Court Opinion

ID: 2962260
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:55:28.558788+00
Date Added: 2024-06-11T11:42:27.555818
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1641                                MELINDA RYAN ARMACOST,                                 Plaintiff, Appellee,                                          v.                           AMICA MUTUAL INSURANCE COMPANY,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                [Hon. Raymond J. Pettine, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                               Torruella, Circuit Judge,                                          _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Stahl, Circuit Judge.                                         _____________                                 ____________________            Thomas R. Bender, with whom David P. Whitman, and Hanson,  Curran,            ________________            ________________      ________________        Parks & Whitman were on brief for defendant-appellant.        _______________            Mark S. Mandell, with  whom Mandell, DeLuca & Schwartz, Ltd.  were            _______________             ________________________________        on brief for plaintiff-appellee.                                 ____________________                                  December 10, 1993                                 ____________________                      BOWNES, Senior Circuit Judge.   The principal issue                      BOWNES, Senior Circuit Judge.                              ____________________            in this automobile accident diversity case is whether a Rhode            Island  statute  requires  that  an  insurer pay  prejudgment            interest over and  above its policy limits  to the plaintiff.            We hold  that the statute  does so require.   Some background            facts are necessary.                                          I.                                          I.                      Plaintiff-appellee,  Melinda Ryan  Armacost, was  a            pedestrian in Newport, Rhode  Island, when she was  struck by            an  automobile  owned and  operated  by  Stephen  B. Owen,  a            resident  of  New  York.   Owen  was  insured  by  defendant-            appellant,  Amica   Mutual  Insurance   Company  (Amica)   of            Providence,  Rhode Island.    A complaint  was  filed in  the            district court against Owen, but the summons was returned non                                                                      ___            est  inventus.   Plaintiff  promptly  amended her  complaint,            ___  ________            naming  Amica as defendant under Rhode Island's direct action            statute.1   After  discovery  was  completed,  but  prior  to            trial, Amica admitted  negligence by its  insured.  The  only            issue for trial, therefore, was the amount of damages.                                            ____________________            1.  The  statute,  R.I.  Gen.  Laws     27-7-2,  provides  in            pertinent part:                         An injured party, or, in the  event of                                               that party's death, the party entitled to                      sue therefor, in his or her suit  against                      the insured, shall  not join the  insurer                      as a defendant.  If, however, the officer                      serving any  process against  the insured                      shall  return   that  process   "non  est                      inventus,"  . .  . the  party .  . .  may                      proceed directly against the insurer.                                           -2-                                          2                      Shortly  prior  to   the  trial  date,  plaintiff's            counsel made a  written demand "equal to  the coverage limits            of  $500,000" to  settle the case.   The  demand specifically            referred to the statute at  issue, R.I. Gen. Laws   27-7-2.2.            Amica  rejected  the  demand  and  made  a  counter offer  of            $175,000.  This  was spurned by plaintiff.   During the trial            Amica  again offered to  settle for  $175,000; the  offer was            again  rejected.   The jury  returned a verdict  of $750,000.            The district court amended the judgment by reducing it to the            amount  of Amica's contractual  liability under its  policy              $495,000.2   The  district  court then  held  that Amica  was            required under  the  statute  to  pay  plaintiff  prejudgment            interest on the amended judgment, "even though such interest,            when added to the amended  judgment, requires Amica to pay an            amount which exceeds  the limits of  its liability under  the            applicable  insurance policy."   Armacost v. Amica  Mut. Ins.                                             ________    ________________            Co., 821 F. Supp. 75, 82 (D.R.I. 1993).            ___                                         II.                                         II.                      The  statute at issue  has not been  interpreted by            the  Rhode Island  Supreme Court.    The only  court to  have            considered it  is the  United  States District  Court in  the            opinion from  which this appeal  has been taken.   This means            that  we are  called  upon  to decide  how  the Rhode  Island                                            ____________________            2.  The original policy  limits of $500,000 had  been reduced            by $5,000 because of a payment  in that amount to settle  the            claim of plaintiff's husband.                                         -3-                                          3            Supreme  Court would construe  the statute in  the context of            this case.   The standard  of review of the  district court's            opinion is  de  novo.   We  do not  accord deference  to  the                        __  ____            district  court's determination of  Rhode Island law.   Salve                                                                    _____            Regina College v. Russell, 499 U.S. 225, 231-35 (1991).            ______________    _______                      The statute to be construed provides:                         Interest  on  judgment     Payment  by                         Interest  on  judgment     Payment  by                      insurer.    In any civil  action in which                      insurer.                        the  defendant  is covered  by  liability                      insurance  and  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                      on the  liability policy in force  at the                      time the action accrues and the offer  is                      rejected by the  defendant's insurer then                      the defendant's  insurer shall  be liable                      for all  interest  due  on  the  judgment                      entered by  the court even if the payment                      of  the  judgment  and  interest  thereon                      totals  a sum  in  excess  of the  policy                      coverage limitation.   This written offer                      shall be presumed  to have been  rejected                      if  the insurer does not respond within a                      period of thirty (30) days.            R.I. Gen. Laws   27-7-2.2.                      Rhode   Island's   prejudgment   interest   statute            provides:                         Interest  in civil  action.    In  any                         Interest  in civil  action.                          civil  action  in   which  a  verdict  is                      rendered or a decision made for pecuniary                      damages, there  shall  be  added  by  the                      clerk  of  the  court to  the  amount  of                      damages, interest at  the rate of  twelve                      per cent (12%) per annum thereon from the                      date  the cause  of action  accrued which                      shall be included in the judgment entered                      therein.   This section  shall not  apply                      until  entry   of  judgment  or   to  any                      contractual                                          -4-                                          4                      obligation  where  interest   is  already                      provided  or   as  to   any  condemnation                      action.            Id.   9-21-10.            ___                      The  question is  whether the  prejudgment interest            statute,   9-21-10, applies to the  rejected-settlement-offer            statute,   27-7-2.2.  Ordinarily, we would certify to a state            supreme  court a question  of first impression  involving the            interpretation of  a state statute.   In this  case, however,            the  language of the implicated statutes, the evident purpose            of the statutes, and the case law are so clear that  we think            certification would be a waste of judicial resources.                      Amica  raises two issues:  whether the Rhode Island            Supreme Court would construe    27-7-2.2 as not applicable to            direct action suits  against insurers; and whether  the Rhode            Island Supreme Court  would limit the  interest due on  cases            arising under   27-7-2.2 to that accruing after judgment.            A.  The Applicability of   27-7-2.2 to the Direct Action            A.  The Applicability of   27-7-2.2 to the Direct Action                ____________________________________________________                Statute                Statute                _______                      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,   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                                         -5-                                          5            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.                      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,    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    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    27-7-2.2  is not            applicable to the insurer under the direct action statute.                                         -6-                                          6                                                     -7-                                          7            B.  Construing the Statute            B.  Construing the Statute                ______________________                      Amica  makes  a number  of arguments  attacking the            district  court's   construction   of  the   statute.     The            overarching argument is that the district court did not apply            the  rules of  statutory construction  that  would have  been            applied by the  Rhode Island Supreme Court and,  as a result,            improperly construed the statute.   Because our review is  de                                                                       __            novo without any  deference to the district court,  we do not            ____            think  it  necessary  to  discuss point-by-point  defendant's            attack on the  district court opinion.  The  only question is            whether  the ultimate conclusion of the district court should            be affirmed.  We  are not concerned  with the route taken  by            the court in reaching its result.                      We start our  analysis with a determination  of the            purpose of the rejected-settlement-offer statute,   27-7-2.2.            Although  the construction of  this statute  is one  of first            impression, the purpose of the prejudgment  interest statute,              9-21-10, has been  articulated by the Rhode  Island Supreme            Court.   In Martin  v. Lumberman's Mutual  Casualty, 559 A.2d                        ______     ____________________________            1028 (R.I.  1989), the Rhode  Island Supreme Court  held that            the prejudgment interest did not apply to condemnation cases.            In the course of its opinion it stated:                      Statutes that award  prejudgment interest                      generally  serve  the  dual  purposes  of                      encouraging  the   early  settlement   of                      claims, Pray v.  Narragansett Improvement                              ____     ________________________                      Co., 434  A.2d 923, 930  (R.I. 1981), and                      ___                      compensating plaintiffs  for waiting  for                                         -8-                                          8                      recompense  to  which they  were  legally                      entitled,  Dennis v.  Rhode Island  Hosp.                                 ______     ___________________                      Trust Nat'l Bank, 744 F.2d  893, 901 (1st                      ________________                      Cir. 1984).            Martin, 559  A.2d at 1031;  see also Isserlis v.  Director of            ______                      ___ ____ ________     ___________            Public Works, 300 A.2d 273, 274 (R.I. 1973) (clear purpose of            ____________            such legislation was to accelerate settlement of tort cases).            We have  echoed this finding  of settlement purpose.   Roy v.                                                                   ___            Star Chopper Co.,  584 F.2d 1124, 1135 (1st  Cir. 1978) ("The            ________________            Rhode Island prejudgment  statute was enacted to  promote the            expeditious settlement of claims.").                      We think it plain from its terms that the rejected-            settlement-offer  statute   has  the  same  purpose   as  the            prejudgment interest statute    to accelerate the  settlement            of tort  cases.   This purpose is  readily apparent  from its            provision that if the plaintiff's offer of settlement                      is  rejected by  the defendant's  insurer                      then  the  defendant's insurer  shall  be                      liable  for  all  interest   due  on  the                      judgment entered by the court even if the                      payment  of  the  judgment  and  interest                      thereon  totals a  sum  in excess  of the                      policy coverage limitation.              27-7-2.2.            This language tells the insurer in no uncertain terms that it            runs the  risk of paying a  stiff price for shrugging  off an            offer of settlement.                      We next turn  to the wording of the  two implicated            statutes.   The prejudgment interest  statute says:   "In any                                                                      ___            civil action in which a verdict is rendered or a  decision is                                         -9-                                          9            made for pecuniary  damages," interest shall be added  to the            amount of damages from the  date the cause of action accrued.              9-21-10.   It is beyond  cavil that this  case was a  civil            action,  that  plaintiff's  offer of  settlement  was  for an            amount "equal to  . . . the coverage limits  in the liability            policy in  force at  the time the  action accrue[d],  and the            offer  was rejected  by the  insurer."      27-7-2.2.   It is            manifest  that  the  prejudgment  interest  statute   applies            directly to the case at bar.                      It also  seems  evident to  us  that, by  its  very            words,     27-7-2.2  requires  the  payment  of   prejudgment            interest.  It says that  if the plaintiff's offer is rejected            "then  the  defendant's  insurer  shall  be  liable  for  all                                                                      ___            interest due on the judgment entered by the court even if the            payment of the judgment and  interest thereon totals a sum in            excess of the policy coverage limitation."  (Emphasis added.)            Despite the labored  argument of defendants to  the contrary,            it   seems  obvious  that   "all  interest"  can   only  mean            prejudgment  and postjudgment interest.  And this is the only            interpretation that makes sense if the purpose of the statute            is to promote settlement, as is  obvious.  There would be  no            pressure on the insurer to consider a settlement offer if all            it  had to  pay  for rejecting  the  offer was  post-judgment            interest.  Defendant's  suggested construction of the statute            would take all of the bite out of it.                                         -10-                                          10                      We  think  the  following statement  by  the  Rhode            Island Supreme Court applies to the statute in issue:                         In  the face of a statute so clear and                      unambiguous there  is  no  room  for  the                      application  of   the  usual   canons  of                      statutory construction.   In such a  case                      the statute  declares itself.   Vezina v.                                                      ______                      Bodreau, 86 R.I.  87, 133 A.2d 753;  Long                      _______                              ____                      v.  Langlois, R.I., 170 A.2d 618.  We may                          ________                      not  where  no  ambiguity  exists  search                      beyond  the   statute  for   a  different                      meaning.  Hathaway  v. Hathaway, 52  R.I.                                ________     ________                      39, 156 A.  800.  Even hardship  does not                      justify a court in reading into a statute                      something  contrary  to  its  unequivocal                      language.  Clark v.  Orabona, 1 Cir.,  59                                 _____     _______                      F.2d  187.    Only when  the  legislature                      sounds an uncertain trumpet may the court                      move  in to clarify  the call.   But when                      the  call is clear  and certain as  it is                      here  we  may  not  consider whether  the                      statute  as  written  comports  with  our                      ideas  of  justice, expediency  or  sound                      public  policy.   In  such  circumstances                      that is not the  court's business.  Blais                                                          _____                      v. Franklin, 31 R.I. 95, 77 A. 172.                         ________            Kastal v.  Hickory House,  Inc., 187  A.2d 262,  264-65 (R.I.            ______     ____________________            1963).                      Out of  an abundance  of caution  we have  examined            similar  statutes in other jurisdictions because we think the            Rhode Island Supreme  Court might possibly have done  so.  Of            the more than  thirty states surveyed, many  have prejudgment            interest  statutes  accompanied  by rejected-settlement-offer            provisions, or separate  statutes that are invoked  in tandem            to expedite claims  settlement.  See, e.g., Cal.  Civ. Code                                               ___  ____            3291 (West Supp. 1993); Conn.  Gen. Stat.   52-192a(b); Minn.            Stat. Ann.    549.09(c) (West  Supp. 1993); Mo. Ann.  Stat.                                           -11-                                          11            408.040.2 (Vernon  1990); Ohio  Rev. Code  Ann.    1343.03(c)            (Anderson Supp. 1993).  Our survey has not disclosed a single            instance  where prejudgment  interest has  been  held not  to            apply to  a rejected-   settlement-offer statute.   Given the            rejected-settlement-offer  statute's plain  language and  the            Rhode Island courts' long history of applying the prejudgment            interest  statute in tort  cases, we  think the  Rhode Island            Supreme Court would apply its prejudgment interest statute to            the rejected-settlement-offer statute.                      Affirmed. Costs on appeal awarded to appellee.                      Affirmed. Costs on appeal awarded to appellee.                      _________ ____________________________________                                         -12-                                          12