Opinion ID: 195082
Heading Depth: 2
Heading Rank: 1

Heading: The Applicability of Sec. 27-7-2.2 to the Direct Action Statute

Text: 13 Amica's argument on the first issue runs as follows. The starting point is that statutes granting interest on judgment must be strictly construed because they are in derogation of the common law. So construed, Sec. 27-7-2.2 applies only to actions in which the defendant is covered by liability insurance. Amica therefore contends that, because it is an insurer, and not, in the words of the statute, a defendant covered by liability insurance, it does not come within the compass of the statute. It argues that the phrase written offer to the defendant's insurer is directed at the situation where the decision to settle is not within the control of the defendant, but lies with defendant's insurer. The purpose of the statute, Amica concludes, is to protect a defendant who is insured from interest liability in excess of the policy limits due to a decision made by the insurer. 14 This is an ingenious argument; it uses the strict construction doctrine to avoid the plain meaning of the statute. But it ignores the legal fact that the action against the insurer is a derivative action. Amica was the insurer of defendant Owen. The complaint was originally brought against Owen. Amica was made a defendant under the direct action statute, Sec. 27-7-2, because its insured could not be served with process. Amica stands in Owen's shoes. It is both defendant and insurer. This case started out, in the words of Sec. 27-7-2.2, as a civil action in which the defendant is covered by liability insurance. If process had been served on Owen, Amica's handling of the case would have been no different, and it would be making the same argument as to prejudgment interest because in either case it would have to pay the amount found due. We see no basis in logic or common sense for the argument that Sec. 27-7-2.2 is not applicable to the insurer under the direct action statute.