This Rhode Island Insurance Car Accident post is about the curious case of a mundane and garden variety rear end car accident case named ASERMELY v. ALLSTATE INSURANCE COMPANY , 728 A.2d 461 (1999). The end result of this cause of action is the potential for insurance companies to be exposed to extra contractual liability in Rhode Island.
A 15 year tortious litigation brouhaha
As it turns out, Asermely is a case in which the facts and the decision pertaining to the RI Car Crash Injury case and the victim’s claims that Allstate acted in bad faith are MEANINGLESS for any real precedential value. This scarecrow of an automobile collision case and Insurance brouhaha dragged on for over 15 tortuous years, since the date of the auto wreck. It winded its way through the Rhode Island Court system with the parties fighting over relative peanuts.
Court acts as a legislative body and makes rules imposing potential extra contractual liability
Nonetheless, Asermly is important, very important and perhaps ground breaking. Essentially, in dicta, the Rhode Island Supreme Court acted as a legislative, administrative body and issued rules. These new rules are music to the ears of Rhode Island Personal Injury Attorneys and a complete headache to Allstate, RI car accident insurance defense lawyers and all other insurance companies doing business in the state of Rhode Island.
(Editor’s note: The cliff notes takeaway is that an insurer who declines a settlement demand for within policy limits is on the hook for the entire judgment if they lose at trial including interest of twelve percent)
In Asermely, Allstate won all the battles and won the case but lost the war in the long run!
The decision of the RI Supreme Court pertaining to the case and controversy has no precedence and can be ignored. Nonetheless, the RULE OF LAW set forth in Assermely is nothing short of GROUNDBREAKING! Asermely is important because the RI Supreme Court, in dicta, which in essence is the LAW IN RI, set new rules concerning insurance obligations to settle within the policy limits. “We shall take this opportunity to promulgate a new rule to guide the trial courts in deciding these issues. This Court has held that an insurance company has a fiduciary obligation to act in the “best interests of its insured in order to protect the insured from excess liability * * * [and to] refrain from acts that demonstrate greater concern for the insurer’s monetary interest than the financial risk attendant to the insured’s situation.” Id.
If Insurance company refuses settlement for policy limits they must pony up entire judgment
“It is not sufficient that the insurance company act in good faith. An insurance company’s fiduciary obligations include a duty to consider seriously a plaintiffs reasonable offer to settle within the policy limits. Accordingly, if it has been afforded reasonable notice and if a plaintiff has made a reasonable written offer to a defendant’s insurer to settle within the policy limits, the insurer is obligated to seriously consider such an offer. If the insurer declines to settle the case within the policy limits, it does so at its peril in the event that a trial results in a judgment that exceeds the policy limits, including interest. If such a judgment is sustained on appeal or is unappealed, the insurer is liable for the amount that exceeds the policy limits, unless it can show that the insured was unwilling to accept the offer of settlement. The insurer’s duty is a fiduciary obligation to act in the best interests of the insured. Even if the insurer believes in good faith that it has a legitimate defense against the third party, it must assume the risk of miscalculation if the ultimate judgment should exceed the policy limits.” Id.
After all Asermely was really supposed to be about a boring RI rear end car accident in which ALL STATE WON! Now getting back to all states “victory”: “… on July 9, 1984, when Michelle Asermely collided with the rear end of a vehicle operated by Allstate’s insureds. All states’ insured had a 50,000 car accident liability policy.
“On or about September 8, 1989, the arbitrator issued an award for plaintiff in the sum of $47,557.37, finding plaintiff 25 percent liable and defendant’s insured 75 percent at fault. On “September 20, 1989, plaintiff’s attorney wrote a letter to the arbitrator advising that “[p]laintiff will accept the award of the arbitrator.” The defendant rejected the result of the arbitration and proceeded to trial.” Id.
AllState wins the Case but loses the war
“The total amount of the judgment, including interest, was $86,333.57. The plaintiff alleged that defendant issued a check on January 9, 1990, for $50,000 as “[f]inal settlement of any and all claims arising from bodily injury and property damage caused by accident on 463*463 7/9/84.” The plaintiff refused to negotiate this check and instead filed an action for debt on the judgment in Superior Court. Subsequently, Rendine and Bernier assigned their rights to plaintiff. On May 24, 1991, defendant issued a second check for $50,000 without the limiting language of the first check, and plaintiff negotiated the second check.” Id.
“Ok, that’s enough of the facts. In the end the Court did not believe All State acted in bad faith in Asermely and also did not believe that Plaintiff’s counsel made a clear offer to settle for within the policy limits. But who cares since Rhode Island car Accident Attorneys, RI wrongful death lawyers, Providence Premises Liability lawyers and other RI negligence lawyers are singing the praise of the RI Supreme Court.