Opinion
No. CV97 056 75 71 S
November 13, 2003
MEMORANDUM OF DECISION ON MOTIONS FOR SUMMARY JUDGMENT
This declaratory judgment action stems from a motor vehicle accident occurring on or about June 14, 1994 in Lebanon, Connecticut, which involved a Florida-registered vehicle insured under an automobile liability insurance policy issued by the defendant Allstate Insurance Company. The Allstate policy lists Victoria O'Neill ("O'Neill") and Patricia Sargent ("Sargent") mother and daughter, as named insureds. In addition to the Allstate policy a personal umbrella policy had been issued by American States to Sargent.
As a result of the accident O'Neill commenced suit against Sargent, who forwarded the complaint to her insurer Allstate and requested a defense. After her request was denied, American States provided Sargent a defense:
American Stated commenced this action seeking a declaration as to Allstate's obligation under its policy and reimbursement for amounts spent in defending Allstate's insured. Both American States and Allstate have revived longstanding previous motions for summary judgment directed against each other.
I
American States is seeking a declaratory judgment to contest the validity of the defendant insurer's denial of coverage in the underlying action and its standing to do so has been challenged on the ground that it acted as a volunteer when it paid the arbitration award in the underlying personal injury claim. In Colonial Penn Ins. v. Patriot General Ins. Co., Superior Court, judicial district of New Haven, Docket No. 377876, 16 Conn. L. Rptr. 73 (January 19, 1996, Licari, J.), the court found that "since Colonial Penn maintains a legal interest in the controversy that can be distinguished from the interest of the general public . . . namely, its duty to provide uninsured motorist coverage may depend on the existence of liability coverage under the Patriot general policy, Colonial Penn has standing to assert this declaratory judgment action."
Furthermore, American States argues that it has standing through equitable subrogation. In Westchester Fire Ins. Co. v. Allstate Insurance Co., our Supreme Court stated:
The right of [equitable] subrogation is not a matter of contract; it does not arise from any contractual relationship between the parties, but takes place as a matter of equity, with or without an agreement to that effect . . . The object of [equitable] subrogation is the prevention of injustice. It is designed to promote and to accomplish justice, and is the mode which equity adopts to compel the ultimate payment of a debt by one who, injustice, equity, and good conscience, should pay it . . . As now applied, the doctrine of equitable subrogation is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.
It is true that an insurer which pays a loss for which it is not liable thereby becomes a mere volunteer, and is not entitled to subrogation unless certain conditions have been met. Allstate Ins. Co. v. Lerer, Superior Court, Complex Litigation Docket, judicial district of New Britain, Docket No. 502559 (January 19, 2001, Aurigemma, J.). American States contends that it was obligated to represent its insured only after the defendant, the primary insurer, breached its duty to defend. The duty to defend has a broader aspect than the duty to indemnify and does not depend on whether the injured party will prevail against the insured. The duty to defend the action depends on whether the complaint in the action states facts which appear to bring the claimed injury within the policy coverage. If an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured. Mikolinski v. Cumberland Mutual Fire Ins. Co., Superior Court, judicial district of New Haven, Docket No. 338674 (November 7, 1997, Zoarski, J.T.R.).
Although the policy in question was a Florida insurance policy issued by Allstate with a specific exclusion with regard to resident relatives bringing claims, the underlying claim was brought in Connecticut, where that provision would have been void. If Connecticut law is held to apply, and the exclusion was void, then the claim would have been covered under the policy and Allstate would have breached its duty to defend. The plaintiff, as the secondary insured was, under those circumstances, forced to step in and defend the insured.
As to the arbitration award, it is reasonable to conclude that American States did not volunteer the payment, but rather, because of the arbitration decision was obligated to pay the claim under its contract. In Westchester Fire Ins. v. Allstate Ins. Co., supra, 236 Conn. 362, the plaintiff insurer sought, by way of a subrogation action, to recover underinsured motorist benefits it had paid to its insured as a result of the defendant's allegedly wrongful denial of coverage under a certain commercial insurance policy. The court found that "[t]he insurer was not acting as a mere volunteer; rather, it was obligated by a preexisting contract of insurance to pay the losses of its insured."
In the present case, it is undisputed that there was a preexisting contract between the underlying insured and the plaintiff. Our courts have generally upheld the rights of the insured and excess carrier to settle a case in which the primary insurer wrongfully refused to contribute its policy limits. Veteran's Memorial Medical Center v. CIGA, Superior Court, judicial district of New Haven, Docket No. 246878, 18 Conn. L. Rptr. 39 (October 23, 1996, Silbert, J.).
It is concluded that American States has standing to seek a declaratory judgment and bring an equitable subrogation claim against Allstate.
II
Allstate argues that because the policy in question was issued in Florida and the vehicle was registered in Florida, Florida law should apply. American States argues that because the accident occurred in Connecticut and that both mother and daughter were residing here at the time of the accident, among several other factors, that Connecticut law should apply. Connecticut's choice of law approach for contracts is the `most significant relationship' test of the Restatement (Second) [Conflict of Laws § 188 (1971)]. Reichhold Chemicals v. Hartford Accident Indemnity Co. et al., 252 Conn. 774, 781, 750 A.2d 1051 (2000). That case states:
With respect to liability insurance contracts, the starting point is § 193 of the Restatement (Second), supra, which creates a rebuttable presumption in favor of the state where the insured risk is located. In order to overcome this presumption, another state's interest must outweigh those of the state where the insured risk is located and must be sufficiently compelling to trump the § 193 presumption. Section 6(2) of the Restatement (Second), supra, provides the criteria by which that overriding interest should be evaluated.
Id., 782.
Section 6(a) of the Restatement (Second), [ supra] which is applicable to all substantive areas, sets forth seven overreaching considerations in determining which state has the "most significant relationship":
(a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied. (Internal quotation marks omitted.) Furthermore, "the contracts to be taken into account in applying the principles of § 6 [of the Restatement (Second), supra] to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties.
In the present case, although the policy was issued in Florida, both the mother and daughter listed their residence on the policy as Broad Brook, Connecticut, where both insureds were living at the time of the accident. The accident occurred in Connecticut, the driver carried a Connecticut license and the underlying claim was brought in Connecticut. It is a reasonable conclusion that the parties understood that the location of the insured risk was to be Connecticut. Simpson v. National Union Fire Ins. Co., Superior Court, judicial district of Hartford, Docket Nos. 579769, 578278 28 Conn. L. Rptr. 64 (September 8, 2000, Peck, J.). Cf. Infinity Ins. Co. v. Merrian, Superior Court, judicial district of Hartford, Docket No. 261511, 24 Conn. L. Rptr. 173 (March 9, 1999, Beach, J.); Bellavita v. Allstate Ins. Co., Superior Court, judicial district of Fairfield, Docket No. 327000 (August 12, 1999, CT Page 13216 Melville, J.) ( 25 Conn. L. Rptr. 229).
In the present case, as in Bellavita v. Allstate Ins. Co., supra, the defendant insurer has multiple places of business. Although in her deposition testimony the mother admitted she was a resident of Florida, that she owns a home there, that the car was registered there and was to be garaged there, the majority of the factors still weigh in Connecticut's favor as the state with the most significant contacts. First, the policy states that the insureds' residence is Connecticut, which is evidence of their understanding as to where the principle location of the insured risk would be. The insured driving the vehicle maintained a Connecticut drivers license. From the mother's deposition it appears that she lived half of the year in Florida, and the other half in Connecticut with her daughter. The insured vehicle is garaged wherever she is living at the time. The accident occurred in Connecticut, as did the underlying lawsuit for injuries. Based on the factors reiterated in §§ 188, 193 and 6 of the Restatement (Second) of Conflicts of Law, Connecticut is the state with the most significant contacts and Connecticut law should apply.
III
"It is well established . . . that a liability insurer has a duty to defend its insured in a pending lawsuit if the pleadings allege a covered occurrence, even though facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered . . . [T]he oft-stated principle [is] that the duty to defend is broader than the duty to indemnify . . ." QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 352 (2001) (affirming the granting of a motion for summary judgment). "Indeed, [i]f an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured . . . [In deciding the issue of coverage], [t]he [i]nterpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy . . . The determinative question is the intent of the parties, that is what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . ." Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., 254 Conn. 387, 399 (2000).
Whether an insurer has a duty to defend depends on a comparison of the allegations of the underlying complaint to the relevant policy provisions. When a declaratory judgment action is brought to determine a insurer's duty to defend a court must look solely to the complaint in the underlying action to determine whether the allegations show that the claim falls within or potentially within the coverage of the policy. National Union Fire Ins. v. R. Olson Const., 769 N.E.2d 977, 981 (Ill.App. 2002).
In the present case the underlying complaint was based on a personal injury action resulting from a motor vehicle accident. Allstate policy provides liability coverage for "all damages a person insured is legally obligated to pay . . . because of bodily injury . . . to any person." Additionally, the Allstate policy obligates Allstate "to defend a person insured if sued as the result of a covered auto accident . . . even if the suit is groundless, false or fraudulent."
It is concluded that the underlying claim in this action falls within the coverage of the Allstate policy.
IV
Allstate correctly points out that its policy did provide certain exclusions to coverage under the policy. Review of this claim makes it apparent that this case does not properly fall under one of the written exclusions, and that the basic exclusion as written is not effective under Connecticut public policy. The pertinent exclusion states "[t]his coverage does not apply to liability for: . . . (6) Bodily injury to any person related to a person insured by blood, marriage or adoption and residing in that person insured's household." However, General Statutes § 38a-335(d) states "[w]ith respect to the insured motor vehicle, the coverage afforded under the bodily injury liability and property damage liability provisions in any such policy shall apply to the named insured and relatives residing in his household unless any such person is specifically excluded by endorsement." (Emphasis added.) Allstate argues convincingly that since the insured at issue was not specifically excluded from coverage, based on Connecticut law, the policy has to provide coverage. Allstate's claim that the statute addresses who is to be considered an insured under a liability policy in Connecticut is unavailing since Florida Amendatory language in the Allstate Policy does not specifically exclude O'Neill or anyone else by name.
While courts have recognized the validity of several exclusions in other insurance policies under General Statutes § 38a-335(d). See Kaminski v. Reed, Superior Court, judicial district of Waterbury, Docket No. CV 99 0152814 (December 12, 2001, Pittman, J.); Colonial Penn Ins. v. Patriot General, Superior Court, judicial district of New Haven, Docket No. CV 95 0377876, 22 Conn. L. Rptr. 355 (June 19, 1998, Moran, J.), in all these cases the pertinent exclusions specifically named the individuals who were being excluded. The Allstate policy in this case does not fall within the parameters of anything that our courts have recognized as being a valid exclusion under General Statutes § 38a-335(d). General Statutes § 38a-335(d) clearly suggests Connecticut public policy runs contrary to the exclusion advocated for by Allstate unless the individual is clearly and specifically excluded from coverage. It is concluded that the Florida Amendatory language is insufficient under Connecticut law to preclude coverage and, therefore, Allstate was required to provide liability insurance coverage to Sargent for the underlying accident.
Accordingly, defendant's motion for summary judgment is denied and plaintiff's motion for summary judgment is GRANTED.
WAGNER, JUDGE TRIAL REFEREE.