26 A.3d 585 (R.I. 2011), 2008-334-Appeal, DeMarco v. Travelers Ins. Co.
|Citation:||26 A.3d 585|
|Opinion Judge:||ROBINSON, Justice.|
|Party Name:||Wayne DeMARCO et al. v. TRAVELERS INSURANCE COMPANY et al.|
|Attorney:||Robert A. D'Amico, II, Providence, for Plaintiff. Anthony Zelle, Esq., Pro Hac Vice, for Defendant.|
|Judge Panel:||Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ. Justice FLAHERTY, dissenting.|
|Case Date:||July 12, 2011|
|Court:||Supreme Court of Rhode Island|
What are the responsibilities of an insurance company when a single motor vehicle collision results in multiple claims being asserted against the insureds, which claims in the aggregate exceed the policy limits? That, in essence, is the question that this appeal calls upon us to answer.
The defendant, Travelers Insurance Company (Travelers),1 appeals from the Superior Court's grant of partial summary judgment in favor of the plaintiff, Wayne DeMarco.2 On appeal, Travelers contends that in so ruling the hearing justice erred for two primary reasons, viz.: (1) that the plaintiff's release of the individual and the corporation insured by Travelers and/or
the existence of what the parties refer to as a " judgment satisfied order" extinguished any claim against Travelers that might have been assigned to the plaintiff by the insureds; and (2) that the record contains facts on the basis of which a finder of fact could conclude that Travelers acted reasonably and in its insureds' best interests in dealing with this particular multiple claimant case. Travelers contends that the Superior Court's order granting partial summary judgment should be vacated and that this Court should direct that summary judgment be entered in Travelers' favor.
For the reasons set forth below, we deem the grant of partial summary judgment in plaintiff's favor as to Travelers' liability pursuant to the principles set forth in Asermely v. Allstate Insurance Co. 3 to have been unwarranted in view of the state of the record at that time. However, we affirm the ruling of the hearing justice with respect to the applicability of the rejected settlement offer statute in the multiple claimant context. Accordingly, we shall remand the case to the Superior Court for further proceedings consistent with this opinion.4
Facts and Travel
On September 10, 2003, Wayne DeMarco was seriously injured in a collision while traveling as a passenger in a motor vehicle owned by Virginia Transportation Corp. (Virginia Transportation) and operated by that company's owner, Leo H. Doire, when the vehicle veered off the road and struck two utility poles.5 A second passenger, Paul Woscyna, was also seriously injured; in addition, the public utility then known as The Narragansett Electric Company 6 sustained property damage as a result of its utility poles having been struck. At the time of the collision, the vehicle in which Mr. DeMarco was a passenger was insured by defendant Travelers; significantly, the Travelers policy had liability limits of $1 million.7
Events Leading to the Trial of the Personal Injury Action Against Travelers' Insureds
On February 2, 2004 (less than six months after the collision), Mr. DeMarco's attorney submitted to Travelers' claim services director a demand letter seeking the payment of $1 million (the policy limits) to plaintiff. The letter stated that the attorney was still in the process of obtaining Mr. DeMarco's " voluminous medical records and bills," but the letter also indicated that hospital bills totaling $190,932.56 had already been sent to Travelers. In that February 2 letter, plaintiff's attorney also stated that she was enclosing " a courtesy copy of the lawsuit that [she intended] to file within 14 days of the date of [the] letter," and she requested that Travelers " review and advise."
On February 25, 2004, plaintiff's attorney sent another letter to Travelers' claim services director, stating that " we believe that our client's claim for personal injuries far exceeds your insured's [ sic ] liability coverage policy limit; " the attorney demanded that her client's claim be settled in the amount of the policy limits. The attorney went on to state that, if Travelers did not agree to settle in accordance with plaintiff's demand, the insurance company might be exposed to liability for damages in excess of the policy limits and for interest. In support of that assertion, plaintiff's attorney explicitly cited this Court's opinion in the case of Asermely v. Allstate Insurance Co., 728 A.2d 461 (R.I.1999); the attorney stated in her letter that the Asermely opinion set forth principles relative to an insurance company's potential responsibility for such excess damages and for interest. The letter then quoted from the Asermely opinion, including the language stating that an insurance company's fiduciary obligation extends not only to its insureds but also to a party to whom the insureds have assigned their rights. The letter from plaintiff's attorney also quoted the language in the Asermely opinion which states that an insurance company must seriously consider a plaintiff's reasonable written offer to settle within policy limits and which also states that, if the insurer declines to settle, it will be liable for an eventual judgment against its insureds in excess of the policy limits (unless it can show that the insureds were unwilling to accept the offer of settlement).8
On February 27, 2004, Travelers' claim services director sent a letter to plaintiff's attorney acknowledging receipt of plaintiff's February 2 demand letter. The claim services director stated that Travelers was " not in a position to make an offer to Mr. Demarco [ sic ] at this time," noting that the insurer had not yet received medical records describing Mr. DeMarco's injuries. The letter from Travelers went on to express the insurer's understanding that " there were multiple persons 9 who were seriously injured" as a result of the collision and that medical bills unrelated to Mr. DeMarco could equal or exceed his own. The letter from Travelers further stated that, under such circumstances, " Travelers [could not] exhaust its policy limit of $1 million by paying it to Mr. Demarco [ sic ]."
Nothing in the record indicates that Travelers responded to the February 25 demand letter from plaintiff's attorney, which had made explicit reference to the insurer's potential liability under Asermely. 10 However, on March 1, 2004, an attorney retained by Travelers ( see footnote 12, infra ) wrote to Travelers' claim services director to provide his legal opinion regarding Mr. DeMarco's demand for the policy limits. He stated that the claim services director should respond to Mr. DeMarco's demand letter, but he also expressed his view that the insurer was not at that time required to make a counter-offer. The attorney stated: " Generally, Asermely holds that an insurance carrier can be held liable in excess of its policy limits if it fails or refuses to settle a claim within its policy limits and a judgment is rendered that exceeds the policy limits." Nevertheless, in the same letter the attorney opined that, " under the circumstances of this case, Travelers will not be held liable for damages in excess of the policy limits." He acknowledged that Travelers had a duty under Asermely to settle within the policy limits; but he then stated that, since there was at least one other seriously injured party in addition to Mr. DeMarco, if Travelers were to pay the entire limits to Mr. DeMarco, such an action by Travelers could expose the insureds to personal liability stemming from non-DeMarco-related claims. The attorney noted that the Asermely opinion stated that an insurer had a fiduciary obligation to act in the best interests of its insured and to strive to protect the insured from excess liability, and the attorney expressed his view that " the payment of policy limits to one claimant may be a violation of Asermely that will expose Travelers to extra-contractual liability."
Shortly thereafter, on March 4, 2004, Mr. DeMarco commenced a personal injury action in the Superior Court for Providence
County against Travelers' insureds— viz., Virginia Transportation and Mr. Doire.11
Almost a year later, on February 7, 2005, plaintiff's attorney wrote to the attorney who had been retained by Travelers to represent its insureds in the personal injury litigation which plaintiff had commenced in March of 2004. 12 The plaintiff's attorney indicated that she was aware that Mr. Woscyna's attorney had submitted a settlement demand totaling $829,747 to Travelers, and she asked that the retained attorney advise Travelers' claim services director " that Mr. DeMarco is not yet done treating" and " that Mr. DeMarco's medical bills are five (5) times the amount of Mr. Woscyna's medical bills * * *." The plaintiff's attorney then observed: " That being said, I suspect that Mr. Woscyna's claim will not be resolved until Mr. DeMarco's claim is ready to be resolved." She concluded by asking the retained attorney to respond with his thoughts. The retained attorney responded in a letter dated February 23, 2005, in which he stated that he would like to take the deposition of Mr. DeMarco " so that we can be in the best position to assess the claim of each injured person; " a notice of deposition was enclosed.
On April 19, 2005, plaintiff's attorney sent a letter and copies of her client's medical records and bills to Travelers' retained attorney; the letter indicated that Mr. DeMarco had been discharged from his doctor's care on February 28, 2005. The plaintiff's attorney further asked the retained attorney to contact her so that they could discuss moving toward a resolution of the matter.
On June 7, 2005, plaintiff's attorney sent Travelers' retained...
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