Opinion
No. CV 03 0081699
January 12, 2007
MEMORANDUM OF DECISION RE APPLICATION FOR ORDER TO PROCEED WITH ARBITRATION
On June 23, 2005, the plaintiffs, George Lucido and Thomas Domingue, filed a two-count second amended complaint against the defendant, Zurich Insurance Company. The complaint arises out of a motor vehicle accident that occurred on December 16, 2000 between the plaintiffs and a vehicle owned and operated by Eugenia M. Kowats, in which the plaintiffs suffered personal injuries. The plaintiffs maintain that, at the time of the accident, Domingue was driving his own personal vehicle, in which Lucido was a passenger. They contend that they were using Domingue's vehicle at the direction of their employer and for employment purposes because the employer's vehicle was unavailable. Such use of Domingue's vehicle, the plaintiffs argue, qualifies it as a "temporary substitute" for a "covered auto" for the purposes of their employer's insurance policy with the defendant. The plaintiffs allege that, because Kowat's insurance policy was inadequate to compensate them for their injuries, they are entitled to recover benefits under the underinsured coverage portion of their employer's policy, in accordance with General Statutes § 38a-336.
General Statutes § 38a-336(a)(1) provides, in relevant part: "Each automobile liability insurance policy shall provide . . . uninsured and underinsured motorist coverage . . . for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and underinsured motor vehicles . . . because of bodily injury, including death resulting therefrom." (Emphasis added.)
On June 19, 2006, Lucido filed an application requesting an order to proceed to arbitration of his claim against the defendant. He points out that the insurance policy allows an "insured" party to settle disputed matters through binding arbitration, and he contends that the issue of whether he is entitled to coverage and, if so, the amount thereof should be decided in arbitration. The defendant objects to the application, arguing that the policy did not cover Domingue's vehicle and, as a result, Lucido is not in the class of "covered persons" who can compel arbitration. The defendant also contends that Lucido's application is untimely and prejudicial.
I
General Statutes § 38a-336(c) provides, in relevant part: "Each automobile liability policy . . . which contains a provision for binding arbitration shall include a provision for final determination of insurance coverage in such arbitration proceeding." The uninsured portion of the uninsured/underinsured motorist provision of the policy at issue provides, in relevant part: "If we and an `insured' disagree whether the `insured' is legally entitled to recover damages from the owner or driver of an `uninsured motor vehicle,' or do not agree as to the amount of damages, the `insured' may make a written demand for arbitration . . . A decision agreed to by the arbitrator(s) will be binding."
The defendant does not dispute that this arbitration provision applies to claims that relate to underinsured motorists, such as the one at issue here.
The uninsured/underinsured portion defines the "insured" as "you," presumably the named insured, i.e., the plaintiff's employer, as well as "[a]nyone else `occupying' a covered `auto' or a temporary substitute for a covered `auto.' The covered `auto' must be out of service because of its breakdown, repair, servicing, loss or destruction."
"General Statutes § 38-175c [now codified at § 38a-336] requires binding arbitration for `final determination of insurance coverage' with respect to uninsured motorist claims if the insurance policy includes a provision for binding arbitration. The history of this provision is well documented in [Connecticut] case law . . . Suffice it to say that this provision requires arbitration, in the first instance, of all issues pertaining to coverage." (Citations omitted.) Gaudet v. Safeco Ins. Co., 219 Conn. 391, 394-96, 593 A.2d 1362 (1991).
"Where an issue may fairly be categorized as either (1) an issue of arbitrability, i.e., a question for the courts to decide in the first instance, or (2) an issue of insurance coverage, i.e., a question for the arbitrator to decide in the first instance, legislative policy requires the court to elect the latter characterization and submit the issue to the arbitrator together with all other issues of insurance coverage." Id., 399. In Gaudet, the court broadly held that "in an action to compel arbitration of an uninsured motorist insurance claim the court should order arbitration of [the issue of whether the claimant was statutorily barred from receiving benefits under the policy] as well as all other issues that may reasonably be characterized as issues of coverage." Id., 392. Recently, the court has emphasized the preference of the use of arbitration in this context, stating that "[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." (Emphasis in original; internal quotation marks omitted.) Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 246, 772 A.2d 577 (2001).
Furthermore, the purpose of § 38a-336(c) in requiring an arbitration clause, is to avoid "clogging the courts with piecemeal litigation, and leveling the procedural playing field by guarding against the possibility of insurers unfairly using their superior economic resources to delay the final resolution of claims by their insureds." Quigley-Dodd v. General Accident Ins. Co. of America, supra, 256 Conn. 247-48.
"The distinctions between coverage issues and arbitrability issues have not always been readily apparent. Although no bright line rule has emerged, the cases demonstrate that the hallmark of a coverage issue is that it necessarily involves an analysis of the scope of coverage as provided by the terms of the policy. Consequently, a coverage issue is one that is governed wholly by the policy language . . . or involves the interpretation of both statutory and policy language . . . or otherwise implicates the scope of coverage afforded by the terms of the policy . . . An issue of arbitrability, by comparison, is one that addresses the arbitrability of the claim and is capable of being decided by the court as a matter of law irrespective of the terms of the policy . . ." (Internal quotation marks omitted.) Prudential Property Casualty Ins. Co. v. Perez-Henderson, 49 Conn.App. 653, 656, 714 A.2d 1281, cert. denied, 247 Conn. 917, 722 A.2d 807 (1998).
The defendant's reliance on Gaudet v. Safeco Ins. Co., supra, 219 Conn. 398, for the proposition that the plaintiff must first establish, among other requirements, that he is "in the class of `covered persons . . . for whom the policy provided uninsured motorists' coverage;' " id., 400; before he may compel arbitration, is misplaced for two reasons.
First, as previously mentioned, the uninsured/underinsured portion of the policy at issue expressly states that the phrase "an insured" includes "[a]nyone . . . `occupying' a covered `auto' or a temporary substitute for a covered auto" if the covered auto is out of service. Lucido's allegations put him in this class of covered persons. This is consistent with § 38a-336(f) which provides in relevant part: "[A]n employee of a named insured injured while occupying a covered motor vehicle in the course of employment shall be covered by such insured's otherwise applicable uninsured and underinsured motorist coverage."
It is noted that the court previously denied the defendant's motion for summary judgment on the ground that issues of material fact existed as to "whether the plaintiffs, at the time of the accident, were `employee[s] of a named insured injured while occupying a covered motor vehicle in the course of employment . . .' § 38a-336(f)." Lucido v. Zurich Ins. Co., Superior Court, judicial district of Ansonia-Milford at Derby, Docket No. CV 03 0081699 (May 3, 2006, Sylvester, J.T.R.)
Secondly, in the portion of Gaudet upon which the defendant relies, the court was discussing whether General Statutes § 52-410(a), which permits "a party to a written agreement for arbitration" to apply for an order to proceed with arbitration, precludes third party beneficiaries to the insurance contract from making such applications. Id., 396. The court resolved the issue, stating that "the clear legislative purpose favoring arbitration of all uninsured motorist coverage issues would be defeated if it were available only to named insureds. In enacting § 38-175c, the legislature thus implicitly assumed that the word `party' in § 52-410 would encompass all persons to whom the uninsured motorist statutes have enforcement powers. In the context of uninsured motorist coverage, therefore, we conclude that § 52-410 does not exclude enforcement of its terms by third party beneficiaries. We construe the word `party' within § 52-410 to refer to anyone on whom the agreement confers enforcement rights." Id., 397.
General Statutes § 52-410(a) provides, in relevant part: "A party to a written agreement for arbitration claiming the neglect or refusal of another to proceed with an arbitration thereunder may make application to the superior court . . . for an order directing the parties to proceed with the arbitration in compliance with their agreement." (Emphasis added.)
Thus, the court concluded, "[i]n order to compel arbitration under § 52-410, therefore, one claiming uninsured motorist coverage need prove to the court only that (1) the policy was in effect at the time of the accident, (2) the policy provides for arbitration, (3) the claimant was in the class of `covered persons,' e.g., as provided in the [relevant] policy, an owner, occupant or driver of the insured vehicle, for whom the policy provided uninsured motorists' coverage, and (4) the insurer has refused to pay the claim for uninsured motorist benefits arising out of the claimed accident." Id., 400; see also Stevens v. Hartford, 39 Conn.App. 429, 434-35, 615 A.2d 507 (1992) (issue of whether plaintiff was member of named insured's household and thus could compel arbitration of dispute of uninsured motorist claim was coverage issue which should be submitted to arbitration).
Contrary to the defendant's argument, Lucido's allegations, when considered in light of his employer's policy and the evidence in the record, are sufficient to satisfy the third element. Accordingly, Lucido's application adequately alleges coverage issues which are subject to arbitration.
II
The defendant also argues that the court should deny Lucido's application to proceed to arbitration pursuant to the doctrine of laches, in that Lucido's delay in filing the application is both inexcusable and prejudicial. According to the defendant, the plaintiffs initiated this action in 2003; and Lucido is only seeking to arbitrate his claim at this time to avoid an order in which the court directed the plaintiffs to amend their complaint, as well as to avoid the defendant's motions to compel and/or for nonsuit, which are premised on the plaintiffs' alleged failure to respond to the defendant's requests for discovery. In addition, the defendant points out that it has expended time and funds in litigating both of these issues as well as its motion for summary judgment, which motion the court, Sylvester, J.T.R., denied on May 3, 2006. The defendant is concerned that if the court grants Lucido's application, the defendant will lose the ability to appeal the summary judgment decision.
"Laches consists of an inexcusable delay which prejudices the defendant . . . First there must have been a delay that was inexcusable, and second, that delay must have prejudiced the defendant . . . A conclusion by the trial court that a party has been guilty of laches is one of fact for the trier and not one that can be made by [an appellate] court, unless the subordinate facts found make such a conclusion inevitable as a matter of law." (Citations omitted; internal quotation marks omitted.) Farmers Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 350, 579 A.2d 1054 (1990). "The burden of proof as to the existence of laches is on the party asserting it . . ." A. Sangivanni Sons v. F.M. Floyan Co., 158 Conn. 467, 476, 262 A.2d 159 (1969).
Lucido's right to compel arbitration is conveyed by the insurance policy. That policy does not limit Lucido to a specific time frame within which to apply for arbitration, nor does it prohibit him from doing so after filing a suit premised on the same claims. Moreover, in discussing applications to compel arbitration under § 52-410, our Supreme Court has stated that "[l]aches is purely an equitable doctrine, is largely governed by the circumstances, and is not to be imputed to one who has brought an action at law within the statutory period . . . [As to] action to compel arbitration . . . brought pursuant to General Statutes § 52-410 . . . we have said under certain circumstances that laches is not available as a defense to an action at law . . . This was held to have been so since an action in a court of law is governed by the Statute of Limitations and ordinarily the defense may not be invoked in such a situation." (Citations omitted.) Id., 474-75.
In the present case, the court finds, for three reasons, that Lucido's delay in applying for arbitration was not inexcusable. First, although Lucido did not file a demand for arbitration immediately, he also did not act in a manner that would suggest that he was explicitly or intentionally giving up his right to do so.
Second, the lack of a definite time limitation in the insurance policy within which Lucido would have been required to request arbitration, does not make the conclusion that Lucido is guilty of laches "inevitable as a matter of law." Farmers Mechanics Savings Bank v. Sullivan, supra, 216 Conn. 350.
Third, Lucido filed his application for arbitration within the limitations period that governs actions to recover underinsured motorist benefits from an insurance company. General Statutes § 52-576(a) provides, in relevant part: "No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues . . ." As to underinsured motorist claims, "an action for underinsured motorist benefits does not accrue until the limits of liability under the tortfeasor's policy have been exhausted." Coelho v. ITT Hartford, 251 Conn. 106, 111, 752 A.2d 1063 (1999). Neither party has supplied the court with the date that the liability limits of Kowat's insurance policy were exhausted. By necessity, it would have been sometime after the date of the accident, which occurred on December 16, 2000. Lucido filed his application for arbitration on June 19, 2006. Thus, Lucido filed his application within the relevant limitations period.
Finally, the court considers the defendant's argument that it will be prejudiced if the court grants this application for arbitration, in that the defendant would have incurred unnecessary expense. As the court stated in A. Sangivanni, "[t]he defendants had an adequate procedural remedy available to them to ensure a prompt trial or early disposition to the case." A. Sangivanni Sons v. F.M. Floryan Co., supra, 158 Conn. 475. The defendant's decision to delay proceeding on its motions to compel and for nonsuit and to pursue a motion for summary judgment indicate that it also may have contributed to the delay in resolving this matter.
The defendant also attempts to establish prejudice by positing that a failure of a party to file suit in a timely manner results in prejudice to the opposing party, who is made to spend time and effort in the action. Haggerty v. Parniewski, 11 Conn.App. 37, 41, 525 A.2d 984 (1987). The facts of the present case are distinguishable from those in Haggerty, however, in that the plaintiffs in Haggerty had filed suit to obtain an injunction to force the town of Stratford to void police promotional examinations and to refrain from filling the position of police captain. Id., 38. In this case, the relief ultimately sought by Lucido is merely monetary compensation for his injuries. Regardless of whether this action concludes in court or in arbitration, both sides will need to spend time and effort in establishing their respective positions. Accordingly, the court finds that Lucido's application for arbitration is not barred under the doctrine of laches.
CONCLUSION
In light of the legislature's encouragement of arbitration and the court's finding that Lucido's application for arbitration pertains to an issue of coverage and is not barred by laches, the court overrules the defendant's objection to Lucido's application. Lucido's application for an order to proceed to arbitration is granted.