Opinion ID: 196374
Heading Depth: 2
Heading Rank: 3

Heading: Further Discovery on Leach's Dissolution

Text: Carreiro appeals the district court's denial of his request for additional discovery (after the discovery deadline) that might have shown that Leach was not dissolved in 1982 in accordance with Rhode Island law. To support its motion for summary judgment, Leach submitted a certificate, signed by the First Deputy Secretary of State and bearing the state seal, attesting to Leach's dissolution on March 25, 1982. Carreiro does not challenge that the certificate was validly issued, but instead argues that the court should have allowed Carreiro to conduct further discovery seeking unspecified evidence that Leach had somehow failed to comply with the statutory requirements for dissolution. Rhode Island law provides that a certificate of the secretary of state shall be taken and received in all courts . . . as prima facie evidence of the existence or non-existence of the facts stated therein. R.I. Gen. Laws 7-1.1-134. Because -17- 17 Leach submitted the certificate, the district court treated Leach's renewed motion to dismiss as a motion for summary judgment. See Fed. R. Civ. P. 12(b). A party opposing summary judgment may have additional discovery under Fed. R. Civ. P. 56(f) where it cannot present essential facts by affidavit, but the party must articulate a plausible basis for the belief that discoverable materials exist which would raise a trialworthy issue. Price v. General Motors Corp., 931 F.2d 162, 164 (1st Cir. 1991). Carreiro neither pointed to any evidence nor made any specific allegations that Leach failed to comply with the requirements for dissolution, and accordingly the district court's denial of the requested discovery was well within its discretion. D. Survival of Actions Against a Dissolved Corporation According to R.I. Gen Laws 7-1.1-98, entitled Survival of remedy after dissolution, a claimant may sue a dissolved corporation for any right or claim existing, or any liability incurred, prior to the dissolution if action or other proceeding thereon is commenced within two (2) years after the date of dissolution. Leach's dissolution in March 1982 was certified by the Rhode Island Secretary of State and is uncontroverted on the summary judgment record. Carreiro argues that his suit can be brought against the dissolved Leach well after the two-year survival period because the liability was not incurred prior to dissolution, and -18- 18 therefore does not fall within the literal scope of the statute. Although there is no Rhode Island case law discussing the survival of claims against a dissolved corporation under section 7-1.1-98, the Supreme Court of Rhode Island interpreted the analogous Massachusetts statute in Halliwell Assocs., Inc. v. C.E. Maguire Servs., Inc., 586 A.2d 530 (R.I. 1991). The court explained that at common law a corporation's capacity to sue or be sued was completely destroyed upon dissolution. Id. at 533. The court added: Today, all jurisdictions have enacted corporate-survival statutes that abrogate the harsh effect of the common-law rule by allowing a corporation's existence to continue for some time past the date of dissolution to settle its corporate affairs gradually, but not to continue its business. Id. Rhode Island has enacted exactly such a statute, section 7-1.1-98, and the Supreme Court of Rhode Island's explanation of the background common law rule and the intent behind the typical survival statute is persuasive authority as to the proper interpretation of R.I. Gen. Law 7-1.1-98. See supra section II.B.2.(c) (discussing use of other authority in the absence of a holding by state's highest court). In light of the Supreme Court of Rhode Island's explanation of the legislative intent behind the typical -19- 19 survival statute, the language at issue in section 7-1.1-98 (providing a two-year survival period only for liabilities incurred prior to dissolution) logically means that actions on liabilities incurred after dissolution do not survive at all, not even for the two-year wind-up period. Carreiro's argument that actions on liabilities incurred after dissolution survive forever is untenable in light of the common law rule and the legislative intent to create a limited wind-up period. We conclude that Leach, whose dissolution in 1982 is uncontroverted on the summary judgment record, is not amenable to a suit brought almost ten years after its dissolution and eight years after the expiration of the two-year survival period. Accordingly, we affirm the district court's grant of summary judgment for Leach. E. Direct Action Against Insurer of Dissolved Corporation The district court granted Rumford's motion to dismiss under Fed. R. Civ. P. 12(b)(6), having determined that R.I. Gen. Laws 27-7-2 does not permit a direct action against the insurer of a dissolved corporation. We agree with the district court's analysis and ruling. Section 27-7-2 generally bars a plaintiff from joining an insurer as a defendant in a suit against the insured, a so-called direct action. An exception to that bar applies where before suit has been brought and probate -20- 20 proceedings have not been initiated the insured has died.4 R.I. Gen. Laws 27-7-2. Carreiro argues that Leach died when it dissolved in 1982, and therefore the foregoing exception applies. Carreiro's suggested interpretation of section 27- 2-2 is unpersuasive. Although the statute's language is not without difficulty, the Rhode Island Supreme Court has stated that section 27-7-2 is free from ambiguity and expresses a plain and sensible meaning and the meaning so expressed will be conclusively presumed to be the one intended by the Legislature. Chalou v. LaPierre, 443 A.2d 1241, 1241 (R.I. 1982). The plain and sensible meaning of the statute does not authorize direct actions against the insurer of a dissolved corporation for the following reasons. First, the plain and sensible meaning of died does not embrace the dissolution of a corporation, and Carreiro points to no Rhode Island authority supporting such an interpretation. Second, the legislature surely understood that corporations do not enter probate proceedings; this strongly 4. The syntax of the statute is rather convoluted. Contrary to what the statute suggests, we believe that probate proceedings in Rhode Island are never initiated before death.The Rhode Island Supreme Court has given this provision its only logical meaning - that where probate proceedings have been initiated before suit is brought, the plaintiff may not proceed directly against the insurer. Markham v. Allstate Ins. Co., 352 A.2d 651, 653 (R.I. 1976). -21- 21 implies that it did not intend to apply this exception to corporations. Furthermore, the statute provides that once probate has been initiated, direct action against the insurer of a deceased natural person is no longer available. See Markham v. Allstate Ins. Co., 352 A.2d 651, 653 (R.I. 1976). Thus, the legislature intended this exception to the general rule barring direct action to apply only during the time between the death of the insured and the initiation of probate. If we accept Carreiro's interpretation, there would be no analogous temporal limitation on the exception as applied to a dissolved corporation since probate cannot be initiated. Under that view an insurer would be forever amenable to direct action, and there is no reason to believe that the legislature intended such a result. Third, Carreiro's proposed interpretation of the statute would increase the insurer's liability beyond that of the insured. The Supreme Court of Rhode Island held in Barber v. Canela, 570 A.2d 670 (R.I. 1990), that section 27- 7-2 did not enlarge the liability of the insurer beyond the limits stated in the policy. It set forth as a general rule that any rights of a plaintiff against the insurer are dependent upon the existence of liability of the insurer to the insured under the contract of insurance. Id. at 671 (quoting George J. Couch, et al., 12A Couch Cyclopedia of Insurance Law 2d 45:833 at 486 (1981)). A direct action -22- 22 here, where the insured cannot be sued because it is a dissolved corporation, would contravene that rule. It would be unreasonable for us to reach that result through a tortured interpretation of the statute and without precedent under Rhode Island law. In light of the foregoing, we find it unnecessary to certify this statutory interpretation question to the Supreme Court of Rhode Island as Carreiro urges. Because section 27-7-2 generally prohibits direct actions against the insurer of a potentially liable party and because we conclude that Carreiro's suit does not fit within the statutory exceptions to that prohibition, we affirm the dismissal of Rumford. F. Main's Indemnification Claim Against Robbins Because we affirm the district court's grant of summary judgment in favor of Main on Carreiro's complaint, Main's appeal seeking to revive its third-party indemnification claim against Robbins is moot.