Opinion ID: 2351539
Heading Depth: 1
Heading Rank: 3

Heading: The Letters of April 2, 1991, and May 13, 1991

Text: The defendants first assert that plaintiff should have been put on notice of the prospect of malpractice by the letters sent to him by Prudential on April 2, 1991, and May 3, 1991, both of which notified plaintiff that the carrier was reserving its rights because of the lack of timely notice. Examining this correspondence in the light most favorable to plaintiff, however, we cannot conclude that there was anything in those identical letters that adequately suggests that a potential malpractice situation had arisen. Although the letters notified plaintiff that Prudential was reserving its rights to provide underinsured coverage to him, they expressed no indication that Prudential would not pay his claim. Indeed, both letters informed plaintiff that [t]he service of this notice upon you does not deprive you of any rights you may have against this company.  (Emphasis added.) Thus, the letters informed plaintiff only that Prudential was reserving its rights because plaintiff had not provided prompt notice of the claim. Moreover, we deem it highly significant that neither letter cited Canavan's apparent failure to obtain consent before settling with Hanover as a reason for Prudential's reservation of rights. In late notice cases, this Court has held that the insurance carrier has the burden to show that it was prejudiced by the insured's late notice before it can `declare a forfeiture of the bargained-for protection.' Avco Corp. v. Aetna Casualty & Surety Co., 679 A.2d 323, 329 (R.I.1996) (quoting Pickering v. American Employers Insurance Co., 109 R.I. 143, 160, 282 A.2d 584, 593 (1971)). In consent cases, however, we have deemed that G.L.1956 § 27-7-2.1(h), when read together with a consent exclusion in an insurance policy, unambiguously requires that a plaintiff gain consent of his or her underinsurance carrier before settling with the tortfeasor. Consequently, failure to obtain consent in such circumstances bars the claimant from thereafter seeking the underinsurance coverage protections of his or her own policy. Manzo v. AMICA Mutual Insurance Co., 666 A.2d 417, 417 (R.I. 1995) (mem.); but see Fraioli v. Metropolitan Property and Casualty Insurance Co., 748 A.2d 273, 275 (R.I.2000). Because an insurer's burden of proof is lower in such cases, failure to obtain consent before settling with a tortfeasor's carrier is inherently more damning to a subsequent claim for underinsured benefits than is mere late notice. Considering this critical distinction, we cannot definitively conclude as a matter of law that the letters were sufficient to impart to Canavan enough knowledge from which to suspect potential malpractice by his attorneys, as the letters merely reserved Prudential's rights due to late notice. Viewed in the light most favorable to plaintiff, the letters actually suggest less of a problem than truly existed concerning Canavan's claim for underinsured benefits.