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Rhode Island Insurers' Insolvency Fund v. Leviton Manufacturing Co.12/13/2000
This case represents the next chapter in the previously decided Rhode Island Insurers' Insolvency Fund v. Leviton Manufacturing Co., 716 A.2d 730 (R.I. 1998) (Leviton I). The defendant, Leviton Manufacturing Company, Inc. (Leviton), is appealing from the entry of summary judgment and the imposition of sanctions in favor of the plaintiff, Rhode Island Insurers' Insolvency Fund (the Fund). Leviton and its wholly owned subsidiary corporation, American Insulated Wire Corporation (AIW), were insured for workers' compensation liability by American Mutual Life Insurance Company (American Mutual) during the period from March 15, 1953, through 1986. On March 9, 1989, however, American Mutual was declared insolvent. Thereafter, the Fund assumed American Mutual's obligations and, pursuant to G.L. 1956 § 27-34-11, sought reimbursement from Leviton. We affirm the entry of summary judgment and the imposition of sanctions, but sustain the appeal as it relates to the award of pre-judgment interest.
Facts and Procedural History
The basic facts remain unchanged. The Fund is a nonprofit unincorporated legal entity established by the Legislature as a means to guarantee payment to an insured in the event an insurer becomes insolvent and is unable to discharge its obligations. See § 27-34-2. Created to protect both claimants and policyholders from the catastrophic consequences of an insurer's insolvency, the Fund's income is derived from assessments made upon all insurers transacting business in Rhode Island. See McGuirl v. Anjou International Co., 713 A.2d 194, 197 (R.I. 1998); Medical Malpractice Joint Underwriting Association of Rhode Island v. Rhode Island Insurers' Insolvency Fund, 703 A.2d 1097, 1100 (R.I. 1997). See also § 27-34-2. We have consistently construed the act in accordance with the public-policy considerations that support the objectives of the statute. See Medical Malpractice Joint Underwriting Association, 703 A.2d at 1102; Bassi v. Rhode Island Insurers' Insolvency Fund, 661 A.2d 77, 80 (R.I. 1995).
On May 13, 1993, the Fund filed a complaint in Providence County Superior Court, alleging that it had made payments in excess of $1 million on Leviton and AIW's behalf. After it was determined that Leviton and AIW had a combined net worth in excess of $50 million, the Fund, pursuant to § 27-34-11(b)(1), demanded full recovery for the sums previously paid as a result of American Mutual's insolvency. Leviton defended, asserting numerous affirmative defenses, including several challenges to the constitutionality of § 27-34-11(b)(1). The Fund moved for partial summary judgment with respect to the constitutional claims, and sought a monetary judgment against Leviton. The trial justice granted the Fund's motion concerning the constitutional defenses and this Court affirmed in Leviton I. However, referring to the non-constitutional defenses, the trial court found that summary judgment on the amount owed by Leviton presented an issue of fact that was at the very least premature. The trial justice then permitted Leviton additional time to review the Fund's claim files relative to payment amounts and the reasonableness of settlements made by the Fund. It is from this point that the current controversy proceeds.
The Fund's claim files were not reviewed by Leviton, and on February 24, 1998, approximately a year and a half after the entry of the order denying summary judgment, the Fund sought to compel Leviton to review the claim files and respond to the Fund's request for admissions. The motion was granted on March 18, 1998, and Leviton was ordered to review the claim files and respond to the request for admissions within seventy-five days from the entry of the order. In its
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