Liguori v. Aetna Cas. & Sur. Co.

• Decision Date: 30 March 1978
• Docket Number: No. 76-113-M,76-113-M
• Citation: 384 A.2d 308,119 R.I. 875
• Parties: Robert F. LIGUORI et al. v. The AETNA CASUALTY AND SURETY CO. P.
• Court: Rhode Island Supreme Court

Page 308

384 A.2d 308

119 R.I. 875

Robert F. LIGUORI et al. v. The AETNA CASUALTY AND SURETY CO.

No. 76-113-M.P.

Supreme Court of Rhode Island.

March 30, 1978.

[119 R.I. 886] William T. Murphy, Pawtucket, John H. Hines, Jr., Providence, for petitioners.

Hinckley, Allen, Salisbury & Parsons, Robert W. Lovegreen, Providence, for respondent.

OPINION

KELLEHER, Justice.

We have issued a writ of certiorari pursuant to the pertinent provisions of the Administrative Procedures Act, to wit, G.L.1956 (1977 Reenactment) § 42-35-16 in order that we might review a judgment entered in the Superior Court reversing a decision and order issued by the Director of Business Regulation. ¹ The director, who is also the state's Insurance Commissioner, had ruled that Aetna Casualty and Surety Co. (Aetna) unlawfully cancelled the automobile liability coverage of the petitioner, Thomas F. Keough, Jr., and ordered Aetna to reinstate his insurance coverage.

There is no dispute as to the facts. On February 23, 1973, Keough purchased an automobile insurance policy from Aetna. He had to finance a part of the premium due on the policy, and to obtain the needed funds, he went to Valley Premium Plan (Valley), a private financing institution. Keough signed a promissory note with Valley in which he agreed to pay Valley the financed balance of the premium ($201) plus interest in ten successive monthly installments beginning on March 23, 1973. The note also provided that should Keough default on any monthly installment, the unpaid balance would become payable immediately. A clause in the note stated:

"Such default * * * shall constitute an election by the insured to cancel said policy * * * and the insured agrees, in such event, promptly to return the described policy * * * to the payee named herein (Valley).

" * * *fau

"The insured hereby appoints the payee herein * * * the insured's attorney-in-fact to effectuate the foregoing in the name of the insured."

Attached to Keough's policy was a "Financed Premium Endorsement." This was an agreement between Aetna and Valley in which Aetna agreed to abide by a request by Valley for cancellation of the policy made in accordance with the power of attorney granted to it by Keough. The endorsement provided that, upon a proper request by Valley, the company would then terminate the policy in the manner prescribed by it. The policy stipulated that the insured could cancel the policy at any time by "mailing to the company written notice" stating when the policy should cease to be effective.

On July 11, 1973, Valley wrote to Keough, informing him that he was in default on the note as of June 23, 1973, and reminded him of the terms of the promissory note which equate a default with an election by the insured to cancel the policy. Valley said that it would exercise its power of attorney and direct Aetna to terminate coverage as of 12:01 a.m. on July 14, 1973. Valley also wrote to Aetna on July 11 and ordered the cancellation of Keough's policy. In its letter Valley stated that its action was being taken "(u)nder the terms of our finance agreement and regulation 16 of the R.I. Dept. of Business Regulations * * *."

As his luck would have it, Keough was involved in an automobile collision on July 27, 1973. Shortly thereafter, he contacted Aetna to learn if the company would cover him against any liability arising from the collision. Aetna informed him that even though his policy had not yet been processed for cancellation, the company considered his coverage terminated as of July 14. Keough, hoping that Valley would then withdraw its cancellation request, sought to pay Valley the full amount of his indebtedness. Unfortunately for Keough, his offer of payment fell upon deaf ears. Keough filed a complaint with the Department of Business Regulation, alleging that Aetna refused to honor its policy commitment.

A hearing was held on February 5, 1974 before the Commissioner of Insurance. ² The evidence presented at this hearing consisted almost entirely of the written documents which the parties deemed controlling, i. e. the insurance policy, the promissory note, Valley's July 11 letters to Aetna and Keough, and correspondence between Aetna and Keough. After presenting these documents, counsel for Aetna and Keough explained their respective positions on the proper interpretation to be given to the documents. The commissioner ruled that Valley's reference to department Regulation 16 in its cancellation letter to Aetna bound Aetna to give Keough the regulatory minimum of 10 days' notice before his coverage ³ could be cancelled. The commissioner, after describing the cancellation notice as a nullity, ordered Aetna to reinstate Keough's coverage.

Aetna appealed the commissioner's decision to the Superior Court under § 42-35-15, naming both the commissioner and Keough as defendants. The Superior Court justice subsequently granted Aetna's motion for summary judgment. He found that the commissioner lacked the authority to order reinstatement and also pointed out that the most the commissioner could do was to invoke § 42-35-8 of the Administrative Procedures Act and issue a declaratory ruling as to whether Regulation 16 applied to Keough's predicament. Upon examination of the commissioner's ruling on the applicability of the regulation, the trial justice held that the commissioner's finding was "contrary to the reliable, probative, and substantial evidence on the whole record." Judgment was entered for Aetna, whereupon the commissioner and Keough sought certiorari.

In our order granting the petition for certiorari, we requested the parties to brief the question of whether the commissioner has standing to seek review under § 42-35-16 of a judicial reversal of one of his orders. Before proceeding to the substantive matters of this controversy, we will first dispose of the issue of the commissioner's standing.

Section 42-35-16 provides that only a "party in interest, if aggrieved by a final judgment of the superior or district court" may petition the Supreme Court for a writ of certiorari. This statute, as with others providing for judicial review of administrative agency determinations, makes "aggrievement" the requisite stake in the disposition of the dispute which justifies a person's pursuing a particular claim before this court. In New England Tel. & Tel. Co. v. Fascio, 105 R.I. 711, 717, 254 A.2d 758, 761-62 (1969), we held that "aggrievement results when the order, decision, or decree adversely affects in a substantial manner some personal or property right of the party or imposes upon it some burden or obligation." Admittedly, if Fascio was applicable, the commissioner could not assert that either a personal or property right of his was affected or that an additional burden was imposed upon him.

However, this court has recognized several exceptions to the general standard of "aggrievement." In the proper circumstances, an agency or head of an agency may seek judicial review of a lower court ruling in this court "if the public has an interest in the issue at stake which reaches out beyond that of the immediate parties" or if the judgment of the lower tribunal would otherwise escape review. Altman v. School Committee, 115 R.I. 399, 403, 347 A.2d 37, 39 (1975); Buffi v. Ferri, 106 R.I. 349, 259 A.2d 847 (1969). Here the Superior Court's judgment would not escape review if the commissioner were barred from petitioning for certiorari because Keough had already sought and obtained appellate review of the trial justice's ruling. Nevertheless, this proceeding does involve an issue that goes beyond the concerns of either Aetna or Keough, since it brings into focus an issue that unquestionably affects the public interest.

The Superior Court's ruling that a public official who is charged with the responsibility of administering laws that regulate an industry whose operation affects the life, property, and financial resources of many Rhode Islanders is powerless to grant affirmative relief to an individual such as Keough must be considered in the light of the public's concern that the insurance industry be held accountable for its conduct through effective regulation and proper enforcement of those regulations. Since the commissioner is the statutory guardian of the public's interest in this area, this official is especially suited to protect that interest before this court. ⁴

Turning now to the merits of the controversy, we initiate our discussion by noting that, although framed in terms of a formal complaint seeking an adjudication of rights and duties, Keough's request for administrative assistance in his dispute with Aetna cannot be viewed as anything other than the commencement of a § 42-35-8 declaratory ruling proceeding. ⁵ The commissioner has apparently agreed that this is the case, since he has not objected to the trial justice's characterization of the proceeding. Our own independent review reveals no statutory basis, other than § 42-35-8, for the commissioner to become involved in a difference of opinion over the cancellation of a policy between an insured and the insurer.

The commissioner also concedes, as he must, that neither § 42-35-8 nor any other statute detailing his regulatory powers authorizes him to order an insurer to reinstate insurance coverage after a finding that a department regulation is applicable to a given transaction. Section 42-35-8 simply states that in an agency proceeding of this type, the agency shall declare whether the regulation applies. The statute goes no further and is silent as to whether, after making a declaratory ruling, the agency may then grant some form of affirmative relief.

The commissioner argues that his authority to fashion specific relief is inherent in his statutory authority to regulate the insurance industry by the issuance of rules and is implicit in his statutory power to suspend or revoke an insurer's license when the public interest so...