Opinion
No. CV08-5006195S
June 22, 2010
MEMORANDUM OF DECISION
FACTS
The Plaintiff, Baran Schultz, Executor of the Estate of Joseph J. Schultz, Jr., brings this action to recover underinsured motorist benefits, pursuant to a policy of insurance issued by the Defendant, Safeco Insurance Company of Illinois (Safeco).
The claim, arises out of an incident which occurred on November 12, 2004, on Elizabeth Street in Derby.
In the initial action, a two-count complaint was filed, naming Betzy Sanchez and the United Illuminating Company as defendants. In that action, it was alleged that the Plaintiff's decedent Joseph J. Schultz, Jr., was crossing from the west side of Elizabeth Street to the east side of the road at approximately 7:04 p.m., when he was struck by a vehicle operated by Betzy Sanchez. The decedent sustained injuries, from which he died.
The Plaintiff alleged that the accident and the death of Joseph J. Schultz, Jr., resulted from the negligent operation of the Sanchez vehicle. The Plaintiff further claimed that street lights in the area of Elizabeth Street and Third Avenue were malfunctioning on November 12, 2004, thus rendering the area hazardous, and unsafe for pedestrian travel, after dark.
The street lights were maintained by the United Illuminating Company.
In the settlement of the initial action, the Plaintiff received $20,000 from Betzy Sanchez. This represented the limits of liability applicable to the Sanchez vehicle, at the time of the accident.
The Plaintiff Executor also obtained $425,000 from the United Illuminating Company. The utility was self-insured for the initial one million dollars, of any claim.
In this action, the Plaintiff Executor claims to be entitled to recover underinsured motorist benefits, pursuant to the Safeco policy issued by the Defendant. The policy limits are $100,000 per person, and $300,000 per occurrence.
The Plaintiff contends that $80,000 of coverage is available after the Safeco policy limits are reduced by the $20,000 applicable to the Sanchez vehicle.
Safeco has moved for summary judgment. It claims that the limits of the Safeco policy have been reduced to zero, based upon the payment of $425,000 on behalf of the United Illuminating Company. Safeco argues that it is entitled to the reduction, based upon a provision of its policy which reads:
Part C — Uninsured/Underinsured Motorist Coverage
B. The limit of liability shall be reduced by all sums:
1. Paid because of any bodily injury by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A.
The Plaintiff insists that the policy provision is not authorized, pursuant to the applicable regulations, § 38a-334-6(d) of the Regulations of Connecticut State Agencies. This regulation provides:
(1) The limit of the insurers liability may not be less than the applicable limits for bodily injury liability specified in subsection (a) of Section 14-112 of the general statutes, except that the policy may provide for the reduction of limits to the extent damages have been
(A) paid by or on behalf of any person responsible for the injury,
(B) paid or are payable under any workers' compensation law, or
(C) paid under the policy in settlement of a liability claim.
(2) The policy may also provide that any direct indemnity for medical expenses paid or payable under the policy will reduce the damages which the insured may recover under this coverage.
(3) Any payment under these coverages stall reduce the company's obligation under the bodily injury liability coverage to the extent of the payment.
(4) This subsection shall not apply to underinsured motorist coverage except that no payment under a policy providing underinsured motorist coverage shall duplicate payment from any other source.
The Plaintiff argues that the payment by the United Illuminating Company of $425,000 does not reduce the $100,000 of available coverage under the Safeco policy, because the regulation only permits a reduction of the limits for monies paid on behalf of any responsible "person." The Plaintiff interprets the word "person" as used in the regulation to mean a natural person, not a corporation or other organization.
The Plaintiff Executor also maintains that his initial complaint against Betzy Sanchez and the United Illuminating Company did not allege a claim for the destruction of the decedent's earning capacity, and that no "double recover" for those damages is sought in this action against Safeco.
STANDARD OF REVIEW — SUMMARY JUDGMENT
A trial court may appropriately render summary judgment, when documentary and other evidence demonstrate that no genuine issue of material fact remains between the parties, and the moving party is entitled to judgment as a matter of law. Hammer v. Lumberman's Mutual, 214 Conn. 573, 578 (1990); Bartha v. Waterbury House Wrecking Co., 190 Conn. 8, 11 (1983). A material fact has been defined as one which will make a difference in the result. United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 379 (1969).
The burden is upon the moving party to show quite clearly what the law is, and that the movant 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); Connecticut Practice Book § 17-49.
Because all parties agree as to the material facts which may be considered in this case, the motion for summary judgment is somewhat akin to a common law motion for judgment on the pleadings. Miller's Pond, LLC v. City of New London, 273 Conn. 786, 790 (2005). While the purpose of a motion for summary judgment is to test for the presence of disputed or contested factual issues, the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate where, as here, it is claimed that the complaint fails to set forth a viable cause of action, and the defect cannot be cured by repleading. Larobina v. McDonald, 274 Conn. 392, 401 (2005).
THE WORD `PERSONS' IN THE REGULATION APPLIES TO CORPORATIONS OR TO OTHER FORMS OF ORGANIZATION, NOT ONLY TO NATURAL PERSONS
An insurer may reduce its liability for uninsured or underinsured motorist coverage, based upon a regulation promulgated pursuant to § 38a-336 of the General Statutes. Lowrey v. Valley Forge Insurance Co., 224 Conn. 152, 156 (1992); Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 486 (1986). When an insurer seeks to limit its liability for uninsured or underinsured motorist coverage, based upon either a regulation or a provision of the General Statutes, the limitation must be expressly authorized by the applicable regulation or statute. Although the regulation or statute need not be identical to the policy provision; Jacaruso v. Lebski, 118 Conn.App. 216, 225 (2009); there must be substantial congruence between the regulation or statute, and the policy provision. Nicolletta v. Nationwide Ins. Co., 211 Conn. 640, 647, 48 (1989); Nichols v. Salem Subway Restaurant, 98 Conn.App. 837, 844 (2006).
Here, the Plaintiff maintains that the provision of the Safeco policy, which reduces the limits of liability based upon a payment by an "organization," is not authorized by Regulation § 38a-334-6(d). The interpretation of a state regulation, presents a question of law. Executive Services, Inc. v. Karwowski, 80 Conn.App. 124, 126 (2003).
A limitation of liability on uninsured or underinsured motorist coverage, according to basic rules of contract construction, must be construed most strongly against the insurer. Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 375 (1995); American Universal Ins. Co. v. Del Greco, 205 Conn. 178, 196 (1987). However, the Plaintiff is not assisted by this ride of construction.
The Safeco policy allows for a reduction of the limits of liability based on payments tendered on behalf of "persons or organizations who may be legally responsible." The phrase "persons or organizations" is unambiguous, and clearly applies to payments made by the United Illuminating Company. The question presented here, is whether the language of the policy is permitted, based upon the applicable regulation § 38a-334-6(d).
Section 1-1(k) of the General Statutes states that the word "person" may intend and be applied to "communities, companies, corporations, public or private, limited liability companies, societies, and associations." The law regards a corporation just as it does a natural person, except that a corporation may only act through its authorized agents or employees.
Where the named insured on an insurance policy is a corporation, that fact will not automatically defeat a claim for uninsured motorist benefits. In the context of a closely held corporation, insurance companies are not permitted to deny uninsured motorist coverage to "family members," notwithstanding the fact that corporate entities, unlike human beings, do not have "families," since they are not natural persons. Hansen v. Ohio Casualty Company, 239 Conn. 537, 543 (1996); Ceci v. Nationwide Indemnity Co., 225 Conn. 165, 168-69 (1993).
The Plaintiff insists that the word "persons" as used in the regulation refers only to natural persons, not corporations or other business entities. This argument, while creative, is not controlling, and ignores both the statutory definition contained in § 1-1(k) of the General Statutes, and the historic recognition that corporations are treated as persons, entitled to sue and be sued, own property, and incur contractual obligations.
In order for an insurance policy provision to be authorized by a regulation, the policy provision need not be an exact replica or a mirror image of the regulation. What is required, instead, is substantial congruence. Jacaruso v. Lebski, supra, 225.
The Safeco policy provision limiting underinsured motorist coverage meets the substantial congruence test, when measured against the language of the applicable regulation, § 38a-334-6(d). Had the regulation been intended to apply only to "natural persons," additional language could have been supplied. In the absence of such language, the statutory definition, § 1-1(k) is persuasive.
Furthermore, the public policy which underlies the requirement that all automobile liability insurance policies contain uninsured and underinsured motorist coverage, is to permit an injured person to recover, as if the uninsured or underinsured tortfeasor had maintained a liability insurance policy. Buell v. American Universal Ins. Co., 224 Conn. 766, 775 (1993); Middlesex Ins. Co. v. Quinn, 225 Conn. 257, 268 (1993). That policy is served by interpreting the word "persons" in the regulation to include corporate entities, as well as natural persons.
Because the Plaintiff, as Executor of the Estate of Joseph J. Schultz, Jr., received $20,000 from the tortfeasor, and an additional $425,000 from the United Illuminating Company as a result of the November 12, 2004 accident, the limits of the Safeco, policy have been reduced to zero, and no recovery can be realized, pursuant to the policy provisions.
The issue of whether the action against Safeco would result in a "double recovery" for the Plaintiff, need not be decided.
However, having recovered $445,000 from two parties, the Plaintiff's right to recover is not dependent upon the allegations contained in the initial complaint, when the matter was not litigated to a conclusion.
The Defendant's motion for summary judgment, is GRANTED.