Papudesu v. Medical Malpractice Joint Underwriting Ass'n
2011 R.I. LEXIS 48
| R.I. | 2011Background
- Dr. Papudesu was a malpractice defendant in a wrongful-death case involving a stillborn delivery and disputed on-call status.
- During trial, the insurer settled the action for $500,000 despite Papudesu’s objections.
- Papudesu argued the settlement would harm his reputation and insurance costs and violated good-faith duties.
- Papudesu sued the insurer in Superior Court, asserting seven counts including breach of contract and bad faith.
- The trial court granted summary judgment for the insurer on count one (breach of contract) and later on the remaining counts.
- The Rhode Island Supreme Court granted review to resolve whether the policy language—“as it deems expedient”—imposes limits on settlement discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the clause grant dispositive settlement discretion to insurer in good faith? | Papudesu argues the insurer must exercise discretion in good faith and not disregard insured interests. | Papudesu argues the clause is unambiguous and authorizes expedient settlements without additional limits. | Yes; the clause unambiguously grants broad settlement discretion to the insurer. |
| Should breach-of-contract issue be decided by jury or summary judgment? | Papudesu contends a jury should resolve contract ambiguity and duty of good faith. | Defendant contends contract terms are unambiguous; no factual dispute necessitates a jury. | Contractual interpretation is a matter of law; summary judgment proper where unambiguous. |
Key Cases Cited
- Gorman v. Gorman, 883 A.2d 732 (R.I. 2005) (ambiguity questions are questions of law; contract terms apply as written)
- Aetna Casualty & Surety Co. v. Sullivan, 633 A.2d 684 (R.I. 1993) (clear, unambiguous policy terms applied as written)
- Vickers Antone v. Vickers, 610 A.2d 120 (R.I. 1992) (contract interpretation based on plain meaning)
- A.F. Lusi Construction, Inc. v. Peerless Insurance Co., 847 A.2d 254 (R.I. 2004) (contract terms judged for plain meaning)
- Beacon Mutual Insurance Co. v. Spino Brothers, Inc., 11 A.3d 645 (R.I. 2011) (ambiguity and contract interpretation in insurance context)
- Town of Cumberland v. Rhode Island Interlocal Risk Management Trust, Inc., 860 A.2d 1210 (R.I. 2004) (insurance contract construction principles)
- Lynch v. Spirit Rent-A-Car, Inc., 965 A.2d 417 (R.I. 2009) (summary judgment standards on contract claims)
- Tavares ex rel. Guiterrez v. Barbour, 790 A.2d 1110 (R.I. 2002) (interpretation of contract; facts vs. law distinction)
- Delta Airlines, Inc. v. Neary, 785 A.2d 1123 (R.I. 2001) (contract interpretation principles in Rhode Island)
- Haffenreffer v. Haffenreffer, 994 A.2d 1226 (R.I. 2010) (good-faith and reasonableness in contract performance)
- Pearson v. Pearson, 11 A.3d 103 (R.I. 2011) (absence of terms or limitations read into contract)
- Soares v. Langlois, 934 A.2d 806 (R.I. 2007) (contract terms unambiguously set forth parties' rights)
- Manchester v. Pereira, 926 A.2d 1005 (R.I. 2007) (freedom to contract; limits not implied)
- Westerly Hospital v. Higgins, 106 R.I. 155, 256 A.2d 506 (R.I. 1969) (historical perspective on contract interpretation)