Filed: Mar. 13, 2020
Latest Update: Mar. 13, 2020
Summary: United States Court of Appeals For the First Circuit No. 19-1719 ALTHEA JOHNSON, individually and as Heir and Natural Guardian of Carlton Johnson; CARLTON JOHNSON, Plaintiffs, Appellants, v. HORACE JOHNSON; STATE ROAD AUTO SALES, INC.; ARBELLA MUTUAL INSURANCE COMPANY, Defendants, Appellees. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. John J. McConnell, Jr., U.S. District Judge] Before Thompson, Stahl, and Barron, Circuit Judges. Ronald J. Resmini, with wh
Summary: United States Court of Appeals For the First Circuit No. 19-1719 ALTHEA JOHNSON, individually and as Heir and Natural Guardian of Carlton Johnson; CARLTON JOHNSON, Plaintiffs, Appellants, v. HORACE JOHNSON; STATE ROAD AUTO SALES, INC.; ARBELLA MUTUAL INSURANCE COMPANY, Defendants, Appellees. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. John J. McConnell, Jr., U.S. District Judge] Before Thompson, Stahl, and Barron, Circuit Judges. Ronald J. Resmini, with who..
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United States Court of Appeals
For the First Circuit
No. 19-1719
ALTHEA JOHNSON, individually and as Heir and Natural Guardian of
Carlton Johnson; CARLTON JOHNSON,
Plaintiffs, Appellants,
v.
HORACE JOHNSON; STATE ROAD AUTO SALES, INC.;
ARBELLA MUTUAL INSURANCE COMPANY,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. John J. McConnell, Jr., U.S. District Judge]
Before
Thompson, Stahl, and Barron,
Circuit Judges.
Ronald J. Resmini, with whom Law Offices of Ronald J. Resmini,
Ltd. was on brief, for appellants.
Thomas A. Pursley, with whom Stephen E. Navega, II and Lynch
& Lynch were on brief, for appellee Arbella Mutual Insurance.
Lisa De Mari, with whom Heffernan & De Mari, P.C. was on
brief, for appellees Horace Johnson and State Road Auto Sales.
March 13, 2020
Per Curiam. A car accident involving Horace Johnson
("Horace"), who was the driver, and Horace's cousin, Carlton
Johnson ("Carlton"), who was the sole passenger, is what led to
this lawsuit, which was filed through Carlton's mother to recover
damages for serious injuries Carlton sustained in the accident.1
Deciding the appeal now before us will require us to resolve
whether a settlement contract under Rhode Island law was formed
and the potential applicability of a Rhode Island statute. These
determinations rest on an important question of state law -- one
which the Rhode Island Supreme Court has not yet had occasion to
answer.
So, "[b]ecause the Rhode Island Supreme Court is the
ultimate arbiter of matters of Rhode Island law, we certify th[is]
unsettled question[] to that court for guidance." W. Reserve Life
Assur. Co. of Ohio v. ADM Assocs., LLC, 737 F.3d 135, 136 (1st
Cir. 2013), certified question answered,
116 A.3d 794 (R.I. 2015);
R.I. Sup. Ct. R. 6.2
1 We note that Carlton's mother, Althea, sought to recover
damages in her individual capacity via loss of consortium and
intentional infliction of emotional distress claims, but the
dismissal of those claims is not challenged on appeal.
2 Rule 6(c) of the Rhode Island Supreme Court Rules of
Appellate Procedure requires that the certifying court "set forth
(1) the questions of law to be answered; and (2) a statement of
all facts relevant to the questions certified and showing fully
the nature of the controversy in which the questions arose."
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I. Background
On December 17, 2017, Horace, a Massachusetts resident,
was driving in Providence, Rhode Island with Carlton, a Rhode
Island resident then 28 years old, as Horace's passenger. The car
struck a utility pole, and both Horace and Carlton were seriously
injured. Horace was driving a car leased to him by State Road
Auto Sales ("State Road"), and he was insured by Arbella Mutual
Insurance Company ("Arbella") under an automobile insurance policy
that provided a limit of $100,000 of bodily injury coverage for
guest occupants injured in accidents outside Massachusetts.3
Just over a month after the accident (January 25, 2018),
Carlton's counsel sent a letter to Arbella demanding a settlement
for his bodily injury claims at the $100,000 policy limit. In a
letter dated February 28, 2018, Arbella sent a response to
Carlton's counsel in which Arbella accepted Carlton's demand to
settle for the policy limits of $100,000.
Soon after, on March 6, 2018, Carlton and his mother
filed a lawsuit in the Superior Court of Rhode Island against the
appellees. Arbella removed the case to federal court. See 28
U.S.C. §§ 1332, 1441. In time, the appellees moved for summary
judgment, and the district court granted it. In so doing (as is
relevant to our question-certification), the district court
3 We will sometimes refer to Horace, Arbella, and State Road
collectively as "the appellees."
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rejected Carlton's argument that Rhode Island's Rejected
Settlement Offer Interest Statute, R.I.G.L. § 27-7-2.2, applied to
the case and operated to render Arbella's acceptance of the
settlement offer invalid because it occurred more than the
statutorily prescribed thirty days after his settlement offer
(under the statute, the "written offer shall be presumed to have
been rejected if the insurer does not respond in writing within a
period of thirty (30) days"). Rather, after careful consideration,
the district court determined that the statute's "[i]n any civil
action" language requires that a legal proceeding in court needs
to be underway to trigger the statute's application. Accordingly,
the district court concluded that since Carlton did not file suit
until after the settlement-offer-and-acceptance episode, the
statute did not apply, and the parties had otherwise entered into
a valid settlement contract for policy limits, meaning Carlton's
claims for bodily injury could not be brought in court.
Carlton timely appealed the dismissal of two counts in
his complaint, each of which rests on the premise that no valid
settlement contract was formed: Count I seeks damages for
Carlton's "severe personal injuries, which continue to date"
causing "significant hospitalization, medical treatment, home
health care, rehabilitation, lost wages, loss of consortium,
permanent injuries, as well as loss of earning capacity"; and Count
III claims that the appellees disregarded Rhode Island insurance
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settlement law and violated and breached Massachusetts insurance
settlement law.
II. The Issues
Much of the appeal now before us rests on the
applicability of § 27-7-2.2. Let's break that down, starting with
the full language of the statute:
In any civil action in which 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 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 in
writing within a period of thirty (30) days.
Before us, Carlton rehashes his argument below in
insisting that, contrary to the district court's conclusion, the
parties never entered into a valid settlement contract: § 27-7-
2.2 applies, and it renders the settlement contract unenforceable
because Arbella failed to accept his settlement offer within the
thirty-day window the statute lays out. To his thinking, the
statute applies even though he hadn't filed a complaint yet because
"'any civil action' means from the time a torts or contracts-based
cause of action begins to accrue" (he did not propose this
definition before the district court). Further, he says that the
Rhode Island Supreme Court's jurisprudence has assumed
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applicability of the statute to matters like his, i.e. fact
patterns involving a pre-suit settlement offer, followed by an
insurer's failure to respond in writing within the thirty-day
window. See, e.g., Summit Ins. Co. v. Stricklett, 199 A.3d 523
(R.I. 2019); DeMarco v. Travelers Ins. Co.,
26 A.3d 585 (R.I.
2011).
The appellees respond by arguing that the district court
was correct to conclude that the statute is inapplicable: it
requires a civil action be underway, and because no lawsuit had
been filed at the time the parties' settlement correspondence was
playing out, Arbella simply was not bound by the statute's thirty-
day deadline. To the appellees, this means the offer and Arbella's
acceptance were valid under Rhode Island law, and the enforceable
settlement agreement that resulted categorically bars Carlton from
pursuing his claims in court.
Clearly, whether Carlton's case can succeed hinges on
whether § 27-7-2.2 applies to his case. In order to perform that
analysis, however, we need to pin down the meaning of "[i]n any
civil action" as it appears in § 27-7-2.2. The Rhode Island
Supreme Court has not yet provided a definition of "civil action"
as it relates to the statute, but it is precisely this definition
that will determine whether the statute applies to Carlton's case.
And while we are aware of the considerations and tools at our
disposal to decide upon a definition for ourselves, we think it
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more prudent to afford the Rhode Island Supreme Court the
opportunity to lay out its controlling take on this matter of state
law. This is particularly so because of Rhode Island case law
that involves § 27-7-2.2 in cases that also had their genesis in
pre-suit settlement negotiations. See, e.g., Stricklett, 199 A.3d
at 527, 533;
DeMarco, 26 A.3d at 617.
III. Certification
In light of the foregoing, we certify to the Rhode Island
Supreme Court the following question:
(1) What is the definition of "civil action" in R.I.G.L.
§ 27-7-2.2?
We would welcome further guidance from the Rhode Island
Supreme Court on any other relevant aspect of Rhode Island law
that it believes would aid in the proper resolution of the issues
pending in this matter.
The clerk of this Court is directed to forward to the
Rhode Island Supreme Court, under the official seal of this Court,
a copy of the certified question, this opinion, the district
court's opinion, and the merits briefs and appendices filed by the
parties. We retain jurisdiction over this issue pending resolution
of this certified question.
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