Obert v. Republic Western Ins. Co.

• Decision Date: 29 March 2002
• Docket Number: C.A. No. 01-324L.
• Citation: 190 F.Supp.2d 279
• Parties: Joseph OBERT, Plaintiff, v. REPUBLIC WESTERN INSURANCE COMPANY, Joseph J. Fratus, Stephanie Fratus Forte, and Carissa Fratus, a Minor, p.p.a. Joseph J. Fratus and Stephanie Fratus Forte, Defendants. Republic Western Insurance Company, Third-party Plaintiff, v. Jefrey C. Schreck, a professional corporation, Third-party Defendant.
• Court: U.S. District Court — District of Rhode Island

190 F.Supp.2d 279

Joseph OBERT, Plaintiff, v. REPUBLIC WESTERN INSURANCE COMPANY, Joseph J. Fratus, Stephanie Fratus Forte, and Carissa Fratus, a Minor, p.p.a. Joseph J. Fratus and Stephanie Fratus Forte, Defendants.

Republic Western Insurance Company, Third-party Plaintiff, v. Jefrey C. Schreck, a professional corporation, Third-party Defendant.

C.A. No. 01-324L.

United States District Court, D. Rhode Island.

March 29, 2002.

COPYRIGHT MATERIAL OMITTED

Max Wistow, Wistow & Barylick, Providence, RI, for plaintiff.

Elizabeth McDonough Noonan, Adler Pollock & Sheehan, Providence, RI, Robert Macleish, Jr., Robert A. Sherman, Annapoorni Sankaran, Greenberg Traurig, LLP, Boston, MA, for Defendants.

OPINION AND ORDER

LAGUEUX, Senior District Judge.

On September 5, 2001, defendant Republic Western filed a motion to disqualify this Judge pursuant to 28 U.S.C. § 455(a). In the alternative, Republic Western requests that this matter be referred to U.S. District Judge Mary Lisi of this Court, who Republic Western contends was originally assigned to this case. This Court, for the reasons herein set forth, denies Republic Western's motion to disqualify. Furthermore, this Court declines to refer the matter to Judge Lisi. Finally, because of reasons that will become apparent in this opinion, this Court will issue a show cause order preparatory to revoking the pro hac vice admission of Republic Western's counsel in this case.

I. BACKGROUND

Nearly seventeen years ago, on June 4, 1985, Joseph F. Fratus was gravely injured in an accident in Cranston, Rhode Island. While directing traffic at a construction site, Fratus was hit by a rented U-Haul truck, driven by Joseph Obert, plaintiff in this case. At the time, Obert was working for American Drywall Company, Inc. and was driving the truck as part of his job. Republic Western was U-Haul's insurer.

Fratus and his family sued Obert, Drywall, and U-Haul in this Court, and Republic Western defended the suit. Fratus v. Amerco, C.A. No. 87-364-B. The case was assigned to then Chief Judge Francis J. Boyle. On December 12, 1988, the jury returned a verdict in favor of the Fratuses against Obert, Drywall, and U-Haul and awarded the Fratuses over three million dollars. U-Haul challenged whether it was vicariously liable as a matter of law, and the question was certified to the Rhode Island Supreme Court. The Rhode Island Supreme Court ruled, as a matter of state law, that U-Haul was not jointly and severally liable for Obert's and Drywall's negligence. Fratus v. Amerco, 575 A.2d 989 (R.I.1990). Thereafter, on July 2, 1990, Judge Boyle entered judgment in accordance with that decision. At that time, it was undisputed that Republic Western, as U-Haul's insurer, had to pay at least $25,000 to the Fratuses, the minimum insurance coverage that the state required. Payment was not made until October 24, 1994. The Fratuses and Republic Western, however, disputed the payment of interest on the judgment. On July 26, 1994, the Fratuses again sued in this Court claiming that, under the terms of the basic operative policy, Republic Western was obligated to pay all of the interest that had accrued on the original judgment and not just the interest accrued on $25,000. On May 29, 1997, Judge Boyle (then a senior judge) determined that the Fratuses were entitled to post-judgment interest for the period from December 12, 1988 to October 20, 1994 on the full amount of the judgment. Fratus v. Republic Western Ins. Co., 963 F.Supp. 113 (D.R.I.1997). Republic Western appealed that ruling to the First Circuit Court of Appeals. Judge Boyle also found that certain additional umbrella policies issued by Republic Western to U-Haul ("the excess policies") did not apply to make Obert an insured. The Fratuses appealed that determination. The First Circuit agreed with Judge Boyle that the clear and unambiguous terms of the basic policy required Republic Western to pay all interest on the entire judgment, up to the date that the amount that it was obligated to pay, $25,000, was actually paid. Fratus v. Republic Western Ins. Co., 147 F.3d 25, 28-29, 33 (1st Cir.1998). Post-judgment interest amounted to over one million dollars. The First Circuit also modified the pre-judgment interest award. With regard to the coverage provided by the excess policies, the First Circuit remanded the issue to this Court because there was a material dispute of fact. Id. at 33. The First Circuit noted that the claim of the Fratuses that Republic Western was not being truthful about certain endorsements concerning the original policy were "not altogether unsupported." Id. at 32. The First Circuit also remanded for a factual finding on the issue of the dates of coverage of one policy. Id. at 33. Therefore, after remand, the key issue that this Court had to decide was whether Obert was an insured under the excess policies that Republic Western had issued to U-Haul before the accident.

After the First Circuit remanded the case to this Court, it was reassigned to this writer on July 15, 1998, using the process of random assignment. The case was reassigned because Judge Boyle, who had overseen all the prior litigation, had taken inactive senior status. This Judge, consistent with the First Circuit's ruling, allowed discovery to proceed on the limited disputed issues of fact to be resolved on remand. A host of discovery disputes consumed a large part of 1999 and most of 2000. Just prior to the trial date set by this Court, the case was dismissed with prejudice on September 5, 2000 after a settlement agreement had been reached between the Fratuses and Republic Western which required Republic Western to pay over two million more dollars to the Fratuses. The liability of Obert was not released or disclosed by the settlement so the Fratuses continued to seek payment from Obert on the part of the original judgment remaining unpaid.

A year later, on July 3, 2001, the instant case was filed by Obert in this Court. Count I of the Complaint alleges numerous bad faith acts on the part of Republic Western, relating to its duty to defend Obert in the lawsuits arising from the accident, to keep Obert truthfully informed of the status of his rights, and to indemnify Obert for claims that survive settlement. Count II alleges that, because a reasonable person would believe that Obert was insured, Republic Western breached its contractual obligations to Obert in not including him in the settlement. Count III claims that Republic Western owed Obert a duty of good faith and fair dealing and that it breached that implied duty. Count IV seeks a declaration from this Court as to the amount of outstanding judgment liability that Obert owes to the Fratuses. On September 10, 2001, Republic Western filed a third-party complaint against Jeffrey C. Schreck, the Rhode Island lawyer hired by Republic Western to represent Obert in the original case. Republic Western seeks indemnification from Schreck for any amounts that it may be required to pay Obert, because of his alleged negligence in handling the case. On the same day that Obert filed this case, Republic Western filed a declaratory judgment action against Obert in the U.S. District Court for the District of Massachusets sitting in Worcester, seeking a ruling that Obert is not an insured under the excess policies. Consequently, the key issue in both cases is whether Obert was an insured under the excess policies at the time of the accident.

On September 5, 2001, defendant Republic Western moved to disqualify this Judge pursuant to 28 U.S.C. § 455(a). The motion was accompanied by a memorandum of law and several affidavits. Both plaintiff Obert and the Fratuses as defendants in this case filed objections to the motion. A hearing on the matter was held on November 1, 2001. Attending that hearing for defendant Republic Western was Roderick MacLeish, Jr., and Annapoorni Sankaran of the law firm of Greenberg Traurig, LLP, both admitted pro hac vice, and Elizabeth McDonough Noonan of the law firm of Adler Pollock & Sheehan, local counsel. Peter Cerilli and Fred Polacek (who left early to attend an unrelated state court proceeding) represented the Fratuses. Max Wistow appeared as plaintiff's counsel. On the same day, the Court issued an order staying the case pending a written decision on the motion to disqualify.

II. LEGAL STANDARD

Section 455(a) of Title 28 of the United States Code sets forth when a federal judge must disqualify him or herself from a proceeding. "Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." 28 U.S.C. § 455(a).¹ The statute contains mandatory language directing a judge to recuse himself or herself upon the occurrence of certain conditions. Most importantly, a judge does not have to wait and, in this Judge's opinion, should not wait until a party moves for disqualification. It is the judge's duty to ensure that his or her presence does not taint the process of justice or the integrity of the United States Courts.

The integrity of the Court rests on its ability to remain independent. Independence, in this context, means appearing impartial to the reasonable observer while making unpopular or controversial decisions, picking winners and losers in adversarial proceedings, and maintaining order and respect in the courtroom. In the course of rendering judicial decisions, a judge must be partial only to the law.

The statute only mandates disqualification when the situation is such that the judge's impartiality can reasonably be questioned. Liteky v. United States, 510 U.S. 540, 548, 114 S.Ct. 1147, 127 L.Ed.2d 474 (1994). The test for disqualification is objective, not subjective. Id. It only matters whether the judge reasonably appears to be biased. Id. Actual bias is not required for recusal and need not be established. See In re Boston's Children First, 244 F.3d 164, 171 (1st Cir.2001)...