116 F.4th 32
1st Cir.2024Background
- Tiffany Briere and her minor daughter were injured as passengers on a Rhode Island-registered school bus involved in an accident with underinsured motorists.
- First Student, the bus owner, had a fleet insurance policy from National Union Fire Insurance Company, arranged through a New York broker and delivered to an Ohio headquarters.
- Briere demanded underinsured motorist (UIM) benefits under the policy, arguing Rhode Island law required such coverage.
- National Union denied coverage, citing only First Student’s rejection of UIM coverage, without referencing the policy’s place of delivery as a basis.
- Briere sued for breach of contract, bad faith, and declaratory relief, alleging coverage was required under R.I. Gen. Laws § 27-7-2.1(a).
- The District Court granted summary judgment to National Union and First Student, relying on the argument that the policy was not delivered or issued for delivery in Rhode Island.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether National Union could deny UIM coverage based on a new argument not included in its denial letter | Insurers can only rely on grounds stated in their denial letter; new defenses are waived | The policy was not delivered or issued for delivery in Rhode Island, so RI law does not apply | National Union waived the delivery defense by not raising it in the denial letter |
| Applicability of Rhode Island’s UIM statute to the multi-state fleet policy | Policy insuring RI-registered bus must comply with § 27-7-2.1(a), requiring UIM coverage | Statute doesn’t apply because the policy wasn't delivered/issued for delivery in Rhode Island | Court declined to decide on statute interpretation due to waiver issue |
| Whether Skaling’s waiver rule applies to breach of contract claims (not just bad-faith claims) | Waiver rule should limit defenses in both bad-faith and contract claims | Waiver rule only applies to bad-faith claims | Court held Skaling applies to contract and bad-faith claims |
| Whether Briere needed to prove the other motorists were in fact underinsured | Demanded UIM benefits with damages exceeding the motorists’ policy limits | Briere failed to prove other motorists were underinsured | Issue left for district court to address on remand |
Key Cases Cited
- Skaling v. Aetna Ins. Co., 799 A.2d 997 (R.I. 2002) (insurer waives coverage defenses not communicated to insured in denial letter; explain-or-waive rule).
- Rueschemeyer v. Liberty Mut. Ins. Co., 673 A.2d 448 (R.I. 1996) (no waiver found when a defense was sufficiently explained in the denial letter).
- Gen. Accident Ins. Co. of Am. v. Am. Nat'l Fireproofing, Inc., 716 A.2d 751 (R.I. 1998) (estoppel doctrine cannot be used to expand coverage beyond the policy’s terms).
- Zarrella v. Minn. Mut. Life Ins. Co., 824 A.2d 1249 (R.I. 2003) (bad-faith claims require a successful breach of contract claim first).
- Bibeault v. Hanover Ins. Co., 417 A.2d 313 (R.I. 1980) (bad-faith insurance denial as an independent tort).