should be resolved
in favor of arbitration does not relieve a court of the responsibility of applying
traditional principles of contract interpretation in an effort to ascertain the
intention of the contracting parties.” Appeal of Town of Bedford, 142 N.H. 637,
640 (1998) (quotation omitted). Therefore, we agree with the reasoning of the
New Jersey Appellate Division that:

      Although the public policy of this State is to favor arbitration . . .
      [t]he parties may shape their arbitration in any form they choose
      and may include whatever provisions they wish to limit its scope.
      . . . Thus the ascertainable public policy here is to encourage
      resort to arbitration while preserving full flexibility to the parties to
      elect or reject, and to structure and limit, that process as they
      choose.

Cohen v. Allstate Ins., 555 A.2d 21, 23 (N.J. Super. Ct. App. Div. 1989)
(citations omitted). We conclude that the trial de novo provision does not
contravene New Hampshire public policy regarding arbitration. Our conclusion
comports with New Hampshire court rules, which give parties the freedom to
agree to binding or non-binding alternative dispute resolution. See Super. Ct.
Civ. R. 30(b) (stating, in the context of court-ordered mediation, “[i]f the parties
agree, they may elect a form of alternative dispute resolution other than



                                          5
mediation (e.g. neutral evaluation, non-binding arbitration or binding
arbitration)”).

       Allstate next argues that the trial court erred when it concluded that the
trial de novo provision is unenforceable because it contravenes the public
policy embodied in the uninsured motorist statute in effect at that time. RSA
264:15, I (Supp. 2009) (amended 2015). We have stated that the purpose of
the uninsured motorist statute is to place “insured persons in the same
position that they would have been if the offending uninsured motorist had
possessed comparable liability insurance.” Rivera v. Liberty Mut. Fire Ins. Co.,
163 N.H. 603, 608 (2012) (quotation and emphasis omitted). Rizzo argues that,
because the trial de novo provision requires a person seeking uninsured
motorist coverage to participate in “an expensive, time consuming and
ultimately useless arbitration proceeding” that is different from the procedure
for making a claim against a motorist with adequate coverage, it does not place
the insured in the “same position.” We agree with Allstate.

       The uninsured motorist statute in effect in 2009 required that, if an
insured elected to purchase liability coverage in an amount greater than the
financial responsibility limits, the policy include an identical amount of
uninsured motorist coverage. RSA 264:15, I (Supp. 2009); see Swain v.
Employers Mut. Cas. Co., 150 N.H. 574, 578 (2004) (holding that RSA 264:15,
I, required an insurance policy to offer “uninsured motorist coverage in an
amount equal to the amount of general liability coverage”). However, the
statute did not require that liability coverage and uninsured motorist coverage
be identical in all respects. See Swain, 150 N.H. at 578 (holding that RSA
264:15, I, did not require mutuality with regards to what automobiles were
covered); Gisonni v. State Farm Mut. Auto. Ins. Co., 141 N.H. 518, 520-21
(1996) (holding that RSA 264:15, I, did not require complete mutuality with
regard to the territorial limits of coverage). Accordingly, we conclude that the
trial de novo provision does not contravene public policy as codified in RSA
264:15, I (Supp. 2009).

       Allstate also argues that the trial court erred when it concluded that the
trial de novo provision contravenes the public policy underlying New
Hampshire’s Unfair Insurance Trade Practices Act. See RSA ch. 417 (2015).
Allstate argues that “[t]here is no reason to believe Allstate would exercise the
de novo [provision] in bad faith, and it was improper for the trial court to strike
the [provision] based on nothing more than speculation.” Rizzo counters that
the trial court was correct when it ruled that, “[e]ven if the provision [in
Allstate’s policy] does not per se constitute an unfair practice, the statute and
the statutory scheme as a whole suggests an animus towards the use of
insurance clauses that operate unfairly.” Again, we agree with Allstate.




                                         6
       The Act provides that it is an “unfair claim settlement practice[]” for an
insurance company to “[a]dopt[] or mak[e] known to insureds or claimants a
policy of appealing from arbitration awards in favor of insureds or claimants for
the purpose of compelling them to accept settlements or compromises less than
the amount awarded in arbitration.” RSA 417:4, XV(a)(6) (2015). There is no
evidence in the record that suggests that Allstate has a policy of appealing
arbitration awards for the purpose of compelling claimants to accept
settlements lower than the arbitration award. The trial de novo provision itself
is not a policy: it simply gives either party the right to a de novo trial if an
arbitration award exceeds the financial responsibility limits. We conclude that
the trial de novo provision does not violate the public policy that underlies the
Unfair Insurance Trade Practices Act.

       We now turn to the issue of unconscionability. The trial court reasoned,
and Rizzo argues on appeal, that the trial de novo provision is unconscionable
because Rizzo — as a passenger as opposed to the policyholder — was not in a
position to bargain for different insurance terms or choose a different carrier,
and because the provision unreasonably favors the insurer. Allstate argues
that the provision is not unconscionable because there is no evidence that the
policyholder lacked choice when choosing to purchase the Allstate policy. It
also contends that the trial de novo provision does not unreasonably favor
Allstate. We are not persuaded that the trial de novo provision is
unconscionable.

       We reject the proposition that Rizzo’s status as a passenger in the vehicle
has any bearing on the unconscionability analysis. It is not disputed that
Rizzo, as a passenger in the insured vehicle with the policyholder’s permission,
is an “insured person” under the policy and is, therefore, an intended third-
party beneficiary of the insurance contract. It is “generally recognized that
third-party beneficiaries of an insurance contract are bound by arbitration . . .
agreements which are part of the contract.” 15 Lee R. Russ & Thomas F.
Segalla, Couch on Insurance 3d § 210:17, at 210-16 (1999). “An arbitration
agreement may be enforced by or against a non-party who is an intended third
party beneficiary of that agreement.” Licata v. GGNSC Malden Dexter LLC, No.
SUCV2011-02815-A, 2012 WL 1414881, at *7 (Mass. Super. Ct. Mar. 14,
2012), aff’d, 2 N.E.3d 840 (Mass. 2014). We agree with the Pennsylvania
Supreme Court that:

      An injured person who makes a claim for uninsured motorist
      benefits under a policy to which he is not a signatory is in the
      category of a third party beneficiary. . . . [T]hird party beneficiaries
      are bound by the same limitations in the contract as the
      signatories of that contract. The third party beneficiary cannot



                                         7
      recover except under the terms and conditions of the contract from
      which he makes a claim.

Johnson v. Pennsylvania Nat. Ins., 594 A.2d 296, 298-99 (Pa. 1991).
Consequently, we conclude that Rizzo’s status as a passenger does not require
that we deviate from our usual unconscionability analysis.

       “Unconscionability has generally been recognized to include an absence
of meaningful choice on the part of one of the parties together with contract
terms which are unreasonably favorable to the other party.” Pittsfield Weaving
Co., Inc., 121 N.H. at 346 (quotation omitted). The existence of gross
inequality of bargaining power is a factor to be considered. Id. “Difference in
size is not to be equated per se with difference in the power to bargain.” Cailler
v. Humble Oil & Refining Co., 117 N.H. 915, 919 (1977). We have observed
that “courts cannot make better agreements than the parties themselves have
entered into or rewrite contracts merely because they might operate harshly or
inequitably.” Appeal of Silverstein, 163 N.H 192, 202 (2012) (quotation
omitted).

        We first consider whether the policyholder lacked meaningful choice
when she chose to contract with Allstate. Pittsfield Weaving Co., Inc., 121 N.H.
at 346. The trial court correctly observed that insurance policies are contracts
of adhesion in which there is little equality of bargaining power. However,
superior bargaining power benefitting the favored party is not sufficient to
render a contract provision unconscionable. Hydraform Prods. Corp. v.
American Steel & Alum. Corp., 127 N.H. 187, 195 (1985). Rather, the relevant
inquiry is “whether the bargaining power is so disparate that the weaker party
is left without any genuine choice.” Id. This conclusion “can be difficult to
draw when the favored party has competitors with whom the other party may
deal.” Id. Here, there is no evidence in the record as to whether trial de novo
provisions are present in the uninsured motorist provisions of automobile
insurance policies offered in New Hampshire by other insurance companies.
Thus, we cannot conclude that the policyholder lacked meaningful choice when
purchasing the policy from Allstate.

       Rizzo next argues that the provision is unconscionable because the
contract terms are unreasonably favorable to Allstate. Rizzo contends that the
trial de novo provision offers Allstate an unreasonably favorable “escape hatch,”
protecting it from high arbitration awards. Courts disagree as to whether trial
de novo provisions unreasonably favor insurers and whether the provisions are
enforceable.

     A number of courts have concluded that trial de novo provisions are
unconscionable because they unreasonably benefit insurance companies. See
Worldwide, 603 A.2d at 791 (observing that “[w]hile high awards may be



                                        8
appealed by either party, common experience suggests that it is unlikely that
an insured would appeal such an award”); Padilla v. State Farm Mut. Auto. Ins.
Co., 68 P.3d 901, 907 (N.M. 2003); Zak v. Prudential Property & Cas. Ins. Co.,
713 A.2d 681, 684 (Pa. Super. Ct. 1998). We, however, agree with the many
courts that have concluded that trial de novo provisions do not unreasonably
favor insurance companies. See Phoenix Ins. Co., 949 N.E.2d at 655-56;
Hayden, 5 F. Supp. 2d at 653; Liberty Mut. Fire Ins. Co. v. Mandile, 963 P.2d
295, 299-300 (Ariz. Ct. App. 1997); Allstate Ins. Co. v. Balsamello, 643
N.Y.S.2d 184, 185 (App. Div. 1996); Cohen, 555 A.2d at 23-24. As the Arizona
Court of Appeals explained:

      When a plaintiff who thinks his case is worth $300,000 gets only
      $50,000 from the arbitrators, that plaintiff will want the option of
      an appeal (and may use that option as a leverage point in
      settlement discussions). Conversely, an insurance company that
      thinks a case is defensible, and is ordered to pay [a dollar below
      financial responsibility limits] may wish it could appeal but will
      lack the right to do so. The de novo appeal right, overall, is
      probably as important to plaintiffs as to defendants.

Phoenix Ins. Co., 963 P.2d at 300. The notion that the right to elect a trial de
novo may benefit the insured is not a mere abstraction: there are instances
when insureds have invoked the right to a trial after receiving an arbitration
award that exceeded the financial responsibility limit, but was lower than the
insured thought the case was worth. See Zappia, 847 N.E.2d at 598 (insured
invoked trial de novo provision after arbitration award exceeded the $20,000
financial responsibility limit); Kost v. Farmers Auto. Ins. Ass’n, 766 N.E.2d
676, 677 (Ill. App. Ct. 2002), overruled on other grounds by Phoenix Ins. Co.,
949 N.E.2d at 656 (insured invoked trial de novo provision after arbitrators
awarded $150,000 in recoverable damages). Accordingly, we conclude that the
provision does not unreasonably favor Allstate and that the trial court erred
when it ruled that the trial de novo provision is unconscionable.

       Turning to the last issue before us, the trial court ruled that the
trial de novo provision is unenforceable because it is ambiguous. Allstate
argues that the policy language is clear, and consistent with other provisions in
the policy. Rizzo counters that the trial de novo provision is ambiguous
because it cannot be read harmoniously with another provision in the policy.
Again, we agree with Allstate.

       Interpretation of the language in an insurance policy presents a question
of law. Barbuto v. Peerless Ins. Co., 156 N.H. 565, 566 (2007). We review the
trial court’s interpretation of the trial de novo provision, including its
conclusion as to whether that provision is ambiguous, de novo. See
EnergyNorth Natural Gas v. Continental Ins. Co., 146 N.H. 156, 159 (2001).



                                        9
We construe the language of an insurance policy as would a reasonable person
in the position of the insured based upon a more than casual reading of the
policy as a whole. Barbuto, 156 N.H. at 566. Where the terms of the policy are
clear and unambiguous, we accord the language its natural and ordinary
meaning. Id.

      The section of the policy that addresses disagreements between insured
persons and the company states that “[i]f an insured person or we don’t agree
on that person’s right to receive any damages or the amount, . . . the
disagreement will be settled by arbitration.” Three brief paragraphs
immediately follow this introductory language: the first provides additional
information about the method of arbitration; the second states “[r]egardless of
the method of arbitration, any award not exceeding the limits of the Financial
Responsibility law of New Hampshire will be binding and may be entered as a
judgment in a proper court”; and the third paragraph includes the trial de novo
provision at issue here:

      Regardless of the method of arbitration, when any arbitration
      award exceeds the Financial Responsibility limits in the State of
      New Hampshire, either party has a right to trial on all issues in a
      court of competent jurisdiction.

Given the language, structure, and context of this section of the policy, we
conclude that a reasonable person in the position of the insured would
understand that any arbitration award below the financial responsibility limits
is binding, whereas either party has the right to elect a trial if an award
exceeds the financial responsibility limits.

       Finally, Rizzo argues that the policy is ambiguous because a “so-called
arbitration that can be appealed for a trial de novo is simply not an
‘arbitration.’” (Quotation omitted.) However, as discussed earlier, we reject the
proposition that non-binding arbitration is not arbitration. The mere fact that
an arbitration award will be binding under some circumstances, and non-
binding under other circumstances, does not create an ambiguity.

      In sum, we conclude that the trial court erred when it ruled that the trial
de novo provision is unenforceable and confirmed the arbitration award.

                                                  Reversed and remanded.

       LYNN, C.J., and HANTZ MARCONI, J., concurred; DALIANIS, C.J.,
retired, specially assigned under RSA 490:3, concurred.




                                       10
