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Bowen Court Associates v. Ernst & Young3/27/2003
onduct that formed the basis for the 1997 settlement between DEPCO and the accountants.
Also, the mere fact that the 1997 settlement agreement included a provision requiring DEPCO to indemnify the accountants if any third party sued them in connection with matters addressed in the settlement did not prove, as plaintiffs suggest, that the parties to that settlement must have believed that such claims would not be subject to the statutory immunity provided for in § 42-116-40. The accountants were entitled to negotiate for and obtain as part of their settlement with DEPCO whatever supplemental protection that they believed might be prudent or advisable to insulate themselves from the threat of incurring double liability or additional defense costs in connection with having to relitigate the malpractice claims that they had settled with DEPCO.
Moreover, it would make little sense as a matter of legislative interpretation to construe § 42-116-40 as requiring DEPCO to indemnify the accountants for their liability to repay plaintiffs' outstanding loan balance to DEPCO. Such a result would mean that DEPCO would have to absorb the losses created when plaintiffs defaulted on the credit union loan and the accompanying loan guarantees. Such an absurd result would confound the very purpose of DEPCO's existence -- namely, to purchase and recover the assets of failed financial institutions forced into receivership, thereby allowing DEPCO to make "payment to the depositors of the institutions certain amounts in respect of their deposit liabilities * * *." Section 42-116-2 (c); see also In re Advisory Opinion to the Governor (DEPCO), 593 A.2d 943, 946 (R.I. 1991) (describing DEPCO as created "to remedy the economic disaster arising from the failure of the Rhode Island Share and Deposit Indemnity Corporation (RISDIC) and the subsequent banking crisis").
In sum, the subject matter of this complaint was substantially identical to the professional negligence and negligent misrepresentation claims that DEPCO asserted against the accountants in the litigation that led to the 1997 settlement between DEPCO and the accountants. In both cases, the claims in question included ones that arose out of the accountants' providing professional services to the credit union and RISDIC from 1982 to 1990. Thus, the Superior Court properly ruled that § 42-116-40 barred the plaintiffs' attempt to obtain indemnification from the accountants.
Conclusion
Given our disposition of this appeal, we have no need to reach and decide the parties' other arguments. For these reasons, we affirm the Superior Court's judgment and deny the appeal.
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