Opinion
No. CV 04-4000060-S
January 23, 2007
MEMORANDUM OF DECISION
After a bench trial, the court finds the following material facts and reaches the following conclusions.
I A
On or about January 9, 2003, the plaintiff, National Grange Mutual Insurance Company, issued an insurance policy that originally insured three rather than four sets of dealer plates for defendant Carbone's Auto Body, Inc. (Carbone's). Although the application for insurance sought coverage for four sets of dealer plates, the plaintiff learned from Mitchell Marcus, the insurance agent with whom it worked, that the fourth plate would be permanently affixed to a 2000 International truck. Since the policy separately listed and insured the truck, there was no reason for the policy to cover a fourth dealer plate and it accordingly did not do so. While Marcus may have been mistaken in representing that the fourth plate was permanently affixed to the truck, this mistake was reasonable, as demonstrated by the confusion that the witnesses exhibited at trial concerning the nature and status of the truck and the fourth dealer plate. Thus, this case is not one in which Carbone's clearly requested separate coverage for the fourth plate and the plaintiff negligently failed to honor that request.
On or about February 2, 2003, the plaintiff deleted coverage of the three dealer plates with the consent or authorization of Carbone's. The contemporaneous documents establish this fact. In addition, there would be no economic or other motive for Marcus to request a deletion without the consent of Carbone's, and there are ample economic reasons why Carbone's would request such a deletion. The court credits the testimony of Jeffrey Burns that this deletion meant that there was no longer any separate coverage for dealer plates under the policy. Carbone's received notice of this deletion shortly after February 10, 2003, when Marcus mailed to Carbone's the plaintiff's notice of change in policy, along with a covering memo. To be sure, Carbone's already had notice of this change because, as the court has found, Carbone's requested or at least authorized it.
An inspection conducted on or about February 27, 2003 revealed that, notwithstanding this deletion of coverage with Carbone's approval and knowledge, Carbone's was using "four dealer plates . . . as floaters . . . primarily on vehicles being towed." Carbone's was thus not relying on a mistaken belief that the plaintiff was insuring one remaining dealer plate. Instead, Carbone's was still using all four plates despite its request to delete coverage for three such plates and the notice it received that the plaintiff had done so. Further, Carbone's was no longer paying, and the plaintiff was accordingly not receiving, a premium for any dealer plates. Thus, the defendants cannot sustain their argument that the plaintiff should be estopped on equitable grounds from denying coverage on the fourth plate or that Carbone's was justifiably relying on a mistaken belief that the policy covered the fourth plate. Accordingly, the plaintiff was not responsible for coverage of dealer plates at the time of the May 26, 2003 accident in this case.
The defendants additionally argue that the plaintiff's elimination of dealer plate coverage was invalid because it did not comply with General Statutes § 38a-343. This argument appears to be in the nature of a special defense, but the defendants did not plead it as such. Among the various issues raised by this argument are whether elimination of the dealer plate coverage constituted "cancellation of [a] motor vehicle liability policy" within the meaning of the applicable definitions in General Statutes § 38a-341 and whether the alleged cancellation was one to which General Statutes § 38a-342, entitled "Bases for cancellation," applied, as required by § 38a-343(a). Because the defendants did not plead or brief these matters, the court finds that these arguments lack merit.
B
The defendants' alternative argument is that the Plymouth Voyager involved in the accident with defendant Felix Santaniello was a "covered auto" within the meaning of the policy, regardless of whether the policy covered the dealer plates. The applicable provision in the policy, found in section II.A and entitled "Liability Coverage," states: "We will pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies caused by an 'accident' and resulting from 'garage operations' involving the ownership, maintenance or use of 'covered autos.'" The policy defines "Garage operations" to "[include] the ownership, maintenance or use of the 'autos' indicated in SECTION I of this Coverage Form as covered 'autos.'" (Emphasis in original.) Because the definition of "garage operations" employs the same "ownership, maintenance or use of 'covered autos'" language as does the liability coverage section, it does not add any additional qualifications to that coverage. Thus, the controlling issue becomes whether this case "[involves] the ownership, maintenance or use of covered 'autos.'"
The plaintiff relies on the portion of the definition of "garage operations" providing that it "also includes all operations necessary or incidental to a garage business." As the plain language reveals, however, this component of the definition is a sufficient but not necessary criterium. "Garage operations" can consist of the ownership, maintenance or use of a covered auto, without regard to whether it also satisfies the "garage business" clause relied upon by the plaintiff. However, insofar as the defendants alternatively contend that the policy applied even if the Voyager was not a "covered auto"; the "garage business" clause becomes relevant. The defendants' specific alternative contention is that, even if the Voyager was not a "covered auto," coverage exists because the accident resulted from " 'garage operations' other than ownership, maintenance or use of covered 'autos'" under the first paragraph of section II.A. of the policy. "Garage operations" in this context would refer only to "operations necessary or incidental to a garage business." See Rinehart v. Anderson, 985 S.W.2d 363, 368-70 (Mo.Ct.App. 1998) (interpreting same policy language). As discussed infra, however, the sale or lease of a used car is not necessary or incidental to the operation of the garage business in this case. Therefore, the defendants cannot establish coverage under this provision of the policy.
The garage policy declarations indicate that the policy provides liability coverage for covered auto types 27, 28, and 29. Type 27 refers to "specifically defined autos." This coverage does not apply here, as the only specifically defined auto in the policy is the 2000 International. The defendants oppose this conclusion by maintaining that there were three other specifically defined vehicles on form 64-7986, which is entitled "Schedule of Covered Auto You Own," and that there is sufficient ambiguity as to whether the Plymouth Voyager was one of those three additional vehicles to justify coverage. The January 9, 2003 form on which the defendants rely, however, lists the 2000 International and then three other unidentified vehicles—referred to only as vehicles 2, 3, and 4—along with premium information. It is hard to find from this anonymous listing of three vehicles that the Plymouth Voyager, which Carbone's did not even own on January 9, 2003, is a "specifically defined auto." In any event, the defendants overlook the fact that on or about February 2, 2003, when the plaintiff deleted dealer plate coverage, the plaintiff issued an amended form 64-7986 that deletes any reference to a second, third, or fourth vehicle. Thus, as of the date of the accident in May 2003, the policy unambiguously and specifically identified only the 2000 International. The defendants therefore cannot obtain coverage under the theory that the Voyager was a type 27 "specifically defined" auto.
The policy describes type 28 autos as "Hired 'Autos' Only." The policy defines them as: "Only those 'autos' you lease, hire, rent or borrow. This does not include any 'auto' you lease, hire, rent or borrow from any of your 'employees' or partners or members of their households." The defendants argue that the Plymouth Voyager falls within this definition because it was on loan from Tony March Buick (March) to Carbone's at the time of the vehicle's transfer to Nickolas Topintzis just prior to the accident. There are, however, no indicia of a loan from March to Carbone's. The evidence revealed that on or about May 20, 2003, Carbone's paid what it negotiated to be the full price for the vehicle and intended to resell it. There is no evidence of any arrangement whereby Carbone's would return the vehicle to March. The title documents simply trailed the actual exchange of ownership, a situation recognized by law. Accordingly, the defendants cannot establish that the Voyager was a type 28 "hired auto."
General Statutes § 14-60(a) governs the use of dealers' and repairers' plates in a variety of situations, including "when [a] person has purchased a motor vehicle, the registration of which is pending . . ."
The final applicable category is type 29, entitled "Non-owned 'autos' used in your garage business." The policy defines such an auto as:
Any "auto" you do not own, lease, hire, rent or borrow used in connection with your garage business described in your Declarations. This includes "autos" owned by your "employees" or partners (if you are a partnership), members (if you are a limited liability company), or members of their households while used in your garage business.
Thus, this type of covered auto must be "used in connection with [the insured's] garage business described in [the] Declarations."
The "garage business" defined in the declarations of the policy is "repair shop." The sale or lease of a used car—in this case, the sale by Carbone's of the preowned Voyager to Topintzis—is not a use commonly considered to be in connection with a repair shop. See Lindsay v Safeco Insurance Co., 447 F.3d 615, 618-19 (8th Cir. 2006) (sale of ATV by repair shop was not necessary or incidental to garage business under same policy language). Cf. Rinehart v. Anderson, 985 S.W.2d 363, 370-71 (Mo.Ct.App. 1998) (facts showing, under same policy language, that garage owner's non-covered auto was being used to assist in the return of a repaired vehicle were sufficient to survive summary judgment on issue of whether the resulting accident was incidental to a repair business). Our motor vehicle statutes define a motor vehicle "repairer" in pertinent part as "any person, firm or corporation . . . engaged in repairing, overhauling, adjusting, assembling or disassembling any motor vehicle . . ." General Statutes § 14-51(a)(3). In contrast, the statutes define "used car dealer" in pertinent part to "[include] any person, firm or corporation engaged in the business of merchandising motor vehicles other than new who may, incidental to such business, repair motor vehicles." General Statutes § 14-51(a)(2). Thus, the statutes define "used car dealer" to encompass repair work, but do not define "repairer" to include sale or leasing. For these reasons, the Plymouth Voyager was not used in connection with the repair shop business and was therefore not a type 29 covered auto.
These cases actually addressed "non-covered autos." See note 2 supra. The policy language in question was whether the use of the vehicle was "necessary or incidental to a garage business." See, e.g., Lindsay v. Safeco Insurance Co., supra, 447 F.3d at 618. The question is essentially the same as whether the vehicle was "used in connection with your garage business."
Although the evidence revealed that Carbone's was in fact a used car dealership, Carbone's simply did not obtain coverage, and pay the appropriate premium, for a policy that would cover all autos or even autos sold by dealers. Thus, under no theory did the policy provide coverage for the Plymouth Voyager. The plaintiff is accordingly entitled to judgment under count one of the complaint.
Specifically, Carbone's did not obtain Type 21 coverage under "covered autos" for "any 'auto,'" or Type 31 coverage for "dealers 'autos' and 'autos' held for sale by nondealers or trailer dealers . . ." As discussed, Carbone's obtained insurance only for types 27, 28, and 29.
The defendants repeatedly rely on the rule that the court should construe ambiguities in the policy in favor of the insured. See, e, g, Imperial Casualty Indemnity Co. v. State, 246 Conn. 313, 325, 714 A.2d 1230 (1998). This case, however, does not involve a conflict in the terms or meaning of policy provisions, but rather an application of clearly identified sections of the policy to the specific facts of the case.
II
In count two, the plaintiff alleges that the policy is void because of material misrepresentation or fraud by Carbone's concerning the nature of its business. While the plaintiff need only prove this position by a preponderance of the evidence, see Rego v. Connecticut Insurance Placement Facility, 219 Conn. 339, 347, 593 A.2d 491 (1991), the plaintiff did not meet its burden of proof. Carbone's did not sign, or even review, the insurance application that described the nature of its business. Given that fact, and the other relevant testimony at trial, the court finds that, in addition to fraud or misrepresentation, there is an equal likelihood that the misinformation that the plaintiff received about the nature of Carbone's business was the product of simply insufficient discussion of these issues between Alfred Carbone, III, and Mitchell Marcus. Accordingly, the plaintiff did not prove lack of coverage under count two of the complaint.
Although the court has already decided that there is no coverage, the court addresses this issue for the sake of completeness.
A declaratory judgment of no coverage shall enter for the plaintiff. Each party shall bear its own costs.
It is so ordered.