Opinion
No. HHBCV085010050
August 3, 2009
MEMORANDUM OF DECISION RE MOTION TO STRIKE #101
FACTS
On October 21, 2008, the plaintiff, Christopher Alexander, filed a two-count complaint against the two defendants, W.F. Shuck Petroleum Company (W.F. Shuck) and Utica First Insurance Company (Utica), to recover for injuries he allegedly sustained in a slip and fall incident. In the complaint, the plaintiff alleges the following facts.
On March 18, 2007, the plaintiff was exiting his vehicle at a Shell gas station located at 158 Newington Avenue, New Britain, Connecticut, when he slipped and fell on ice and snow that had accumulated near the pump, thereby suffering serious injuries. The Shell gas station located at 158 Newington Avenue was owned and operated by W.F. Shuck. At the time of the incident, Utica had a contract of insurance with W.F. Shuck whereby Utica agreed to provide liability coverage for injuries sustained at 158 Newington Avenue, and agreed to make reasonable medical payments to those injured claimants. The plaintiff alleges a claim of negligence against W.F. Shuck, and what appears to be a breach of contract claim against Utica.
With respect to count two of the complaint, which is the subject of the present motion to strike, the plaintiff alleges that W.F. Shuck was insured by Utica, and that W.F. Shuck had medical payment coverage (med-pay) in its insurance policy, in which Utica agreed to pay the medical expenses of those individuals, like the plaintiff, who sustain injuries on W.F. Shuck's property. The complaint further alleges that Utica has failed to pay the plaintiff's medical expenses. The plaintiff is seeking payment of his medical expenses pursuant to a written contract of insurance.
Utica filed its motion to strike count two of the complaint and the plaintiff's corresponding prayer for relief on the ground that the plaintiff is not a party to the insurance contract between the two defendants, thereby making the plaintiff a third-party claimant lacking a cause of action until judgment is rendered against W.P. Shuck.
DISCUSSION A Motion to Strike Standard
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). In ruling on a motion to strike, "we construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Doe v. Yale University, 252 Conn. 641, 667, 748 A.2d 843 (2000). "Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." Id. "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "A motion to strike is the proper procedural vehicle . . . to test whether Connecticut is ready to recognize some newly emerging ground of liability." (Internal quotation marks omitted.) Rich v. Foye, Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 06 5003443 (August 28, 2006, Cremins, J.) ( 44 Conn. L. Rptr. 184, 186).
B Count Two: Medical Payment Coverage
Utica, construing the plaintiff's claims for medical payments as a breach of contract action, argues that under Connecticut law, the plaintiff is barred from bringing a direct action against the insurer to recover for injuries sustained at the insured's property. Utica argues that because an injured individual is not a party to the contract between the insurer and its insured, it has no direct right of action. Utica argues that thus, before the plaintiff can bring an action against an insurance company, there must be a judgment sustained against the tortfeasor.
Superior courts have consistently determined that "a claimant does not have a direct cause of action against an insurance company of the tortfeasor" absent a third-party beneficiary relationship. (Internal quotation marks omitted.) Asmus Electric, Inc. v. G.M.K. Contract, Superior Court, judicial district of New Haven, Docket No. CV 04 0489527 (February 25, 2005, Lopez, J.); see also Johnson v. Preston, Superior Court, judicial district of New London at Norwich, Docket No. 128433 (August 4, 2004, Martin, J.) (concluding that "[t]he judges of this court have previously concluded that [a] claimant has no direct action against an insurance company of the tortfeasor."); Gregory v. Murphy, Superior Court, judicial district of New London, Docket No. CV 02 0561286 (August 12, 2003, Hurley, J.T.R.). Moreover, General Statutes § 38a-321 provides in relevant part: "Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer had such defendant paid such judgment." Thus, absent a direct contractual relationship between the party bringing the action and the insurance company, or a third-party beneficiary relationship, an injured party is precluded from bringing a direct action for negligence against the insurer until judgment is obtained against the tortfeasor. In the present case, because there was no contract between the plaintiff and Utica, the plaintiff must show that he is a third-party beneficiary to the contract in order to bring a direct action against the insurer.
The plaintiff counters that while he is not necessarily a party to the insurance contract, he is an intended beneficiary of the provision of the contract between W.F. Shuck and Utica concerning medical payment coverages and, therefore, he has the ability to bring a direct action against Utica. Utica does not dispute that intended third-party beneficiaries have a direct right of action against the parties to a contract, rather, it argues that the plaintiff is not an intended beneficiary of the provision of the insurance contract governing medical payments and, therefore, has no direct action against, it. Utica argues that in order for a third-party beneficiary relationship to be formed, the parties to the contract must have intended to create a direct obligation. Utica maintains that in the present case, there was no intention on the part of the defendants to create such a relationship, for three reasons.
First, Utica argues that language in the insurance policy is at odds with any intention on its part to allow an injured party to bring a direct action against it. It argues that contract language, which forbids a direct action against the insurer until a final judgment is rendered, indicates that the defendants did not intend for a plaintiff to be able to bring a suit directly against Utica until judgment has been rendered. Second, Utica argues that the purpose behind obtaining liability insurance is at odds with such an intention. The purpose, it argues, of the liability policy is to protect the insured from liability, and ensure that the insured will not have to pay out-of-pocket expenses for injuries sustained on its property. The purpose is not to provide compensation to an injured party. Third, Utica argues that the class of proposed intended beneficiaries is too large and nonspecific to indicate any intention on the part of the defendants to create a direct obligation. The class would include all individuals injured on W.F. Shuck's property.
The plaintiff did not attach the W.F. Shuck's insurance policy to the complaint. Utica attached the policy to its reply memorandum filed in support of its motion to strike on January 23, 2009. However, to the extent the defendant cites specific policy language and bases its argument on such language, the court is unable to consider these arguments. "It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents . . . We are limited . . . to a consideration of the facts alleged in the complaint. A `speaking' motion to strike (one imparting facts outside the pleadings) will not be granted." (Internal quotation marks omitted.) Zirinsky v. Zirinsky, 87 Conn.App. 257, 268 n. 9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005); see also Rowe v. Godou, 209 Conn. 273, 278, 550 A.2d 1073 (1988). Therefore, the court does not consider the policy in reviewing the motion presently before it.
Utica also argues that adopting such a rule that an injured individual is considered a third-party beneficiary and can bring a direct action would be at odds with Connecticut law and public policy. It maintains that while Connecticut courts have not explicitly addressed the issue of whether medical payment coverage provides a direct action against an insurance company, the courts have held in cases concerning other types of coverage that an injured party is not a third-party beneficiary, and they have consistently refused to allow third parties to bring direct actions against the insurer. Utica argues that one of the reasons behind the policy prohibiting an injured party from bringing a direct action against the insurer is to ensure that a jury would not have knowledge that a tortfeasor possessed insurance, and then issue a higher verdict based on the insurance company's deep pockets.
In further support of this argument, Utica cites to caselaw from other jurisdictions in which the courts have concluded that the medical payments provision found in insurance policies does not confer third-party beneficiary status upon persons injured on the insured's property, and that these plaintiffs are barred from bringing direct actions against the insurer.
The plaintiff counters that to conclude that an injured party is not the intended beneficiary of the medical payment provision found in the insurance contract would render the provision unenforceable and superfluous. The plaintiff points out that both the insured and the employees of the insured are excluded from the medical payment provision in the policy, and argues that such a provision would be utterly useless if it was not intended to benefit the injured party because no one could recover under it. In support of this argument, the plaintiff cites to cases from other jurisdictions in which courts have concluded that an injured plaintiff is a third-party beneficiary to insurance contracts containing medical payment provisions, and that the injured plaintiff has a direct right of action against the insured.
The plaintiff did not attach a copy of the insurance policy to his complaint. Therefore, the court cannot consider any arguments made by either party pertaining to the policy language. See footnote one above.
Our Supreme Court has stated that "the ultimate test to be applied [in determining whether a person has a right of action as a third party beneficiary] is whether the [mutual] intent of the parties to the contract was that the promisor should assume a direct obligation to the third party [beneficiary] and . . . that intent is to be determined from the terms of the contract read in the light of circumstances attending its making . . ." Pelletier v. Sordoni/Skanska Construction Co., 264 Conn. 509, 531, 825 A.2d 72 (2003). The Supreme Court has further maintained that although "it is not in all instances necessary that there be express language in the contract creating a direct obligation to the claimed third party beneficiary . . . the only way a contract could create a direct obligation between a promisor and a third party beneficiary would have to be, under our rule, because the parties to the contract so intended." (Citation omitted.) Gazo v. Stamford, 255 Conn. 245, 261, 765 A.2d 505 (2001).
The mere fact that a contract of liability insurance exists between the tortfeasor and insurance company does not somehow make the injured party a third-party beneficiary to the contract. "While there is [little] appellate guidance on third-party beneficiary status as it impacts insurance parties, there are unreported Superior Court cases which carefully analyze those issues. They conclude that an injured party is not, without more, a third party beneficiary of the insurance contract between a tortfeasor and the insurance company." Estate of Ridgaway v. Cowles Connell, complex litigation docket at Middletown, Docket No. X04 CV 03 0103516 (May 21, 2004, Quinn, J.). The Appellate Court has intimated that a direct action against an insurer by the injured party will not lie without some contractual relationship between the two, and that such a relationship does not arise simply from the liability portion of the contract between the insured and the insurer. In Carford v. Empire Fire Marine Ins. Co., 94 Conn.App. 41, 891 A.2d 55 (2006), the court examined whether an injured party could bring an action to enforce an insurer's duty of good faith and fair dealing. There, the court concluded that an injured party could not bring a direct action against an insurer for breach of the covenant of good faith and fair dealing. Id., 46. The court found that "[b]ecause there was no contractual relationship between the parties, nor any judgment leading to subrogation, the [insurer] owed no duty of good faith and fair dealing to the plaintiffs." Id., 46-47. The court noted that a third-party claimant may be able to bring an action directly against the insured but "only after judgment" has been obtained. (Emphasis in original.) Id., 46.
Although there is no Connecticut appellate or court authority addressing the specific issue of whether an injured party can bring a direct action for medical payments as a third-party beneficiary, "a number of other authorities have concluded [that] medical payment provisions . . . provide exceptions to the general rule barring actions against the insurer for liability." Harper v. Wausau Ins. Co., 56 Cal.App.4th 1079, 1089, 66 Cal.Rptr.2d 64 (1997). These courts have concluded that "[t]he weight of authority suggests that medical payment provisions regarding injured parties are third party beneficiary contracts" giving the injured party a right to a direct action against the insured. Donald v. Liberty Mutual Ins. Co., 18 F.3d 474, 481 (7th Cir. 1994); see also Harper v. Wausau Ins. Co., supra, 56 Cal.App.4th 1079; Hunt v. First Ins. Co. of Hawaii Ltd., 82 Haw. 363, 922 P.2d 976, cert. dismissed, 83 Haw. 204, 925 P.2d 374 (1996); Desmond v. American Ins. Co., 786 S.W.2d 144 (Mo.App. 1989); Maxwell v. Southern American Fire Ins. Co., 235 So.2d 786 (Fla.Dist.Ct.App. 1970); Blanton v. Nationwide Mutual Ins. Co., 247 S.C. 148, 146 S.E.2d 156 (1966); American Family Ins. Group v. Cleveland, 256 Ill.App.3d 945, 827 N.E.2d 490, cert. denied, 216 Ill.2d 679, 839 N.E.2d 1021 (2005); Holmes v. Federal Ins. Co., 353 Ill.App.3d 1062, 820 N.E.2d 526 (2004); Prince v. Louisville Municipal School District, 741 So.2d 707 (Miss. 1999).
These jurisdictions have concluded that in cases concerning the medical payments provision of an insurance policy, "[the traditional] policy against [an injured party bringing a] direct action [against the insured] is not violated. First . . . the obligation of the insurer to the insured is separate and direct as the insurer undertook, through its contract, to make payment directly to the [injured party]. Second, the payment of medical expenses is not premised on the insurer's indemnification nor on the negligence of the policyholder. Rather, the insurer's obligation arises upon the happening of a defined event, and there is no need to intermingle the liability of the insurer with that of the insured . . . Additionally, for purposes of the public policy, the plaintiff is not a `true' third-party tort claimant whose rights arise only incidentally from the negligence of another, but is a party who has standing to sue as a direct beneficiary of an insurance contract for whom the payments were intended." (Citations omitted.) Garcia v. Lovellette, 256 Ill.App.3d 724, 731, 639 N.E.2d 935 (1994). Courts have further reasoned that such a rule does not "conflict with the stated public policy . . . that no direct action may be brought against an insurance company to recover damages for the insured's negligence prior to the entry of a judgment [because] . . . [t]he policy against direct actions is not completely mandatory . . . It is applied where the issue of the insurer's liability would be intermingled with that of the insured and with the assessment of damages . . . [A] suit by an injured party to recover under the medical expenses provision of the policy is not a suit to recover damages for the insured's negligence. Because fault is not an issue with respect to medical expenses benefits, there is no danger that the liability of the insured and the liability of the insurer would become intermingled." (Citations omitted.) Holmes v. Federal Ins. Co., supra, 353 Ill.App.3d 1066.
In finding that medical payments allow an injured party to sue the insurer directly, courts from other jurisdictions have noted that "[t]he policies that underlie many states' unwillingness to allow direct actions against the tortfeasor's insurer do not necessarily apply in contexts other than tort . . . [C]ourts have explained . . . [these states'] prohibition against direct actions by noting that the `rationale . . . is that disclosure of liability coverage at a trial against an insured for injuries resulting from his negligence constitutes prejudicial error . . . Thus, adherence to this policy is required when the issue of the insurer's liability would be intermingled with that of the liability of insured . . . [Cases related to medical payments are] wholly unrelated to the issue of [the tortfeasor's] liability." (Citations omitted.) Donald v. Liberty Mutual Ins. Co., supra, 18 F.3d 480 n. 3.
These courts have emphasized the fact that "such an action is based on contract rather than tort; [and consequently] the rights of the third party beneficiary do not arise through the negligence of the insured but rather are his own rights based on a contractual obligation by the insurer. The [injured party] . . . is a direct rather than incidental beneficiary." Desmond v. American Ins. Co., supra, 786 S.W.2d 147. Thus, these courts have interpreted "medical payment coverage [as a] distinct and separate provision under a liability policy" finding that the "insurer is not in the position of a tortfeasor, but is called upon to honor a contractual obligation which arises without regard to fault." (Internal quotation marks omitted.) Id. A suit on the basis of the medical payments provision is "a suit brought by the plaintiff to recover benefits under the policy that are owed directly to him, regardless of fault, under the terms of the policy." Holmes v. Federal Ins. Co., supra, 353 Ill.App.3d 1065. "The obligation of the defendant insurer to the injured plaintiff is separate from the obligation to the insured and is owed directly to the injured plaintiff, as the defendant insurer undertook, through its contract, to make payment directly to the injured party." Id. "Since recovery [by the injured party under the medical payment provision] is completely independent of liability on the part of the insured, insurance under [this provision] is closely akin to a personal accident policy . . . Medical provisions . . . are a form of group . . . accident insurance provided at minimal cost with a named insured as the entity through whom coverage is issued . . . Such coverage creates . . . a direct liability to the contemplated beneficiaries. 8A [J.] Appleman [ J. Appleman], Insurance and Law Practice § 4902 (Revised Vol. 1981)." Donald v. Liberty Mutual Ins. Co., supra, 18 F.3d 481.
Other jurisdictions have specifically allowed direct actions against insurers for medical payments in premises liability cases similar to the present case. In Desmond v. American Ins. Co., supra, 786 S.W.2d 147, the Missouri Appellate Court concluded that an injured party who fell in a theater could bring a direct action against the theater's insurer for medical payment coverage arising under the insured's policy. The court determined that a provision in the tortfeasor's insurance policy providing that the "company will pay to or for each person who sustains bodily injury caused by accident all reasonable medical expenses incurred" made the plaintiff a "direct rather than incidental beneficiary" allowing him to bring a direct action against the tortfeasor's insurer. Id., 146-47.
In Holmes v. Federal Ins. Co., supra, 353 Ill.App.3d 1065, the Illinois Appellate Court found that an individual injured after an accidental fall on the premises of the defendant insurance company's insured could bring a direct action against the defendant insurance company for medical payments under the medical payments clause found in the policy. The court determined that the clause stating that "the defendant will pay each person who sustains bodily injury caused by an accident all medical expenses incurred" regardless of fault was a "benefit that [ran] separately and directly to the injured person rather than to the person insured against liability under the policy." Id. The court noted that a provision in the policy forbidding an injured individual from bringing a direct action against the insurer until a final judgment against the insured is obtained, did not in any way circumvent the injured party's ability to bring a direct action for medical payments under the medical payments provision. Id. The court reasoned that the no direct action provision described above applied only to actions brought by injured parties seeking damages from the insured, and that, because "[a] suit to collect under the medical expenses provision is not a suit asking for damages from the insured," the no direct action provision was inapplicable. Id., 1064.
The rule articulated above "is not [the] universal [rule] however, at least as to the rights of injured `third party' versus the insurer." 2 G. Couch, Insurance (3d Ed. 1995), § 158:4 p. 158-10. There does appear to be somewhat of a split of authority on whether an injured party can bring a direct action against the tortfeasor's insurer, although the majority of caselaw from other jurisdictions seems to be in favor of allowing such actions. In Zegar v. Sears Roebuck Co., 211 Ill.App.3d 1025, 570 N.E.2d 1176 (1991), the Illinois Appellate Court declined to allow the plaintiff to sue the tortfeasor's insurer directly for medical payments after she slipped and fell on the tortfeasor's premises. The court stated that it did "not find that the insurance contract between the [tortfeasor] and the [insurer] contemplates a direct action against the insurer for an injured party's medical expenses whenever any person is injured on the [insured's] premises . . ." Id., 1030. The court further reasoned that the "medical payments coverage may be viewed as a salutary attempt to allow, but not require, [the insured] . . . to pay relatively small, easily ascertainable medical reimbursements, without a formal determination of fault. This would allow [the insured] to facilitate settlement of some claims by paying actual medical costs without admitting or contesting liability." (Emphasis in original.) Id., 1030. Thus, the court concluded that an intended beneficiary of the provision could only be the tortfeasor because the "general purpose of medical payments provisions is to create a fund for the payment of medical services so that those injured will not necessarily be contemplating how to impose liability on the insured." (Internal quotation marks omitted.) Id., 1030-31.
In Trouten v. Heritage Mutual Ins. Co., 632 N.W.2d 856, 862 (SD 2001), the Supreme Court of South Dakota, applying the reasoning used in Zegar, also declined to allow a pedestrian who was injured after slipping and falling on a sidewalk located outside the tortfeasor's premises to sue the tortfeasor's insurer directly for medical payments under the medical payment clause found in the policy. The court, after reviewing the breadth of caselaw from other jurisdictions covering this issue, decided that the "rationale set forth in Zegar" was more persuasive, and that the fundamental rule established in the legislative policy of both Illinois and South Dakota prohibited such a direct action against an insurer. Id., 861-62.
Similarly, in Schmalfeldt v. North Pointe Ins. Co., 469 Mich. 422, 428 (2003), the Michigan Supreme Court concluded that a plaintiff injured in a fight at the tortfeasor's bar could not bring an action directly against the insurer because he was not a third-party beneficiary to the contract between the tortfeasor and the insured. In so holding, the court noted that "[a]t best, the policy recognizes the possibility of some incidental benefit to members of the public at large, but such a class is too broad to qualify for third-party status under the statute." Id., 429; see also Burkes v. Federal Ins. Co., 883 A.2d 1086, 1091 (Pa.Super. 2005) (declining to find that injured party was third-party beneficiary and concluding that "[t]o hold otherwise would be to confer a blanket accidental medical insurance policy to all individuals that sustain bodily injury . . .").
Until further guidance from our appellate courts, on balance, the view articulated by a majority of the jurisdictions that an injured party can bring a direct action against an insurer under the medical payments clause of the insured's policy is more persuasive and is not at odds with our caselaw. While it is true that our appellate courts have refused to allow injured parties to bring direct actions against a tortfeasor's insurer, they, like courts in other jurisdictions that have favored direct actions under the medical payments provision, have only prohibited direct actions where "the issue of the insurer's liability would be intermingled with that of the insured and with the assessment of damages." Holmes v. Federal Ins. Co., supra, 353 Ill.App.3d 1066; see also Carford v. Empire Fire Marine Ins. Co., supra, 94 Conn.App. 46. For example, our appellate courts have prohibited injured parties from bringing direct actions against insurers for claims of bad faith. See Carford v. Empire Fire Marine Ins. Co., supra, 46; Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 642, 804 A.2d 180 (2002). Bad faith claims deal with an insurer's responsibility to settle claims of negligence implicated by the liability section of a policy. Allowing such an action would cause a conflict between the insurer's duty to the insured. See Macomber v. Travelers Property Casualty Corp., supra, 642 (in context of settling claims, insurer owes no fiduciary duty to third-party claimant because "such a duty would interfere with the insurer s ability to act primarily for the benefit of its insured" [emphasis in original]). Thus, because the medical payments provision is a "distinct and separate provision"; Desmond v. American Ins. Co., supra, 786 S.W.2d 147; that does not implicate the insured's negligence, the policy concerns embodied under Connecticut law are inapplicable, and the plaintiff can bring a direct action against the insurer.
While the reasoning articulated by the Illinois Appellate court in Zegar is sound, the current viability of the decision is questionable. Recently, the Illinois Appellate court has seemed to retract from its position in Zegar. In Garcia and Holmes, the court has concluded that an injured party is a third-party beneficiary for the purposes of the medical payment clause, and can bring a direct action. The Garcia court distinguished Zegar by explaining that the language in the policy was different from that in Zegar. The Holmes court, on the other hand, noted that the language in its policy was similar to that found in the policy contemplated in Zegar. Nevertheless, the Holmes court found that the injured plaintiff could bring a direct action against the insurer. The Holmes court concluded that the Zegar court had misconstrued the language in the policy which provided that an insurer could not be sued until after judgment. The court concluded that despite the existence of the direct action clause, a clause that is similarly worded to the direct action clause in the present case, the injured plaintiff could still bring a direct action. It is also noted that the other four cases cited above, which embody the view articulated in Zegar all cite to and include Zegar in their analysis.
In the present case, in count two of his complaint, the plaintiff has alleged that Utica has medical payment coverage for any individual, including the plaintiff, who might incur injuries as the result of a slip and fall on the property. The plaintiff alleges that Utica has failed to pay medical expenses incurred by the plaintiff as a result of a slip and fall that occurred on the insured's property. Although the plaintiff has not used the magic words "third party beneficiary" in his complaint, he has stated that the medical payments provision was for individuals injured on W.F. Shuck's property. It can be inferred from the allegations of the complaint that the medical provisions payment was made for the benefit of the plaintiff. While the complaint is admittedly sparse, construing the complaint in the manner most favorable to sustaining its legal sufficiency; Doe v. Yale University, supra, 252 Conn. 667; and given that a plaintiff can bring a direct action against the insurance company for medical payments, the plaintiff has pleaded a sufficient cause of action in count two of the complaint.