D'AMICO v. Johnston Partners

• Decision Date: 31 January 2005
• Docket Number: No. 2004-3-Appeal.,2004-3-Appeal.
• Citation: 866 A.2d 1222
• Parties: Mary D'AMICO v. JOHNSTON PARTNERS et al.
• Court: Rhode Island Supreme Court

866 A.2d 1222

Mary D'AMICO v. JOHNSTON PARTNERS et al.

No. 2004-3-Appeal.

Supreme Court of Rhode Island.

January 31, 2005.

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

Mark Nugent, Esq., Providence, for Defendant.

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

OPINION

FLAHERTY, Justice.

This matter came before this Court for oral argument on November 3, 2004, pursuant to an order directing the parties to appear and show cause why the issues raised by this appeal should not summarily be decided. After hearing the arguments of counsel and examining the memoranda filed by the parties, we are of the opinion that cause has not been shown and that the case should be decided at this time.

Facts and Procedural History

This case calls upon the Court to determine whether a plaintiff seeking to initiate a direct action against a tortfeasor's liability insurance carrier under G.L.1956 § 27-7-2.4 is required to do so prior to the termination of the tortfeasor's bankruptcy case. It is our opinion that the plain language of the statute expresses no such requirement. Furthermore, our rules of construction and statutory interpretation do not permit us to impose such a condition in the law's application. Accordingly, we reverse the Superior Court's denial of the plaintiff's motion to substitute the defendant's liability insurance carrier.

The facts pertinent to this appeal are brief. The plaintiff, Mary D'Amico, filed a civil action against Johnston Partners in 1990. Her complaint alleged that Johnston Partners (Johnston) had wrongfully encroached upon and caused surface water to run onto her property during a construction project on Johnston's land, which abutted plaintiff's land. In 1992, D'Amico amended her complaint to add Garofalo & Associates, Inc. (Garofalo) as a defendant, alleging that negligence by that company in performing engineering design services for Johnston had proximately caused her damages.

On March 20, 1996, however, Garofalo filed a voluntary petition for Chapter 11 Reorganization in the United States Bankruptcy Court. Garofalo followed up with a notice of bankruptcy in the pending Superior Court action. On June 6, 1997, the Bankruptcy Court confirmed Garofalo's reorganization plan, and that court entered a final decree closing Garofalo's Chapter 11 case on November 14, 1997.

On August 1, 2003, Garofalo moved for summary judgment in D'Amico's action, contending that the approval of its reorganization plan discharged any and all debts incurred prior to June 6, 1997, and thereby extinguished D'Amico's claim against it.¹ D'Amico responded by filing a motion to substitute Evanston Insurance Co. (Evanston) for Garofalo pursuant to § 27-7-2.4. The court consolidated the motions for hearing on October 7, 2003, at which time the motion justice ruled in favor of Garofalo on both motions. The court based its decision upon an expansive interpretation of § 27-7-2.4:

"[T]he disposition of both motions * * * rises and or falls on the interpretation of [§ 27-7-2.4] * * *. And that statute was interpreted by our Supreme Court as being broad and granting a broad entitlement to a claimant to pursue the insurer in the event that the insured files for bankruptcy. However, it does not assume that the claimant can sort of sit on its rights and lose the claim in the Bankruptcy Court, and, after the conclusion of the entire bankruptcy proceeding, thereafter, [attempt] to join the insurer. * * * In this case, I find that by reason of the passage of time and the confirmation of a plan, that this plaintiff lost its claim in the bankruptcy court and therefore cannot partake of the provisions of 27-7-2.4, as a person having a claim, and therefore cannot proceed against its insurer in this case."

The plaintiff filed a timely notice of appeal, contesting only the denial of its motion to substitute.

Standard of Review

Questions of statutory interpretation are reviewed de novo by this Court. Webster v. Perrotta, 774 A.2d 68, 75 (R.I.2001). In carrying out our duty as the final arbiter on questions of statutory construction, "[i]t is well settled that when the language of a statute is clear and unambiguous, this Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings." Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1226 (R.I.1996). "This is particularly true where the Legislature has not defined or qualified the words used within the statute." Markham v. Allstate Insurance Co., 116 R.I. 152, 156, 352 A.2d 651, 654 (1976). "In matters of statutory interpretation our ultimate goal is to give effect to the purpose of the act as intended by the Legislature." Webster, 774 A.2d at 75.

Analysis and Discussion

Before delving into an examination of § 27-7-2.4, we will first address Evanston's argument that plaintiff's appeal is moot. We previously have held that "a case is moot `if the original complaint raised a justiciable controversy, but events occurring after the filing have deprived the litigant of a continuing stake in the controversy.'" Foster-Glocester Regional School Committee v. Board of Review, 854 A.2d 1008, 1013 (R.I.2004) (quoting In re New England Gas Co., 842 A.2d 545, 553 (R.I.2004)). The defendant argues that plaintiff's failure to appeal the motion justice's decision on Garofalo's motion for summary judgment effectively renders this Court's decision on its motion to substitute moot because the claim against Garofalo no longer exists as a matter of law. This argument misses the mark. It is apparent in this case that the motion justice granted summary judgment in favor of Garofalo on the grounds that D'Amico's claim had been extinguished at the conclusion of Garofalo's bankruptcy proceedings. These are the same grounds upon which the court denied D'Amico's motion to substitute. Because plaintiff seeks review on its motion to substitute Evanston for Garofalo, however, our decision consequently goes to the heart of the summary disposition and addresses the same issues central to it. Therefore, D'Amico retains a continuing stake in this controversy.² Turning to the merits of the appeal, we note that § 27-7-2.4 provides:

"Any person, having a claim because of damages of any kind caused by the tort of any other person, may file a complaint directly against the liability insurer of the alleged tortfeasor seeking compensation by way of a judgment for money damages whenever the alleged tortfeasor files for bankruptcy, involving a chapter 7 liquidation, a chapter 11 reorganization for the benefit of creditors or a chapter 13 wage earner plan, provided that the complaining party shall not recover an amount in excess of the insurance coverage available for the tort complained of."

This Court previously has concluded that § 27-7-2.4 "clearly and unambiguously allows the injured party to substitute the tort-feasor's liability insurer as defendant after the tort-feasor files for bankruptcy." Giroux v. Purington Building Systems, Inc., 670 A.2d 1227, 1229 (R.I.1996) (emphasis added). In Giroux, the plaintiff sustained injury after being struck by a section of prefabricated roof decking while working as an employee of the defendant subcontractor. Giroux initiated suit against both the subcontractor and the manufacturer of the roof components, alleging that their negligence had proximately caused his injuries. After the manufacturer received protection under Chapter 11 of the Bankruptcy Code, Giroux moved to substitute the manufacturer's insurer under § 27-7-2.4. In response, the insurer argued that relief from the automatic stay imposed by the Bankruptcy Court pursuant to 11 U.S.C. § 362 was a condition precedent to substitution. The insurer further asserted that substitution under the statute was both permissive and discretionary, and that the Superior Court therefore had discretion to protect the insurer from substantial prejudice caused by its substitution as defendant. Reiterating our standard of review that "where the language of [a] statute is clear and unambiguous and `expresses a plain and sensible meaning, the meaning so expressed will be conclusively presumed to be the one intended by the Legislature[,]'" Giroux, 670 A.2d at 1229 (quoting Markham, 116 R.I. at 156, 352 A.2d at 653), we determined that § 27-7-2.4 did not allow additional conditions to be imposed for an injured party to substitute an insurer as a defendant. Accordingly, we held that "there is no provision under the clear and direct language of § 27-7-2.4 that would mandate this step in the application of the statute." Giroux, 670 A.2d at 1229.

This Court likewise has refrained from an overly inferential reading of § 27-7-2, a similar direct action statute.³ First, in Maczuga v. American Universal Insurance Co., 92 R.I. 76, 166 A.2d 227 (1960), we concluded that the clear language of § 27-7-2 allowed an insurer to be substituted based upon a non est inventus return of process when the plaintiff received knowledge of the tortfeasor's whereabouts after the direct action had begun. In that case, after the complaint issued against the insured tortfeasor was returned non est inventus on September 11, 1959, plaintiff served defendant's liability insurer pursuant to the statute on November 10, 1959. Thereafter, in March 1960, defendant's counsel informed plaintiff's counsel of his client's whereabouts. At trial, the substituted insurer argued that such knowledge, acquired subsequent to the commencement of the action against it, constituted valid grounds for dismissal of plaintiff's direct action. Affirming the Superior Court, we rejected defendant's argument and held that the clear and unambiguous language of § 27-7-2 did not "reasonably submit" to the imposition of the condition urged by the insurer. Maczuga, 92 R.I. at 81,166 A.2d at 230.

Similarly, in Gnys v. Amica Mutual Insurance Co., 121 R.I. 131, 396 A.2d 107 (1979), we reaffirmed the...