Opinion ID: 2327093
Heading Depth: 1
Heading Rank: 7

Heading: Applicability of the Rejected Settlement Offer Statute

Text: Travelers also contends on appeal that § 27-7-2.2 (the rejected settlement offer statute) [46] is inapplicable to any case involving multiple claimants and insufficient policy limits. Travelers asserts (1) that the purpose of § 27-7-2.2 is to prevent an insurer from placing its own financial interests ahead of those of its insured by imposing liability on an insurer for all interest due on a judgment entered against its insured if the insurer chose not to settle the claim within the policy limits before trial, even though the insured had indicated that it would accept such a settlement; and (2) that the rationale for imposing liability on an insurer under § 27-7-2.2 for rejecting a settlement offer makes sense only in the context of a case in which there is a single claimant making a settlement demand within the policy limits. In such a situation, Travelers argues, it is entirely within the insurer's power to prevent its insured from facing direct liability (in the event that a trial results in a judgment against its insured in excess of the policy limits) by simply settling with the single claimant prior to trial. By contrast, Travelers argues that what it characterizes as the strict liability imposed by § 27-7-2.2 should not apply in multiple claimant cases where the claims in the aggregate exceed the policy limitssince in such a situation an insurer would not be able to eliminate the risk of its insured facing exposure beyond the policy limits by accepting a settlement offer within the limits. Rather, Travelers contends that, even if the insurer accepted a settlement offer for the policy limits to avoid liability under § 27-7-2.2, the insured would still face direct liability for the amount of the other claim(s) in excess of the limits, due to the fact that the multiple claims exceeded the amount of the policy limits. In his motion for summary judgment with respect to count two of his complaint, Mr. DeMarco sought a declaration that Travelers was liable for the prejudgment and postjudgment interest that had accrued on the judgment in the personal injury action. In her decision granting the motion for summary judgment as to this count, the hearing justice ruled that the terms of § 27-7-2.2 are clear and unambiguous. Having so concluded, the hearing justice went on to rule that the statute clearly applied to Mr. DeMarco's case in view of the undisputed fact that, in the words of the hearing justice, Travelers did not accept DeMarco's written offers to settle the action in an amount equal to the Travelers' policy limit. This Court reviews questions of statutory interpretation de novo. In re Brown, 903 A.2d 147, 149 (R.I.2006); see also State v. Germane, 971 A.2d 555, 573 (R.I.2009). In our approach to that interpretive task, we have said that our ultimate goal is to give effect to the General Assembly's intent. Martone v. Johnston School Committee, 824 A.2d 426, 431 (R.I. 2003). We have further stated that [t]he plain statutory language is the best indicator of legislative intent. State v. Santos, 870 A.2d 1029, 1032 (R.I.2005); see also Martone, 824 A.2d at 431. And we have indicated that a clear and unambiguous statute will be literally construed. Martone, 824 A.2d at 431; see also Santos, 870 A.2d at 1032. Accordingly, when the language of a statute is clear and unambiguous, this Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings. State v. DiCicco, 707 A.2d 251, 253 (R.I. 1998) (internal quotation marks omitted); see also Germane, 971 A.2d at 574; Chambers v. Ormiston, 935 A.2d 956, 961 (R.I. 2007). This Court has previously described the language of § 27-7-2.2 as being neither complex nor ambiguous. Skaling v. Aetna Insurance Co., 742 A.2d 282, 291 (R.I. 1999) ( Skaling I ). Although we have considered Travelers' above-summarized arguments carefully, we remain persuaded that the rejected settlement offer statute is indeed unambiguous and requires that both prejudgment and postjudgment interest be assessed in the instant case. See Skaling I, 742 A.2d at 291. The clear and straightforward language of § 27-7-2.2 indicates that it applies to  any civil action    in which the plaintiff makes a written offer to the defendant's insurer to settle the action in an amount equal to or less than the coverage limits and said offer is rejected by the defendant's insurer. (Emphasis added.) In such circumstances, the statute imposes liability on defendant's insurer for all interest due on the judgment entered by the court even if the payment of the judgment and interest totals a sum in excess of the policy coverage limitation. Id. Thus, in spite of the fact that this case at one time involved multiple claimants whose combined claims appeared to exceed the policy limits, the inexorable reality is that we are now confronted with a civil action involving only one plaintiff, Wayne DeMarco, [47] whose written offer to settle in an amount equal to the coverage limits was rejected by the insurer. Since we are not now confronted with multiple plaintiffs (as contrasted with multiple claimants making demands for policy proceeds), we need not reach the issue of the applicability ( vel non ) of § 27-7-2.2 in such a case. We simply hold that the provisions of the rejected settlement offer statute encompass the case at bar and are to be applied on remand to the extent that Travelers is found liable.