Opinion
No. CV04 400 23 40 S
April 5, 2006
MEMORANDUM OF DECISION
FACTS
The plaintiff, Amica Mutual Insurance Company, brings this declaratory judgment action against the defendant Massachusetts Bay Insurance Company d/b/a Hanover Insurance Company, returnable December 21, 2004.
The declaratory judgment action follows the bringing of two actions by the defendant, Edward Vitka, seeking to recover pursuant to the uninsured motorist provisions of two insurance policies.
Both of the claims arise out of a July 21, 2001 incident, in which Edward Vitka sustained personal injuries.
The initial claim, Docket #CV02 0392775S, was instituted against the Amica Mutual Insurance Company, followed by a second complaint, Docket #CV02 0394982 S, naming the Massachusetts Bay Insurance Company, d/b/a Hanover Insurance Company as the defendant.
On July 21, 2001, at approximately 11:35 a.m., Edward Vitka was a pedestrian attempting to cross Palisade Avenue, a public highway located in the City of Bridgeport. As he crossed the street, in the vicinity of 73-75 Palisade Avenue, Vitka was struck by a motor vehicle operated by one Salvatore Deamico.
As a result of the impact, Vitka sustained a displaced fracture of his right ankle, bruises and contusions, and a loss of consciousness.
He claims to have suffered permanent injury to his right ankle as a consequence of the accident.
He further maintains that he lost time from his employment, suffered a loss of earning capacity, and will incur medical expenses in the future.
At the time of the accident, Salvatore Deamico was insured under a policy of insurance issued by the Nationwide Mutual Fire Insurance Company. That policy provided coverage of up to $20,000 per person, and $40,000 per accident.
Vitka was paid $20,000 by Nationwide, thus exhausting the limits of the applicable policy.
Insurance policies issued by the Amica Mutual Insurance Company and the Massachusetts Bay Insurance Company (Hanover) were in effect on July 21, 2001.
In this action, Amica Mutual asks the court to determine the priority of insurance coverage, as between its policy, and that issued by Hanover.
Both parties have moved for summary judgment, claiming that there is no genuine issue of fact to be decided, and that the other's policy should be found to be primary as a matter of law.
In its motion for summary judgment, Amica asks, in the alternative, for a determination that both policies be designated as "excess," and that each insurance company be liable on a pro rata basis.
The Amica Mutual policy is a personal automobile policy issued to Edward Vitka, with uninsured/underinsured motorist limits of $500,000.
The Hanover policy is a commercial lines insurance policy, issued to Edward Vitka's employer, Neon Communications, Inc. And Neon Optics, Inc. It carries limits of one million dollars.
The plaintiff argues that the Hanover policy is primary, based upon the language of the "other insurance" clauses in both policies, when the clauses are compared and contrasted.
The applicable "other insurance" language contained in the Hanover policy, provides:
If there is other applicable similar insurance available under one or more policies or provisions of coverage:
a. Any recovery for damages under all such policies or provisions of coverage may be equal but not exceed the highest applicable limit for any one vehicle under any insurance providing coverage on either a primary or excess basis.
b. Subject to paragraph 1.a above, with respect to "bodily injury" an "insured" while:
(1) Occupying a vehicle owned by that "insured," only the uninsured/underinsured motorist coverage applicable to that vehicle will apply, and no other policies or provisions of coverage will apply.
(2) "Occupying" a vehicle owned by that "insured," or while not" occupying" any vehicle, the following priorities of recovery apply:
FIRST: The uninsured/underinsured motorist coverage applicable to the vehicle the "insured" was "occupying" at the time of the "accident."
SECOND: Any coverage form or policy affording uninsured/underinsured motorist coverage to the "insured" as a named insured.
THIRD: Any coverage form or policy affording uninsured/underinsured motorist coverage to the "insured" as a "family member."
With respect to the second and third priorities, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all limits applicable on the same level of priority.
The language of the Amica Mutual Insurance Company policy, concerning "other insurance" reads:
If there is other applicable insurance available under one or more provisions of coverage that is similar to the insurance provided under this part of the policy:
1. Any recovery for damages under all such policies or provisions of coverage may equal but not exceed the highest applicable limit for any one vehicle under any insurance providing coverage on either a primary or secondary basis.
2. Any insurance we provide with respect to a vehicle you do not own shall be excess over any collectable insurance providing coverage on primary basis.
3. If the coverage under this policy is provided:
a. On a primary basis, we will pay only our share of the loss that must be paid under insurance providing coverage on a primary basis. Our share is the proportion that our limit of liability bears to the total of all applicable limits of liability for coverage provided on a primary basis.
b. On an excess basis, we will pay only our share of the loss that must be paid under insurance providing coverage on an excess basis. Our share is the proportion of all applicable limits of liability for coverage provided on an excess basis.
Amica Mutual argues that it policy is "excess" to the Hanover policy, and that Edward Vitka must exhaust Hanover's one million dollar limits, before pursuing any recovery under the Amica Mutual policy.
Hanover maintains that its commercial lines policy, in which the named insured is Edward Vitka's corporate employer, is secondary to the Amica Mutual policy, on which Edward Vitka is designated as a named insured.
Hanover contends that the system of priorities established pursuant to § 38a-336 of the Connecticut General Statutes, controls the determination of which policy is primary.
Section 38a-336(d) reads:
If a person insured for uninsured and underinsured motorist coverage is an occupant of a non owned vehicle covered by a policy also providing uninsured and underinsured motorist coverage, the coverage of the occupied vehicle shall be primary, and any coverage for which such person is a named insured shall be secondary. All other applicable policies shall be excess . . .
The statute provides for a three tier approach: 1) the primary policy, 2) the secondary policy, and 3) excess policies.
Amica Mutual claims that the statute has no application, because Edward Vitka was a pedestrian at the time of the incident, and was not occupying a non-owned motor vehicle. Therefore, it maintains, any analysis should be confined to the language of the two policies concerning "other insurance."
Hanover argues that uninsured motorist coverage is applicable to pedestrians, and that such coverage is designed to protect persons, not vehicles. Therefore, it insists, whether a person is a passenger, pedestrian or driver, is irrelevant to recovery under statutorily mandated coverage. Harvey v. Travelers Indemnity Co., 188 Conn. 245, 250 (1982).
Hanover also maintains that the Amica Mutual policy is primary, because coverage is afforded to Edward Vitka as a named insured. It argues that any coverage available under the Hanover policy would be applicable to Edward Vitka as a "family member" which is a third priority of coverage under the policy.
Amica Mutual insists that the two policies share the same level of priority, and that Edward Vitka is a named insured under the Massachusetts Bay policy.
The language of the Hanover policy provides:
WHO IS AN INSURED
1. You.
2. If you are an individual, any family member.
3. Anyone `occupying' a covered auto . . .
It claims that a corporation cannot sustain personal injuries, and that "You" refers to corporation employees and shareholders, thus qualifying Edward Vitka as a named insured. Hansen v. Ohio Casualty Company, 239 Conn. 537, 546 (1996); Ceci v. Nationwide Indemnity Co., 225 Conn. 165 (1993).
Both parties agree that the facts are not in dispute, and that any decision concerning the motions for summary judgment action will be dispositive of the declarative judgment action.
STANDARD OF REVIEW
A motion for summary judgment may be granted only when affidavits and other documentary evidence demonstrate that no genuine issue of material fact exists or remains between the parties, and the moving party is entitled to judgment as a matter of law. Bartha v. Waterbury House Wrecking Co., 190 Conn. 8, 11 (1983); Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578 (1990).
The burden is upon the moving party to show quite clearly what the law is, and that the moving party is entitled to judgment, because all real doubt as to the existence of a material fact has been excluded. Fogarty v. Rashaw, 193 Conn. 442, 445 (1984); Yanow v. Teal Industries, Inc., 178 Conn. 262, 268 (1979).
Practice Book § 17-49 provides that summary judgment shall be rendered "forthwith, if the pleadings, affidavits and other proof show that there is no genuine issue as to any material fact." The test to be applied is whether the party seeking summary judgment would be entitled to a directed verdict. United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 380 (1969).
THE PROVISIONS OF § 38a-366(d) ESTABLISH THE PRIORITIES BETWEEN THE TWO POLICIES OF INSURANCE
Section 38a-366(d) of the General Statutes establishes a three-tier priority structure, to be applied in a situation in which a claimant is not occupying his own vehicle at the time injury is sustained as the result of the operation of an uninsured or underinsured motor vehicle.
The statute designates as the "primary policy" the policy covering the vehicle occupied by the claimant.
The "secondary policy," or second tier policy is a policy under which the claimant is a named insured.
The third tier is composed of all other policies applicable at the time of the accident, under which a claimant may be insured.
The parties seem to acknowledge that if the statute applies to the facts of this case, and the two policies are ranked in accordance with the statute's priority scheme, the Amica Mutual policy under which Edward Vitka is a named insured, would have priority over the Hanover policy.
Amica argues, however, that the statute is not applicable, because Edward Vitka was a pedestrian at the time of the accident, and was therefore not the "occupant" of a motor vehicle.
This claim is not persuasive.
Section 38a-336(d) was first enacted as part of Public Act 92-297, a comprehensive revision of Connecticut's uninsured motorist statutes.
The effect of adopting Amica's position, is to create one criteria for coverage priority where one is a pedestrian, and a second for situations in which a claimant is occupying a non-owned vehicle. Inconsistent results are possible, based upon the specific language of the policies being compared. Had Edward Vitka been a passenger in the Deamico vehicle, the Amica Mutual policy, under which he is a named insured, would be "secondary," and would take priority over the Hanover policy.
Commentators have considered this issue, and have recognized that plausible arguments can be made for both positions. John Berk Michael C. Jainchill, Connecticut Law of Uninsured and Underinsured Motorist Coverage; (Third Edition); 2004 § 9.2, p. 583-84.
In declining to position themselves conspicuously on one side of the issue, Berke Jainchill stated:
The statutory amendment does not specifically reference an insured as a "pedestrian." It could be argued that the statutory prioritization language is inapplicable, and one should refer to competing "other insurance" clauses. (Such an exercise would probably result in the proration of applicable coverage.) See Section 9.1.4. On the other hand, it is reasonable to conclude under the tiered system of the statute that the personal policy of the pedestrian (the so-called "secondary" policy) would "drop down" and be the primary coverage. J. Berke M. Jainchill, Connecticut of Unisured and Underinsured Motorist Coverage (Third Edition), supra.
The "drop down" approach under the statute provides a uniform method for determining policy priorities, and avoids the need to compare competing policy provisions, thus producing the potentially inconsistent results which are inevitable, given the case by case analysis.
The "drop down" approach is consistent with the long-established public policy of this state, that uninsured motorist protection covers persons, not vehicles, and the status of an individual as a pedestrian, passenger or driver of an insured or uninsured vehicle is irrelevant to recovery under the statutorily mandated coverage. Harvey v. Travelers Indemnity Co., supra, 250.
It is found that § 38a-336(d) of the General Statutes applies to the facts of this case, and that a clear reading of the statute requires a determination that the Amica Mutual Policy under which Edward Vitka is a named insured takes priority, and is the primary coverage available to Edward Vitka.
A COMPARISON OF THE "OTHER INSURANCE" LANGUAGE OF BOTH POLICIES SUPPORTS THE CONCLUSION THAT AMICA MUTUAL'S POLICY IS PRIMARY
Assuming, arguendo, that § 38a-336(d) of the General Statutes does not apply to this case, a reading of the "other insurance" language of both policies compels the conclusion that the Amica Mutual policy is the primary policy.
The Amica Mutual policy provides that it "shall be excess over any collectable insurance providing such coverage on a primary basis."
An examination of the Hanover policy reveals that any obligation of Hanover to provide coverage is not primary, in that Edward Vitka is not the named insured on that policy.
The term "named insured" refers to the name actually appearing on the insurance policy. Testone v. Allstate Insurance Co., 165 Conn. 126, 129-30. The named insured in the Hanover policy is Edward Vitka's employer, Neon Optics, Inc. And Neon Communications, Inc.
In its policy, Hanover has incorporated the three tier priority scheme contained in § 38a-336(d), C.G.S. Based upon that criteria, any coverage available to Edward Vitka is available in the third tier, as a family member, not as the named insured.
The plaintiff, Amica Mutual, cannot claim that its policy is an "excess" policy in relation to the Hanover policy, because Hanover's policy is not primary, and the two policies do not share the same level of priority.
It is therefore found based upon a comparison of the "other insurance" clauses contained in both policies, that the Amica Mutual policy takes priority over the Hanover policy, where coverage is provided under the third level of priority in the Hanover policy.
WHETHER THE HANOVER (MASSACHUSETTS BAY) POLICY PROVIDES ANY COVERAGE TO EDWARD VITKA REQUIRES A FACT BASED ANALYSIS.
In its memorandum in support of its motion for summary judgment (p. 9), the Massachusetts Bay Insurance Company, a/k/a Hanover Insurance Company seems to concede that Edward Vitka is covered as a "family member" under its policy.
In support of this conclusion, two Connecticut Supreme Court cases are cited, Ceci v. Nationwide Indemnity Co., supra, and Hansen v. Ohio Casualty Insurance Co., supra.
Although it is not necessary to determine whether Edward Vitka is a covered person under the Hanover policy in order to resolve the issue of policy priority between Amica Mutual and Hanover, an examination of the two cases cited reveals factual issues concerning Edward Vitka's ability to recover uninsured or underinsured motorist benefits under the policy issued to his employer.
The issue of employer coverage is not raised in a situation governed by § 38a-336(f) of the General Statutes.
Section 38a-336(f), C.G.S. . . . "Notwithstanding subsection (a) of § 31-284, an employee of a named insured injured while occupying a covered motor vehicle in the course of employment, shall be covered by the insured's otherwise applicable uninsured and underinsured motorist coverage."
In Ceci, the plaintiff was injured while a pedestrian. The question was whether the claimant, who was struck by an uninsured vehicle, was entitled to coverage under his employer's policy as a "family member."
The policy in question had been issued to Victor Ceci Refuse, Inc., a small, family-operated business.
An arbitration panel had determined that the claimant was not a "family member" under the policy, and that he was not "occupying" the vehicle, within the meaning of the policy. The Appellate Court found that the policy language was unambiguous, and agreed with the arbitration panel.
The Supreme Court, in its decision, maintained that the determination of whether one was a "family member" is a fact-oriented decision, and requires careful consideration of the situation of the parties to the policy, and the circumstances connected with the transaction. Ceci v. Nationwide Indemnity Co., supra, 168-69 (citing Leonard Concrete Pipe Co. v. C.W. Blakeslee Sons, Inc., 178 Conn. 594, 598 (1979)).
In reversing the decision of the Appellate Court, the Supreme Court reviewed the actions of the underwriter of the policy in question, one Nancy Belliveau. The court stated that the underwriter had considerable information concerning the named insured, including the fact that the business was small and family-owned, that the plaintiff was listed as one of three drivers on the schedule of drivers, that all vehicles were garaged at the same location, and that the plaintiff and members of his family resided at the location. The court insisted that the policy endorsement was not prepared in a vacuum. Ceci v. Nationwide Indemnity Co., supra, at 170.
After looking to the facts known to the preparer of the policy, the court then examined the specific language of the policy, stating, "It is with regard to these particular facts that we construe the language of the policy. Ceci v. Nationwide Indemnity Co., supra, at 170.
The policy in question contained the following language:
D. WHO IS INSURED
1. You or any family member
The court determined, based upon the circumstances of the case, that the term "family member" was ambiguous, and that the term, when construed form the standpoint of the reasonable lay person, would reasonably be understood as providing uninsured motorist insurance to members of the Ceci family. Ceci v. Nationwide Indemnity Co., supra, at 175.
In Hansen, which the Supreme Court described as a sequel to Ceci, Hansen v. Ohio Casualty Ins. Co., supra, at 543, the issue concerned whether the estate of the decedent, Richard P. Hansen, was entitled to uninsured motorist benefits as a covered insured, under a policy issued to a closely held corporation owned and operated by the decedent and his wife.
The language of the policy in Hansen, was identical to the language of the Hanover policy issued to Edward Vitka's employer. The policy read:
B. WHO IS AN INSURED
1. You
CT Page 8793 2. If you are an individual, any family member.
Once again, the Court discussed the specific facts of the case, including the fact that the decedent and his wife were the sole shareholders of the corporation, West Warf Garage, Inc., that the decedent was the only paid employee of the corporation, that the surviving spouse was the secretary and treasurer of the corporation, and that the policy covered two wreckers and three vehicle registration repair plates.
The decedent was killed while riding in a snowmobile, which collided with an uninsured vehicle.
The Hansen court also determined that portions of the policy were ambiguous, following the same fact-driven analysis employed in Ceci.
The facts in the case at bar, do not concern a closely held family corporation. The policy names as the insured "Neon Optica, Inc. And Neon Communications, Inc., 2200 West Park Drive, Suite 200, Westborough, Mass 01518."
The insured is a multi-state corporation, which extends coverage to Northeast Optic Network of New York, Inc., Northeast Optic Network of Connecticut, Inc. And Neon Securities Corp.
The policy also contains endorsement changes to reflect the various states in which business is conducted.
The loss payee schedule also contains several additional entities.
Whether a reasonable person, following the methodology employed in Ceci and Hansen, would necessarily understand that these corporations intended to provide uninsured and underinsured motorist coverage to employees and shareholders of the various corporate entities, given the size, complexity and multi-state character of the business, represents a question of fact, to be determined by the trier of fact, following the receipt of evidence.
Whether the holdings in Ceci and Hansen would be extended beyond closely held family corporations, would then be susceptible of resolution. The issue need not be confronted here. The motion for summary judgment of the defendant, Massachusetts Bay Insurance Company, d/b/a Hanover Insurance Company is GRANTED.
The motion for summary judgment filed on behalf of the plaintiff, Amica Insurance Company is DENIED.
It is found, that the Amica Insurance Company policy is the priority policy.