Opinion
No. HHD-CV-08-4035100S
September 17, 2009
MEMORANDUM OF DECISION DECLARATORY JUDGMENT ACTION
I STATEMENT OF CASE
This is an action for a declaratory judgment to determine whether the plaintiff/counterclaim defendant, AIG Casualty Company f/k/a Birmingham Fire Insurance Company of PA (AIG), is obligated to defend and indemnify the defendant/counterclaim plaintiff, Jill Schweiger, under an automobile insurance policy issued by AIG to Schweiger.
In its amended complaint, dated July 8, 2009, AIG seeks a declaratory judgment that it has no duty to indemnify Schweiger for any liability arising from a motor vehicle accident on August 8, 2006, in which Schweiger rear ended the defendant, William Figella, causing him to sustain personal injuries. The court granted the plaintiff's motion to substitute AIG as the party plaintiff on July 8, 2009.
On October 15, 2008, Schweiger filed an answer and counterclaim. She demanded that AIG provide her with a defense and indemnity under her automobile insurance policy from the claims brought by Figella. AIG has denied this demand on the basis that the policy had been cancelled by reason of non-payment of premiums. AIG has under a reservation of rights provided Schweiger a defense from the claims presented by the defendant Figella.
The matter was heard on July 8, 2009. The last post-hearing brief was filed on August 28, 2009.
II FINDINGS OF FACT
The following facts were proved at trial by a fair preponderance of the evidence.
Birmingham Fire Insurance Company of PA is a subsidiary of AIG and is in the business of selling automobile insurance in Connecticut. On April 16, 2005, AIG issued an automobile insurance policy (policy) to Schweiger for a six-month period from April 16, 2005, to October 16, 2005. (Plaintiff's Exhibit 1.) The policy covered her leased 2005 Honda Accord. The policy renewed for the first time on October 16, 2005, and again on April 16, 2006. The second renewal covered the period from April 16, 2006, to October 16, 2006.
Under the terms of the lease agreement for the 2005 Honda Accord, Schweiger was required to obtain insurance. This insurance obligation is set forth in a lease with American Honda Finance Corporation (Honda) wherein Schweiger was the lessee and Honda is the lessor. (Defendant's Ex. A.) When Schweiger first leased the vehicle, she had insurance coverage through another company.
The automobile insurance policy issued by AIG to Schweiger provides for notice of cancellation to the lessor: "3. If we terminate this policy, notice will also be mailed to the lessor." (Plaintiff's Exhibit 2, Additional Insured-Lessor endorsement.) The policy also provides for notice of cancellation to the loss payee: "However, we reserve the right to cancel the policy as permitted by policy terms and the cancellation shall terminate this agreement as to the loss payee's interest. We will give the same advance notice of cancellation to the loss payee as we give to the named insured shown in the Declarations." (Plaintiff's Exhibit 2, Loss Payable Clause endorsement.)
In numerous policy documents starting in July 2005, Honda is listed as the loss payee and also the additional insured. The first mention of Honda in any of the policy documents is as a loss payee in the Policy Declaration, Amend-Policy Change, dated July 6, 2005. (Plaintiff's Exhibit 3.) Honda is listed as both the loss payee and additional insured in the following policy documents: the August 9, 2005 and September 19, 2005 Policy Declaration, Amend-Policy Change; the August 17, 2005 Renewal for the period from October 16, 2005, to April 16, 2006; the September 19, 2005 Amend-Renewal; the January 25, 2006 Policy Declaration, Amend-Policy Change; and the April 16, 2006 Renewal for the period from April 16, 2006 to October 16, 2006. (Plaintiff's Exhibit 3.) The evidence clearly demonstrates that on August 3, 2006, Schweiger was the insured and Honda was the loss payee and additional insured.
When Schweiger switched her automobile insurance to AIG, she elected to make premium payments on a monthly installment basis via the AIG Automated Payment Center. Schweiger provided her home address of 107 Quaker Lane South, West Hartford, Connecticut 06119. She continued to live at that address during the period in question.
Policy documents, including insurance cards, renewals, declarations, amended policy forms, bills, late payment notices and notices of cancellation, are generated through AIG's automated system. Under AIG's policies and procedures, if payment is not made by the due date, a ten-day cancellation notice is sent for a renewal policy. Notices of cancellation were sent by certificates of mailing. The certificate of mailing process used by AIG is accepted by the U.S. Postal Office. The certificate of mailing is stamped by the postal employee to acknowledge receipt of the items of mail. The postage meter stamp is made by AIG and reflects the cost of postage.
AIG's records reflect that numerous policy documents were mailed to Schweiger at her home address between April 2005 and August 2006. According to Schweiger, she never received the vast majority of the documents that AIG's records reflect were mailed to her as evidenced by certificates of mailing. She testified that during this period she did not receive notices of cancellation for non-payment via the mail at her home address. Schweiger admitted, however, that she received a few documents sent by AIG: a renewal declaration, a Connecticut insurance I.D. Card, and the August 14, 2006 denial of coverage letter from AIG. During this period, Schweiger did not complain to the post office about any mail delivery problems. She did not take any long vacations and had no knowledge that anyone was taking her mail without her permission. AIG's records reflect that only one item mailed to Schweiger, a cancellation withdrawal notice from August 2005, was returned.
Schweiger testified that she made premium payments electronically by interactive voice response credit card premium payment, also known as Electronic Fund Transfer (EFT) automatic debit. AIG's records reflect that Schweiger failed to make payments on a timely basis. From April 2005, to July 2006, AIG mailed to Schweiger, at her home address, thirteen notices of cancellation for nonpayment of premium. The certificates of mailing received into evidence correspond to the notices of cancellation sent to Schweiger's home address.
Ms Schweiger's bank records reflect that the last payment made to AIG was a late payment made by ATM check card purchase in the amount of $131.17 on or about July 7, 2006.
On July 10, 2006, AIG mailed a bill to Schweiger which indicated that the minimum payment of $131.17 was due by July 16, 2006. (Plaintiff's Exhibit 7.) When no payment was received by that date, on July 20, 2006, a notice of cancellation and a bill with the notation ***Cancellation Pending*** was mailed to Schweiger. (Plaintiff's Exhibit 7.) The July 20, 2006 notice of cancellation indicated that the policy would expire on August 3, 2006, if the overdue premium amount of $136.17 was not paid. The July 20, 2006 notice of cancellation was evidenced by a certificate of mailing.
AIG's records reflect that Schweiger failed to make the required installment payment by August 3, 2006, and AIG deemed the policy cancelled effective August 3, 2006.
Schweiger testified that she made payments by phone using the automated payment center. She paid through debit card and never mailed any payments. She paid what she was told to pay. She testified that as of August 8, 2006, she had made all premium payments required under the policy (Defendant's Exhibit C). Schweiger testified that she did not receive the July 20, 2006 notice of cancellation, and she did not have actual notice of the cancellation. She believes that the policy was in effect as of August 8, 2006.
On August 8, 2006, Schweiger was involved in an automobile accident in which a vehicle operated by her rear-ended a vehicle operated by Figella.
On August 9, 2006, AIG sent Honda a notice of cancellation which stated that the cancellation would take effect on August 24, 2006. (Plaintiff's Exhibit 7.) The parties stipulated that the August 9, 2006 notice of cancellation to Honda entitled "Loss Payee Auto Insurance Notice of Cancellation," was not sent until the day after the accident.
On or about August 14, 2006, Schweiger received a letter from AIG indicating that coverage was not going to be provided because the policy was cancelled effective August 3, 2006, due to nonpayment of premium.
On September 4, 2007, Figella brought suit against Schweiger seeking damages for injuries sustained as a result of being struck by Schweiger's vehicle. See Figella v. Schweiger, Superior Court, judicial district of Hartford, Docket No. CV 07 5013314. Under a reservation of rights, AIG has provided Schweiger with a defense in the suit by Figella as provided by the policy.
Additional facts will be provided as needed and are proved by a fair preponderance.
III DISCUSSION A Declaratory Judgment
An action for a declaratory judgment is governed by General Statutes § 52-29(a), which provides: "The Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed. The declaration shall have the force of a final judgment." "The purpose of a declaratory judgment action, as authorized by General Statutes § 52-29 . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties." (Internal quotation marks omitted.) Wilson v. Kelley, 224 Conn. 110, 115, 617 A.2d 433 (1992).
AIG has asked for a declaratory judgment that the automobile insurance policy had been cancelled by virtue of the nonpayment of premiums as of August 8, 2006, that it has no duty to indemnify or defend Schweiger from any and all claims brought by Figella, and that AIG may cause the counsel it has retained to defend Schweiger from the law suit brought by Figella to withdraw its appearance on her behalf.
Schweiger has asked for a declaratory judgment that the automobile insurance policy issued by AIG was in full force and effect at the time of the motor vehicle accident on August 8, 2006, and that AIG has a duty to indemnify and defend Jill Schweiger from any and all claims brought by Figella in regard to that motor vehicle accident.
B Statutory Notice Cancellation Requirements
AIG claims that on July 10, 2006, a bill was sent to the defendant with a minimum amount due of $131.17 and a payment due date of July 16, 2006. AIG did not receive the payment of $131.17 from Schweiger as of July 16, 2006. The July 20, 2006 notice of cancellation mailed to Schweiger included the notation ***Cancellation Pending***, and indicated that the policy wound expire on August 3, 2006. This notice of cancellation was evidenced by a certificate of mailing in a form accepted and approved by the United States Postal Service.
Schweiger claims that she did not receive the July 20, 2006 notice of cancellation and did not have actual notice of the cancellation. She also contests its validity by arguing that the August 9, 2006 notice of cancellation sent to stated that the policy would expire on August 24, 2006. In her counterclaim, Schweiger asserts that she paid all of her premium payments due through and including August 8, 2006, and therefore, the policy was in full force and effect on August 8, 2006, when she was involved in an automobile accident with Figella.
The court must first determine whether the July 20, 2006 notice of cancellation to Schweiger complies with the statutory requirements. The August 9, 2006 notice of cancellation to Honda will be addressed later in this decision.
As in Echavarria v. Nat'l Grange Mutual Ins. Co., 275 Conn. 408, 409-10, 880 A.2d 882 (2005), the certificate of mailing log procedure utilized to send the July 20, 2006 notice of cancellation must satisfy General Statutes § 38a-343(a), which governs the cancellation of an automobile insurance policy. Section 38a-343 provides in relevant part: "(a) No notice of cancellation of a policy to which Section 38a-342 applies may be effective unless sent, by registered or certified mail or by mail evidenced by a certificate of mailing, or delivered by the insurer to the named insured, and any third party designated pursuant to Section 38a-323a, at least forty-five days before the effective date of cancellation, except that . . . (2) where cancellation is for nonpayment of any other premium, at least ten days notice of cancellation accompanied by the reason for cancellation shall be given." For cancellation of a renewal policy, the statute requires that the notice of cancellation must be (1) timely and (2) properly mailed or delivered.
The policy in question incorporates the ten-day notice of cancellation requirement for nonpayment. Under the terms of the renewal policy effective from April 16, 2006 to October 16, 2006, Part F-General Provisions, Termination, A. Cancellation, "[t]his policy may be cancelled during the policy period as follows . . . 2. We may cancel by mailing to the named insured shown in the Declarations at the address shown in this policy: a. At least 10 days notice: (1) If cancellation is for nonpayment of premium . . ." (Plaintiff's Exhibit 2.)
"The purpose of § 38a-343 is to assure that before an automobile insurance policy is cancelled the insured has a clear and unambiguous notice of the cancellation." (Internal quotation marks omitted.) Kane v. American Ins. Co., 52 Conn.App. 497, 502, 725 A.2d 1000 (1999), aff'd, 252 Conn. 113, 743 A.2d 612 (2000). "The plain language of § 38a-343(a) clearly and unambiguously indicates that sending a notice of cancellation by mail evidenced by a certificate of mailing satisfies the obligation imposed by the statute. Moreover, there is no reference in the statute to any additional evidentiary requirement beyond the certificate itself as proof of mailing or any indication that the determination of the adequacy of any of the methods listed might be reserved to the judgment of the trial court." Echavarria v. Nat'l Grange Mutual Ins. Co., supra, 275 Conn. 414-15. A valid certificate of mailing, "by definition serves as proof that the United States Postal Service received and sent a particular piece of mail." Id., 415.
The evidence demonstrates that AIG generated a certificate of mailing with a log page listing all of the cancellation and nonrenewal notice that were mailed out to policyholders. (Plaintiff's Exhibit 8.) The log page listing includes the names and addresses of the policyholders. The name "Jill Schweiger" is listed on the log page 75 dated July 20, 2006, which was the date on which the notice of cancellation was sent by AIG to Schweiger. The log page listing was assigned a log number, which appears above Schweiger's name and address, along with the date of mailing on the cancellation notice itself, July 20, 2006. The post office placed a bull's-eye postmark stamp on the log page listing to indicate that the mail listed thereon was mailed on that particular date. The log page listing includes a certification, which states: "I certify that I personally mailed in the U.S. Post Office at the place and date stamped a notice of cancellation or nonrenewal to the insured and, if required to the lienholder, and at the same time received from the U.S. Postal Service the attached receipt." An AIG representative signed and dated the certification.
The evidence demonstrates that the notice of cancellation provided by AIG to Ms. Schweiger was timely. The notice was mailed on July 20, 2006, more than ten days before the cancellation date of August 3, 2006. The facts also show that the notice of cancellation was properly mailed. Both the requirements of § 38a-343, mailed with at least ten days notice and by a certificate of mailing, were satisfied with respect to the July 20, 2006 notice of cancellation to Schweiger.
C Mailbox Rule
AIG sent to Schweiger a timely notice of cancellation which was properly mailed. The court, however, must also determine whether the notice of cancellation was effective under the mailbox rule.
"[T]he mailbox rule . . . provides that a properly stamped and addressed letter that is placed into a mailbox or handed over to the United States Postal Service raises a rebuttable presumption that it will be received." Echavarria v. Nat'l Grange Mutual Ins. Co., supra, 275 Conn. 418. "[I]n Connecticut the law is that if a letter is mailed to the right address with the correct postage, it is presumed it was received." Precision Mechanical Services, Inc. v. Scottsdale Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV 98 0416692 (March 3, 2006, Corradino, J.) ( 41 Conn. L. Rptr. 65). "Pursuant to the mailbox rule, the burden then shifts to [Schweiger] to present evidence that rebuts this presumption." Echavarria v. Nat'l Grange Mutual Ins. Co., supra, 275 Conn. 418. A simple denial of receipt is not sufficient to rebut the presumption. As the court noted in Precision Mechanical Services, Inc. v. Scottsdale Ins. Co., "[i]f the mailing procedure was adequate to prove actual mailing and no serious flaws were found in it, as the court concludes here, then mere denial of receipt of the mail in question should not be sufficient to rebut the presumption that the letter was received. How can a mere denial of receipt without more be considered to be `substantial evidence?' Governmental and nongovernmental agencies would presumably have to rely on personal service, maybe abode service, to insure the integrity of their notice systems, otherwise someone could come to court and defeat notice by just denying that he or she got it." Precision Mechanical Services, Inc. v. Scottsdale Ins. Co., supra, 41 Conn. L. Rptr. 74.
Here, Schweiger attempts to rebut the presumption of receipt based on a denial of the receipt of the July 20, 2006 notice of cancellation. She also generally claims lack of receipt of policy documents from AIG. For the period from April 2005 to August 2006, she claims that she never received the vast majority of the documents that AIG's records reflect were mailed to her, which are evidenced by certificates of mailing. She did admit, however, to receiving a few documents sent by AIG: a renewal declaration, a Connecticut insurance I.D. card, and the August 14, 2006 denial of coverage letter from AIG.
In order to determine whether Schweiger presented evidence that rebuts the presumption of the mailbox rule the court must evaluate her credibility. "It is well established that in cases tried before courts, trial judges are the sole arbiters of the credibility of witnesses and it is they who determine the weight to be given specific testimony . . . It is the quintessential function of the fact finder to reject or accept certain evidence . . ." (Internal quotation marks omitted.) In re Antonio M., 56 Conn.App. 534, 540, 744 A.2d 915 (2000). "The sifting and weighing of evidence is peculiarly the function of the trier [of fact]. [N]othing in our law is more elementary than that the trier [of fact] is the final judge of the credibility of witnesses and of the weight to be accorded their testimony . . . The trier is free to accept or reject, in whole or in part, the testimony offered by either party." (Citations omitted; internal quotation marks omitted.) Smith v. Smith, 183 Conn. 121, 123,438 A.2d 842 (1981).
As a whole, Schweiger's testimony lacked sufficient credibility. The court does not credit her testimony that during the period in question she only received in the mail from AIG: an insurance card, a six-month renewal package, and the August 14, 2006 coverage denial letter. Schweiger's testimony conflicts with numerous certificates of mailing that were not contradicted in any way. Schweiger never reported any mail delivery problems to the post office. She did not report any problems receiving mail from other sources. There was no evidence that she went on any extended vacations. She was not on vacation at the time of the mailing of the notice of cancellation. During this period, only one item mailed to Schweiger was ever returned to AIG. The July 20, 2006 notice of cancellation was not returned to AIG as undeliverable or wrong address.
Schweiger's claim that she was somehow treated differently as an "internet consumer" was not proven. Under the terms of the policy, for example, internet customers, like regular customers, were mailed notices of cancellation to their home addresses. (Plaintiff's Exhibit 2.) ("[t]his policy may be cancelled during the policy period as follows . . . 2. We may cancel by mailing to the named insured shown in the Declarations at the address shown in this policy . . .").
Schweiger has not presented sufficient evidence to rebut the presumption of the mailbox rule. Contrary to Schweiger's claims, the evidence demonstrates that the July 20, 2006 notice of cancellation was mailed by AIG to her home address. Under the mailbox rule, the court finds that Schweiger has not rebutted the presumption of receipt of the July 20, 2006 notice of cancellation.
D Actual Notice
In addition to claiming that she did not receive the July 20, 2006 notice of cancellation, Schweiger claims that she did not have actual notice of the cancellation. Although there is a split of trial court authority on the issue of whether § 38a-343 requires actual notice by the insured in order for a notice of cancellation to be effective; see Starr v. Pistone, Superior Court, judicial district of Fairfield, Docket No. CV 05 5000534 (January 9, 2009, Hiller, J.) ( 47 Conn. L. Rptr. 67); Schneider v. Brown, Superior Court, judicial district of Fairfield, Docket No. 340692 (April 23, 2003, Levin, J.) ( 34 Conn. L. Rptr. 403); the Supreme Court in Echavarria stated that "[i]nasmuch as the plaintiffs, by failing to allege that they did not receive notice of cancellation, have not succeeded in rebutting the presumption of receipt generated by the mailbox rule, we need not and, in fact, cannot consider the issue of the statute's requirements respecting actual notice." Echavarria v. Nat'l Grange Mutual Ins. Co., supra, 275 Conn. 419. The court further noted that: "Even if § 38a-343(a) requires actual notice, as the plaintiff's claim that it does, the plaintiffs cannot prevail in the present case because they have failed to rebut the presumption generated by the mailbox rule that they had, indeed, received notice of cancellation of their automobile insurance from the defendant at least fifteen days before it was canceled." Echavarria v. Nat'l Grange Mutual Ins. Co., supra, 275 Conn. 419 n. 12.
Based on Echavarria, this court concludes that even though Schweiger actually alleged that she did not receive the July 20, 2006 notice of cancellation, she has failed to rebut the presumption of receipt generated by the mailbox rule, and therefore, the court need not consider the issue of lack of actual notice.
E Counterclaim
In her counterclaim, Schweiger asserts that she paid all of her premium payments due through and including August 8, 2006, and therefore, the policy was in full force and effect on August 8, 2006, when she was involved in an automobile accident with Figella.
Schweiger's claim that she paid all of her premium payments due was not supported by the proven facts. She was not able to provide sufficient evidence that the premium payment was made before the August 3, 2006 cancellation date. Schweiger's bank records fail to show that she made the premium payment in question. Her testimony that she made all of her premium payments lacked credibility. Schweiger failed to prove her counterclaim by a fair preponderance of the evidence.
F Notice of Cancellation to Honda
Schweiger has also raised an issue with respect to the August 9, 2009 notice of cancellation to Honda. The notice stated that the cancellation of the policy would take effect on August 24, 2006. The parties stipulate that the Loss Payee Auto Insurance Notice of Cancellation was not sent by AIG to Honda until the day after the accident.
As previously noted, General Statutes § 38a-343 provides: "(a) No notice of cancellation of a policy to which section 38a-342 applies may be effective unless sent, by registered or certified mail or by mail evidenced by a certificate of mailing, or delivered by the insurer to the named insured, and any third party designated pursuant to section 38a-323a . . ." (Emphasis added.) section 38a-323a, entitled "Designation of a third party to receive nonrenewal and cancellation notices on behalf of an individual aged fifty-five or older. Option available for automobile and homeowners policies," is clearly not applicable to the facts of this case.
The policy also provided for notice of cancellation to the loss payee and lessor. Under the Additional Insured-Lessor endorsement, the policy provides that: "3. If we terminate this policy, notice will also be mailed to the lessor." (Plaintiff's Exhibit 2, Additional Insured-Lessor endorsement.) The Loss Payable Clause endorsement of the policy provides that: "We will give the same advance notice of cancellation to the loss payee as we give to the named insured show in the Declarations." (Plaintiff's Exhibit 2, Loss Payable Clause endorsement.)
"Strict compliance by an insurer with the statutory mandates and policy provisions as to notice is essential to effect a cancellation through such notice. Any ambiguities in the notice will be construed in favor of the insured . . . To be effective, a notice of cancellation must be definite and certain . . . Any uncertainty as to the meaning of a notice from an insurer to its insured must be resolved against the insurer and in favor of the insured." (Citations omitted.) Travelers Ins. Co. v. Hendrickson, 1 Conn.App. 409, 412, 472 A.2d 356 (1984). The issue in Travelers Ins. Co. v. Hendrickson was whether two notices mailed to the defendant, which failed to mention cancellation, were effective. See Travelers Ins. Co. v. Hendrickson, supra, 1 Conn.App. 412-13.
The August 9, 2006 notice of cancellation to Honda indicated that the cancellation of the policy would take effect on August 24, 2006. The notice was not sent by AIG to Honda until the day after the accident. This notice of cancellation conflicted with the notice of cancellation mailed to Schweiger, which indicated a termination date of August 3, 2006. AIG failed to give Honda, the loss payee and additional insured-lessor, the same notice of cancellation as was given to Schweiger.
As previously noted the purpose of § 38a-343 is to assure that before an automobile insurance policy is cancelled there is clear and unambiguous notice of the cancellation. See Kane v. American Ins. Co., supra, 52 Conn.App. 502. In Travelers Ins. Co., the court found that: "Since neither of the notices mentioned cancellation, we cannot say that they were clear and unambiguous; they must be resolved against the plaintiff and they cannot be taken, either separately or together, as an effective notice of cancellation . . ." Travelers Ins. Co. v. Hendrickson, supra, 1 Conn.App. 413.
Given the discrepancy in the effective date of cancellation, the court cannot find that the July 20, 2006 and August 9, 2006 notices of cancellation were clear and unambiguous. As in Travelers Ins. Co. v. Hendrickson, the notices of cancellation must be resolved against AIG, and the notices cannot be taken, either separately or together, as an effective notice of cancellation. "[W]hen written notice of cancellation is required, an insurer must comply strictly with policy provisions and statutory mandates." Majernicek v. Hartford Casualty Ins. Co., 240 Conn. 86, 95, 688 A.2d 1330 (1997). The notices in this case failed to strictly comply with the mandates of the statute and policy provisions.
IV CONCLUSION AND ORDER
For the above-stated reasons, the court enters a declaratory judgment in favor of Schweiger and orders as follows:
1. That the automobile insurance policy issued by AIG Casualty Company f/k/a Birmingham Fire Insurance Company of PA was in full force and effect at the time of the motor vehicle accident on August 8, 2006.
2. The AIG Casualty Company f/k/a Birmingham Fire Insurance Company of PA has a duty to indemnify and defend Jill Schweiger from any and all claims brought by William Figella in regard to that motor vehicle accident.
SO ORDERED.