USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-1641
MELINDA RYAN ARMACOST,
Plaintiff, Appellee,
v.
AMICA MUTUAL INSURANCE COMPANY,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
__________________________
____________________
Before
Torruella, Circuit Judge,
_____________
Bownes, Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________
____________________

Thomas R. Bender, with whom David P. Whitman, and Hanson, Curr

________________
________________
_____________
Parks & Whitman were on brief for defendant-appellant.
_______________
Mark S. Mandell, with whom Mandell, DeLuca & Schwartz, Ltd. w
_______________
________________________________
on brief for plaintiff-appellee.
____________________
December 10, 1993
____________________

BOWNES, Senior Circuit Judge.

BOWNES, Senior Circuit Judge.
____________________

The principal issue

in this automobile accident diversity case is whether a Rhode

Island

statute

interest over and

We hold

requires

that

an

insurer pay

above its policy limits

that the statute

does so require.

prejudgment

to the plaintiff.
Some background

facts are necessary.

I.
I.
Plaintiff-appellee,
pedestrian in Newport, Rhode

Melinda Ryan

Armacost, was

Island, when she was

struck by

an

automobile

resident

of

appellant,

owned and
New

York.

Amica

Providence,

operated
Owen

Mutual

Rhode Island.

by

was

Stephen

insured

Insurance

B. Owen,

by

Company

A complaint

was

defendant(Amica)

of

filed in

the

district court against Owen, but the summons was returned non
___
est
___

inventus.
________

naming

Plaintiff

promptly

amended her

complaint,

Amica as defendant under Rhode Island's direct action

statute.1

After

discovery

trial, Amica admitted

was

completed,

negligence by its

but

insured.

prior
The

to
only

issue for trial, therefore, was the amount of damages.

____________________
1. The statute, R.I. Gen. Laws
27-7-2, provides
pertinent part:
An injured party, or, in the event of
that party's death, the party entitled to
sue therefor, in his or her suit against
the insured, shall not join the insurer
as a defendant. If, however, the officer
serving any process against the insured
shall return
that process
"non est
inventus," . . . the party . . . may
proceed directly against the insurer.
-22

in

Shortly
counsel made a
of

prior

to

settle the case.

referred to the statute at

rejected

$175,000.

trial

date,

written demand "equal to

$500,000" to

Amica

the

the

This

the coverage limits

The

demand specifically

issue, R.I. Gen. Laws

demand

and

made

again offered to

again

rejected.

settle for

The jury

27-7-2.2.

counter offer

was spurned by plaintiff.

Amica

plaintiff's

of

During the trial

$175,000; the

returned a verdict

offer was

of $750,000.

The district court amended the judgment by reducing it to the

amount

of Amica's contractual

$495,000.2

The

required under

district
the

liability under its

court then

statute

to

pay

held

policy

that Amica

plaintiff

was

prejudgment

interest on the amended judgment, "even though such interest,

when added to the amended
amount which exceeds
applicable

judgment, requires Amica to pay an

the limits of

insurance policy."

its liability under

the

Armacost v. Amica Mut. Ins.

________
________________

Co., 821 F. Supp. 75, 82 (D.R.I. 1993).

___
II.
II.
The
the

statute at issue

Rhode Island

considered it

Supreme Court.

is the

United

opinion from

which this appeal

that

called

we are

has not been

upon

The only

interpreted by
court to

States District
has been taken.

to decide

how

have

Court in

the

This means

the Rhode

Island

____________________
2.

The original policy

limits of $500,000 had

been reduced

by $5,000 because of a payment

claim of plaintiff's husband.

in that amount to settle

the

-33

Supreme

Court would construe

this case.
opinion is
district

The standard
de
__

novo.
____

We

the statute in

of review of the
do not

court's determination of

the context of
district court's

accord deference

to

Rhode Island law.

Regina College v. Russell, 499 U.S. 225, 231-35 (1991).

______________
_______
The statute to be construed provides:
Interest on judgment
Payment by
Interest on judgment
Payment by
insurer.
In any civil action in which
insurer.
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 thereon
totals a sum in excess of the policy
coverage limitation.
This written offer
shall be presumed to have been rejected

the
Salve
_____

if the insurer does not respond within a

period of thirty (30) days.
R.I. Gen. Laws
Rhode

27-7-2.2.
Island's

prejudgment

interest

statute

provides:
Interest in civil action.
In any
Interest in civil action.
civil action in
which a verdict is
rendered or a decision made for pecuniary
damages, there shall be added by the
clerk of the court to the amount of
damages, interest at the rate of twelve
per cent (12%) per annum thereon from the
date the cause of action accrued which
shall be included in the judgment entered
therein.
This section shall not apply
until entry
of judgment or
to any
contractual
-44

obligation where
provided or
as
action.
Id.
___

interest
to
any

is already
condemnation

9-21-10.
The

question is

whether the

statute,

9-21-10, applies to the

statute,

27-7-2.2.

prejudgment interest

rejected-settlement-offer

Ordinarily, we would certify to a state

supreme

court a question

interpretation of
the

of first impression

a state statute.

In this

involving the
case, however,

language of the implicated statutes, the evident purpose

of the statutes, and the case law are so clear that

we think

certification would be a waste of judicial resources.

Amica

raises two issues:

Supreme Court would construe

direct action suits

A.
A.

would limit the

the Rhode

interest due on

cases

27-7-2.2 to that accruing after judgment.

The Applicability of
27-7-2.2 to the Direct Action
The Applicability of
27-7-2.2 to the Direct Action
____________________________________________________
Statute
Statute
_______
Amica's

follows.
interest

The

only

the

point

first

is

that

of the common law.

to actions

"in

liability insurance."

that, because it
statute,

on

issue

statutes

runs

as

granting

on judgment must be strictly construed because they

applies

covered by

argument

starting

are in derogation
2.2

27-7-2.2 as not applicable to

against insurers; and whether

Island Supreme Court

arising under

whether the Rhode Island

So
which

construed,

27-7-

the defendant

Amica therefore

is

contends

is an insurer, and not, in the words of the

"a defendant

covered by
-55

liability insurance,"

it

does not come

within the compass of the

statute.

It argues

that the phrase "written offer to the defendant's insurer" is

directed at the situation where the decision to settle is not
within

the

control

defendant's

of

insurer.

concludes,

is to

the

The purpose

protect a

interest liability

defendant,
of

but

the

defendant who

in excess of

lies

with

statute, Amica
is

insured from

the policy limits due

to a

decision made by the insurer.

This is an
construction
statute.

doctrine

But

against the
insurer

ingenious argument; it uses

to

avoid the

it ignores

insurer is a

of defendant

brought against Owen.

the

legal fact

Owen.

The

not be

served with process.

This case

have to pay the amount found

the

originally

insured could
Owen's shoes.
started out, in
in which

the

If process had

handling of the case would have

and it would be making

sense for

was the

a "civil action

prejudgment interest because

common

Amica

Amica stands in

27-7-2.2, as

been served on Owen, Amica's

or

action

defendant under the

defendant is covered by liability insurance."

as to

that the

27-7-2, because its

It is both defendant and insurer.

been no different,

of the

complaint was

Amica was made a

action statute,

of

meaning

derivative action.

direct

the words

plain

the strict

due.

the same argument

in either case

it would

We see no basis

in logic

argument that

27-7-2.2

is not

applicable to the insurer under the direct action statute.

-66

-77

B.
B.

Construing the Statute

Construing the Statute
______________________
Amica

district

makes

court's

a number

construction

of arguments
of

the

attacking the

statute.

The

overarching argument is that the district court did not apply

the

rules of

applied by the

statutory construction

that

would have

Rhode Island Supreme Court and,

improperly construed the statute.

been

as a result,

Because our review is

de
__

novo without any

____
think

it

necessary

attack on the
whether

deference to the district court,

to

discuss point-by-point

district court opinion.

The

we do not
defendant's

only question is

the ultimate conclusion of the district court should

be affirmed.

We

are not concerned

with the route taken

by

the court in reaching its result.

We start our

analysis with a determination

purpose of the rejected-settlement-offer statute,

Although

the construction of

this statute

impression, the purpose of the prejudgment

9-21-10, has been
Court.

In Martin
______

1028 (R.I.

is one

of the

27-7-2.2.
of first

interest statute,

articulated by the Rhode

Island Supreme

v. Lumberman's Mutual Casualty, 559 A.2d

____________________________

1989), the Rhode

Island Supreme Court

held that

the prejudgment interest did not apply to condemnation cases.

In the course of its opinion it stated:
Statutes that award prejudgment interest
generally serve the dual purposes of
encouraging the
early settlement
of
claims, Pray v. Narragansett Improvement
____
________________________
Co., 434 A.2d 923, 930 (R.I. 1981), and
___
compensating plaintiffs for waiting for
-88

recompense to which
entitled, Dennis v.
______
Trust Nat'l Bank, 744
________________
Cir. 1984).
Martin, 559
______

A.2d at 1031;

they were legally

Rhode Island Hosp.
___________________
F.2d 893, 901 (1st

see also Isserlis v.

___ ____ ________

Director of
___________

Public Works, 300 A.2d 273, 274 (R.I. 1973) (clear purpose of
____________
such legislation was to accelerate settlement of tort cases).
We have

echoed this finding

Star Chopper Co.,

________________

of settlement purpose.

584 F.2d 1124, 1135 (1st

Rhode Island prejudgment

Roy v.
___

Cir. 1978) ("The

statute was enacted to

promote the

expeditious settlement of claims.").

We think it plain from its terms that the rejectedsettlement-offer

statute

prejudgment interest statute

of tort

cases.

has

the

same

purpose

to accelerate the

This purpose is

as

the

settlement

readily apparent

from its

provision that if the plaintiff's offer of settlement

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
thereon totals a sum in excess of the
policy coverage limitation.
27-7-2.2.
This language tells the insurer in no uncertain terms that it
runs the

risk of paying a

stiff price for shrugging

off an

offer of settlement.
We next turn
statutes.

to the wording of the

The prejudgment interest

two implicated

statute says:

civil action in which a verdict is rendered or a

"In any
___

decision is

-99

made for pecuniary

damages," interest shall be added

amount of damages from the

9-21-10.
action,

offer

force at

that

offer of

case was a

settlement

. . . the coverage limits

was rejected

manifest

cavil that this

plaintiff's

amount "equal to
policy in

date the cause of action accrued.

It is beyond

that

the

to the

the time the

by the

prejudgment

was

for an

in the liability

action accrue[d],

insurer."

civil

and the

27-7-2.2.

interest

statute

It is
applies

directly to the case at bar.

It also

seems

words,

27-7-2.2

interest.

It says that

"then

the

evident to

requires

defendant's

the

us

that, by

payment

of

its

very

prejudgment

if the plaintiff's offer is rejected

insurer

shall

be

liable

for

all
___

interest due on the judgment entered by the court even if the

payment of the judgment and

interest thereon totals a sum in

excess of the policy coverage limitation."

(Emphasis added.)

Despite the labored

argument of defendants to

it

that

seems

obvious

prejudgment

"all

interest"

and postjudgment interest.

the contrary,

can

only

mean

And this is the only

interpretation that makes sense if the purpose of the statute

is to promote settlement, as is

obvious.

There would be

no

pressure on the insurer to consider a settlement offer if all

it

had to

interest.

pay

for rejecting

Defendant's

the

offer was

post-judgment

suggested construction of the statute

would take all of the bite out of it.

-1010

We

think

the

following statement

by

the

Island Supreme Court applies to the statute in issue:

In the face of a statute so clear and
unambiguous there is no room for the
application of
the usual
canons of
statutory construction.
In such a case
the statute declares itself.
Vezina v.
______
Bodreau, 86 R.I. 87, 133 A.2d 753; Long

Rhode

_______
____
v. Langlois, R.I., 170 A.2d 618. We may
________
not where no ambiguity exists search
beyond the
statute for
a different
meaning. Hathaway v. Hathaway, 52 R.I.
________
________
39, 156 A. 800. Even hardship does not
justify a court in reading into a statute
something contrary to its unequivocal
language. Clark v. Orabona, 1 Cir., 59
_____
_______
F.2d 187.
Only when the legislature
sounds an uncertain trumpet may the court
move in to clarify the call.
But when
the call is clear and certain as it is
here we may not consider whether the
statute as written comports with our
ideas of justice, expediency or sound
public policy.
In such circumstances
that is not the court's business. Blais
_____
v. Franklin, 31 R.I. 95, 77 A. 172.
________
Kastal v.
______

Hickory House, Inc., 187

____________________

A.2d 262,

264-65 (R.I.

1963).
Out of
similar

an abundance

of caution

we have

examined

statutes in other jurisdictions because we think the

Rhode Island Supreme

the more than
interest

Court might possibly have done

thirty states surveyed, many

statutes

accompanied

provisions, or separate
to expedite claims

Of

have prejudgment

by rejected-settlement-offer

statutes that are invoked

settlement.

See, e.g., Cal.

___ ____

in tandem
Civ. Code

3291 (West Supp. 1993); Conn.

Gen. Stat.

Stat. Ann.

Supp. 1993); Mo. Ann.

549.09(c) (West

so.

-1111

52-192a(b); Minn.
Stat.

408.040.2 (Vernon

1990); Ohio

(Anderson Supp. 1993).

Rev. Code

Ann.

1343.03(c)

Our survey has not disclosed a single

instance

where prejudgment

apply to

a rejected-

interest has

been

settlement-offer statute.

rejected-settlement-offer

statute's plain

held not

to

Given the

language and

the

Rhode Island courts' long history of applying the prejudgment

interest

statute in tort

cases, we

think the

Rhode Island

Supreme Court would apply its prejudgment interest statute to

the rejected-settlement-offer statute.
Affirmed. Costs on appeal awarded to appellee.
Affirmed. Costs on appeal awarded to appellee.
_________ ____________________________________

-1212