Bitgood v. Allstate Ins. Co.

• Decision Date: 21 August 1984
• Docket Number: No. 81-504-A,81-504-A
• Citation: 481 A.2d 1001
• Parties: Kenneth BITGOOD, d.b.a. v. ALLSTATE INSURANCE COMPANY et al. ppeal.
• Court: Rhode Island Supreme Court

Page 1001

481 A.2d 1001

Kenneth BITGOOD, d.b.a. v. ALLSTATE INSURANCE COMPANY et al.

No. 81-504-Appeal.

Supreme Court of Rhode Island.

Aug. 21, 1984.

Leo P. Attilli, Providence, for plaintiff.

Paul A. Anderson, Anderson, Henning & Anderson, Providence, Dennis J. Roberts II, Atty. Gen., Richard B. Woolley, Sp. Asst. Atty. Gen., for defendants.

OPINION

WEISBERGER, Justice.

This is a civil action in which the plaintiff, Kenneth W. Bitgood (Bitgood), the insured under a fire-insurance policy issued by defendant Allstate Insurance Company (Allstate), seeks to recover both from the state and the State Deputy Fire Marshal, Everett Ignagni (Ignagni), for damages allegedly resulting from misconduct on the part of Ignagni in connection with the investigation of a fire occurring at Bitgood's business premises and from Allstate for prejudgment interest.

The series of events giving rise to the instant action originate in Bitgood's purchase of a $25,000 fire-insurance policy on his business, Ridgerunner Speed Shop, a store for high-performance auto parts located at 608 Broad Street in Cumberland, Rhode Island, from Allstate in September 1975. During the early morning hours of December 6, 1975, the building and inventory were destroyed by an explosion and a fire. Bitgood testified that earlier that night, he had arranged to have Michael Gallipeau, his car-racing associate, purchase three five-gallon containers of gasoline from a local gas station and deliver them to his establishment for the purpose of fueling a ramp truck so that Bitgood could drive the truck home. Bitgood was not in the habit of driving the ramp truck home as it was usually used solely to transport the racing car stored in Bitgood's business shop to and from competitive events. After the delivery of the gasoline, Bitgood closed the shop for the day and went home, only to return to his business premises a short time later when he became aware of an explosion and a fire in the vicinity of his store. The deputy fire marshal, Ignagni, was at the scene, and a brief conversation between the two parties ensued concerning the building's contents and other formalities. At some point thereafter, Bitgood returned home.

Later that morning the police contacted Bitgood to arrange for another discussion with Ignagni to be conducted at the scene of the fire. That same day, in the aftermath of the fire and the cleanup, the charred body of Michael Gallipeau was discovered in the debris. Prior to the discovery of the body, no one had been aware that Gallipeau might have been in the building. This factor accompanied by several other suspicious circumstances resulted in the commencement of an extensive investigation into the fire by the State Fire Marshal's office in conjunction with the Cumberland police department. Bitgood was questioned a third time at Cumberland police headquarters on the following afternoon. Ignagni requested that Bitgood consent to taking a polygraph test as part of the standard fire investigation. Bitgood refused this request. After seeking the advice of his attorney, Bitgood again declined to give his consent (as the trial justice ruled he had a right to do).

Pursuant to the insurance-policy provisions, Bitgood submitted an inventory to Allstate in the early spring of 1976 which failed to conform to the required proof of loss. Subsequently, in May 1976, a satisfactory inventory was submitted to Allstate. However, Allstate representatives believed that there was a possibility that the investigation might reveal evidence that Bitgood was criminally involved with the fire. Therefore, Allstate, while awaiting the fire marshal's final report, advised Bitgood and his attorney that it would be willing to pay the face amount of the policy ($25,000) upon the receipt of the fire marshal's report absolving Bitgood of criminal responsibility for the fire. It was further stated at trial that Allstate's company policy was to postpone the settlement of claims of this nature until a final copy of the report was received from the State Fire Marshal.

As part of the continuing investigation by the fire marshal's office, certain gas-meter equipment found on the business premises was sent to be tested at the University of Rhode Island crime laboratory. The crime laboratory's report was not received by Ignagni until May 19, 1976. ¹ When the information was received evidencing nothing suspicious regarding the gas-meter equipment, the fire marshal's report was submitted on June 10, 1976, to a special assistant attorney general who formed the opinion that there was insufficient evidence to warrant the issuance of an information or indictment against anyone in connection with the December 6, 1975 fire. Therefore, the case was put in a "closed status," which required no further review by law enforcement authorities. Ignagni prepared a final report embodying this information on June 29, 1976.

On July 15, 1976, Bitgood instituted suit against Ignagni, two deputy fire marshals, the state, Allstate, and two of its agents, alleging, among other counts of misconduct incident to the settlement of the fire-loss claim, a conspiracy to delay the issuance of the fire marshal's report. Subsequently, Bitgood sought to amend his complaint to include counts pursuant to 42 U.S.C.A. §§ 1983, 1985 for violation of his federally protected rights as a result of the tortious interference with his contractual and personal relationships. The motion to file the amended complaint was granted on November 6, 1980. On November 13, 1980, defendants filed a motion to dismiss the amended complaint, which was denied by the trial justice after memoranda of law were filed and oral argument heard on the matter.

The fire marshal's report was received by Allstate and by Bitgood in February 1977. No explanation was furnished for the delay in the delivery of this report from the date of its preparation. Thereafter, Allstate evaluated Bitgood's claim under its standard settlement procedure. Authorization for settlement of the claim was issued by the company, and numerous offers to tender the full policy coverage amount of $25,000 were made to Bitgood by Allstate. Finally, prior to trial Bitgood accepted the policy limit, and judgment for this amount was entered with the provision, by agreement of the parties, that the issue of the addition of prejudgment interest would be submitted to the trial justice for determination. A dismissal with prejudice of Bitgood's actions against two of Allstate's adjusters and an agreed statement of facts were made part of the judgment order. The judgment and findings of fact read as follows:

"1. Judgment may enter in favor of the plaintiff in the sum of Twenty-five thousand ($25,000) dollars against the defendant, Allstate Insurance Company.

"2. The plaintiff's claims against the defendants, Domenic Rendine and Edward Candell, a/k/a Edward Kennelly, are dismissed with prejudice.

"3. The plaintiff, Kenneth Bitgood and the defendant, Allstate Insurance Company, agree to the following facts:

"a. There was an insurance policy issued to the plaintiff, Kenneth Bitgood, by the Allstate Insurance Company identified as Policy No. 19-596-990 BP. Said policy was issued on or about September 12, 1975, and said policy included a fire loss provision relating to the business fixtures and contents of a building located at 608 Broad Street in the Town of Cumberland identified as 'The Ridgerunner Speed Shop.'

"b. On or about December 6, 1975, the above mentioned building and its contents were destroyed by fire. At the time of said fire the policy of insurance referred to above was in full force and effect.

"c. Subsequent to said fire an inventory was submitted to the Allstate Insurance Company on or about May 1, 1976, in compliance with the appropriate provisions of said policy.

"d. The Allstate Insurance Company did not make payment on this loss, at that time, due to the fact that neither it nor the plaintiff were able to obtain a copy of the State Fire Marshal's report of the incident. Further, it was alleged that there were 'suspicious circumstances' surrounding the cause of the fire which allegedly brought about the delay in the release of the report.

"e. During the month of July the plaintiff, Kenneth Bitgood, instituted the instant action in the Providence County Superior Court.

"f. In February 1977 the State Fire Marshal's report was first made available to both the plaintiff and the defendant, Allstate Insurance Company.

"g. Within two to three weeks subsequent to the release of the report the defendant, Allstate Insurance Company, offered payment of the full face amount of the policy totalling Twenty-five thousand ($25,000.00) dollars. Said offer was contingent solely on the plaintiff dismissing his suit against the Allstate Insurance Company and its agents."

It should be noted that the agreed statement of facts includes no explanation for the delay encountered by Allstate or Bitgood in receiving the final report of the fire marshal. The evidence in the case also provides no reasons for this delay. Former counsel for Bitgood stated in his testimony that his first request in writing for the report was made on February 8, 1977. The report was forwarded to counsel on February 10, 1977. Although counsel testified that he had made many calls to the Attorney General's office subsequent to the bringing of suit, he could not recall to whom he spoke during these telephonic communications.

Bitgood's case against both Ignagni in his capacity as deputy fire marshal and the State of Rhode Island proceeded to trial. At the close of all the evidence, the trial justice granted Ignagni's motion for a directed verdict. This case is presently before us on appeal from the judgment entered pursuant thereto. In addition, Bitgood appeals from the trial justice's order denying him prejudgment interest in addition to the policy limit of $25,000 as against Allstate.

The state has filed a...