Stateline Steel Erectors, Inc. v. Shields

Summary

The New Hampshire Supreme Court held that an insured’s claims against an insurance agent for negligent failure to procure adequate coverage could be assigned to contractors under a settlement agreement accompanied by a covenant not to execute. The court concluded that Stateline suffered legally cognizable harm despite not having paid the excess stipulated judgment and that the agreement was a covenant not to sue or execute, rather than a release. The court reversed the grant of summary judgment and remanded for further proceedings.

Holdings

1. An insured's claims against an allegedly negligent insurance agent may be assigned to others when the assignment is accompanied by a covenant not to execute or sue on an excess judgment; the settlement arrangement does not, by itself, extinguish the assigned claims.
2. Stateline may have suffered legally cognizable damages even though it did not pay the stipulated excess judgment out of its own funds.
3. The settlement agreement was a covenant not to sue or execute, not a full release, and therefore did not extinguish Stateline's claims.

Questions Presented

1. Whether an insured's claims against an allegedly negligent insurance agent may be assigned when the insured has entered a settlement agreement containing a covenant not to execute or sue on an excess judgment.
2. Whether Stateline suffered legally cognizable damages even though the stipulated excess judgment was never collected from Stateline.
3. Whether the settlement agreement constituted a release that extinguished Stateline's claims rather than a covenant not to sue or execute.
4. Whether summary judgment was proper on the negligence and breach of contract claims.

Disposition

reversed_and_remanded