Opinion
No. HHB CV 05 4008424S
July 21, 2006
MEMORANDUM OF DECISION RE MOTION TO DISMISS #104.00
I. FACTS PROCEDURAL BACKGROUND
The plaintiff, New Hampshire Insurance Company (New Hampshire) has filed a two-count complaint against the defendant Admiral Insurance Company (Admiral) relative to funds expended by New Hampshire in the defense of legal actions brought against the National Shooting Sports Foundation, Inc. (NSSF) and the Sporting Arms and Ammunition Manufacturing Institute (SAAMI). The defense was provided in multiple lawsuits brought by municipalities across the country seeking the recovery of damages alleged to have been suffered by the municipalities as a result of gun-related violence. Admiral had issued a general liability insurance policy to SAAMI under which NSSF was an additional named insured. It admits that claims regarding the lawsuits were tendered to it, but it has not made any payment toward those claims. New Hampshire had issued a general liability policy only to NSSF and had limited the scope of its liability coverage to certain gun shows. Nonetheless, New Hampshire provided both NSSF and SAAMI with a defense of the multiple lawsuits pursuant to a full reservation of rights.
In its April 5, 2006 memorandum of law in opposition to the motion to dismiss, the plaintiff in effect acknowledges that SAAMI was not an insured under its policy. In footnote 1 of its memorandum it states: "New Hampshire has asserted a cause of action for indemnification, seeking reimbursement in full, in addition to contribution because none of the underlying lawsuits implicate coverage under its policy and/or SAAMI does not qualify as an insured under the New Hampshire policy." (Emphasis added.)
In its first count, New Hampshire seeks reimbursement, contribution and/or indemnification from Admiral for all costs expended by it relative to the defense of NSSF and SAAMI.
In the second count, New Hampshire seeks a declaratory judgment ruling that it is entitled to reimbursement, contribution and/or indemnification from Admiral for any and all future costs incurred by New Hampshire relative to the defense of any similar lawsuits filed against NSSF and SAAMI in the future.
On March 23, 2006 the defendant filed a motion to dismiss both counts of the complaint on the ground that there was a lack of subject matter jurisdiction. On April 5, 2006, the plaintiff filed a memorandum of law in opposition to the motion to dismiss. It must be noted that prior to filing the motion to dismiss, the plaintiff had filed a motion for default for failure to plead which was granted on March 10, 2006. Although a motion to set aside the default was filed by the defendant on April 6, 2006 it cannot be ruled on as the jurisdictional issue must be resolved prior to ruling on any other motions pending before the court. Golden Hill Paugussett Tribe of Indians v. Southbury, 231 Conn. 563, 570, 651 A.2d 1246 (1995); see Felletter v. Thompson 133 Conn. 277, 280, 50 A.2d 81 (1946) ("if the question whether there is a lack of jurisdiction of the subject matter of an action comes to the attention of the court, it can proceed no further until the matter is determined"). See also, Seigel Realty, Inc. v. Ellis, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 98 0061155 (November 5, 1998, Curran, J.) ( 23 Conn. L. Rptr. 254) (holding that "failure to plead and failure to disclose a defense is of no moment since the . . . motion to dismiss implicates the subject matter jurisdiction of the court").
II. STANDARD OP REVIEW
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005); see also Dyous v. Psychiatric Security Review Board, 264 Conn. 766, 773, 826 A.2d 138 (2003); Blumenthal v. Barnes, 261 Conn. 434, 442, 804 A.2d 152 (2002). "When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light." (Internal quotation marks omitted.) Filippi v. Sullivan, supra, 273 Conn. 8.
"The grounds which may be asserted in [a motion to dismiss] are: (1) lack of jurisdiction over the subject matter; (2) lack of jurisdiction over the person; (3) improper venue; (4) insufficiency of process; and (5) insufficiency of service of process." Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985), citing what is now Practice Book § 10-31. "A determination regarding a trial court's subject matter jurisdiction is a question of law." (Internal quotations marks omitted.) Miller v. Egan, 265 Conn. 301, 313, 828 A.2d 549 (2003).
III. DISCUSSION
As noted above, the plaintiff has brought forth two counts. The court will address the motion to dismiss as to each count in order.
FIRST COUNT
In the first count, the plaintiff seeks reimbursement, indemnification and/or contribution from the defendant. In its motion the defendant argues that the court is without subject matter jurisdiction for the reason that the plaintiff has no real interest in the cause of action and thereby has no standing. It is the defendant's contention that it is the insured, and not its insurer, who would have standing to make the claims set forth in the complaint. "It is axiomatic that a party must have standing to assert a claim in order for the court to have subject matter jurisdiction." (Citations omitted.) Ganim v. Smith Wesson Corp., 258 Conn. 313, 346, 780 A.2d 98 (2001). In furtherance of this position, the defendant cites Transamerica Ins. Group v. Empire Mutual Ins. Co., 31 Conn.Sup. 235, 327 A.2d 734 (1974), for the proposition that there is no standing on the part of the plaintiff absent a contractual agreement between the parties obligating the defendant to contribute to the plaintiff's expenses in defending the claims against NSSF and SAAMI. It argues that without such an agreement, there can be no liability on the part of the defendant.
In opposition, the plaintiff argues that the doctrine of equitable subrogation allows a claim to be brought for those expenses incurred by the plaintiff which in justice, equity, and good conscience, should be borne by the defendant.
In Westchester Fire Insurance Co., v. Allstate Insurance Co., 236 Conn. 362, 672 A.2d 939 (1996), the Connecticut Supreme Court clearly endorsed the doctrine of equitable subrogation between insurance carriers thereby permitting, under certain circumstances, one insurer to recover expenses occurred in the defense of a claim from another insurer. That action involved the recovery of underinsured motorist benefits paid by Westchester to one of its insureds because of Allstate's wrongful denial of coverage. The court noted that equitable subrogation was derived from the principle against unjust enrichment. Id., 370-71, footnote 7. That case broke from prior precedent that had prohibited certain subrogation claims.
More recent case law has underscored this principle and reiterates that there are circumstances under which an insurer may bring a claim against another insurer. In American States Insurance Co., v. Allstate Insurance Co., 94 Conn.App. 79, 891 A.2d 75 (2006), the plaintiff brought an action against the defendant Allstate to recover declaratory relief, reimbursement and indemnity for defense payments that it spent on an insured due to a motor vehicle accident. Allstate had denied coverage to the insured under its policy and refused to provide a defense. American States provided a defense under an umbrella policy it had issued to the insured. American States claimed, "that it had standing to seek declaratory relief and reimbursement for indemnity and defense payments . . . predicated on the doctrine of equitable subrogation." Id., 84. The court then reviewed the basic tenants supporting the doctrine and noted: "[T]he right of [equitable] subrogation is not a matter of contract; it . . . takes place as a matter of equity, with or without an agreement to that effect. The object of [equitable] subrogation is the prevention of injustice. It is designed to promote and to accomplish justice, and is the mode which equity adopts to compel the ultimate payment of a debt by one who, in justice, equity, and good conscience, should pay it. As now applied, the doctrine of equitable subrogation is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter . . . Furthermore, [s]ubrogation is a highly favored doctrine . . . which courts should be inclined to extend rather than restrict." (Citations omitted; internal quotation marks omitted.) Id., 84. The court further stated "[Connecticut law] would permit subrogation actions where an insurer pays a loss for which it reasonably may be liable, even if its obligation under its policy is in dispute." (Internal quotation marks omitted.) Id., 86.
As noted the defendant has relied in part on the case of Transamerica Insurance Group v. Empire Mutual Insurance Company, supra, 31 Conn.Sup. 235. In that case the court held that an insurer who, pursuant to its policy obligations defends its insured, has no right to contribution to the costs it incurs, from a second insurer. To the extent that it may be factually analogous to this case, the rigidity of its holding must give way to the more recent precedent and appellate authority regarding equitable subrogation set forth in the Westchester Fire Ins. Co. and American States Insurance Co. cases. Moreover, it also should be noted that the court in Transamerica ruled on the merits of the claim and not on the issue of the jurisdiction of the court to hear the case.
Based on the pleadings as framed, it does not appear that the plaintiff acted as a volunteer in its defense of NSSF. Although limited by its terms, the general liability policy issued by the plaintiff named NSSF as an insured. (Plaintiff's complaint, paragraphs 9 and 10.) In defending the claims brought against NSSF, the payments made by the plaintiff on the insured's behalf were not voluntary in that they were made with a reasonable or good faith belief it might be liable to do so even though it disputed that it had such an obligation. The conclusion that the plaintiff is not a volunteer would hold true even if it is ultimately determined that the insurance policy coverage did not apply in this instance. Westport Ins. v. St. Paul Fire Marine Ins. Co., 375 F.Sup.2d 4, 11 (D.Conn. 2005). Because the defendant had also issued a general liability policy to SAAMI naming NSSF as an additional insured (plaintiff's complaint, paragraphs 12 and 13), and coverage under that policy was broader than the policy issued by the plaintiff, it was not unreasonable for the plaintiff to dispute its obligation for payment and to claim in good faith that such obligation rightfully belonged to the defendant.
Had plaintiff acted as a volunteer in providing a defense to NSSF and then sought recovery of its expenditures, it would have no right of equitable subrogation. Reading the allegations favorably to the plaintiff (i.e., the non-movant), it cannot be said that the plaintiff is a volunteer with respect to the claims against NSSF. Therefore the plaintiff does have standing to pursue a claim of equitable subrogation for its expenses relative to its defense of NSSF.
However, the same reading of the plaintiff's pleadings reveals nothing which would indicate the existence of an obligation on the part of the plaintiff to incur the cost of defense relative to the claims brought by SAAMI. There is no allegation of an insurance policy issued by the plaintiff to SAAMI or, for that matter, of any agreement between them (formal or informal, written or oral) which would give rise to a reasonable belief on the part of the plaintiff that it would be liable to provide defense coverage. In fact, plaintiff's complaint makes clear that "the New Hampshire policy was issued solely to NSSF and does not contain any provisions that provide coverage to SAAMI as an insured, a named insured or additional named insured." (Plaintiff's complaint, paragraph 10.) The complaint does allege that the defendant issued a general liability policy to SAAMI and therefore was obligated to provide coverage in defense of the claims. But there is no evidence to indicate that during the course of the litigation which took place between 1998 and 2002 there existed any formal or informal agreement directly between the plaintiff and the defendant regarding the defense of SAAMI and the reimbursement, contribution and/or indemnification of the costs related to it. In fact, the complaint clearly states that there was no such agreement. The plaintiff does allege that in 2004, after the conclusion of the litigation, it again attempted to negotiate with the defendant relative to defense costs that the plaintiff had incurred. However, based on the reading of the pleadings there is nothing to indicate that the decision of the plaintiff to undertake the defense of SAAMI at the time of the litigation was done other than on a voluntary basis as the defendant had clearly refused the proposal regarding any cost-sharing arrangement5 Accordingly, the plaintiff does not have standing to make a claim for equitable subrogation against the defendant as to the defense costs relative to SAAMI.
See paragraph 4 of plaintiff's complaint.
Plaintiff's complaint alleges:
"16. New Hampshire entered into a cost-sharing agreement with other carriers who had issued policies to NSSF and/or SAAMI during the timeframe at issue in the underlying gun litigation to fund the defense of NSSF and SAMAI. The carriers include Acceptance Insurance Company, Continental Insurance Company, The Hartford Insurance Company, and Scottsdale Insurance Company.
17. During the negotiation of the cost-sharing agreement, New Hampshire proposed that Admiral and New Hampshire share the costs of defending NSSF and SAAMI since the allegations in the fifteen underlying gun lawsuits clearly fell within the terms of the Admiral policy. Admiral refused and/or failed to agree to such a cost-sharing arrangement." (Emphasis added.)
Plaintiff's complaint alleges:
"18. Counsel for New Hampshire again proposed a cost-sharing arrangement in 2004 which was formalized in a letter sent to counsel for Admiral dated March 22, 2004.
19. Counsel for New Hampshire subsequently placed over thirty telephone calls to counsel for Admiral after forwarding the formalized defense cost-sharing proposal to counsel for Admiral in 2004. While counsel for Admiral indicated on numerous occasions that Admiral intended to share in the defense costs of NSSF and SAAMI with New Hampshire, Admiral has not agreed nor funded any such cost-sharing arrangement to date." Paragraph 22 of plaintiff's complaint states in part: ". . . Admiral has refused to pay any defense costs to date."
SECOND COUNT
In the second count, New Hampshire seeks a declaratory judgment ruling that it is entitled to reimbursement, contribution and/or indemnification from Admiral for any and all future costs incurred by New Hampshire relative to the defense of any similar lawsuits filed against NSSF and SAAMI in the future. In effect, the plaintiff seeks a ruling from the court that Admiral has a duty to defend all claims that may arise in the future that are similar to the claims which the plaintiff has already defended on behalf of NSSF and SAAMI.
"The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties." (Internal quotation marks omitted.) Mannweiler v. LaFlamme, 232 Conn. 27, 33, CT Page 14585 653 A.2d 168 (1995). "There is no question that a declaratory judgment is a suitable vehicle to test the rights and liabilities under an insurance policy." St Paul Fire Marine Ins. Co. v. Shernow, 22 Conn.App. 377, 380-81, 577 A.2d 1093 (1990), aff'd., 222 Conn. 823, 610 A.2d 1281 (1992).
A declaratory judgment concerning an insurance company's duty to defend is determined by the allegations of the complaint and the terms of the policy. In order to determine that an insurance company has a duty to defend, the complaint must state a cause of action that appears to be covered by the policy. "The question of whether an insurer has a duty to defend its insured is purely a question of law, which is to be determined by comparing the allegations of [the] complaint with the terms of the insurance policy." Wentland v. American Equity Insurance Co., 267 Conn. 592, 611 n. 7, 840 A.2d 1158 (2004). "The duty to defend an insured arises if the complaint states a cause of action which appears on its face to be within the terms of the policy coverage." (Internal quotation marks omitted.) Lightowler v. Continental Insurance Co., 255 Conn. 639, 643 n. 7, 769 A.2d 49 (2001) (in claim for declaratory judgment in duty to defend action court looked to the complaint to determine coverage); see also Underwriters at Lloyds of London v. Lauretti's, Superior Court, Judicial District of Milford, Docket No. CV 02 078675 (February 26, 2002, Ronan, J.) (in declaratory judgment duty to defend action, the court looked to the complaint to determine coverage).
The common thread through these cases is that there was a complaint in existence which contained allegations that could then be compared to the language of the policy issued by the insurer. It is difficult to conceive how the court could have jurisdiction over claims that are yet to come into being let alone issue a declaratory judgment on them. Moreover, the court notes that as to any insurance policy which might exist currently, such a policy is issued for limited periods of time (typically six months or a year). At the time of renewal the terms of the policy are often amended either by the carrier or modified by the insured through the election of different levels or scope of coverage. Any declaratory judgment by the court at this time as to future claims, even of a similar nature, would have to presume that there was no change in the language of the policy in effect at the time of the ruling. Moreover, the court notes that the plaintiff has failed to provide a certified copy of either policy referenced in the complaint. Hence, there exists neither a complaint nor a copy of the policy for the purposes of the comparisons called for in a declaratory judgment analysis. While some may view the power of jurists to border on that of being clairvoyant, the unfortunate reality is that our ability to act as a seer of future events is no greater than that of all other earthbound mortals.
To declare that the defendant must defend any future (and hypothetical) claims similar to those brought against NSSF and SAAMI would be unfounded, irrational and unreasonable. The plaintiff has cited no authority in its memorandum of law to support such a proposition. For subject matter jurisdiction to exist, there must be an actual or justiciable controversy between the parties. Milford Power Co. v. Alstom Power, Inc. 263 Conn. 616, 629, 822 A.2d 196 (2003) (where a plaintiff's claims are contingent on the outcome of a dispute that has not yet transferred, the injury is hypothetical and therefore the claim is not justiciable); Board of Education v. Naugatuck, 257 Conn. 409, 416, 778 A.2d 862 (2001). As to the second count, there is no such controversy.
Plaintiff's reliance on ACMAT Corp. v. Greater New York Mutual Ins. Co., 88 Conn.App. 471, 869 A.2d 1254 (2005), for the proposition that future claims are justiciable is misplaced. There, although the plaintiff had produced evidence of the existence of a policy issued by the defendant insuring the plaintiff, the defendant denied the existence of the policy and refused to tender a defense relative to asbestos claims that had been filed against the plaintiff. The trial court entered a declaratory judgment establishing the existence of the policy. The expenses the plaintiff had incurred in defending itself, and would continue to incur into the future, were related to existing lawsuits. The Appellate Court noted that in that situation, "there is no future or contingent event that is required to make the plaintiff's claims justiciable." Id., 480. This is distinguishable from the instant matter where the plaintiff is asking the court to enter a declaratory judgment requiring the defendant to provide coverage for expenses related to the defense of claims or legal actions that are not yet in existence.
CONCLUSION
As to the first count the defendant's motion to dismiss is denied as to the claims of the plaintiff to the extent they relate to NSSF. The motion is granted to the extent that the plaintiff's claims relate to SAAMI.
As to the second count regarding the plaintiff's request for a declaratory judgment relative to future claims, the motion to dismiss is granted as there can exist no justiciable controversy between the parties on claims that have not yet come into being.