Children's Friend & Serv. V. St. Paul Ins.

• Decision Date: 02 February 2006
• Docket Number: No. 2004-35-Appeal.,2004-35-Appeal.
• Citation: 893 A.2d 222
• Parties: CHILDREN'S FRIEND & SERVICE v. ST. PAUL FIRE & MARINE INSURANCE COMPANY.
• Court: Rhode Island Supreme Court

893 A.2d 222

CHILDREN'S FRIEND & SERVICE v. ST. PAUL FIRE & MARINE INSURANCE COMPANY.

No. 2004-35-Appeal.

Supreme Court of Rhode Island.

February 2, 2006.

COPYRIGHT MATERIAL OMITTED

Matthew T. Oliverio, for Plaintiff.

Thomas R. Bender, Providence, for Defendant.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, and SUTTELL, JJ.

OPINION

Justice SUTTELL, for the Court.

This appeal arises out of an action for declaratory judgment, brought by Children's Friend & Service (plaintiff or CFS), concerning an insurance policy St. Paul Fire & Marine Insurance Company (defendant or St. Paul) issued to CFS in 1982. The impetus behind the complaint was an underlying tort action against CFS involving claims of wrongful adoption. In the declaratory judgment action, certain issues concerning indemnity coverage were severed and stayed pending resolution of the underlying tort action. The only remaining issue, which concerned the applicability of an endorsement that St. Paul said was part of CFS's policy in 1982, was tried before a jury.¹ After a verdict in CFS's favor and entry of final judgment pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure, St. Paul filed a renewed motion for judgment as a matter of law and a motion for a new trial, both of which were denied by the trial justice.

On appeal, St. Paul assigns error to the trial justice's denial of both its renewed motion for judgment as a matter of law and its motion for a new trial. The gravamen of defendant's appeal is its assertion that the trial justice erroneously instructed the jury on the substantive law concerning the construction of insurance contracts. Because we are satisfied that the trial justice correctly applied the substantive law in charging the jury, and because we conclude the record provides a legally sufficient evidentiary basis for the jury to have found for CFS, we affirm the judgment.

I Facts and Procedural History

A brief description of the underlying tort action provides the backdrop for the issues presented in the case before us. On January 12, 1998, Joseph and Linda Rowey, along with their daughters Meghan and Lisa, filed suit against CFS concerning the adoption of Lisa, which had been made final on September 21, 1983.² CFS was founded in 1834 and is one of the oldest nonprofit social service agencies in the country. As described by its executive director, its primary mission is "to make sure that disadvantaged young children * * * get off to the best possible start in life." To accomplish this goal, CFS provides a variety of community and home-based services, including adoption services. In their complaint, the Roweys alleged that CFS failed to provide them with Lisa's complete and accurate medical history before adoption, and failed to inform them of her probable need for care.

On February 7, 1997, before filing suit, the Roweys' attorney notified CFS of her representation of the Roweys concerning their dispute with CFS over the wrongful adoption of Lisa. Upon receipt of the letter, CFS's executive director, Lenette Azzi-Lessing, notified legal counsel, who instructed Dr. Azzi-Lessing to identify all insurance companies with whom CFS maintained a liability policy for the applicable period. Doctor Azzi-Lessing, with the assistance of staff, located certain insurance records pertaining to St. Paul, including a one-page document entitled "DECLARATIONS" (declarations page) for the policy period from November 17, 1982 to November 17, 1983, another one-page document entitled "RENEWAL CERTIFICATE" for the period from January 1, 1984 to January 1, 1985, and a multipage document entitled "UMBRELLA EXCESS LIABILITY POLICY" (standard form policy) covering the period from January 1, 1985 to January 1, 1986. The declarations page indicates a policy number of "569XE5976," and identifies St. Paul as the insurer and CFS as the insured, with a liability limit of $1 million. The standard form policy, which does not bear a specific policy number, is a preprinted document that provides the details of coverage under St. Paul's basic excess liability policy. An introductory page to the 1985 standard form policy references a "Professional Services Exclusion Endorsement" as one of the forms included in the policy.

Doctor Azzi-Lessing notified St. Paul of the potential claim against CFS for wrongful adoption in a letter dated March 18, 1997, but received no reply from St. Paul. After the complaint was filed, Dr. Azzi-Lessing sent a second letter, on January 29, 1998, this time to an attorney representing St. Paul. The attorney responded on February 24, 1998, indicating that St. Paul would evaluate the extent to which the policy provided coverage, if at all, should CFS incur liability. After a series of correspondence, St. Paul informed CFS by letter dated April 6, 1998, that the policy did not provide coverage for the liability invoked in the Roweys' complaint. St. Paul based its decision on an endorsement that excluded coverage for "Personal Injury or Property Damage arising out of professional services rendered or which should have been rendered for others in the Insured[']s capacity as an Adoption & Social Welfare Agency."

Thereafter, on July 24, 1998, CFS initiated the present action, seeking declaratory judgment that the 1982-1983 policy covered CFS should the Roweys succeed on their claims in tort. On June 17, 2002, the parties filed a joint motion, which sought to sever certain issues before trial. The parties agreed that the resolution of those issues, which included the question of indemnity coverage, would be premature before the complete litigation of the underlying tort action against CFS. Specifically, the parties maintained that defenses concerning whether there was an "occurrence" or "personal injury" during the policy period of November 17, 1982 to November 17, 1983, depended in large part upon factual determinations in the underlying, and yet undecided, wrongful adoption tort action against CFS. The parties acknowledged, however, that the issue concerning the applicability of the professional services endorsement was properly before the court and perhaps even dispositive concerning CFS's remaining claims; should CFS fail to succeed on this issue, a subsequent determination of indemnity would be irrelevant because no coverage would exist from which CFS could seek indemnification. The motion justice agreed, and issued an order on July 25, 2002, effectively bifurcating CFS's claims.

The trial was heard on various days throughout January 2003. After instructing the jury, the trial justice presented two interrogatories to the jury. The first, which was CFS's burden to prove by a preponderance of the evidence, said: "Do you find that St. Paul Fire & Marine Insurance Company * * * issued an Excess Umbrella Liability Policy naming Children's Friend and Service as the Named Insured, effective from November 17, 1982 to November 17, 1983 * * *?" The second, for which St. Paul bore the same burden of proof, said: "Do you find that an endorsement entitled `Exclusion of Professional Liability or Error and Omissions' was part of and attached to the Umbrella Excess Liability Policy when issued?" After deliberating, the jury answered the first interrogatory in the affirmative, and the second in the negative. Referring to the court's July 25, 2002 order severing CFS's claims, the trial justice entered judgment under Rule 54(b) on January 21, 2003.³ On January 30, 2003, St. Paul moved for renewed judgment as a matter of law and a new trial, pursuant to Rules 50(b) and 59(a) of the Superior Court Rules of Civil Procedure, respectively. The trial justice entertained the post-verdict motions at a March 31, 2003 hearing and denied both motions. Orders denying the motions were entered on April 2, 2003, and defendant filed a notice of appeal on April 15, 2003.⁴

II Discussion

A. Renewed Judgment as a Matter of Law

We begin by addressing the trial justice's denial of defendant's renewed motion for judgment as a matter of law pursuant to Rule 50(b). The defendant advances two arguments. The first is predicated upon an alleged error in the instructions through which the trial justice charged the jury. St. Paul argues that instructing the jury to find whether the "professional services endorsement was attached to the original policy when it was issued" misinterpreted the applicable substantive law. (Emphasis added.) Second, defendant asserts that we should reverse the denial of the motion because no reasonable jury could have found that the endorsement was not issued with the standard form policy.

When considering a motion for judgment as a matter of law, the trial justice must examine "the evidence in the light most favorable to the nonmoving party, without weighing the evidence or evaluating the credibility of witnesses, * * * draw[ing] from the record all reasonable inferences that support the position of the nonmoving party." Marketing Design Source, Inc. v. Pranda North America, Inc., 799 A.2d 267, 271 (R.I.2002) (quoting Martinelli v. Hopkins, 787 A.2d 1158, 1165 (R.I.2001)). "If, after such a review, there remain factual issues upon which reasonable persons might draw different conclusions, the motion for [judgment as a matter of law] must be denied * * *." Wellborn v. Spurwink/Rhode Island, 873 A.2d 884, 887 (R.I.2005) (quoting Francis v. American Bankers Life Assurance Co. of Florida, 861 A.2d 1040, 1045 (R.I.2004)). This Court is bound by the same standards and rules as the trial justice. Saber v. Dan Angelone Chevrolet, Inc., 811 A.2d 644, 648 (R.I.2002).

For reasons more fully discussed in Part II B. of our opinion, we are satisfied that the trial justice did not instruct the jury erroneously about the applicable legal principles. We proceed to address, therefore, defendant's assertions with respect to the sufficiency of the evidence.

The defendant argues that CFS had the burden of proving the existence of the umbrella policy, and...