Derderian v. Essex Insurance Co., C.A. No. PC-2004-3458 (R.I. Super 6/25/2009)
| Decision Date | 25 June 2009 |
| Docket Number | C.A. No. PC-2004-3458 |
| Parties | MICHAEL DERDERIAN and JEFFREY DERDERIAN v. ESSEX INSURANCE CO. |
| Court | Rhode Island Superior Court |
In this declaratory judgment action, filed by Michael and Jeffrey Derderian ("Derderians") pursuant to G.L. 1956 § 9-30-1 et seq., each party has moved for summary judgment. At issue is whether Essex Insurance Co. ("Essex") has a duty to defend the Derderians against the state's criminal prosecution of them on charges of involuntary manslaughter.
On February 20, 2003, a fire occurred at the Station nightclub in West Warwick, Rhode Island, claiming the lives of one hundred people. On December 9, 2003, a Rhode Island grand jury returned separate indictments against Michael Derderian and Jeffrey Derderian. Counts One through One Hundred of the respective indictments alleged that the Derderians "without malice aforethought, perform[ed] a lawful act with criminal negligence . . . which on February 20, 2003 unintentionally and proximately caused the death of [the victims], in violation of § 11-23-3 of the General Laws of Rhode Island . . . ."1 Counts 101 through 200 alleged that the Derderians "without malice aforethought, perform[ed] an unlawful act not amounting to a felony, to wit, the violation of § 23-28.6-15 of the General Laws of Rhode Island . . . which unintentionally and proximately caused the death of [the victims], in violation of § 11-23-3 of the General Laws of Rhode Island . . . ."2
On March 24, 2002, Essex Insurance Company ("Essex") had issued an insurance policy ("Policy") to Michael Derderian. The Policy states that the named insured and mailing address is The Station, c/o Michael Derderian, 6500 Post Road, North Kingstown, RI 02852. The Policy covered the period from March 24, 2002 to March 24, 2003. The relevant portions of the Policy state:
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies. We will have the right and duty to defend the insured against any `suit' seeking those damages. However, we will have no duty to defend the insured against any `suit' seeking damages for `bodily injury' or `property damage' to which this insurance does not apply. We may, at our discretion, investigate any `occurrence' and settle any claim or `suit' that may result.[]
b. This insurance applies to `bodily injury' and `property damage' only if:
(1) The `bodily injury' or `property damage' is caused by an `occurrence' that takes place in the `coverage territory'; and (2) The `bodily injury' or `property damage' occurs during the policy period.
c. Damages because of `bodily injury' include damages claimed by any person or organization for care, loss of services or death resulting at any time from the `bodily injury'. (Policy § I.A.1.)
Occurrence means "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Policy § V.13.) The coverage territory includes the United States. (Policy § V.4.a.) The Policy defines bodily injury as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." (Policy § V.3.) Property damage is defined as:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the `occurrence' that caused it. (Policy § V.17.)
The Policy defines suit as
[A] civil proceeding in which damages because of `bodily injury', `property damage' or `personal and advertising injury' to which this insurance applies are alleged. `Suit' includes:
a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or
b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent. (Policy § V.18.)
Lastly, the Policy states that "[w]here there is no coverage under this policy, there is no duty to defend." (Policy at Combination General Endorsement Form M/E-001 (4/00).)
Pursuant to the Policy and G.L. 1956 § 12-28-5,3 the Derderians demanded that Essex provide them a defense against the criminal prosecutions arising from the December 9, 2003 indictments. Essex refused to provide such a defense, maintaining that the Derderians were not entitled to such a defense under the terms of the Policy.
On June 28, 2004, the Derderians filed a complaint against Essex alleging that "[b]ecause a verdict against each defendant in the indictments would result in the imposition of civil judgment for liability and damages as provided in § 12-28-5, each indictment constitutes a `suit' under the terms of the Essex policy." (Compl. ¶12.) Accordingly, the Derderians' complaint sought a declaratory judgment that Essex has a duty to provide them with a defense to their respective indictments. On August 17, 2004, Essex filed its answer and a counterclaim seeking a declaration that it need not provide or fund the Derderians' defense to the criminal prosecutions.
Rule 56 of the Rhode Island Superior Court Rules of Civil Procedure empowers a trial justice, upon proper motion, to enter summary judgment. Summary judgment should be granted only when "`the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Stewart v. Sheppard, 885 A.2d 715, 719 (R.I. 2005) (quoting Plunkett v. State, 869 A.2d 1185, 1187 (R.I. 2005)). In considering a motion for summary judgment, the court does not weigh the evidence or make credibility determinations. Weaver v. American Power Conversion Corp., 863 A.2d 193, 200 (R.I. 2004) (citing Palmisciano v. Burrillville Racing Assoc., 603 A.2d 317, 320 (R.I. 1992)). When adversary parties file motions for summary judgment, this Court "shall treat the relevant allegations of both parties in the most favorable light insofar as they oppose the respective motions for summary judgment." RIH Med. Found., Inc. v. Nolan, 723 A.2d 1123, 1125 (R.I. 1999). It is well-established that the "`purpose of the summary judgment procedure is issue finding, not issue determination.'" Estate of Giuliano v. Giuliano, 949 A.2d 386, 391 (R.I. 2008) (quoting Industrial Nat'l Bank v. Peloso, 121 R.I. 305, 307, 397 A.2d 1312, 1313 (1979)). However, when both parties move for summary judgment and no genuine issues of material fact exist, this Court must review the record to determine if either party is entitled to judgment as a matter of law. See Dubis v. East Greenwich Fire Dist., 754 A.2d 98, 100 (R.I. 2000).
Law and Analysis
The Derderians argue that because § 12-28-5 provides for entry of a civil judgment in the event of a felony conviction after a trial by jury, the indictments against the Derderians constitute suits under the Policy. Further, the Derderians argue that if the Policy is ambiguous, then this Court should interpret the ambiguity in their favor. Essex contends that the contractual language does not support coverage of criminal defense costs.
It is well-settled that Rhode Island courts apply "`the rules for construction of contracts when interpreting an insurance policy and that [they] shall not depart from the literal language of the policy absent a finding that the policy is ambiguous.'" Lynch v. Spirit Rent-A-Car, Inc., 965 A.2d 417, 425 (R.I. 2009) (). Further:
`In order to determine whether the policy is ambiguous, we read the policy in its entirety, giving words their plain, ordinary, and usual meaning.' . . . `We refrain from engaging in mental gymnastics or from stretching the imagination to read ambiguity into a policy where none is present.'. . . `If the terms of the policy are ambiguous, subjecting them to more than one reasonable interpretation, `the policy will be strictly construed in favor of the insured and against the insurer.' Id. (quoting Mallane, 658 A.2d at 20 (internal citations omitted).
The plain language of the Policy provides that Essex "will have the right and duty to defend the insured against any `suit' seeking those damages [for `bodily injury' or `property damage' to which the insurance applies]." (Policy § I.A.1.a.) The Policy defines "suit" as "a civil proceeding in which damages because of `bodily injury', `property damage' or `personal and advertising injury' to which this insurance applies are alleged." (Policy § V.18.) This Court finds that the Policy language unambiguously provides for a defense of the insured only in civil proceedings in which damages are alleged.
The indictments to which the Derderians direct this Court, alleging involuntary manslaughter, neither initiated a civil proceeding nor alleged damages.4 See Hoyle v. Utica Mut. Ins. Co., 48 P.3d 1256, 1263 (Idaho 2002) (); Bodell v. Walbrook Ins. Co., 119 F.3d 1411, 1418 (9th Cir. 1997) () (citing Jaffe v. Cranford Ins. Co., 214 Cal.Rptr. 567, 570 (Cal. Ct. App. 1985)); Spiegel v. State Farm Fire and Cas. Co., 660 N.E.2d 200, 202 (Ill. App. Ct. 1995) (...
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