Houle v. Liberty Ins. Corp.
| Decision Date | 30 March 2022 |
| Docket Number | 2021-30-Appeal.,PC 16-4707 |
| Citation | 271 A.3d 591 |
| Parties | Daniel HOULE et al. v. LIBERTY INSURANCE CORPORATION, Alias, a/k/a Liberty Mutual Group, a/k/a Liberty Mutual, a/k/a Liberty Mutual Insurance. |
| Court | Rhode Island Supreme Court |
Tanis G. Caine, Esq., Kevin M. Daley, Esq., for Plaintiffs.
Christopher M. Reilly, Esq., for Defendant.
Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.
Justice Lynch Prata, for the Court.
This case came before the Supreme Court on March 1, 2022, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. The plaintiffs, Daniel Houle and Karen Houle (plaintiffs or the Houles), appeal from a decision and order of the Superior Court granting the motion for judgment on the pleadings by the defendant, Liberty Mutual Insurance Corporation, alias, a/k/a Liberty Mutual Group, a/k/a Liberty Mutual, a/k/a Liberty Mutual Insurance (defendant or Liberty Mutual).1 After considering the parties’ written and oral submissions and reviewing the record, we are satisfied that cause has not been shown and that this appeal may be decided at this time. For the reasons set forth herein, we vacate the order of the Superior Court.
On February 21, 2015, the roof at plaintiffs’ home located at 520 Snake Hill Road in North Scituate, Rhode Island (the property), collapsed due to accumulating ice and snow. The property was insured through a "Libertyguard Deluxe Homeowners Policy" issued by Liberty Mutual (the policy or the Libertyguard Deluxe policy). The plaintiffs timely notified Liberty Mutual about the loss, and an adjuster from Liberty Mutual was assigned to investigate. The adjuster submitted a repair estimate of $18,349.66. Thereafter, the Houles submitted proof-of-loss documents estimating that the cost of repair would amount to $193,280.40. The defendant then enlisted the services of an engineering firm and a construction company to draw plans and estimate the cost of repairs. The estimate was $53,615.26.
On June 20, 2016, the Houles informed Liberty Mutual that they were electing to invoke the appraisal provision of the Libertyguard Deluxe policy, which provides, in pertinent part, that:
Both parties selected their appraiser, but the appraisers could not agree on an umpire.
The Houles filed the instant action in Superior Court on October 7, 2016, seeking "relief in the form of a judgment naming an independent and qualified umpire to set the amount of loss for insurance coverage[.]" Liberty Mutual filed an answer and counterclaim, as well as an objection to plaintiffs’ request for declaratory relief and cross-motion for declaratory judgment. On December 6, 2016, the various matters were heard before a Superior Court justice. On December 30, 2016, an order entered by agreement, stating that the parties had agreed upon the selection of an umpire. The appraisal hearing went forward on March 9, 2018, and plaintiffs were awarded $81,641 by the appraisal panel.
On August 7, 2019, plaintiffs filed a second amended complaint, alleging that Liberty Mutual had breached the terms of the Libertyguard Deluxe policy "by not performing a full and complete investigation." The plaintiffs also alleged that defendant "acted in bad faith in the handling of" their claim. On November 25, 2019, defendant filed a motion for judgment on the pleadings, arguing that plaintiffs’ claims failed as a matter of law because plaintiffs had failed to allege facts that could prove that Liberty Mutual breached the policy and/or acted in bad faith. The Houles objected to the motion, maintaining that, as pled in the second amended complaint, defendant's alleged failure to "provide a full and complete investigation of the Houles’ loss" constituted a prima facie case for breach of contract and bad faith.
A hearing was held on defendant's motion on February 26, 2020, at the conclusion of which the motion justice issued a decision dismissing plaintiffs’ complaint. The motion justice found that plaintiffs failed to "set forth sufficient facts relating to the allegedly deficient investigation and how [it] was a breach of contract and led to damages" and did not identify "any part of the policy that's been breached by * * * Liberty Mutual." She noted that plaintiffs’ amount-of-loss "claim went through the full appraisal process[,]" and was "fully and finally adjudicated by" that process. Because the motion justice found that plaintiffs could not maintain an action for breach of contract against defendant, she also dismissed their bad-faith claim because she found "that bad faith claims cannot be sustained without a breach of contract claim[.]"2
An order consistent with the motion justice's bench decision entered, granting defendant's motion for judgment on the pleadings. The Superior Court granted defendant's motion for entry of judgment, and plaintiffs filed a timely notice of appeal.
Pursuant to Rule 12(c) of the Superior Court Rules of Civil Procedure, a hearing justice may "dispos[e] of a case early in the litigation process when the material facts are not in dispute after the pleadings have been closed and only questions of law remain to be decided." Premier Home Restoration, LLC v. Federal National Mortgage Association , 245 A.3d 745, 748 (R.I. 2021) (quoting Nugent v. State Public Defender's Office , 184 A.3d 703, 706 (R.I. 2018) ). "When reviewing the decision of a hearing justice on a motion for judgment on the pleadings pursuant to [R]ule 12(c), we utilize the Rule 12(b)(6) motion-to-dismiss test." Nugent , 184 A.3d at 706. As such, "a judgment on the pleadings ‘may be granted only when it is established beyond a reasonable doubt that a party would not be entitled to relief from the defendant under any set of conceivable facts that could be proven in support of its claim.’ " Premier Home Restoration, LLC , 245 A.3d at 748 (quoting Nugent , 184 A.3d at 706-07 ).
On appeal, plaintiffs argue that the motion justice erred in granting judgment on the pleadings in favor of Liberty Mutual because, they contend, the pleadings established the facts necessary to support claims for breach of contract and bad faith. Specifically, plaintiffs maintain that, pursuant to the Libertyguard Deluxe policy, "Liberty Mutual had an inherent contractual obligation to perform a full and complete investigation of the loss[,]" which it failed to do.
It is well established that the terms of an insurance policy are interpreted "in accordance [with] the rules of construction that govern contracts." Derderian v. Essex Insurance Co. , 44 A.3d 122, 127 (R.I. 2012). "[W]hether a party has substantially performed or...
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