Opinion
No. CV 07 6000494
February 1, 2011
MEMORANDUM OF DECISION MOTION FOR SUMMARY JUDGMENT #156
The plaintiff, Litton Loan Servicing, LP, brought the present action by service of process against the defendants, New London County Mutual Insurance Company, Anthony Smeraglino and Suzann Smeraglino, on May 21, 2007. The operative complaint is the amended complaint filed by the plaintiff on January 7, 2008. It alleges the following facts. On May 30, 2003, Anthony and Suzann Smeraglino (the Smeraglinos) mortgaged property located at 23 Woodsend Avenue in Shelton (the property) in order to secure a promissory note in the amount of $362,700.00. The note was payable with interest to the order of New Century Mortgage Corporation. The mortgage was assigned to Bank One National Association (Bank One) as trustee on June 6, 2003. On July 16, 2004, Bank One merged with JP Morgan Chase Bank. The merged entity became known as JP Morgan Chase Bank National Association (JP Morgan). The plaintiff was the disclosed servicing agent for JP Morgan.
Because New London County Mutual Insurance Company is the only defendant involved in the present motion, the court hereinafter will refer to it as the defendant.
The mortgage deed required, inter alia, that the Smeraglinos maintain extended coverage hazard insurance on the property and name the plaintiff as an additional loss payee in the policy. To this end, on January 12, 2005, the defendant issued an amended homeowners insurance policy (the policy) to the Smeraglinos in which the plaintiff was identified as mortgagee and additional loss payee. The plaintiff brought a foreclosure action against the Smeraglinos in February 2005. A fire occurred on March 26, 2005 that caused substantial damage to the property. The defendant assigned a claim number to the Smeraglinos' fire loss on April 15, 2005. The Smeraglinos did not report their fire loss to the plaintiff.
On June 6, 2005, the Smeraglinos arranged to have Grow Bridgeport Fund I, LLC replace the plaintiff as the additional loss payee on the policy. The Smeraglinos obtained a commercial loan from Grow Bridgeport Fund I, LLC on June 17, 2005 that was cross-collateralized by the property. The defendant did not provide written notice of the change to the plaintiff, even though it was required to do so under the terms of the policy. On July 11, 2005, the defendant issued a settlement check in the amount of $227,734.34 to the order of the Smeraglinos, their adjuster and Grow Bridgeport Fund I, LLC. The Smeraglinos' attorney contacted the plaintiff on August 12, 2005 and proposed that the Smeraglinos settle their indebtedness with proceeds to be obtained from a short sale in the amount of $330,000.00. On August 24, 2005, during an inspection of the property, the plaintiff first learned about the fire loss.
Counts six and seven of the amended complaint are against the defendant. Count six sounds in breach of contract, and count seven sounds in negligence. The defendant filed the present motion for summary judgment and a memorandum of law in support thereof on September 22, 2010. The plaintiff in turn filed an opposition to the motion and a memorandum of law in support thereof on November 2, 2010. The defendant then filed a reply memorandum on November 23, 2010. The court heard the matter at short calendar on November 29, 2010.
DISCUSSION
"Summary judgment is a method of resolving litigation when the pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury . . . the moving party for summary judgment is to be held to a strict standard . . . of demonstrating his entitlement to summary judgment." (Citation omitted; internal quotation marks omitted.) Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57 (1983).
"[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way . . . [A] summary disposition . . . should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party . . . [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed." (Citations omitted; emphasis in original; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).
The defendant moves for summary judgment on the ground that the plaintiff's action against it is precluded by the suit limitation provision of the policy. According to this provision. "Suit Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss." Defendant's Ex. A, Homeowners 3 Special Form at 11. The present action was started on May 21, 2007, more than two years after the subject loss, which occurred on March 26, 2005. The defendant argues that the plaintiff is a party to the policy and therefore bound to its terms. The defendant also argues that the plaintiff's negligence cause of action is governed by the policy and therefore the suit limitation provision, because the defendant's alleged duty of care arose from the policy. In support of its motion, the defendant submits, inter alia, copies of the policy and the policy's declarations page amended to reflect the change in the designated mortgagee, as exhibits. The defendant's reply memorandum repeats and emphasizes these arguments.
The plaintiff opposes the present motion on the ground that the application of the suit limitation provision to it was conditioned upon the Smeraglinos' failure to provide proof of their claimed loss to the defendant, which did not occur. In the alternative, the plaintiff argues that the issue of whether the suit limitation provision applies to the present action cannot be decided on a motion for summary judgment, because the language in the provision is ambiguous. The plaintiff further argues that its negligence cause of action is not governed by the policy and therefore the suit limitation provision. In support of its opposition, the plaintiff submits copies of the mortgage deed and the settlement check as exhibits.
"Where the issues are purely legal and there is no disputed issue of fact, summary judgment is appropriate. See Vernon v. Cassadega Valley Cent. School Dist., 49 F.3d 886, 889 (2d Cir. 1995)." Annelli v. Ford Motor Co., Superior Court, judicial district of New London, Docket No. CV 04 4001345 (June 7, 2007, Hurley, J.T.R.). See also Blackwell v. Barone's Sports Cafe, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 02 4000570 (January 10, 2005, Schuman, J.) ( 38 Conn. L. Rptr. 636) ("Because the defendants do not dispute the facts for the purposes of this motion, but instead raise [a] purely legal issue . . . the court can decide the issue on summary judgment"). The dispute between the parties in the present action involves legal, not factual, issues. Specifically, the plaintiff and the defendant dispute how the court should interpret the policy.
"Issues related to the content of insurance policies are appropriate for summary judgment review." Conway v. Travelers Casualty and Surety Co. of America, Superior Court, judicial district of Hartford, Docket No. CV 99 0588119 (December 15, 2000, Rubinow, J.). "The [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 . . . It is axiomatic that a contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . The policy words must be accorded their ordinary and natural meaning . . . [and] any ambiguity in the terms of the insurance policy must be construed in favor of the insured because the insurance company drafted the policy . . .
"A necessary predicate to this rule of construction, however, is a determination that the terms of the insurance policy are indeed ambiguous . . . The fact that the parties advocate different meanings of the [insurance policy] does not necessitate a conclusion that the language is ambiguous . . . Moreover, [t]he provisions of the policy issued by the defendant cannot be construed in a vacuum . . . They should be construed from the perspective of a reasonable layperson in the position of the purchaser of the policy." (Internal quotation marks omitted.) Clinch v. Generali-U.S. Branch, 110 Conn.App. 29, 35, 954 A.2d 223, aff'd, 293 Conn. 774, 980 A.2d 313 (2008). It is clear from the intention of the parties in the present action, as evidenced by the existence of the loss payable clause, that the defendant was meant to owe a direct obligation to the plaintiff under the policy. Vernon Foodliner, Inc. v. Central Mutual Ins. Co., 1 Conn.App. 595, 601-02, 474 A.2d 468 (1984). The plaintiff therefore has a right to sue the defendant directly on the contract. Id.
As both parties note in their respective memoranda, there appears to be no Connecticut case law addressing the issue of whether a mortgagee is bound by a suit limitation provision in its mortgagor's homeowners' insurance policy. The court's research has yielded, however, a decision by the Sixth Circuit Court of Appeals that is factually similar and legally identical to the present action. In Ford Motor Credit Co. v. Aetna Casualty and Surety Co., 717 F.2d 959 (6th Cir. 1983), Cuzco Precision Products, Inc. (Cuzco) executed promissory notes in favor of the plaintiff creditor, secured by mortgages on certain of Cuzco's equipment and machinery. Cuzco then obtained casualty insurance on the equipment and machinery from the defendant insurer. A fire occurred on Cuzco's premises, damaging the equipment and machinery.
Cuzco filed a timely proof of loss statement with the defendant and later brought an action against the defendant within a year of its loss for the defendant's failure to honor its claim. Because of its security interest in the equipment and machinery, the plaintiff sought payment from the defendant over a year after Cuzco's loss and then brought the named action against the defendant when the defendant refused to make the requested payment. The trial court granted the defendant's motion for summary judgment on the ground that the plaintiff's action was precluded by the suit limitation provision in Cuzco's casualty insurance policy, which provided: "No suit or action on this policy for the recovery for any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss." Id., 961-62.
The Sixth Circuit reversed the trial court's decision. It determined that the "limitation provision should not be read in isolation, but, rather, it should be interpreted in conjunction with the mortgagee interests and obligations provision contained in the policy." Id., 962. The part of the mortgagee interests and obligations provision at issue in Ford Motor Credit Co. is identical to the part of the mortgagee interests and obligations provision at issue in the present action. Both provide: "If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within sixty (60) days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit." Id. Defendant's Ex. A, Special Provisions-Connecticut at 1.
The Ford Motor Credit Co. court reasoned: "From the face of this provision it is clear that only `if the insured fails to render proof of loss' is the mortgagee required to submit a proof of loss statement. However, it is not clear whether this contingency also triggers the latter portion of the clause which provides that the mortgage shall be subject to the provisions related to the time of bringing suit . . . If the contingency is read in the conjunctive, the logical conclusion is that if the insured does render proof of loss then the mortgagee is not obligated to file an additional proof of loss and likewise is not subject to the contractual time limit for filing suit." (Citation omitted; emphasis in original.) Id. The court then concluded that Cuzco's timely submission of its proof of loss claim "arguably relieved Ford of any obligation to file an additional statement with Aetna or to sue within the one-year period." Id. Because the insurance policy language at issue could "reasonably be understood in different ways," the court deemed it ambiguous, construed it against the defendant and held that it did not preclude the plaintiff's action. (Internal quotation marks omitted.) Id.
The court in the present action is persuaded by the reasoning of the court in Ford Motor Credit Co. and adopts it in deciding the present motion. The parties do not dispute that the Smeraglinos timely filed their proof of loss statement. Therefore, by virtue of the language in the mortgagee interests and obligations provision of the policy, the plaintiff was arguably relieved of any obligation to file an additional statement with the defendant or to sue within the one-year period specified in the suit limitation provision.
The defendant argues in response to the plaintiff's interpretation of the mortgagee interests and obligations provision: "[T]he Mortgage Clause . . . entitles the mortgagee to submit its own proof of loss if the insured fails to do so. However, nothing in the extension of coverage created [by the clause] negates or diminishes the contract terms, conditions and exclusions that are contained elsewhere in the Policy." The defendant's interpretation of the provision is disingenuous and selective. It wholly ignores the use of the word "shall" and the conditional "if-then" construction of the sentence at issue: " If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within sixty (60) days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit." (Emphasis added.)
Like the Sixth Circuit concluded in Ford Motor Credit Co., the court in the present action concludes that the relationship between the Smeraglinos' submission of their proof of loss claim and the applicability of the suit limitation provision to the plaintiff based upon the relevant language in the mortgagee interests and obligations provision, is unclear. The mortgagee interests and obligations provision is therefore ambiguous and should be construed against the defendant insurer, in accordance with our standard rules of contract interpretation. The mortgagee interests and obligations provision, when construed against the defendant, can be read to provide that the plaintiff is not required to file a proof of loss statement and is not subject to, inter alia, the suit limitation provision unless the Smeraglinos fail to file a proof of loss statement. In light of this interpretive ambiguity, the defendant is not entitled to a judgment as a matter of law.
Because the court concludes that the suit limitation provision does not preclude the present action, it need not reach the issue of whether the plaintiff's negligence cause of action is governed by the provision.
For the foregoing reasons, the court denies the defendant's motion for summary judgment.