Petrarca v. FIDELITY AND CAS. INS. CO.

• Citation: 884 A.2d 406
• Decision Date: 31 October 2005
• Docket Number: No. 2005-2-Appeal.,2005-2-Appeal.
• Parties: John H. PETRARCA v. FIDELITY AND CASUALTY INSURANCE COMPANY.
• Court: United States State Supreme Court of Rhode Island

884 A.2d 406

John H. PETRARCA v. FIDELITY AND CASUALTY INSURANCE COMPANY.

No. 2005-2-Appeal.

Supreme Court of Rhode Island.

October 31, 2005.

Jina N. Petrarca, for Plaintiff.

Michael J. Reed, for Defendant.

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

OPINION

Justice FLAHERTY, for the Court.

An insurance company's refusal to honor a claim for damages to a borrowed car gives rise to this dispute. In February 1991, North American Auto Sales and Leasing (North American), a fictitious business entity of Providence Auto Body, Inc., loaned a 1984 Rolls Royce to the plaintiff, John H. Petrarca, whose vehicle was undergoing repairs. While driving the borrowed Rolls Royce, Petrarca was involved in an accident in which the vehicle was damaged. Petrarca, who is also the president of Providence Auto Body, contends that because he had executed a temporary loan agreement with North American pursuant to G.L.1956 § 31-3-20(c), North American is insulated from any liability arising from the accident and that he is personally liable to North American for the cost of repairs. He therefore claims that he is entitled to be indemnified by Fidelity and Casualty Insurance Co. (Fidelity), his personal insurer and the defendant in this case. Fidelity denies that it is liable under its insurance contract with Petrarca.

Petrarca filed suit against Fidelity in December 2000, and on October 26, 2004, the Superior Court granted summary judgment in favor of Fidelity. The court held that the loan agreement between North American and Petrarca did not satisfy the requirements of § 31-3-20(c), which otherwise would have shielded North American from liability. The motion justice agreed with Fidelity's argument that because of the faulty agreement North American or its insurer, not Petrarca or his insurer, should bear the cost of repairing the car. And, because Petrarca neither owned the car nor presented evidence that he was liable for the cost of repairs, the court held that he had suffered no damages, even if a breach of the insurance contract were proven. Petrarca timely appealed. This case came before the Supreme Court for oral argument on September 27, 2005, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not summarily be decided. After hearing the arguments of counsel and examining the memoranda submitted by the parties, we are of the opinion that cause has not been shown and that this case should be decided at this time.

Facts and History

On February 8, 1991, John H. Petrarca brought his car to Providence Auto Body, Inc., for repairs. While his car was being repaired, Petrarca borrowed a 1984 Rolls Royce from North American Auto Sales and Leasing, a fictitious entity of Providence Auto Body. Pursuant to § 31-3-20¹, a statute that applies when auto dealers lend vehicles under such circumstances, Petrarca and North American executed a temporary loan agreement for the car and Petrarca affixed his personal license plates to the Rolls Royce. Petrarca claims that on February 15, 1991, an unidentified motorist struck him from behind as he was driving the borrowed car. Neither Petrarca nor any other person was injured in the accident, but according to a repair estimate, the Rolls Royce sustained $27,000 in damages. After the accident, Petrarca submitted a claim to his insurer, Fidelity. Although Petrarca's policy provided coverage for a substitute car while his own vehicle was being repaired, Fidelity denied the claim. At that time, the carrier contended that Petrarca was the owner, not the borrower, of the 1984 Rolls Royce, and that that vehicle was not insured under his policy.²

On December 4, 2000, almost ten years after the accident, Petrarca filed this action against Fidelity. In his original complaint, Petrarca stated that he personally owned the damaged Rolls Royce. On November 8, 2001, however, Petrarca amended his complaint to reflect that North American was the owner of the car. In both the original and amended complaint, Petrarca alleged that he had personally incurred damages as a result of Fidelity's denial of coverage under the policy.

After Petrarca filed his amended complaint, Fidelity moved for summary judgment. In his ruling, the motion justice held that the temporary loan agreement between Petrarca and North American was defective in that it did not satisfy the statutory proof-of-insurance requirement that would have shielded North American from liability because Petrarca mistakenly wrote "American Casualty" instead of "Fidelity Casualty" on the loan agreement form.³ The motion justice also held that Petrarca had not incurred damages because the Rolls Royce was owned by North American, and Petrarca had failed to present any evidence that he had been sued by the owner or that a claim had otherwise been made against him.

Standard of Review

When reviewing a grant of summary judgment, this Court conducts a de novo review and employs "[t]he same standards applicable to the trial justice." Town of Cumberland v. Rhode Island Interlocal Risk Management Trust, Inc., 860 A.2d 1210, 1214 (R.I.2004). "Accordingly, we will affirm a summary judgment if, after reviewing the admissible evidence in the light most favorable to the nonmoving party, we conclude that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Id. (quoting Rotelli v. Catanzaro, 686 A.2d 91, 93 (R.I.1996)). In opposing a motion for summary judgment, the nonmoving party "carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions." United Lending Corp. v. City of Providence, 827 A.2d 626, 631 (R.I.2003) (quoting Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1225 (R.I.1996)).

Analysis

Petrarca asserts four arguments on appeal. First, he argues that the motion justice erred when he failed to specify which statute he relied upon when he granted Fidelity's motion for summary judgment. Second, Petrarca contends that even if the motion justice correctly based his decision on § 31-3-20(c), his application of that statute was incorrect because, according to Petrarca, § 31-3-20(c) does not require proof of insurance. Third, Petrarca urges that even if § 31-3-20(c) incorporates the proof-of-insurance requirement set forth in § 31-3-20(b), whether North American failed to obtain adequate proof is a question of fact. Finally, Petrarca maintains that the motion justice erred when he held that Petrarca did not suffer damages because Petrarca had waived the statute of limitations and therefore still was at risk for a claim for the cost of repairing the borrowed vehicle. Moreover, Petrarca argues that his fiduciary duty to the owner of the vehicle (North American) obligates him to recover sums owed to the company, and his failure to do so subjects him to personal liability.

Petrarca's first three arguments ask this Court to determine whether the motion justice applied the correct statute and, if so, whether his interpretation of the statute was correct. Although the parties disagree about the requirements of § 31-3-20(c), the essence of Petrarca's complaint is a breach of contract claim. As such, Petrarca must not only prove both the existence and breach of a contract, he also must prove that the defendant's breach thereof caused him damages. Rendine v. Catoia, 52 R.I. 140, 142, 158 A. 712, 713 (1932). Even if this Court were to accept Petrarca's interpretation of § 31-3-20(c) as correct, thereby providing a foundation for his assertion of a contractual breach, his claim must fail if he has not offered competent proof of damages. See Brito v. Capone, 819 A.2d 663, 666 (R.I. 2003)

(party opposing summary judgment cannot rest on "bare allegation[s]" to create factual dispute over damages); General Accident Insurance Company of America v. Cuddy, 658 A.2d 13, 17-18 (R.I.1995) (merely stating that damages exist without proof thereof is not sufficient to survive summary judgment).

In Thibodeau v. Metropolitan Property and Liability Insurance Co., 682 A.2d 474, 475 (R.I.1996), the plaintiffs appealed summary judgment in favor of the defendant, asserting that the trial court had applied the wrong version of an amended statute. In that case, we held that regardless of which version of the statute applied, the plaintiffs had failed to produce "competent and reasonably definite evidence to raise a material issue of fact" regarding damages. Id. In the absence of such evidence, it was not necessary for this Court to address the plaintiffs' statutory argument "[b]ecause plaintiffs' case fail[ed] under either version [of the statute]." Id. Similarly, if Petrarca is unable to produce "competent and reasonably definite evidence" concerning damages caused by Fidelity's alleged breach of contract, we need not address the statutory arguments in this case. See id.

Fidelity contends that even if North American satisfied the dealer-immunity requirements of § 31-3-20(c), Petrarca cannot be found liable for damage to the Rolls Royce because any claim against him for loss to the vehicle is barred by the statute of limitations. In Finck v. Aetna Casualty & Surety Co., 432 A.2d 680 (1981), we held that an insurer "is liable for sums that its insured is legally obligated to pay; however, it cannot be held liable * * * [if its insured] is under no obligation to pay."⁴Id. at 682. The auto dealer in Finck was not liable because it had satisfied the dealer-immunity requirements of § 31-3-20(c). Here, however, whether North American complied or failed to comply with § 31-3-20(c) is not relevant if Petrarca's legal liability, and thus Fidelity's obligation to indemnify him, has lapsed under the statute of limitations.

Indeed, Petrarca does not contest that the time period for North American to...