Carreiro v. Rhodes Gill and Co.

United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit

No. 95-1206
JOAO CARREIRO, INDIVIDUALLY AND AS
ADMINISTRATOR OF THE ESTATE OF
TERESA V. CARREIRO,
Plaintiff, Appellant,

v.

RHODES GILL AND CO., LTD., ET AL.,
Defendants, Appellees.

No. 95-1239
JOAO CARREIRO, INDIVIDUALLY AND AS
ADMINISTRATOR OF THE ESTATE OF
TERESA V. CARREIRO,
Plaintiff, Appellee,

v.

RHODES GILL AND CO., LTD., ET AL.,
Defendants, Appellees,

MAIN MACHINERY COMPANY,
Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, United States District Judge]

[Hon. Richard G. Stearns, United States District Judge]

Before

Selya and Stahl, Circuit Judges,

and Gorton,* District Judge.

Paul A. Epstein with whom Spillane & Epstein was on brief

for Joao Carreiro.
Judith A. Perritano with whom Joel F. Pierce and Morrison,

Mahoney & Miller were on brief for Main Machinery Company and H.

Leach Machinery Company.
Robert D. Fine with whom Licht & Semonoff was on brief for

Barry G. Hittner, Receiver of Rumford Property and Liability
Insurance Company.
Jeanne O'Leary McHugh with whom Law Offices of Bruce R. Fox

was on brief for The Robbins Company.

November 1, 1995
November 1, 1995

*Of the District of Massachusetts, sitting by designation.

STAHL, Circuit Judge. These appeals arise from a
STAHL, Circuit Judge.

product liability and wrongful death suit brought by

appellant Joao Carreiro, whose wife Teresa was killed while

operating a machine press at The Robbins Company ("Robbins").

Carreiro sued Rhodes Gill & Co., Ltd. ("Rhodes"), the English

manufacturer of the machine; H. Leach Machinery Company

("Leach"), the dissolved domestic distributor of the machine;

Main Machinery Company ("Main"), the alleged successor

corporation to Leach; and Rumford Property and Liability

Insurance Company ("Rumford")1, Leach's insurance carrier.

Rhodes failed to answer the complaint and defaulted. The

district court granted summary judgment for Leach, holding

that it was not amenable to suit because it terminated its

corporate existence long before the accident. The court then

dismissed Rumford, ruling that there can be no direct action

against the insurer of a dissolved corporation under the

applicable Rhode Island statute. The court granted summary

judgment for Main, finding that it was not the successor to

Leach. Carreiro appeals those rulings, which we now affirm.

Main impleaded Robbins, who had contractually indemnified

Leach when it purchased the press. The district court found

that Main was not a successor to Leach and granted summary

judgment for Robbins on Main's third-party claim. Because we

1. Rumford is in receivership and is represented in this
action by its receiver, Barry G. Hittner.

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affirm summary judgment for Main on Carreiro's claim, Main's

appeal of the ruling in favor of Robbins is moot.

I.
I.

BACKGROUND
BACKGROUND

A. Overview

In reviewing the several rulings appealed from, we

first offer this brief factual overview. On March 7, 1988,

Teresa Carreiro was operating a "New Stamp-Matic" machine

press while employed at the Robbins Company in Attleboro,

Massachusetts. During operations, a piece of a die broke

off, penetrated a plexiglass guard and struck Ms. Carreiro in

the neck, inflicting a fatal injury.

Rhodes manufactured the allegedly defective "New

Stamp-Matic" press in England. Leach, a seller of new and

used machine tools and the authorized United States

distributor for Rhodes, sold it to Robbins in 1980. In 1980,

several members of the Leach family who were shareholders

and/or officers of Leach started a new corporation, Main

Machinery Co., which continued in the business of selling new

and used machine tools, including "New Stamp-Matic" presses

manufactured by Rhodes. Subsequently, in 1982, Leach

dissolved, a full six years before the accident.

B. Prior Proceedings

In February 1991, Joao Carreiro, individually and

as administrator of the estate of Teresa Carreiro, filed a

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diversity complaint for product liability and wrongful death

in the United States District Court for the District of

Massachusetts against Rhodes, Leach, Main and Rumford. Main

impleaded Robbins as a third-party defendant based on a

preexisting indemnification agreement between Leach and

Robbins. Rhodes failed to answer the complaint and

defaulted. Leach moved to dismiss under Fed. R. Civ. P.

12(b)(2) and 12(b)(6) in April 1991, asserting that it lacked

the capacity to be sued because dissolution had terminated

its corporate existence. The district court deferred ruling

on Leach's motion to dismiss in order to permit discovery by

Carreiro on Leach's claimed dissolution. Meanwhile, Rumford

filed a Rule 12(b)(6) motion to dismiss contending that,

because the dissolved Leach lacked capacity to be sued,

Rumford could not be sued under Rhode Island's direct action

statute. In March 1992, Leach renewed its motion to dismiss,

submitting as support the Rhode Island Secretary of State's

certificate averring that Leach had dissolved on March 25,

1982. In April 1992, Rumford renewed its motion to dismiss,

again based on Leach's dissolution. In an August 31, 1992,

order, the district court, Robert E. Keeton, J., granted

Leach's and Rumford's motions to dismiss,2 finding no basis

2. The district court treated Leach's motion to dismiss as a
motion for summary judgment under Fed R. Civ. P. 56 because
Leach had presented material outside the pleading. See Fed.

R. Civ. P. 12(b).

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for Carreiro's request for further discovery on Leach's

dissolution.

In April 1994, Main moved for summary judgment,

claiming that it was not liable as a successor corporation to

Leach. Main and Robbins also filed cross-motions for summary

judgment on the issue of Robbins' liability to Main based on

Robbins' agreement to indemnify Leach. The district court,

Richard G. Stearns, J., found that Main was not the successor

to Leach and granted summary judgment for Main on Carreiro's

claims. In the same order, Judge Stearns granted summary

judgment for Robbins on Main's third-party claim, ruling that

Main could not benefit from Robbins' contractual obligation

to indemnify Leach because Main was not Leach's successor.

These appeals ensued.

II.
II.

DISCUSSION
DISCUSSION

Joao Carreiro raises four principal arguments on

appeal: (1) genuine factual issues exist as to whether Main

is liable as a successor corporation to Leach; (2) the

district court erred in not allowing further discovery on

whether Leach had been properly dissolved; (3) Rhode Island's

two-year survival period for claims against a dissolved

corporation does not preclude this tort action against Leach

even though the accident occurred six years after its

dissolution; and (4) the Rhode Island statute allowing

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certain direct actions against the insurer of a deceased

natural person applies as well to the insurer of a dissolved

corporation. After setting forth the applicable standards of

review, we discuss each issue in turn.

A. Standards of Review

1. Summary Judgment for Main, Leach and Robbins

We review a grant of summary judgment de novo, in

accordance with our usual standard. See, e.g., Crawford v.

Lamantia, 34 F.3d 28, 31 (1st Cir. 1994), cert. denied, 115

S. Ct. 1393 (1995); Woods v. Friction Materials, Inc., 30

F.3d 255, 259 (1st Cir. 1994).

2. Rule 12(b)(6) Dismissal of Rumford

We review a dismissal for failure to state a claim

pursuant to Fed. R. Civ. P. 12(b)(6) de novo, accepting all

well-pleaded facts as true and drawing all reasonable

inferences in favor of the party dismissed. Washington Legal

Found. v. Massachusetts Bar Found., 993 F.2d 962, 971 (1st

Cir. 1993). We will not accept a plaintiff's unsupported

conclusions or interpretations of law. Id. We may affirm

the district court's order on any independently sufficient

grounds. Id.

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3. Denial of Discovery Request

The trial judge has broad discretion in ruling on

pre-trial management matters. Fusco v. General Motors Corp.,

11 F.3d 259, 267 (1st Cir. 1994). We review a district

court's ruling on a discovery request under Fed. R. Civ. P.

56(f) by a party opposing summary judgment for abuse of that

considerable discretion. Price v. General Motors Corp., 931

F.2d 162, 164 (1st Cir. 1991).

B. Successor Liability of Main

1. Relevant Facts on the Summary Judgment Record

Viewed most favorably to Carreiro, the facts of

record3 relevant to the successor liability question are as

follows. Leach sold the allegedly defective machine press to

Robbins, Carreiro's employer, in 1980. Leach, a Rhode Island

corporation, was originally owned and operated by Harry Leach

and his sons Oscar and Max. After Harry Leach's death,

Oscar, Max, and Max's son Bruce were the stockholders of

3. Local Rule 56.1 of the United States District Court for
the District of Massachusetts requires the party moving for
summary judgment to provide a concise statement of the
material undisputed facts with citations to affidavits,
depositions, or other documentation permitted under Fed. R.
Civ. P. 56(c). The party opposing summary judgment must
provide a concise statement of material disputed facts, also
with citations to affidavits, etc. Properly supported facts
set forth by the moving party are deemed admitted unless
controverted by the factual statement of the opposing party.
See generally Stepansichen v. Merchants Despatch Transp.

Corp., 722 F.2d 922, 930 (1st Cir. 1983) (sanctioning such

local rules that facilitate analysis of summary judgment
motions).

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Leach, with Oscar as President and Secretary and Max as Vice-

President and Treasurer. Leach sold new, rebuilt, and used

machine tools and various other pieces of production and

metalworking equipment, some of which it manufactured.

In March 1980, Main was incorporated under Rhode

Island law with Max Leach and his three children as

stockholders. At incorporation and at the time this action

commenced, Oscar Leach was not a stockholder of Main,

although he was a director. Its other officers and directors

were Max and Bruce Leach. Main's primary business at the

time of the accident was the sale of used machine tools and

various pieces of production and metalworking equipment.

Unlike Leach, it never rebuilt or manufactured machinery.

Main is a registered agent of Rhodes and sells the Rhodes

"New Stamp-Matic" press, the same press that injured Ms.

Carreiro. Thirteen of Main's employees are former employees

of Leach. Main and Leach shared the same address from 1980,

when Main was incorporated, until 1982, when Leach was

dissolved, but Main always had its own telephone number and

letterhead. After Leach dissolved, its address was in care

of Bruce Leach. In response to a discovery request by

Robbins, Main produced certain documents of Leach.

In March 1982, Leach was voluntarily dissolved.

All of Leach's inventory and assets were sold, discarded, or

otherwise disposed of; none were acquired by or transferred

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to Main. Main acquired no shares of Leach stock. Main was

never a creditor of Leach, but it may have done service work

on some machines sold by Leach.

2. Analysis

Carreiro argues that genuine issues of material

fact precluded summary judgment for Main, but Carreiro has

pointed to no disputed facts in either his memorandum

opposing summary judgment or his brief on appeal. Instead,

he asserts in his brief that "[e]valuative applications of

legal standards to the facts are properly questions for the

fact finder," citing as support Springer v. Seaman, 821 F.2d

871, 876 (1st Cir. 1987) (holding that application of tort

concepts of foreseeability and superseding cause were

properly for jury). We need not decide, however, whether the

doctrine of corporate successor liability is the sort of

"evaluative application of a legal standard" appropriate for

a jury. United States v. Rule Indus., Inc., 878 F.2d 535,

541-42 (1st Cir. 1989). The summary judgment record here

contains no evidence of any transfer of assets from Leach to

Main, which, as we explain below, is a threshold requirement

for successor liability under the theories advanced by

Carreiro. Thus, there being no genuine issues of fact in

dispute, Main was entitled to judgment as a matter of law.

(a) Successor Liability Generally

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The corporate law doctrine of "successor liability"

comprises a set of exceptions to the general rule that a

corporation purchasing the assets of another is not liable

for the debts of the seller corporation. The parties' briefs

rely on Dayton v. Peck, Stow & Wilcox Co., 739 F.2d 690, 692

(1st Cir. 1984) (applying Massachusetts law) to set forth the

general rule and the exceptions:

The general rule in the majority of
American jurisdictions, including
Massachusetts, is that "a company which
purchases the assets of another company
is not liable for the debts and
liabilities of the transferor." The
general rule is subject to four
well-recognized exceptions permitting
liability to be imposed on the purchasing
corporation: (1) when the purchasing
corporation expressly or impliedly agreed
to assume the selling corporation's
liability; (2) when the transaction
amounts to a consolidation or merger of
the purchaser and seller corporations;
(3) when the purchaser corporation is
merely a continuation of the seller
corporation; or (4) when the transaction
is entered into fraudulently to escape
liability for such obligations.

(citations omitted). Carreiro argues that Main is the

successor corporation to Leach based on the second ("de facto

merger") and third ("mere continuation") exceptions.

Main counters persuasively that neither of these

exceptions apply because there was no sale or other transfer

of assets from Leach to Main. Main asserts that because the

"de facto merger" and "mere continuation" doctrines are

exceptions to the general rule of non-liability following an

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asset purchase, they necessarily presuppose a sale or other

transfer of assets from one corporation to its alleged

successor. We agree. As discussed below, the cases and

other authority cited by both parties apply the "de facto

merger" or "mere continuation" exceptions only where there

has been a purchase or other transfer of assets; we have

neither been directed to nor found any authority supporting

the application of these exceptions in the absence of some

transfer of assets.

(b) Rhode Island Precedent

Several Rhode Island decisions have applied the

mere continuation exception, but each case involved an asset

transfer. In H.J. Baker & Bro., Inc. v. Orgonics, Inc., 554

A.2d 196, 204 (R.I. 1989), the Supreme Court of Rhode Island

stated that "[g]enerally, a company that purchases the assets

of another is not liable for the debts of the transferor

company." The Baker court, however, imposed successor

liability because the corporation's assets were acquired for

nominal consideration by its president in a manner calculated

to defraud creditors. The president used the acquired assets

to continue the same business with the same employees. Id.

at 7, 9. See also Casey v. San-Lee Realty, Inc., 623 A.2d

16, 19 (R.I. 1993) (finding mere continuation exception

inapplicable to intra-family asset transfer for no

consideration in the absence of fraud); Cranston Dressed Meat

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Co. v. Packers Outlet Co., 190 A. 29, 31 (R.I. 1937) (finding

one corporation a mere continuation of predecessor where

successor corporation used supplies, inventory, and cash-on-

hand of predecessor and where court found intent to defraud

creditors). These Rhode Island cases apply the "mere

continuation" doctrine to impose successor liability in

certain asset transfers, an exception to the general rule set

forth in Baker that an asset transfer does not create

successor liability. Although these cases do not

specifically limit the "mere continuation" doctrine to inter-

corporate asset transfers, there is no hint, and it is not

logical, that the mere continuation exception should have a

broader scope than the rule to which it relates.

We are aware of no opinion of the Supreme Court of

Rhode Island discussing generally the "de facto merger"

exception or specifically whether that exception applies in

the absence of an asset transfer.

(c) Predicting Rhode Island Law

"In the absence of a definitive ruling by the

highest state court, a federal court may consider analogous

decisions, considered dicta, scholarly works, and any other

data tending to show how the highest court in the state would

decide the issue at hand, taking into account the broad

policies and the trends so evinced." Gibson v. City of

Cranston, 37 F.3d 731, 736 (1st Cir. 1994) (quoting Michelin

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Tires (Canada), Ltd. v. First Nat'l Bank, 666 F.2d 673, 682

(1st Cir. 1981)). However, Carreiro, in choosing a federal

rather than a state forum, is "presumably cognizant of this

court's statement that 'litigants who reject a state forum in

order to bring suit in federal court under diversity

jurisdiction cannot expect that new trails will be blazed.'"

Jordan v. Hawker Dayton Corp., 62 F.3d 29, 32 (1st Cir.

1995)(declining invitation to extend successor liability to

asset purchaser under Maine law)(quoting Ryan v. Royal Ins.

Co. of America, 916 F.2d 731, 744 (1st Cir. 1990)).

Carreiro cites no cases or other authority

suggesting that the "mere continuation" or "de facto merger"

exceptions can apply in the absence of an asset transfer.

Every case that Carreiro does cite involved a sale or other

transfer of assets from the original corporation to its

putative successor. In our research of "scholarly works,"

see Gibson, 37 F.3d at 736, we find that successor liability

in general, and the "mere continuation" and "de facto merger"

exceptions in particular, are always discussed and analyzed

in the context of inter-corporate asset transfers. Scholarly

interest and judicial innovation in this area of corporate

law have been fueled by concern with corporate transactions

structured as asset purchases to avoid successor liability,

which exists in a statutory merger but generally does not in

an asset purchase. Because a purchase can achieve the same

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economic result as a merger when the acquirer continues the

same business with the same assets and employees, many courts

have reasoned that the same liability rule -- successor

liability -- should apply. See, e.g., William M. Fletcher,

15 Cyclopedia of the Law of Private Corporations 7122,

7123-23.05 (1990 and Supp. 1995); American Law of Products

Liability 3d 7:1, 7:10-13 (1987 and Supp. 1995); Phillip

I. Blumberg, The Law of Corporate Groups, 13.05-05.1

(1987). But these treatises and the cases Carreiro cites

contain no mention nor even any hint that the "mere

continuation" or "de facto merger" doctrines might apply in

the absence of an asset transfer.

Our research reveals three decisions where a

litigant sought to impose successor liability in the absence

of an asset transfer; all three hold that an asset transfer

was an essential prerequisite to successor liability. See

Williams v. Bowman Livestock Equip Co., 927 F.2d 1128, 1132

(9th Cir. 1991) (without a transfer of assets there is no

basis to impose liability under "mere continuation"

exception, applying Oklahoma law); Meisel v. M&N Modern

Hydraulic Press Co., 645 P.2d 689, 691-92 (Wash. 1982)

(transfer of assets an essential prerequisite to successor

liability under "de facto merger" and "mere continuation"

theories); Evanston Insur. Co. v. Luko, 783 P.2d 293, 296

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(Haw. Ct. App. 1989) (all exceptions to general rule of no

successor liability presuppose a transfer of assets).

We conclude that the Supreme Court of Rhode Island

would not find successor liability under the "mere

continuation" or "de facto merger" doctrines absent any

evidence of an inter-corporate asset transfer. Not only is

it illogical to extend the scope of an exception more broadly

than the general rule to which it relates, but to hold

otherwise would "blaze a new trail," which is inappropriate

for a federal court applying state law under diversity

jurisdiction. See Jordan, 62 F.3d at 32.

(d) Applying Rhode Island Law to Leach and Main

The summary judgment record contains the

uncontroverted affidavit of Main's president Max Leach

stating that "Main did not acquire any inventory or other

assets from H. Leach." At oral argument, Carreiro's lawyer

asked this court to infer that some assets must have been

transferred when Leach employees joined Main (assets such as

hand tools, shop supplies, pencils, and goodwill consisting

of the Rhodes distributorship and Leach's customer base), but

nothing in the summary judgment record supports that

inference. This argument, not presented below and made for

the first time at oral argument, is waived. See National

Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 749 (1st

Cir.), cert. denied, 115 S. Ct 2247 (1995)(arguments not

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presented below are waived); Frazier v. Bailey, 957 F.2d 920,

932 (1st Cir. 1992)(arguments not fully presented in

appellate brief are waived).

In sum, having concluded that Rhode Island law

would not impose successor liability under the de facto

merger and mere continuation exceptions absent an asset

transfer, and finding no evidence of any asset transfer on

the record, we affirm summary judgment for defendant Main.

C. Further Discovery on Leach's Dissolution

Carreiro appeals the district court's denial of his

request for additional discovery (after the discovery

deadline) that might have shown that Leach was not dissolved

in 1982 in accordance with Rhode Island law. To support its

motion for summary judgment, Leach submitted a certificate,

signed by the First Deputy Secretary of State and bearing the

state seal, attesting to Leach's dissolution on March 25,

1982. Carreiro does not challenge that the certificate was

validly issued, but instead argues that the court should have

allowed Carreiro to conduct further discovery seeking

unspecified evidence that Leach had somehow failed to comply

with the statutory requirements for dissolution. Rhode

Island law provides that a certificate of the secretary of

state "shall be taken and received in all courts . . . as

prima facie evidence of the existence or non-existence of the

facts stated therein." R.I. Gen. Laws 7-1.1-134. Because

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Leach submitted the certificate, the district court treated

Leach's renewed motion to dismiss as a motion for summary

judgment. See Fed. R. Civ. P. 12(b). A party opposing

summary judgment may have additional discovery under Fed. R.

Civ. P. 56(f) where it cannot present essential facts by

affidavit, but the party must "articulate a plausible basis

for the belief that discoverable materials exist which would

raise a trialworthy issue." Price v. General Motors Corp.,

931 F.2d 162, 164 (1st Cir. 1991). Carreiro neither pointed

to any evidence nor made any specific allegations that Leach

failed to comply with the requirements for dissolution, and

accordingly the district court's denial of the requested

discovery was well within its discretion.

D. Survival of Actions Against a Dissolved Corporation

According to R.I. Gen Laws 7-1.1-98, entitled

"Survival of remedy after dissolution," a claimant may sue a

dissolved corporation for "any right or claim existing, or

any liability incurred, prior to the dissolution if action or

other proceeding thereon is commenced within two (2) years

after the date of dissolution." Leach's dissolution in March

1982 was certified by the Rhode Island Secretary of State and

is uncontroverted on the summary judgment record. Carreiro

argues that his suit can be brought against the dissolved

Leach well after the two-year survival period because the

liability was not incurred "prior to dissolution," and

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therefore does not fall within the literal scope of the

statute.

Although there is no Rhode Island case law

discussing the survival of claims against a dissolved

corporation under section 7-1.1-98, the Supreme Court of

Rhode Island interpreted the analogous Massachusetts statute

in Halliwell Assocs., Inc. v. C.E. Maguire Servs., Inc., 586

A.2d 530 (R.I. 1991). The court explained that at common law

"a corporation's capacity to sue or be sued was completely

destroyed upon dissolution." Id. at 533. The court added:

"Today, all jurisdictions have enacted corporate-survival

statutes that abrogate the harsh effect of the common-law

rule by allowing a corporation's existence to continue for

some time past the date of dissolution to settle its

corporate affairs gradually, but not to continue its

business." Id. Rhode Island has enacted exactly such a

statute, section 7-1.1-98, and the Supreme Court of Rhode

Island's explanation of the background common law rule and

the intent behind the typical survival statute is persuasive

authority as to the proper interpretation of R.I. Gen. Law

7-1.1-98. See supra section II.B.2.(c) (discussing use of

other authority in the absence of a holding by state's

highest court).

In light of the Supreme Court of Rhode Island's

explanation of the legislative intent behind the typical

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survival statute, the language at issue in section 7-1.1-98

(providing a two-year survival period only for liabilities

incurred "prior to dissolution") logically means that actions

on liabilities incurred after dissolution do not survive at

all, not even for the two-year wind-up period. Carreiro's

argument that actions on liabilities incurred after

dissolution survive forever is untenable in light of the

common law rule and the legislative intent to create a

limited wind-up period. We conclude that Leach, whose

dissolution in 1982 is uncontroverted on the summary judgment

record, is not amenable to a suit brought almost ten years

after its dissolution and eight years after the expiration of

the two-year survival period. Accordingly, we affirm the

district court's grant of summary judgment for Leach.

E. Direct Action Against Insurer of Dissolved Corporation

The district court granted Rumford's motion to

dismiss under Fed. R. Civ. P. 12(b)(6), having determined

that R.I. Gen. Laws 27-7-2 does not permit a direct action

against the insurer of a dissolved corporation. We agree

with the district court's analysis and ruling.

Section 27-7-2 generally bars a plaintiff from

joining an insurer as a defendant in a suit against the

insured, a so-called "direct action." An exception to that

bar applies "where before suit has been brought and probate

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proceedings have not been initiated the insured has died."4

R.I. Gen. Laws 27-7-2. Carreiro argues that Leach "died"

when it dissolved in 1982, and therefore the foregoing

exception applies.

Carreiro's suggested interpretation of section 27-

2-2 is unpersuasive. Although the statute's language is not

without difficulty, the Rhode Island Supreme Court has stated

that section 27-7-2 is "free from ambiguity and expresses a

plain and sensible meaning" and "the meaning so expressed

will be conclusively presumed to be the one intended by the

Legislature." Chalou v. LaPierre, 443 A.2d 1241, 1241 (R.I.

1982). The plain and sensible meaning of the statute does

not authorize direct actions against the insurer of a

dissolved corporation for the following reasons.

First, the plain and sensible meaning of "died"

does not embrace the dissolution of a corporation, and

Carreiro points to no Rhode Island authority supporting such

an interpretation.

Second, the legislature surely understood that

corporations do not enter probate proceedings; this strongly

4. The syntax of the statute is rather convoluted. Contrary
to what the statute suggests, we believe that probate
proceedings in Rhode Island are never initiated before death.
The Rhode Island Supreme Court has given this provision its
only logical meaning - that "where probate proceedings have
been initiated before suit is brought, the plaintiff may not
proceed directly against the insurer." Markham v. Allstate

Ins. Co., 352 A.2d 651, 653 (R.I. 1976).

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implies that it did not intend to apply this exception to

corporations. Furthermore, the statute provides that once

probate has been initiated, direct action against the insurer

of a deceased natural person is no longer available. See

Markham v. Allstate Ins. Co., 352 A.2d 651, 653 (R.I. 1976).

Thus, the legislature intended this exception to the general

rule barring direct action to apply only during the time

between the death of the insured and the initiation of

probate. If we accept Carreiro's interpretation, there would

be no analogous temporal limitation on the exception as

applied to a dissolved corporation since probate cannot be

initiated. Under that view an insurer would be forever

amenable to direct action, and there is no reason to believe

that the legislature intended such a result.

Third, Carreiro's proposed interpretation of the

statute would increase the insurer's liability beyond that of

the insured. The Supreme Court of Rhode Island held in

Barber v. Canela, 570 A.2d 670 (R.I. 1990), that section 27-

7-2 did not enlarge the liability of the insurer beyond the

limits stated in the policy. It set forth as a "general

rule" that any rights of a plaintiff against the insurer are

"dependent upon the existence of liability of the insurer to

the insured under the contract of insurance." Id. at 671

(quoting George J. Couch, et al., 12A Couch Cyclopedia of

Insurance Law 2d 45:833 at 486 (1981)). A direct action

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here, where the insured cannot be sued because it is a

dissolved corporation, would contravene that rule. It would

be unreasonable for us to reach that result through a

tortured interpretation of the statute and without precedent

under Rhode Island law.

In light of the foregoing, we find it unnecessary

to certify this statutory interpretation question to the

Supreme Court of Rhode Island as Carreiro urges. Because

section 27-7-2 generally prohibits direct actions against the

insurer of a potentially liable party and because we conclude

that Carreiro's suit does not fit within the statutory

exceptions to that prohibition, we affirm the dismissal of

Rumford.

F. Main's Indemnification Claim Against Robbins

Because we affirm the district court's grant of

summary judgment in favor of Main on Carreiro's complaint,

Main's appeal seeking to revive its third-party

indemnification claim against Robbins is moot.

IV.
IV.

CONCLUSION
CONCLUSION

For the foregoing reasons, the decisions of the

district court are affirmed.
affirmed

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