Direct-Action Bar Reaffirmed: No Suit Against Auto Liability Insurer Without § 27-7-2 Exception; Bad-Faith Claims Require Contractual Entitlement

1. Introduction

This appeal arose from a 2013 multi-vehicle rear-end collision in Warwick, Rhode Island. The plaintiff, Bryan Edward Menge (pro se), sought compensation for extensive alleged physical injuries and economic losses. He sued two insurers:

• GEICO General Insurance Company (GEICO), the auto liability insurer for the alleged tortfeasors, Rene Mathieu, Jr. and Desiree Mathieu.
• Main Street America Assurance Company (MSAA), which issued the plaintiff a Businessowners Coverage Form (effective January 1, 2013 to January 1, 2014).

The complaint asserted breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory bad faith refusal to settle, all premised on defendants’ alleged failure to compensate him for accident-related injuries.

The key issues on appeal were whether (1) MSAA’s businessowners policy covered the plaintiff’s automobile-accident bodily injury claim; (2) Rhode Island’s direct-action statute, G.L. 1956 § 27-7-2, barred the plaintiff from suing GEICO directly; (3) bad-faith theories could survive without a viable contract entitlement; and (4) the Superior Court’s severance and discovery rulings mattered after summary judgment.

2. Summary of the Opinion

The Supreme Court affirmed summary judgment for both insurers:

• As to MSAA: The businessowners policy contained an unambiguous automobile exclusion barring coverage for bodily injury “arising out of the ownership, maintenance, use or entrustment” of any “auto.” Because the plaintiff could not recover on the contract, his implied-covenant and statutory bad-faith claims also failed.
• As to GEICO: § 27-7-2 generally prohibits joining an insurer as a defendant in the injured party’s action against the insured, subject to narrow statutory exceptions (none applicable here). Therefore, the direct action against GEICO was barred as a matter of law. The Court treated disputes about the release language as immaterial given the dispositive statutory bar.
• Other appealed rulings: Challenges to severance orders and to the denial (without prejudice) of a motion to compel were deemed moot once all merits claims failed.

3. Analysis

3.1 Precedents Cited

The Court’s reasoning was anchored in established Rhode Island doctrine across four clusters: summary judgment standards, insurance contract interpretation, bad-faith prerequisites, and appellate record limits/mootness.

A. Summary judgment framework

• Riccitelli v. Town of North Providence, by and through Vallee, 308 A.3d 977 (R.I. 2024) and Benaski v. Weinberg, 899 A.2d 499 (R.I. 2006): cited for de novo review and use of the same standards as the trial court.
• Bayview Loan Servicing, LLC v. Providence Business Loan Fund, Inc., 200 A.3d 153 (R.I. 2019) and Cancel v. City of Providence, 187 A.3d 347 (R.I. 2018): used to frame the “no genuine issue of material fact” and “entitled to judgment as a matter of law” requirements.
• Estate of Cassiere v. Cassiere, 246 A.3d 391 (R.I. 2021) and Brochu v. Santis, 939 A.2d 449 (R.I. 2008): invoked to emphasize the nonmovant’s “affirmative duty” to produce specific evidence—particularly relevant to the plaintiff’s challenge to MSAA’s policy copy.

B. Insurance policy interpretation (contract principles)

• Josephson, LLC v. Affiliated FM Insurance Company, 314 A.3d 954 (R.I. 2024) and Ajax Construction Company, Inc. v. Liberty Mutual Insurance Company, 154 A.3d 913 (R.I. 2017): cited for the baseline proposition that an insurance policy is contractual and interpreted under general contract rules.
• Koziol v. Peerless Insurance Company, 41 A.3d 647 (R.I. 2012): supplied the controlling interpretive rules: enforce literal language absent ambiguity; give terms their plain, ordinary meaning; construe ambiguity against the insurer.

C. Bad faith and implied covenant claims depend on contract entitlement

• Zarrella v. Minnesota Mutual Life Insurance Company, 824 A.2d 1249 (R.I. 2003): the Court relied on the quoted rule that a plaintiff must first show entitlement to recover on the contract before proving insurer bad faith. This was the linchpin for disposing of the plaintiff’s bad-faith theories against MSAA (and, independently, against GEICO once contract-based theories were unavailable).
• Skaling v. Aetna Insurance Company, 799 A.2d 997 (R.I. 2002): although discussed in the severance motion practice below, its practical role in the Supreme Court’s decision is indirect; the case is part of the doctrinal backdrop supporting management of coverage versus bad-faith claims. The Supreme Court ultimately did not reach severance because the merits failed.

D. Appellate record limits, waiver, and mootness

• West Warwick Housing Authority v. RI Council 94, AFSCME, AFL-CIO, 277 A.3d 707 (R.I. 2022): cited for the principle that the Supreme Court is not a fact-finder and reviews only the certified record—used to reject the plaintiff’s attempt to introduce a new policy copy (exhibit K) via his Rule 12A statement.
• Richmond Square Capital Corporation v. Mittleman, 773 A.2d 882 (R.I. 2001): applied to hold the plaintiff waived a developed appellate challenge to the § 27-7-2 direct-action ruling by not adequately briefing it.
• Capital Video Corporation v. Bevilacqua, 338 A.3d 333 (R.I. 2025) and Evoqua Water Technologies LLC v. Moriarty, 334 A.3d 429 (R.I. 2025): used to define mootness and to decline review of severance and discovery disputes once merits claims were extinguished.

E. Authorities raised by the parties but not outcome-determinative

• Asermely v. Allstate Insurance Company, 728 A.2d 461 (R.I. 1999): invoked by GEICO in briefing to argue the plaintiff’s settlement capped recovery at policy limits and foreclosed an “excess exposure” theory. The Supreme Court did not need to rely on this because § 27-7-2 independently barred suit against GEICO.
• Marr Scaffolding Co., Inc. v. Fairground Forms, Inc., 682 A.2d 455 (R.I. 1996): invoked by the plaintiff to argue a release’s effect turns on party intent and may not extend to unnamed third parties. The Court held the release dispute immaterial given the statutory bar to the GEICO action.

3.2 Legal Reasoning

A. MSAA: no coverage under the businessowners policy; “true and accurate copy” was sufficient

The Court treated MSAA’s policy as a standard contract interpretation exercise. It focused on the policy’s explicit auto-related bodily injury exclusion and the policy’s internal definitions (“auto” and “bodily injury”), concluding the plaintiff’s claim fit squarely within excluded risks.

The plaintiff attempted to create a factual dispute by challenging MSAA’s policy copy as unsigned and by later submitting a different purported policy (exhibit K). The Court rejected both routes:

• Unsigned copy: MSAA produced an affidavit attesting the exhibit was a “true and accurate copy.” The Court held the absence of an “original signed” copy was not a material factual dispute where the existence of a policy was undisputed and the offered copy was authenticated.
• New policy on appeal: Under West Warwick Housing Authority v. RI Council 94, AFSCME, AFL-CIO and Rule 10(a), the Supreme Court would not consider a document not presented below.

With no contractual right to coverage, the Court applied Zarrella v. Minnesota Mutual Life Insurance Company to dispatch the implied covenant and statutory bad-faith counts: absent contractual entitlement, there can be no actionable bad faith in withholding benefits.

B. GEICO: direct action barred by § 27-7-2; release dispute irrelevant

The Court held the case against GEICO failed at the threshold because Rhode Island’s direct-action statute provides that an injured party “shall not join the insurer as a defendant” in the injured party’s suit against the insured, unless specific statutory exceptions apply or the plaintiff has obtained a judgment against the insured.

The Court carefully listed the statutory exceptions (e.g., service returned non est inventus; death of insured in specific procedural postures; nonresident death scenarios; post-judgment direct action) and found none applied: the plaintiff sued the Mathieus, they were alive, service was not non est inventus, and the matter settled without a judgment.

The plaintiff also asserted “first person and third person rights” under the Mathieus’ policy; the hearing justice had found no contractual relationship, no intended-beneficiary status, and no assignment. The Supreme Court did not need to build extensively on those alternative grounds because § 27-7-2 was dispositive.

The Court also held that any appellate challenge to the § 27-7-2 ruling was waived due to inadequate development, citing Richmond Square Capital Corporation v. Mittleman. Still, it addressed the statute on the merits, reinforcing its centrality as a gatekeeping doctrine.

C. Severance and discovery: mootness after merits fail

Once summary judgment eliminated all substantive claims, there was no practical controversy about (1) whether the Superior Court properly severed/stayed discovery on bad-faith-related claims, or (2) whether GEICO should have produced documents responsive to the plaintiff’s fifth request. Applying Capital Video Corporation v. Bevilacqua and Evoqua Water Technologies LLC v. Moriarty, the Court declined to reach those issues as moot.

Notably, the Court added an alternative relevance point: the motion to compel focused on GEICO’s communications/settlements with Johnson and the Parks—not the Mathieus’ policy obligations—underscoring the limited connection between the requested discovery and the pleaded contract theory.

3.3 Impact

• Reinforcement of § 27-7-2 as a threshold defense: The decision signals that Rhode Island courts will treat the direct-action prohibition as a primary, early, and often dispositive ground for summary judgment where no statutory exception or judgment-based pathway exists.
• Practical warning for litigants about appellate “new evidence”: The Court’s refusal to consider exhibit K underscores the rigidity of record-on-appeal limitations. Parties must develop evidentiary disputes in the trial court—especially when contesting contract terms or authenticity.
• Bad-faith claims remain derivative of coverage entitlement: By applying Zarrella v. Minnesota Mutual Life Insurance Company to dispose of bad-faith theories once coverage fails, the opinion maintains a strong sequencing rule: coverage first, bad faith second.
• Businessowners policies and auto exclusions: The case is a straightforward example of enforcing an auto exclusion in a businessowners form, and it may be cited to resist attempts to recast an auto-injury claim as covered “business” risk absent clear policy language.
• Mootness doctrine as an appellate triage tool: The decision illustrates how appellate courts will avoid collateral procedural disputes (severance/discovery) once merits determinations remove any live controversy.

4. Complex Concepts Simplified

• Summary judgment: A pretrial ruling where the court decides there is no real dispute over important facts and one side wins as a matter of law.
• Direct action statute (§ 27-7-2): A rule that generally prevents an injured person from suing the at-fault driver’s insurer directly; the injured person must sue the driver/owner, and only in limited situations may proceed directly against the insurer.
• Insurance policy exclusion: Language that removes certain risks from coverage even if the policy otherwise provides broad protection. Here, injuries arising out of use of an “auto” were excluded.
• Ambiguity in insurance contracts: If policy language is genuinely unclear, courts interpret it against the insurer. But if the language is clear, courts enforce it as written.
• Implied covenant of good faith and fair dealing / statutory bad faith: Claims asserting an insurer acted unfairly in handling or paying claims. Rhode Island requires the claimant to first show a right to benefits under the policy before these claims can succeed.
• Record on appeal: The appellate court reviews only what was presented to the trial court; parties cannot usually add new documents or factual material on appeal.
• Mootness: If a court’s decision would no longer change anything meaningful for the parties, the issue is moot and courts typically will not decide it.

5. Conclusion

Menge v. GEICO General Insurance Company et al. is principally a reaffirmation opinion with clear operational lessons: Rhode Island’s direct-action prohibition in § 27-7-2 is a decisive barrier to suing an at-fault driver’s liability insurer absent a statutory exception or a judgment against the insured; businessowners policies with unambiguous auto exclusions will be enforced according to their plain language; and bad-faith theories cannot proceed without an underlying contractual entitlement to benefits. Procedurally, the Court also underscored that appellate review is confined to the certified trial-court record and that severance/discovery disputes can become moot once the merits are resolved.