-
USCA1 Opinion
United States Court of Appeals United States Court of Appeals
For the First Circuit For the First Circuit
_________________________ _________________________
No. 95-1206
JOAO CARREIRO, INDIVIDUALLY AND AS
ADMINISTRATOR OF THE ESTATE OF
TERESA V. CARREIRO,
Plaintiff, Appellant,
v.
RHODES GILL AND CO., LTD., ET AL.,
Defendants, Appellees.
__________________________ __________________________
No. 95-1239
JOAO CARREIRO, INDIVIDUALLY AND AS
ADMINISTRATOR OF THE ESTATE OF
TERESA V. CARREIRO,
Plaintiff, Appellee,
v.
RHODES GILL AND CO., LTD., ET AL.,
Defendants, Appellees,
_________________________ _________________________
MAIN MACHINERY COMPANY,
Defendant, Appellant.
_________________________ _________________________
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, United States District Judge] ____________________________
[Hon. Richard G. Stearns, United States District Judge] ____________________________
_________________________ _________________________
_________________________ _________________________
Before
Selya and Stahl, Circuit Judges, ______________
and Gorton,* District Judge. ______________
_________________________ _________________________
Paul A. Epstein with whom Spillane & Epstein was on brief ________________ __________________
for Joao Carreiro.
Judith A. Perritano with whom Joel F. Pierce and Morrison, ____________________ ______________ _________
Mahoney & Miller were on brief for Main Machinery Company and H. ________________
Leach Machinery Company.
Robert D. Fine with whom Licht & Semonoff was on brief for ______________ _________________
Barry G. Hittner, Receiver of Rumford Property and Liability
Insurance Company.
Jeanne O'Leary McHugh with whom Law Offices of Bruce R. Fox ______________________ ___________________________
was on brief for The Robbins Company.
_________________________ _________________________
November 1, 1995 November 1, 1995
_________________________ _________________________
_____________________ _____________________
*Of the District of Massachusetts, sitting by designation.
STAHL, Circuit Judge. These appeals arise from a STAHL, Circuit Judge. _____________
product liability and wrongful death suit brought by
appellant Joao Carreiro, whose wife Teresa was killed while
operating a machine press at The Robbins Company ("Robbins").
Carreiro sued Rhodes Gill & Co., Ltd. ("Rhodes"), the English
manufacturer of the machine; H. Leach Machinery Company
("Leach"), the dissolved domestic distributor of the machine;
Main Machinery Company ("Main"), the alleged successor
corporation to Leach; and Rumford Property and Liability
Insurance Company ("Rumford")1, Leach's insurance carrier.
Rhodes failed to answer the complaint and defaulted. The
district court granted summary judgment for Leach, holding
that it was not amenable to suit because it terminated its
corporate existence long before the accident. The court then
dismissed Rumford, ruling that there can be no direct action
against the insurer of a dissolved corporation under the
applicable Rhode Island statute. The court granted summary
judgment for Main, finding that it was not the successor to
Leach. Carreiro appeals those rulings, which we now affirm.
Main impleaded Robbins, who had contractually indemnified
Leach when it purchased the press. The district court found
that Main was not a successor to Leach and granted summary
judgment for Robbins on Main's third-party claim. Because we
____________________
1. Rumford is in receivership and is represented in this
action by its receiver, Barry G. Hittner.
-3- 3
affirm summary judgment for Main on Carreiro's claim, Main's
appeal of the ruling in favor of Robbins is moot.
I. I. __
BACKGROUND BACKGROUND __________
A. Overview ____________
In reviewing the several rulings appealed from, we
first offer this brief factual overview. On March 7, 1988,
Teresa Carreiro was operating a "New Stamp-Matic" machine
press while employed at the Robbins Company in Attleboro,
Massachusetts. During operations, a piece of a die broke
off, penetrated a plexiglass guard and struck Ms. Carreiro in
the neck, inflicting a fatal injury.
Rhodes manufactured the allegedly defective "New
Stamp-Matic" press in England. Leach, a seller of new and
used machine tools and the authorized United States
distributor for Rhodes, sold it to Robbins in 1980. In 1980,
several members of the Leach family who were shareholders
and/or officers of Leach started a new corporation, Main
Machinery Co., which continued in the business of selling new
and used machine tools, including "New Stamp-Matic" presses
manufactured by Rhodes. Subsequently, in 1982, Leach
dissolved, a full six years before the accident.
B. Prior Proceedings _____________________
In February 1991, Joao Carreiro, individually and
as administrator of the estate of Teresa Carreiro, filed a
-4- 4
diversity complaint for product liability and wrongful death
in the United States District Court for the District of
Massachusetts against Rhodes, Leach, Main and Rumford. Main
impleaded Robbins as a third-party defendant based on a
preexisting indemnification agreement between Leach and
Robbins. Rhodes failed to answer the complaint and
defaulted. Leach moved to dismiss under Fed. R. Civ. P.
12(b)(2) and 12(b)(6) in April 1991, asserting that it lacked
the capacity to be sued because dissolution had terminated
its corporate existence. The district court deferred ruling
on Leach's motion to dismiss in order to permit discovery by
Carreiro on Leach's claimed dissolution. Meanwhile, Rumford
filed a Rule 12(b)(6) motion to dismiss contending that,
because the dissolved Leach lacked capacity to be sued,
Rumford could not be sued under Rhode Island's direct action
statute. In March 1992, Leach renewed its motion to dismiss,
submitting as support the Rhode Island Secretary of State's
certificate averring that Leach had dissolved on March 25,
1982. In April 1992, Rumford renewed its motion to dismiss,
again based on Leach's dissolution. In an August 31, 1992,
order, the district court, Robert E. Keeton, J., granted
Leach's and Rumford's motions to dismiss,2 finding no basis
____________________
2. The district court treated Leach's motion to dismiss as a
motion for summary judgment under Fed R. Civ. P. 56 because
Leach had presented material outside the pleading. See Fed. ___
R. Civ. P. 12(b).
-5- 5
for Carreiro's request for further discovery on Leach's
dissolution.
In April 1994, Main moved for summary judgment,
claiming that it was not liable as a successor corporation to
Leach. Main and Robbins also filed cross-motions for summary
judgment on the issue of Robbins' liability to Main based on
Robbins' agreement to indemnify Leach. The district court,
Richard G. Stearns, J., found that Main was not the successor
to Leach and granted summary judgment for Main on Carreiro's
claims. In the same order, Judge Stearns granted summary
judgment for Robbins on Main's third-party claim, ruling that
Main could not benefit from Robbins' contractual obligation
to indemnify Leach because Main was not Leach's successor.
These appeals ensued.
II. II. ___
DISCUSSION DISCUSSION __________
Joao Carreiro raises four principal arguments on
appeal: (1) genuine factual issues exist as to whether Main
is liable as a successor corporation to Leach; (2) the
district court erred in not allowing further discovery on
whether Leach had been properly dissolved; (3) Rhode Island's
two-year survival period for claims against a dissolved
corporation does not preclude this tort action against Leach
even though the accident occurred six years after its
dissolution; and (4) the Rhode Island statute allowing
-6- 6
certain direct actions against the insurer of a deceased
natural person applies as well to the insurer of a dissolved
corporation. After setting forth the applicable standards of
review, we discuss each issue in turn.
A. Standards of Review _______________________
1. Summary Judgment for Main, Leach and Robbins ________________________________________________
We review a grant of summary judgment de novo, in __ ____
accordance with our usual standard. See, e.g., Crawford v. ___ ____ ________
Lamantia, 34 F.3d 28, 31 (1st Cir. 1994), cert. denied, 115 ________ _____ ______
S. Ct. 1393 (1995); Woods v. Friction Materials, Inc., 30 _____ _________________________
F.3d 255, 259 (1st Cir. 1994).
2. Rule 12(b)(6) Dismissal of Rumford _____________________________________
We review a dismissal for failure to state a claim
pursuant to Fed. R. Civ. P. 12(b)(6) de novo, accepting all __ ____
well-pleaded facts as true and drawing all reasonable
inferences in favor of the party dismissed. Washington Legal ________________
Found. v. Massachusetts Bar Found., 993 F.2d 962, 971 (1st ______ _________________________
Cir. 1993). We will not accept a plaintiff's unsupported
conclusions or interpretations of law. Id. We may affirm ___
the district court's order on any independently sufficient
grounds. Id.
-7- 7
3. Denial of Discovery Request ______________________________
The trial judge has broad discretion in ruling on
pre-trial management matters. Fusco v. General Motors Corp., _____ ____________________
11 F.3d 259, 267 (1st Cir. 1994). We review a district
court's ruling on a discovery request under Fed. R. Civ. P.
56(f) by a party opposing summary judgment for abuse of that
considerable discretion. Price v. General Motors Corp., 931 _____ ____________________
F.2d 162, 164 (1st Cir. 1991).
B. Successor Liability of Main _______________________________
1. Relevant Facts on the Summary Judgment Record ________________________________________________
Viewed most favorably to Carreiro, the facts of
record3 relevant to the successor liability question are as
follows. Leach sold the allegedly defective machine press to
Robbins, Carreiro's employer, in 1980. Leach, a Rhode Island
corporation, was originally owned and operated by Harry Leach
and his sons Oscar and Max. After Harry Leach's death,
Oscar, Max, and Max's son Bruce were the stockholders of
____________________
3. Local Rule 56.1 of the United States District Court for
the District of Massachusetts requires the party moving for
summary judgment to provide a concise statement of the
material undisputed facts with citations to affidavits,
depositions, or other documentation permitted under Fed. R.
Civ. P. 56(c). The party opposing summary judgment must
provide a concise statement of material disputed facts, also
with citations to affidavits, etc. Properly supported facts
set forth by the moving party are deemed admitted unless
controverted by the factual statement of the opposing party.
See generally Stepansichen v. Merchants Despatch Transp. ___ _________ ____________ __________________________
Corp., 722 F.2d 922, 930 (1st Cir. 1983) (sanctioning such _____
local rules that facilitate analysis of summary judgment
motions).
-8- 8
Leach, with Oscar as President and Secretary and Max as Vice-
President and Treasurer. Leach sold new, rebuilt, and used
machine tools and various other pieces of production and
metalworking equipment, some of which it manufactured.
In March 1980, Main was incorporated under Rhode
Island law with Max Leach and his three children as
stockholders. At incorporation and at the time this action
commenced, Oscar Leach was not a stockholder of Main,
although he was a director. Its other officers and directors
were Max and Bruce Leach. Main's primary business at the
time of the accident was the sale of used machine tools and
various pieces of production and metalworking equipment.
Unlike Leach, it never rebuilt or manufactured machinery.
Main is a registered agent of Rhodes and sells the Rhodes
"New Stamp-Matic" press, the same press that injured Ms.
Carreiro. Thirteen of Main's employees are former employees
of Leach. Main and Leach shared the same address from 1980,
when Main was incorporated, until 1982, when Leach was
dissolved, but Main always had its own telephone number and
letterhead. After Leach dissolved, its address was in care
of Bruce Leach. In response to a discovery request by
Robbins, Main produced certain documents of Leach.
In March 1982, Leach was voluntarily dissolved.
All of Leach's inventory and assets were sold, discarded, or
otherwise disposed of; none were acquired by or transferred
-9- 9
to Main. Main acquired no shares of Leach stock. Main was
never a creditor of Leach, but it may have done service work
on some machines sold by Leach.
2. Analysis ___________
Carreiro argues that genuine issues of material
fact precluded summary judgment for Main, but Carreiro has
pointed to no disputed facts in either his memorandum _____
opposing summary judgment or his brief on appeal. Instead,
he asserts in his brief that "[e]valuative applications of
legal standards to the facts are properly questions for the
fact finder," citing as support Springer v. Seaman, 821 F.2d ________ ______
871, 876 (1st Cir. 1987) (holding that application of tort
concepts of foreseeability and superseding cause were
properly for jury). We need not decide, however, whether the
doctrine of corporate successor liability is the sort of
"evaluative application of a legal standard" appropriate for
a jury. United States v. Rule Indus., Inc., 878 F.2d 535, _____________ __________________
541-42 (1st Cir. 1989). The summary judgment record here
contains no evidence of any transfer of assets from Leach to
Main, which, as we explain below, is a threshold requirement
for successor liability under the theories advanced by
Carreiro. Thus, there being no genuine issues of fact in
dispute, Main was entitled to judgment as a matter of law.
(a) Successor Liability Generally _____________________________
-10- 10
The corporate law doctrine of "successor liability"
comprises a set of exceptions to the general rule that a
corporation purchasing the assets of another is not liable ___
for the debts of the seller corporation. The parties' briefs
rely on Dayton v. Peck, Stow & Wilcox Co., 739 F.2d 690, 692 ______ _______________________
(1st Cir. 1984) (applying Massachusetts law) to set forth the
general rule and the exceptions:
The general rule in the majority of
American jurisdictions, including
Massachusetts, is that "a company which
purchases the assets of another company
is not liable for the debts and
liabilities of the transferor." The
general rule is subject to four
well-recognized exceptions permitting
liability to be imposed on the purchasing
corporation: (1) when the purchasing
corporation expressly or impliedly agreed
to assume the selling corporation's
liability; (2) when the transaction
amounts to a consolidation or merger of
the purchaser and seller corporations;
(3) when the purchaser corporation is
merely a continuation of the seller
corporation; or (4) when the transaction
is entered into fraudulently to escape
liability for such obligations.
(citations omitted). Carreiro argues that Main is the
successor corporation to Leach based on the second ("de facto
merger") and third ("mere continuation") exceptions.
Main counters persuasively that neither of these
exceptions apply because there was no sale or other transfer
of assets from Leach to Main. Main asserts that because the
"de facto merger" and "mere continuation" doctrines are
exceptions to the general rule of non-liability following an
-11- 11
asset purchase, they necessarily presuppose a sale or other
transfer of assets from one corporation to its alleged
successor. We agree. As discussed below, the cases and
other authority cited by both parties apply the "de facto
merger" or "mere continuation" exceptions only where there
has been a purchase or other transfer of assets; we have
neither been directed to nor found any authority supporting
the application of these exceptions in the absence of some
transfer of assets.
(b) Rhode Island Precedent ______________________
Several Rhode Island decisions have applied the
mere continuation exception, but each case involved an asset
transfer. In H.J. Baker & Bro., Inc. v. Orgonics, Inc., 554 _______________________ ______________
A.2d 196, 204 (R.I. 1989), the Supreme Court of Rhode Island
stated that "[g]enerally, a company that purchases the assets
of another is not liable for the debts of the transferor
company." The Baker court, however, imposed successor _____
liability because the corporation's assets were acquired for
nominal consideration by its president in a manner calculated
to defraud creditors. The president used the acquired assets
to continue the same business with the same employees. Id. ___
at 7, 9. See also Casey v. San-Lee Realty, Inc., 623 A.2d ___ ____ _____ _____________________
16, 19 (R.I. 1993) (finding mere continuation exception
inapplicable to intra-family asset transfer for no
consideration in the absence of fraud); Cranston Dressed Meat _____________________
-12- 12
Co. v. Packers Outlet Co., 190 A. 29, 31 (R.I. 1937) (finding ___ __________________
one corporation a mere continuation of predecessor where
successor corporation used supplies, inventory, and cash-on-
hand of predecessor and where court found intent to defraud
creditors). These Rhode Island cases apply the "mere
continuation" doctrine to impose successor liability in
certain asset transfers, an exception to the general rule set
forth in Baker that an asset transfer does not create _____
successor liability. Although these cases do not
specifically limit the "mere continuation" doctrine to inter- ____________
corporate asset transfers, there is no hint, and it is not
logical, that the mere continuation exception should have a
broader scope than the rule to which it relates.
We are aware of no opinion of the Supreme Court of
Rhode Island discussing generally the "de facto merger"
exception or specifically whether that exception applies in
the absence of an asset transfer.
(c) Predicting Rhode Island Law ___________________________
"In the absence of a definitive ruling by the
highest state court, a federal court may consider analogous
decisions, considered dicta, scholarly works, and any other
data tending to show how the highest court in the state would
decide the issue at hand, taking into account the broad
policies and the trends so evinced." Gibson v. City of ______ _______
Cranston, 37 F.3d 731, 736 (1st Cir. 1994) (quoting Michelin ________ ________
-13- 13
Tires (Canada), Ltd. v. First Nat'l Bank, 666 F.2d 673, 682 ____________________ ________________
(1st Cir. 1981)). However, Carreiro, in choosing a federal
rather than a state forum, is "presumably cognizant of this
court's statement that 'litigants who reject a state forum in
order to bring suit in federal court under diversity
jurisdiction cannot expect that new trails will be blazed.'"
Jordan v. Hawker Dayton Corp., 62 F.3d 29, 32 (1st Cir. ______ ____________________
1995)(declining invitation to extend successor liability to
asset purchaser under Maine law)(quoting Ryan v. Royal Ins. ___________________
Co. of America, 916 F.2d 731, 744 (1st Cir. 1990)). ______________
Carreiro cites no cases or other authority
suggesting that the "mere continuation" or "de facto merger"
exceptions can apply in the absence of an asset transfer.
Every case that Carreiro does cite involved a sale or other
transfer of assets from the original corporation to its
putative successor. In our research of "scholarly works,"
see Gibson, 37 F.3d at 736, we find that successor liability ___ ______
in general, and the "mere continuation" and "de facto merger"
exceptions in particular, are always discussed and analyzed
in the context of inter-corporate asset transfers. Scholarly
interest and judicial innovation in this area of corporate
law have been fueled by concern with corporate transactions
structured as asset purchases to avoid successor liability,
which exists in a statutory merger but generally does not in
an asset purchase. Because a purchase can achieve the same
-14- 14
economic result as a merger when the acquirer continues the
same business with the same assets and employees, many courts
have reasoned that the same liability rule -- successor
liability -- should apply. See, e.g., William M. Fletcher, ___ ____
15 Cyclopedia of the Law of Private Corporations 7122, ________________________________________________
7123-23.05 (1990 and Supp. 1995); American Law of Products _________________________
Liability 3d 7:1, 7:10-13 (1987 and Supp. 1995); Phillip _____________
I. Blumberg, The Law of Corporate Groups, 13.05-05.1 ______________________________
(1987). But these treatises and the cases Carreiro cites
contain no mention nor even any hint that the "mere
continuation" or "de facto merger" doctrines might apply in
the absence of an asset transfer.
Our research reveals three decisions where a
litigant sought to impose successor liability in the absence
of an asset transfer; all three hold that an asset transfer
was an essential prerequisite to successor liability. See ___
Williams v. Bowman Livestock Equip Co., 927 F.2d 1128, 1132 ________ ___________________________
(9th Cir. 1991) (without a transfer of assets there is no
basis to impose liability under "mere continuation"
exception, applying Oklahoma law); Meisel v. M&N Modern ______ ___________
Hydraulic Press Co., 645 P.2d 689, 691-92 (Wash. 1982) _____________________
(transfer of assets an essential prerequisite to successor
liability under "de facto merger" and "mere continuation"
theories); Evanston Insur. Co. v. Luko, 783 P.2d 293, 296 ____________________ ____
-15- 15
(Haw. Ct. App. 1989) (all exceptions to general rule of no
successor liability presuppose a transfer of assets).
We conclude that the Supreme Court of Rhode Island
would not find successor liability under the "mere
continuation" or "de facto merger" doctrines absent any
evidence of an inter-corporate asset transfer. Not only is
it illogical to extend the scope of an exception more broadly
than the general rule to which it relates, but to hold
otherwise would "blaze a new trail," which is inappropriate
for a federal court applying state law under diversity
jurisdiction. See Jordan, 62 F.3d at 32. ___ ______
(d) Applying Rhode Island Law to Leach and Main ___________________________________________
The summary judgment record contains the
uncontroverted affidavit of Main's president Max Leach
stating that "Main did not acquire any inventory or other
assets from H. Leach." At oral argument, Carreiro's lawyer
asked this court to infer that some assets must have been
transferred when Leach employees joined Main (assets such as
hand tools, shop supplies, pencils, and goodwill consisting
of the Rhodes distributorship and Leach's customer base), but
nothing in the summary judgment record supports that
inference. This argument, not presented below and made for
the first time at oral argument, is waived. See National ___ ________
Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 749 (1st ________________ _______________
Cir.), cert. denied, 115 S. Ct 2247 (1995)(arguments not _____ ______
-16- 16
presented below are waived); Frazier v. Bailey, 957 F.2d 920, _______ ______
932 (1st Cir. 1992)(arguments not fully presented in
appellate brief are waived).
In sum, having concluded that Rhode Island law
would not impose successor liability under the de facto
merger and mere continuation exceptions absent an asset
transfer, and finding no evidence of any asset transfer on
the record, we affirm summary judgment for defendant Main.
C. Further Discovery on Leach's Dissolution ____________________________________________
Carreiro appeals the district court's denial of his
request for additional discovery (after the discovery
deadline) that might have shown that Leach was not dissolved
in 1982 in accordance with Rhode Island law. To support its
motion for summary judgment, Leach submitted a certificate,
signed by the First Deputy Secretary of State and bearing the
state seal, attesting to Leach's dissolution on March 25,
1982. Carreiro does not challenge that the certificate was
validly issued, but instead argues that the court should have
allowed Carreiro to conduct further discovery seeking
unspecified evidence that Leach had somehow failed to comply
with the statutory requirements for dissolution. Rhode
Island law provides that a certificate of the secretary of
state "shall be taken and received in all courts . . . as
prima facie evidence of the existence or non-existence of the ___________
facts stated therein." R.I. Gen. Laws 7-1.1-134. Because
-17- 17
Leach submitted the certificate, the district court treated
Leach's renewed motion to dismiss as a motion for summary
judgment. See Fed. R. Civ. P. 12(b). A party opposing ___
summary judgment may have additional discovery under Fed. R.
Civ. P. 56(f) where it cannot present essential facts by
affidavit, but the party must "articulate a plausible basis
for the belief that discoverable materials exist which would
raise a trialworthy issue." Price v. General Motors Corp., _____ _____________________
931 F.2d 162, 164 (1st Cir. 1991). Carreiro neither pointed
to any evidence nor made any specific allegations that Leach
failed to comply with the requirements for dissolution, and
accordingly the district court's denial of the requested
discovery was well within its discretion.
D. Survival of Actions Against a Dissolved Corporation _______________________________________________________
According to R.I. Gen Laws 7-1.1-98, entitled
"Survival of remedy after dissolution," a claimant may sue a
dissolved corporation for "any right or claim existing, or
any liability incurred, prior to the dissolution if action or
other proceeding thereon is commenced within two (2) years
after the date of dissolution." Leach's dissolution in March
1982 was certified by the Rhode Island Secretary of State and
is uncontroverted on the summary judgment record. Carreiro
argues that his suit can be brought against the dissolved
Leach well after the two-year survival period because the
liability was not incurred "prior to dissolution," and
-18- 18
therefore does not fall within the literal scope of the
statute.
Although there is no Rhode Island case law
discussing the survival of claims against a dissolved
corporation under section 7-1.1-98, the Supreme Court of
Rhode Island interpreted the analogous Massachusetts statute
in Halliwell Assocs., Inc. v. C.E. Maguire Servs., Inc., 586 ________________________ _________________________
A.2d 530 (R.I. 1991). The court explained that at common law
"a corporation's capacity to sue or be sued was completely
destroyed upon dissolution." Id. at 533. The court added: ___
"Today, all jurisdictions have enacted corporate-survival
statutes that abrogate the harsh effect of the common-law
rule by allowing a corporation's existence to continue for
some time past the date of dissolution to settle its
corporate affairs gradually, but not to continue its
business." Id. Rhode Island has enacted exactly such a ___
statute, section 7-1.1-98, and the Supreme Court of Rhode
Island's explanation of the background common law rule and
the intent behind the typical survival statute is persuasive
authority as to the proper interpretation of R.I. Gen. Law
7-1.1-98. See supra section II.B.2.(c) (discussing use of ___ _____
other authority in the absence of a holding by state's
highest court).
In light of the Supreme Court of Rhode Island's
explanation of the legislative intent behind the typical
-19- 19
survival statute, the language at issue in section 7-1.1-98
(providing a two-year survival period only for liabilities
incurred "prior to dissolution") logically means that actions
on liabilities incurred after dissolution do not survive at _____
all, not even for the two-year wind-up period. Carreiro's
argument that actions on liabilities incurred after
dissolution survive forever is untenable in light of the
common law rule and the legislative intent to create a
limited wind-up period. We conclude that Leach, whose
dissolution in 1982 is uncontroverted on the summary judgment
record, is not amenable to a suit brought almost ten years
after its dissolution and eight years after the expiration of
the two-year survival period. Accordingly, we affirm the
district court's grant of summary judgment for Leach.
E. Direct Action Against Insurer of Dissolved Corporation __________________________________________________________
The district court granted Rumford's motion to
dismiss under Fed. R. Civ. P. 12(b)(6), having determined
that R.I. Gen. Laws 27-7-2 does not permit a direct action
against the insurer of a dissolved corporation. We agree
with the district court's analysis and ruling.
Section 27-7-2 generally bars a plaintiff from
joining an insurer as a defendant in a suit against the
insured, a so-called "direct action." An exception to that
bar applies "where before suit has been brought and probate
-20- 20
proceedings have not been initiated the insured has died."4
R.I. Gen. Laws 27-7-2. Carreiro argues that Leach "died"
when it dissolved in 1982, and therefore the foregoing
exception applies.
Carreiro's suggested interpretation of section 27-
2-2 is unpersuasive. Although the statute's language is not
without difficulty, the Rhode Island Supreme Court has stated
that section 27-7-2 is "free from ambiguity and expresses a
plain and sensible meaning" and "the meaning so expressed
will be conclusively presumed to be the one intended by the
Legislature." Chalou v. LaPierre, 443 A.2d 1241, 1241 (R.I. ______ ________
1982). The plain and sensible meaning of the statute does
not authorize direct actions against the insurer of a
dissolved corporation for the following reasons.
First, the plain and sensible meaning of "died"
does not embrace the dissolution of a corporation, and
Carreiro points to no Rhode Island authority supporting such
an interpretation.
Second, the legislature surely understood that
corporations do not enter probate proceedings; this strongly
____________________
4. The syntax of the statute is rather convoluted. Contrary
to what the statute suggests, we believe that probate
proceedings in Rhode Island are never initiated before death.
The Rhode Island Supreme Court has given this provision its
only logical meaning - that "where probate proceedings have
been initiated before suit is brought, the plaintiff may not
proceed directly against the insurer." Markham v. Allstate _______ ________
Ins. Co., 352 A.2d 651, 653 (R.I. 1976). ________
-21- 21
implies that it did not intend to apply this exception to
corporations. Furthermore, the statute provides that once
probate has been initiated, direct action against the insurer
of a deceased natural person is no longer available. See ___
Markham v. Allstate Ins. Co., 352 A.2d 651, 653 (R.I. 1976). _______ _________________
Thus, the legislature intended this exception to the general
rule barring direct action to apply only during the time
between the death of the insured and the initiation of
probate. If we accept Carreiro's interpretation, there would
be no analogous temporal limitation on the exception as
applied to a dissolved corporation since probate cannot be
initiated. Under that view an insurer would be forever
amenable to direct action, and there is no reason to believe
that the legislature intended such a result.
Third, Carreiro's proposed interpretation of the
statute would increase the insurer's liability beyond that of
the insured. The Supreme Court of Rhode Island held in
Barber v. Canela, 570 A.2d 670 (R.I. 1990), that section 27- ______ ______
7-2 did not enlarge the liability of the insurer beyond the
limits stated in the policy. It set forth as a "general
rule" that any rights of a plaintiff against the insurer are
"dependent upon the existence of liability of the insurer to
the insured under the contract of insurance." Id. at 671 ___
(quoting George J. Couch, et al., 12A Couch Cyclopedia of ____________________
Insurance Law 2d 45:833 at 486 (1981)). A direct action _________________
-22- 22
here, where the insured cannot be sued because it is a
dissolved corporation, would contravene that rule. It would
be unreasonable for us to reach that result through a
tortured interpretation of the statute and without precedent
under Rhode Island law.
In light of the foregoing, we find it unnecessary
to certify this statutory interpretation question to the
Supreme Court of Rhode Island as Carreiro urges. Because
section 27-7-2 generally prohibits direct actions against the
insurer of a potentially liable party and because we conclude
that Carreiro's suit does not fit within the statutory
exceptions to that prohibition, we affirm the dismissal of
Rumford.
F. Main's Indemnification Claim Against Robbins ________________________________________________
Because we affirm the district court's grant of
summary judgment in favor of Main on Carreiro's complaint,
Main's appeal seeking to revive its third-party
indemnification claim against Robbins is moot.
IV. IV. ___
CONCLUSION CONCLUSION __________
For the foregoing reasons, the decisions of the
district court are affirmed. affirmed ________
-23- 23
Document Info
Docket Number： 95-1206
Filed Date： 11/1/1995
Precedential Status： Precedential
Modified Date： 9/21/2015