MG+M Obtains Dismissal on Behalf of Several Insurance Companies

December 17, 2018

On an issue of first impression in Rhode Island, Brian Gross and Ed Mazzaferro obtained a dismissal on behalf of several insurance companies that faced a direct claim by a plaintiff who claimed that the insurance companies’ former insured manufactured asbestos-containing products which caused the death of plaintiff’s decedent. Plaintiff originally sued the insurance companies’ former insured, but because the former insured corporation had been legally dissolved seven years prior to plaintiff’s claims, the Rhode Island Superior Court granted the former insured summary judgment. In response, plaintiff attempted to bring a direct claim against the insurers for the alleged negligence of its former insured.

Although R.I. General Laws § 27-7-2 generally bars direct actions against insurers of alleged tortfeasors, there are certain limited exceptions to that rule. Plaintiff argued that her claims against the insurers should survive under the exception which allows direct claims against the insurers of a bankrupt entity because the term “bankruptcy” should be broadly interpreted to encompass dissolution, based on prior case law in which the definition of the term bankruptcy was expanded to incorporate receivership.

The Court, on the other hand, agreed with the argument set forth by Brian Gross and Ed Mazzaferro that the language of R.I. General Laws § 27-7-2 and its exceptions are clear and unambiguous and, therefore, the Court must apply the “natural and generally accepted meaning” of the term bankruptcy, which does not encompass dissolution. Accordingly, the plaintiff’s claims were barred as a matter of law, and the Court granted the insurers’ motion to dismiss. This decision not only represents a victory for the insurance carriers in this instance, it also should have a much broader impact in severely limiting the ability of future plaintiffs to bring claims against insurance companies that do not explicitly meet the exceptions carved out by the Rhode Island legislature.

Practices Team
617 670 8519
Brian D.