Opinion
No. CV-06-4005119
May 15, 2009
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT NO. 152
I. PROCEDURAL HISTORY
The issue before the court is the third-party defendant's, The Sanford F. Hall Agency, Inc., doing business as NIA/UIA Group, LLC (NIA/UIA), motion for summary judgment on a third-party complaint for common-law indemnification by the third-party plaintiff, Sako Nurkovic. For reasons more fully set forth in this memorandum of decision, the motion for summary judgment is granted.
The following facts and procedural history are relevant to the issues raised in NIA/UIA's motion for summary judgment. On March 6, 2006, the plaintiff, Quincy Mutual Fire Insurance Company (Quincy Mutual) commenced an action against the defendant, Sako Nurkovic, seeking a declaratory judgment that the defendant's automobile insurance policy is void ab initio due to a material misrepresentation made on the application. Specifically, Quincy Mutual alleges in its complaint the following: The plaintiff is licensed to sell insurance in Connecticut. The plaintiff insured the defendant for a 1996 Dodge Caravan with a policy of insurance beginning on September 5, 2005 and terminating on September 5, 2006. Within this policy period and on September 15, 2005, the defendant was involved in a motor vehicle accident which occurred in the Borough of Bronx in New York City.
The plaintiff alleges that when the defendant applied for insurance for the 1996 Dodge Caravan with Quincy Mutual, he was asked to identify the garage location of the vehicle. In response, the defendant reviewed and signed the application for insurance which identified 36 Grand Street, Middletown, Connecticut as the garage location. At the time the defendant applied for insurance he was living at the 36 Grand Street, Middletown, Connecticut 06457 on the weekends and was residing at the 15 Radford Street, Yonkers, New York address during the week. The plaintiff claims the defendant's statement that the garage location was at 36 Grand Street, Middletown, Connecticut was a material misrepresentation on the application for insurance, rendering the contract of insurance void ab initio.
On January 26, 2007, the defendant filed a motion to cite in the third-party defendant, NIA/UIA. The court granted the motion and on June 11, 2007 the defendant commenced an action against NIA/UIA. In an amended third-party complaint, the defendant alleges a claim for indemnification. Specifically the defendant alleges the following: Quincy Mutual is licensed to sell insurance in Connecticut. NIA/UIA is licensed in and doing business as an insurance agency in Avon, Connecticut. NIA/UIA was engaged in the business or trade of selling insurance policies and was an agent on behalf of Quincy Mutual. On September 5, 2005, the defendant purchased a Quincy Mutual policy of insurance from NIA/UIA for a 1996 Dodge Caravan. Quincy Mutual insured the defendant for a 1996 Dodge Caravan with a policy commencing on September 5, 2005 and ending on September 6, 2006. The third-party complaint further alleges that on August 23, 2005, the defendant disclosed to Steve Toth of NIA/UIA that he maintained two addresses, one in Connecticut (on the weekends) and one in New York (during the week) but was not advised that a New York policy was required to effectuate insurance coverage for any accident he might have in New York.
On September 15, 2005, within the policy period, the defendant was involved in a motor vehicle accident in New York. On March 2, 2006, Quincy Mutual denied coverage relating to the accident because it was a material misrepresentation for the defendant to list a Connecticut address as the garage location for the vehicle while his primary residence was in Yonkers, New York. The defendant claims he relied on the expertise of NIA/UIA and had the expectation that the policy would provide coverage regardless of which state he was driving the vehicle. In addition, the defendant claims that when he signed the August 23, 2005 application for insurance with Quincy Mutual, the garage location was left blank, with only a post office box number on the application as the Connecticut address. He further claims that nowhere on the application was his primary address requested and that, without his knowledge or consent, NIA/UIA changed the application after he signed it to list a Connecticut garage address, without reference to his dual residences, made known to it previously. For these reasons, the defendant alleges that Quincy Mutual's refusal to provide benefits under the policy was a direct result of the negligence and carelessness of NIA/UIA. As a result of NIA/UIA's negligence, the defendant claims he has suffered damages and seeks indemnification from NIA/UIA for the damages.
NIA/UIA's motion for summary judgment on the third-party complaint was filed on September 11, 2008, to which the defendant filed a memorandum of law in opposition to on January 28, 2009. Also on January 28, 2009, Quincy Mutual filed a memorandum of law in opposition to the motion for summary judgment. On January 30, 2009, the NIA/UIA filed a memorandum of law in further support of a motion for summary judgment. The motion for summary judgment was heard before the court on February 2, 2009.
On April 27, 2007, Quincy Mutual had filed a motion for summary judgment claiming that there is no issue of material fact that the defendant made material misrepresentations in his application for automobile insurance, which voids the policy ab initio. On July 31, 2007, the defendant filed a memorandum of law in opposition to the motion for summary judgment. On August 6, 2007, NIA/UIA filed a memorandum of law in opposition to the motion for summary judgment. On November 6, 2007, Quincy Mutual filed a supplement to its motion for summary judgment. On February 2, 2008, NIA/UIA filed a supplemental memorandum of law in opposition to the motion for summary judgment. Quincy Mutual's motion for summary judgment has not been claimed by the plaintiff and therefore is not before the court. However, Quincy Mutual has renewed its arguments set forth in its motion for summary judgment and its accompanying memorandum of law in support of that motion for summary judgment and its supplement to its motion for summary judgment. The court will consider the arguments raised by the plaintiff; however, as stated previously, Quincy Mutual's motion for summary judgment is not before the court.
II. SUMMARY JUDGMENT
"Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if 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 . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Internal quotation marks omitted.) Martinelli v. Fusi, 290 Conn. 347, 354-55, 963 A.2d 640 (2009).
III. DISCUSSION
As stated previously, the issue before the court is whether NIA/UIA is entitled to judgment as a matter of law on the third-party complaint for indemnification. There is no claim by the defendant that he is entitled to indemnity as a result of a contractual agreement with NIA/UIA. The defendant claims that Quincy Mutual's denial and subsequent refusal to render benefits under the defendant's automobile policy was a direct result of the negligence and carelessness of NIA/UIA and as a result of the negligence the defendant suffered damages and seeks indemnification from NIA/UIA. This claim appears to be based on common-law indemnification under Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 416, 207 A.2d 732 (1965). See also Smith v. New Haven, 258 Conn. 56, 779 A.2d 104 (2001).
" Kaplan imposes an implied obligation of indemnity on a tortfeasor whose active negligence is primarily responsible for a plaintiff's injuries, thus superseding the indemnitee's passive negligence . . . To assert a claim for indemnification under Kaplan, an out-of-pocket defendant must show that: (1) the party against whom the indemnification is sought was negligent; (2) that party's active negligence, rather than the defendant's own passive negligence, was the direct, immediate cause of the . . . resulting injuries . . . ; (3) the other party was in control of the situation to the exclusion of the defendant seeking reimbursement; and (4) the defendant did not know of the other party's negligence, had no reason to anticipate it, and reasonably could rely on the other party not to be negligent." (Citations omitted.) Smith v. New Haven, 258 Conn. 56, 66, 779 A.2d 104 (2001).
The defendant asserts that NIA/UIA's motion for summary judgment on the question of indemnity is premature. The defendant claims there is a genuine issue of material fact relating to whether the defendant materially misrepresented facts, rendering his insurance policy void ab initio, which has not been judicially determined in the underlying declaratory judgment action brought by Quincy Mutual. The defendant asserts that if it is ultimately determined that the policy is not void ab initio, then NIA/UIA's duty to indemnify would not be triggered and the defendant may proceed to recover his losses from Quincy Mutual under the insurance policy. However, if it is ultimately determined that the policy in question is void ab initio, it must be subsequently determined whether NIA/UIA should be held liable for the defendant's losses under a theory of common-law indemnity.
In determining whether this motion for summary judgment is premature based on the indemnification claim as alleged in the third-party complaint, the court finds, Lassow v. Jefferson Pilot Financial Ins. Corp., Superior Court, judicial district of Hartford, Docket No. CV 01 0807131 (September 8, 2003, Shapiro, J.) (35 Conn. L. Rptr. 496), instructive on this issue. In Lassow, the court decided that "to ascertain whether a third-party defendant cannot, as a matter of law, be liable to the defendant for the claims by the plaintiff, it is necessary to assume that the jury found that the plaintiff established the elements of the cause or causes of action the first-party complaint against the defendant." (Internal quotation marks omitted.) Id. (citing Hartt v. Schwartz, Superior Court, judicial district of New London, Docket No. CV 331912 (October 20, 1995, Martin, J.). The court stated that "[i]t is settled law that if a judgment in the first action against the defendant third-party plaintiff rests on a fact fatal to recovery in the action over against the third-party defendant, the latter action cannot be successfully maintained." Id. The court finds the reasoning of these decisions to be sound, for if the underlying cause of action against a defendant fails, there would be no need for a third-party action for indemnification.
Furthermore, in Lassow, the court stated, "[o]ur Supreme Court has stated that the applicability of the rule is negatived, wherever it appears that the party seeking indemnity was himself guilty of affirmative misconduct which was a proximate cause of the injury in question . . . Following this precedent, other courts have stated that there can be no indemnification in such contexts. See Hartt v. Schwartz, supra (no indemnity for all or part of fraudulent nondisclosure claim); Fortin v. Bok, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 88 24 82 37 (May 31, 1991, Ballen, J.) ( Kaplan v. Merberg test does not apply to intentional torts); Siegel v. Kaesser Construction Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 90 26 88 03 (March 6, 1991, Ford, J.) (3 Conn. L. Rptr. 310) (principal of indemnity irrelevant to CUTPA claim)." Id.
In Lassow, the court granted the third-party defendant's motion for summary judgment as to the plaintiff's third-party complaint for indemnity based on the plaintiff's complaint as to bad faith and CUTPA violations. This is because the plaintiff could not prevail against the defendant, the third-party plaintiff, on these two counts unless the third-party plaintiff engaged in affirmative misconduct.
Based on the reasoning of Lassow, the court in the present case has to evaluate Quincy Mutual's claim against the defendant, the third-party plaintiff, in order to determine whether NIA/UIA is entitled to judgment as a matter of law on the third-party complaint based on indemnification. Quincy Mutual's only claim in its complaint was that the defendant's statement that the garage location was at 36 Grand Street, Middletown, Connecticut was a material misrepresentation on the application for insurance which voids the policy of insurance ab initio.
"Rescission of a contract is an appropriate remedy if there has been a material misrepresentation of fact upon which a party relied and which caused it to enter the contract . . . Rescission, simply stated, is the unmaking of a contract." (Internal quotation marks omitted.) Paul Revere Life Ins. Co. v. Pastena, 52 Conn.App. 318, 325, 725 A.2d 996, cert. denied, 248 Conn. 917, 734 A.2d 567 (1999). To prevail on a material misrepresentation claim, the insurance company must "prove three elements: (1) a misrepresentation (or untrue statement) by the plaintiff which was (2) knowingly made and (3) material to defendant's decision whether to insure." Pinette v. Assurance Co. of America, 52 F.3d 407, 409 (2nd Cir. 1995).
"For a material misrepresentation to render a contract voidable under Connecticut law, the misrepresentation party must know that he is making a false statement. `Innocent' misrepresentations — those made because of ignorance, mistake or negligence are not sufficient grounds for rescission." Id., 409-10. "When Connecticut courts speak of `innocent' misrepresentations, they generally have in mind the situation in which the applicant does not know that the information he is providing is false. [See, e.g., Middlesex Mutual Assurance Co. v. Walsh, 218 Conn. 682, 686, 590 A.2d 957 (1991)] (`I]n order to constitute a misrepresentation sufficient to defeat recovery on an automobile insurance policy, a material representation on an application for such a policy must be known by the insured to be false when made'); Lazar v. Metropolitan Life Ins. Co., 290 F.Sup. 179, 181 (D.Conn. 1968) (finding an applicant's misrepresentations on an application not `knowing' as a matter of law where the agent stated that the false answers were not within the scope of the question) . . . Under Connecticut law . . . a person may not claim that a misrepresentation is `innocent' solely because the person failed to read the application before signing it. The law requires that the insured shall not only, in good faith, answer all the interrogatories correctly, but shall use reasonable diligence to see that the answers are correctly written. Ryan v. World Life Ins. Co., 41 Conn. 168, 172 (1874) (holding the defendant not to be liable under an insurance policy when plaintiff claimed that she gave defendant's agent the right information but he recorded the wrong answer) . . . [I]n Connecticut, an applicant for insurance has the affirmative duty to inform himself of the content of the application signed by him, under penalty of being bound by the representations as recorded therein." (Citations omitted; internal quotation marks omitted.) Id.
Therefore, in order for Quincy Mutual to void the policy ab initio based on material misrepresentation, it would have to prove (1) the defendant made a misrepresentation (or untrue statement) (2) the defendant knowingly made that statement and (3) it was material to the plaintiff's decision whether to insure. Based on these elements, Quincy Mutual is required to prove affirmative misconduct and not mere negligence on part of the defendant, the third-party plaintiff in this case. Therefore, if a material misrepresentation is found in the underlying declaratory action, such an affirmative act of misconduct by the defendant would prevent recovery as a matter of law from NIA/UIA for common-law indemnification.
In its opposition to the motion for summary judgment, the plaintiff has argued that information regarding the garage location was answered incorrectly by any definition, including that utilized by the agent. The plaintiff has also argued that the fact that the defendant had two residences is irrelevant to the issue of where the defendant's motor vehicle was garaged. Furthermore, the plaintiff claims that the agent was actively involved in the misrepresentation on the insurance application. Specifically, Quincy Mutual alleges that the defendant and the agent are responsible for submitting the application and the agent had a duty to verify the contents of the insurance application.
The arguments raised by the plaintiff concerning NIA/UIA's knowledge about the garage location and the information NIA/UIA received concerning the defendant's residences are relevant to Quincy Mutual's claim of material misrepresentation against the defendant but not to the third-party indemnification claim. If it is found that the defendant fully disclosed all the material facts to the NIA/UIA and was advised by NIA/UIA that his answer was within the framework of the question, as explained and interpreted by NIA/UIA, the defendant could not be found to have made a knowingly false statement. "Absent fraud and collusion, it was within the agent's power and authority to explain the questions and decide for himself and the bona fide applicant, what was a satisfactory answer, and how the answer should be applied to the subject . . . If an insured truthfully states material facts to an agent, who explains that those facts are not encompassed by the language of the question, the company in fairness should be bound by the agent's conclusion." Lazar v. Metropolitan Life Ins. Co., supra, 290 F.Sup. 181.
The defendant claims in its third-party complaint for indemnification that after he signed the application for insurance, NIA/UIA completed it and listed a Connecticut garage location without his knowledge or consent. If the defendant can prove these allegations he could not be held liable for material misrepresentation on the application because an applicant is not responsible for misstatements unless and until he adopts or endorses the particular application containing them. See Bristol v. Commercial Union Life Ins. Co., 211 Conn. 622, 629, 560 A.2d 460 (1989). Lastly, the arguments concerning whether the answer for the garage location was ambiguous or answered truthfully address the underlying material misrepresentation claim and are therefore irrelevant on the motion for summary judgment on the third-party complaint for indemnification. In order for the plaintiff to rescind the insurance contract, it would have to prove the third-party plaintiff engaged in more than innocent misrepresentation — those made because of ignorance, mistake or negligence, would be insufficient. Therefore, if Quincy Mutual's material misrepresentation claim fails, the defendant will be covered under the insurance policy and there will be no basis for the claim of indemnification. If on the other hand material misrepresentation is proved, the defendant cannot hold NIA/UIA liable under a common-law indemnification claim.
IV. CONCLUSION
Based on the foregoing analysis, NIA/UIA's motion for summary judgment as to the defendant's third-party complaint is granted. Further, there being no authority cited to support NIA/UIA's motion for attorneys fees and costs, it is denied.