Am. States Ins. Co. v. LaFlam

Decision Date02 July 2013
Docket NumberNo. 2012–80–M.P.,2012–80–M.P.
Citation69 A.3d 831
PartiesAMERICAN STATES INSURANCE COMPANY v. Joann LAFLAM.
CourtRhode Island Supreme Court

OPINION TEXT STARTS HERE

Kevin J. Holley, Esq., Warwick, for Plaintiff.

Lauren E. Jones, Esq., Providence, for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice GOLDBERG, for the Court.

This case came before the Supreme Court pursuant to a question certified by the United States Court of Appeals for the First Circuit in accordance with Article I, Rule 6 of the Supreme Court Rules of Appellate Procedure. The question centers on the combined effect of two components of a contractual limitations period contained in the uninsured/underinsured (UM/UIM) provision of an insurance contract issued by the plaintiff, American States Insurance Company (ASIC); one component specifies that legal action against ASIC under the policy must be brought within a three-year interval and the other provides that the three-year period begins to run on the date of the accident. The Court of Appeals certified the following question to this Court:

“In light of the UM/UIM statute[, G.L.1956 § 27–7–2.1,] and Rhode Island public policy, would Rhode Island enforce the two provisions of the contractual limitations clause in this case?”

For the reasons that follow, we answer the certified question in the negative.1

Facts and Travel

The back story of this case is straightforward and undisputed. On April 25, 2007, defendant, Joann LaFlam (LaFlam),2was involved in an automobile collision while operating a vehicle insured under a policy issued by ASIC to her employer. LaFlam alleges that she sustained serious injuries as a result of the collision. Almost one year later, on April 3, 2008, LaFlam sent ASIC written notice of a potential claim under ASIC's UM/UIM coverage. On April 23, 2008, ASIC acknowledged receipt of this notice and requested information on LaFlam's claim. Thereafter, ASIC contacted LaFlam four times between September 2008 and late May 2009 for additional information and updates regarding her medical condition.

The insurance contract between ASIC and its insured, LaFlam's employer, provided that a settlement with the UM/UIM tortfeasor required prior authorization from ASIC.3 To that end, on January 25, 2010, LaFlam requested authorization from ASIC to settle her underlying tort claims against the two UIM tortfeasors. ASIC approved the request on February 18, 2010, and, on May 19, 2010, LaFlam sent ASIC a demand for $1 million, the policy limit, to settle her UIM claim.

ASIC did not formally deny the claim, but, instead, responded with this declaratory-judgment action, filed in the United States District Court for the District of Rhode Island, on August 25, 2010. ASIC asserted that, because LaFlam had failed to undertake legal action against ASIC or submit a written demand for arbitration within the three-year limitations period contained in the policy, her UIM claim against ASIC was time-barred. The relevant clause of the policy provides as follows:

“Any legal action against us under this Coverage Form must be brought within three years after the date of the ‘accident’. However, this [p]aragraph * * * does not apply to an ‘insured’ if, within three years after the date of the ‘accident’, we or the ‘insured’ have made a written demand for arbitration in accordance with the provisions of this Coverage Form.”

On the heels of LaFlam's answer and her assertion of numerous counterclaims,4 the parties filed competing motions for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure; the dispositive issue at the heart of these motions was whether the three-year limitations period set forth in the policy was enforceable or was in violation of public policy. Additionally, LaFlam moved to certify two questions to this Court.5

The District Court denied LaFlam's motion for certification and entered judgment on the pleadings in favor of ASIC. The trial judge first determined that, because [t]he limitations period in the [p]olicy operatesnot to restrict coverage, but to fix the time within which an insured may bring legal action against the insurer[,] the clause did not violate public policy. American States Insurance Co. v. LaFlam, 808 F.Supp.2d 400, 404 (D.R.I.2011). He noted that “the Rhode Island Supreme Court has had the opportunity to declare contractual limitations provisions in UM policies void as against public policy, but has declined to do so” and that, “although the Rhode Island General Assembly has expressly restricted contractual limitations provisions in other contexts, it has included no such restriction in the UM statute.” Id. Although the District Court's analysis focused primarily on whether an insurer validly may shorten the limitations period from ten years to three years, the trial judge additionally determined that our decision in Metropolitan Property and Casualty Insurance Co. v. Barry, 892 A.2d 915, 924–25 (R.I.2006), provided [s]ufficient authority * * * to conclude that the limitations period for a UM claim, whether by statute or contractual provision, begins to run at the date of the accident.” LaFlam, 808 F.Supp.2d at 402 n. 4.

On appeal to the Court of Appeals, LaFlam once again urged that two questions be certified to this Court.6 The Court of Appeals concluded that “Rhode Island has clearly expressed a strong public policy against insurers using contractual language to limit an insured's recovery under the UM/UIM statute.” American States Insurance Co. v. LaFlam, 672 F.3d 38, 39 (1st Cir.2012). However, the Court of Appeals “found ‘no controlling precedent’ in Rhode Island law” to assist it in determining “whether considerations of public policy bar insurers from (1) imposing a contractual limitations period on UM/UIM claims which is shorter than the ten-year statute of limitations provided by statute, or (2) requiring that the limitations period begin to run on the date of the accident.” Id. Significantly, the Court of Appeals concluded that the “two aspects of the ASIC clause at issue * * * are interrelated. A short contractual limitations period that begins to run on the date of the accident may operate to bar an insured from recovery before the insured even knows she has a UM/UIM claim.” Id. Accordingly, the Court of Appeals certified the question quoted above to this Court. Id. at 44. We now proceed to answer the certified question.

Standard of Review

Rule 6(a) permits this Court to answer questions of law certified to it by federal courts:

This Court may answer questions of law certified to it by the Supreme Court of the United States, a Court of Appeals of the United States, or of the District of Columbia, or a United States District Court when requested by the certifying court if there are involved in any proceeding before it questions of law of this state which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of this Court.”

Certified questions that properly are before us “are questions of law * * * reviewed de novo by this Court.” In re Tetreault, 11 A.3d 635, 639 (R.I.2011).

Analysis
I

In order to place the certified question into its proper context, we deem it necessary to survey the landscape of UM/UIM coverage in Rhode Island. The General Assembly enacted the UM/UIM statute, § 27–7–2.1, in 1962. P.L.1962, ch. 161, § 1. Section 27–7–2.1 “requires insurance carriers to provide protection for those claimants who voluntarily contract with licensed carriers for liability coverage as against uninsured operators.” Henderson v. Nationwide Insurance Co., 35 A.3d 902, 906 (R.I.2012) (quoting DiTata v. Aetna Casualty and Surety Co., 542 A.2d 245, 247 (R.I.1988)). “This statute was premised on the concept that responsible motorists who carry liability insurance should not be uncompensated when they are without recourse against an uninsured tortfeasor.” Id. (quoting Amica Mutual Insurance Co. v. Streicker, 583 A.2d 550, 553 (R.I.1990)).

We repeatedly have explained that [t]he purpose of enacting the uninsured-motorist coverage statute was to afford protection to the insured against ‘economic loss resulting from injuries sustained by reason of the negligent operation of uninsured motor vehicles or hit-and-run motor vehicles.’ Henderson, 35 A.3d at 906 (quoting McVicker v. Travelers Insurance Co., 785 A.2d 550, 553–54 (R.I.2001)); see also Rueschemeyer v. Liberty Mutual Insurance Co., 673 A.2d 448, 450 (R.I.1996); Pin Pin H. Su v. Kemper Insurance Companies/American Motorists Insurance Co., 431 A.2d 416, 419 (R.I.1981) (recognizing this “broad statutory purpose” behind § 27–7–2.1); Aldcroft v. Fidelity and Casualty Co. of New York, 106 R.I. 311, 318, 259 A.2d 408, 413 (1969). Moreover, [c]ontracts for uninsured-motorist coverage * * * must be construed in light of the public policy mandated by the Legislature.” Henderson, 35 A.3d at 906 (quoting DiTata, 542 A.2d at 247). “The primary object remains indemnification for an insured's loss rather than defeat of his or her claim.” DiTata, 542 A.2d at 247.

Public policy in this area, however, is not entirely one-sided. We also are mindful that [t]he legislative purpose of the statute was not * * * ‘to guard against all economic loss,’ and we have held that reasonable limitations will be imposed on the construction of the uninsured-motorist statute to ‘afford[ ] insurers some financial protection’ from unwarranted claims.” Henderson, 35 A.3d at 906 (quoting Ladouceur v. Hanover Insurance Co., 682 A.2d 467, 470 (R.I.1996)); see also Streicker, 583 A.2d at 553 (We must impose reasonable limitations on the extent that the uninsured-motorist statute is construed to protect an insured because public policy also dictates that we construe the statute ‘in a manner that affords insurers some financial protection.’ quoting DiTata, 542 A.2d at 248).

Several...

To continue reading

Request your trial
24 cases
  • Nationwide Mut. Ins. Co. v. Shilling
    • United States
    • Court of Special Appeals of Maryland
    • 20 Abril 2020
    ...Co. , 2 P.3d 888, 892 (Okla. 2000) ; Vega v. Farmers Ins. Co. of Or. , 134 Or.App. 372, 895 P.2d 337, 340 (1995) ; Am. States Ins. Co. v. LaFlam , 69 A.3d 831, 844 (R.I. 2013) ; In re Britt , 529 S.W.3d 93, 97 (Tex. App. 2016) ; Safeco Ins. Co. v. Barcom , 112 Wash.2d 575, 773 P.2d 56, 60 (......
  • Narragansett Elec. Co. v. Am. Home Assurance Co.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 14 Febrero 2014
    ...Court rejected a “hurry up and wait” approach similar to the one that Century proposes for this action. Am. States Ins. Co. v. LaFlam, 69 A.3d 831, 843–44 (R.I.2013) (refusing to set the accrual date of an underinsured motorist claim at the time of accident rather than at the final date of ......
  • Narragansett Elec. Co. v. Am. Home Assurance Co., 11 Civ. 08299(LGS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 14 Febrero 2014
    ...Court rejected a “hurry up and wait” approach similar to the one that Century proposes for this action. Am. States Ins. Co. v. LaFlam, 69 A.3d 831, 843–44 (R.I.2013) (refusing to set the accrual date of an underinsured motorist claim at the time of accident rather than at the final date of ......
  • McKenna v. Federal Properties of R.I., Inc.
    • United States
    • Superior Court of Rhode Island
    • 16 Mayo 2018
    ...and the applicable statute of limitations begins to run at the time of the injury to the aggrieved party.'" Am. States Ins. Co. v. LaFlam, 69 A.3d 831, 840 (R.I. 2013) (quoting Hill v. R.I. State Emps.' Ret. Bd., 935 A.2d 608, 616 (R.I. 2007)). Federal Properties notes that the 1992 Agreeme......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT