DeMarco v. Travelers Insurance Co.
2011 R.I. LEXIS 116
| R.I. | 2011Background
- DeMarco and Woscyna were seriously injured in a 2003 motor-vehicle collision involving Virginia Transportation Corp. and its owner Doire; Travelers insured the Doire/VT entity with a $1,000,000 policy.
- Multiple claimants asserted damages from the same collision, and their combined demands exceeded the policy limits.
- Travelers declined to settle within policy limits prior to or during the underlying personal-injury trial, despite notices and demands referencing Asermely; the insurer eventually offered portions of the policy later and engaged in interpleader.
- DeMarco, who brought claims as assignee of Doire and VT, received a $550,000 payment and a release; Woscyna received $450,000 and a release; DeMarco expressly reserved claims against Travelers in his release, and VT/Doire assigned their claims to DeMarco.
- The underlying personal-injury verdict against VT/Doire totaled about $2,053,795, plus interest, for a total judgment of roughly $2,801,939.07; DeMarco’s complaint sought, among other things, a declaration that Travelers was liable for the excess judgment under Asermely and related theories.
- The Superior Court granted partial summary judgment for DeMarco on counts seeking excess-judgment liability and interest under § 27-7-2.2, but the Rhode Island Supreme Court vacated in part and remanded for further factual development consistent with its analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Asermely in multi-claimant cases | Asermely applies; insurer must relieve insureds of excess liability even with multiple claimants. | Asermely is inapplicable or should be limited; multi-claimant context requires a reasonableness standard. | Asermely applies to multi-claimant cases; remand for fact-finding on reasonableness of Travelers' conduct. |
| Effect of the released-insureds and judgment-satisfied order on assignment | Release and contemporaneous assignment preserve DeMarco’s rights against Travelers. | Release extinguishes insureds’ liability, extinguishing rights that could be assigned. | Release plus contemporaneous assignment does not extinguish DeMarco’s assignee rights; judgment-satisfied order unaffected; remand appropriate. |
| Applicability of the rejected settlement offer statute (§ 27-7-2.2) | Statute applies to prejudgment and postjudgment interest due to rejection of a written offer within policy limits. | Statute should not apply in multi-claimant scenarios; ambiguity as to scope. | Statute applies and requires prejudgment and postjudgment interest on remand, consistent with language. |
Key Cases Cited
- Asermely v. Allstate Insurance Co., 728 A.2d 461 (R.I. 1999) (insurer must seriously consider reasonable settlements within policy limits; risk of excess judgment shifts to insurer)
- Peckham v. Continental Casualty Insurance Co., 895 F.2d 830 (1st Cir. 1990) (multi-claimant excess-limits context; insurer must negotiate as if liable for all excess; aim to relieve insured of liability within limits)
- Skaling II v. Aetna Insurance Co., 799 A.2d 997 (R.I. 2002) (affirmative duty to engage in timely and meaningful settlement; applies to first- and third-party claims; emphasize settlement to relieve insured from excess liability)
- Hindle v. Travelers Indemnity Co., 748 A.2d 256 (R.I. 2000) (insurer need not use court-ordered discovery; private asset inquiry suffices to meet duty to settle within limits)
- Campione v. Wilson, 422 Mass. 185, 661 N.E.2d 658 (Mass. 1996) (assignment of claims may accompany releases; assess form vs. substance; public policy balance re: collusion)
- Pinto v. Allstate Insurance Co., 221 F.3d 394 (2d Cir. 2000) (assignment of bad-faith claim preserved despite release; look to substance over form)
- Davis v. Liberty Mutual Insurance Co., 412 F.2d 475 (5th Cir. 1969) (factors for jury instruction in multi-claimant excess-limits cases; insurer's good faith vs. informed settlement)
- Mello v. General Insurance Co. of America, 525 A.2d 1304 (R.I. 1987) (insured may assign bad-faith claim against insurer when an excess judgment occurs; context differs because no pre-judgment release)
- Etheridge v. Atlantic Mutual Insurance Co., 480 A.2d 1341 (R.I. 1984) (predecessor discussions on assignment of proceeds and insurer duties)