Opinion
Nos. 538470, 537030
December 18, 1996
MEMORANDUM OF DECISION
ISSUE
These two cases present the same issue. Should the court vacate the December 22, 1995 arbitration panel's decision as to the defendant, Providence Washington Insurance Company, and grant the motion to confirm the award as to Progressive Insurance Company?
FACTS
On January 12, 1996, the plaintiff, Jamie Benoit, filed a motion to confirm in part and vacate in part a December 22, 1995 arbitration award (Benoit Motion). On January 16, 1996, the defendant, Progressive Casualty Company (Progressive), filed an application to vacate the December 22, 1995 arbitration award in the Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 538470 (Progressive Motion). The plaintiff moved the court to transfer the Progressive Motion to the judicial district of New London. This motion was granted by the court, Wagner, J., after the parties failed to object to the transfer.
In support of the Benoit Motion, the plaintiff claims that he was injured when struck by an underinsured motorist. In its memorandum, the defendant, Providence Washington Insurance Company (Providence) claims that the incident took place on April 24, 1993, and that the plaintiff was operating a friend's motorcycle at the time of the incident.
The plaintiff commenced proceedings against the two defendants, Progressive and Providence, for underinsured motorist benefits provided under each company's insurance policy held by the plaintiff's father. The parties agreed to submit the plaintiff's claims under the insurance policies to arbitration. After a full hearing on September 7, 1995, the arbitrators issued a written award, attached to the Benoit Motion as Exhibit A.
The arbitrators found the following facts. The plaintiff collected $20,000 from the underinsured motorist who struck him, thereby exhausting the limits of all applicable liability policies. (Exhibit A, par. 1.) The plaintiff also received $5,500 in collateral source benefits. (Exhibit A, par. 2.) The arbitration panel denied benefits to the plaintiff under the Providence insurance policy, finding that the policy's underinsured motorist coverage is limited to vehicles covered under the policy. Because the Progressive policy covered this incident for the benefit of the plaintiff, the arbitration panel found that the total damages were $150,000, Progressive was given a $25,550 credit (reflecting the underinsured motorist recovery and collateral source benefits received by the plaintiff), leaving a balance of $124,450, for which limits of available coverage under the Progressive policy are $80,000. (Arbitration Decision, Exhibit A.)
Both the plaintiff and defendant, Progressive, bring motions to vacate the arbitration award, claiming that the arbitrators failed to conform their award to Connecticut law, exceeding their powers, or imperfectly executing those powers, so that a mutual, final and definite award on the submitted subject matter was not made. Both the plaintiff and the defendant, Progressive, argue that the plaintiff is entitled to coverage under the Providence policy and that the award, as to Progressive, should be prorated accordingly.
The defendant, Providence, submitted a memorandum on October 21, 1996, arguing that the arbitration panel's award should be upheld because the insurance policy that Providence issued to the plaintiff's father does not cover the vehicle involved in the incident.
DISCUSSION
The plaintiff brings his motion to confirm the December 22, 1995 arbitration award as to the defendant, Progressive, pursuant to General Statutes § 52-417, and his motion to vacate the arbitration award as to the defendant, Providence, pursuant to General Statutes §§ 52-418 and 52-420
General Statutes § 52-417 provides in relevant part: "APPLICATION FOR ORDER CONFIRMING AWARD. At any time within one year after an award has been rendered and the parties to the arbitration notified thereof, any party to the arbitration may make application to the superior court for the judicial district in which one of the parties resides . . . for an order confirming the award. The court or judge shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52-418 and 52-419."
General Statutes § 52-418 provides in relevant part: "VACATING AWARD. (a) Upon the application of any party to an arbitration, the superior court for the judicial district in which one of the parties resides . . . shall make an order vacating the award if it finds any of the following defects: . . . (4) if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made. . . ."
General Statutes § 52-420 provides in relevant part: "MOTION TO CONFIRM, VACATE OR MODIFY AWARD. (a) Any application under section 52-417, 52-418, or 52-419 shall be heard in the manner provided by law for hearing written motions at a short calendar session, or otherwise as the court or judge may direct, in order to dispose of the case with the least possible delay. . . ."
The controlling Connecticut statute for uninsured and under-insured motorist coverage is General Statutes § 38a-336 (formerly § 38-175c). See Middlesex Ins. Co. v. Quinn, 225 Conn. 257, 262, 622 A.2d 572 (1993). General Statutes § 38a-336 "`remove[s] from the court and . . . transfer[s] to the arbitration panel the function of determining, in the first instance, all issues as to coverage . . . .'" Wynn v. Metropolitan Property Casualty Ins. Co., 30 Conn. App. 803, 805-06, 623 A.2d 66, aff'd, 228 Conn. 436 (1993), quoting Oliva v. Aetna Casualty Surety Co., 181 Conn. 37, 42, 434 A.2d 304 (1980).
General Statutes § 38a-336 provides in relevant part: "UNINSURED AND UNDERINSURED MOTORIST COVERAGE. (c) Each automobile liability insurance policy issued on or after October 1, 1971, which contains a provision for binding arbitration shall include a provision for final determination of insurance coverage in such arbitration proceeding. With respect to any claim submitted to arbitration on or after October 1, 1983, the arbitration proceeding shall be conducted by a single arbitrator if the amount in demand is forty thousand dollars or less or by a panel of three arbitrators if the amount in demand is more than forty thousand dollars. . . .
(e) For purposes of this section, an `underinsured motor vehicle' means a motor vehicle with respect to which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under the uninsured motorist portion of the policy against which claim is made under subsection (b) of this section. . . ."
"When reviewing an arbitration panel's factual findings concerning underinsured motorist coverage, our courts' standard of review is whether the arbitrators' findings are supported by substantial evidence." D'Addio v. Connecticut Ins. Guaranty Assn., 30 Conn. App. 729, 733, 622 A.2d 609, cert. denied, 226 Conn. 903, 625 A.2d 1375 (1993), citing Rydingsword v. Liberty Mutual Ins. Co., 224 Conn. 8, 21, 615 A.2d 1032 (1992). "The substantial evidence test in the context of arbitration requires that a court determine whether substantial evidence exists in the `record to support the arbitration panel's findings of basic fact and whether the conclusions drawn from those facts are reasonable . . . .'" Capozzi v. Liberty Mutual Fire Ins. Co., 32 Conn. App. 250, 258, 629 A.2d 424, aff'd, 229 Conn. 448, 642 A.2d 1 (1994), quoting Lawrence v. New Hampshire Ins. Co., 29 Conn. App. 484, 490, 616 A.2d 806, cert. denied, 224 Conn. 923, 618 A.2d 528 (1992).
The central question for the court in deciding the Benoit and the Progressive Motions is whether the arbitration panel was correct in finding that the Providence policy did not provide underinsured motorist coverage for the plaintiff. While General Statutes § 38a-336 "does not require automobile insurance policies to provide uninsured motorist benefits to any particular class or group of insureds . . . the statute requires that underinsured motorist coverage must be provided `for the protection of persons insured thereunder.'" (Emphasis in original.) Middlesex Ins. Co. v. Quinn, supra, 225 Conn. 264, quoting General Statutes § 38a-336 (a)(1).
The Providence insurance policy in dispute in the present case is attached to the Progressive Motion as Exhibit 2. "`An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract and enforced in accordance with the real intent of the parties as expressed in the language employed in the policy.'" Stephan v. Pennsylvania General Ins. Co., 224 Conn. 758, 763, 621 A.2d 258 (1993), quoting Schultz v. Hartford Fire Ins. Co., 213 Conn. 696, 702, 569 A.2d 1131 (1990). "Under well established rules of construction, any ambiguity in the terms of the insurance policy must be construed in favor of the insured because the insurance company drafted the policy." Stephan v. Pennsylvania General Ins. Co., supra, 224 Conn. 763, citing Streitheiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 375, 593 A.2d 498 (1991).
The policy is titled "Business Auto Policy" and is issued to Gregory Benoit, d/b/a Benoit Benoit Maintenance. Gregory Benoit is the plaintiff's father. Item three of the Declarations schedules of the policy describes four vehicles, with the attendant cost of coverage under the insurance policy.
Attached to the Declarations schedules is a "Business Auto Coverage Form."
Section I describes "covered autos" and defines the symbol "7" (which followed the designation of each covered auto under Item 2 of the Declarations schedule) as "[o]nly those `autos' described in ITEM THREE of the Declarations for which a premium charge is shown . . . ."
Section II defines an "insured" under the policy as:
(a) "You for any covered `auto'"; and
(b) "Anyone else while using with your permission a covered `auto' you own, hire or borrow . . . ."
Also attached to the Declarations schedules is a form entitled "Connecticut Changes, "which says that the form is provided under "Business Auto Coverage." This form reads, in pertinent part, "[f]or a covered `auto' licensed or principally garaged in . . . Connecticut, the coverage form is changed as follows:
A. CHANGES IN LIABILITY COVERAGE
1. The following is added to WHO IS AN
INSURED: If you are an individual, your `family member' is an `insured' while using any covered `auto' you own."
Also attached to the Declarations schedules is a form entitled "Connecticut Uninsured Motorist Coverage," which says that it modifies insurance provided under "Business Auto Coverage." This form reads, in pertinent part,
"A. COVERAGE
1. We will pay all sums the "insured" is legally entitled to recover as compensatory damages from the owner or driver of an `uninsured motor vehicle'. The damages must result from `bodily injury' sustained by the `insured' caused by an `accident'. The owner's or driver's liability for these damages must result from the ownership, maintenance or use of the `uninsured motor vehicle'. . . .
B. WHO IS AN INSURED
1. You.
2. If you are an individual, any `family member' . . . ."
The court finds that the Providence insurance policy is ambiguous as to whether benefits are provided to the plaintiff under the Connecticut Uninsured Motorist Coverage portion of the policy. Therefore, construing the policy in favor of the insured, the court finds that, while the policy clearly limits liability coverage only to the operation of vehicles listed under Item Three of the Declarations statements, the Connecticut Uninsured Motorists Coverage endorsement form attached to the Declarations schedules provides that the plaintiff is an insured because the plaintiff is a family member of the individual policy holder, his father. (Connecticut Uninsured Motorists Coverage, Part B "Who is an Insured", par. 2.)
The conclusion that the plaintiff is an insured under the Providence policy is clear in light of Paragraph 3 of part B under the Connecticut Uninsured Motorists Coverage endorsement, which includes as an insured "[a]nyone else `occupying' a covered `auto' or a temporary substitute for a covered `auto'." This portion of the policy specifically limits coverage to persons occupying a "covered auto." Paragraphs 1 and 2 of this portion of the policy contain no such limitation.
Thus, the Connecticut Uninsured Motorist Coverage form attached to the Providence Declarations schedules provides uninsured/underinsured motorist coverage to the plaintiff, as the family member of the named insured, regardless of whether he was occupying an automobile covered under the policy at the time of the incident. Accordingly, the court finds that the arbitration panel misread the Providence insurance policy, thereby imperfectly executing their powers. The court, therefore, grants the plaintiff's and Progressive Casualty Company's motions to vacate the arbitration panel's decision as to the defendant, Providence.
The court also grants the plaintiff's motion to confirm the arbitration panel's award as to the defendant, Progressive, with modification, pursuant to General Statutes § 52-419. Specifically, the court upholds the arbitration panel's findings that the plaintiff incurred $150,000 in damages. The plaintiff received $20,000 from the underinsured motorist, and the plaintiff received $5,500 from a collateral source, leaving a $124,500 balance of loss. Both the Progressive and the Providence insurance policies held by the plaintiff's father provide benefits to cover this balance of loss. See Lumbermens Mutual CT Page 6939Casualty Co. v. Huntley, 223 Conn. 22, 26, 610 A.2d 1292 (1992) (insurer providing underinsured motorists coverage may limit its liability by taking credit for a personal payment made by a tortfeasor to the insured); see also Buell v. American Universal Ins. Co., 224 Conn. 766, 775, 909 A.2d 617 (1993) (the uninsured motorist statute permits an insurer to limit its liability by deducting a settlement payment from the damages owed to its insured).
To determine the amount of the balance of loss covered by each of the policies, the court again turns to the language of the policies themselves. With regard to the insured, an insurer may not reduce the limits of its underinsured motorist coverage because of "other insurance." Pecker v. Aetna Casualty Surety Co., 171 Conn. 443, 451, 370 A.2d 1006 (1976). There are three types of "other insurance" clauses: "escape", "excess", and "prorata". Aetna Casualty Surety Co. v. CNA Ins. Co., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 701687 (July 3, 1991, O'Neill, J., 4 Conn. L. Rptr. 290, 291). As to "other insurance" in the present case, the Progressive policy provides:
"OTHER INSURANCE If there is other insurance on an ACCIDENT covered by [the uninsured motorist] Section, damages shall be deemed not to exceed the higher or highest of the applicable limits of this insurance and the other insurance. Of such damages, WE will pay the proportionate share OUR Limit of Liability bears to the total limits of an applicable insurance. Insurance under this Section for a vehicle other than YOUR INSURED MOTOR HOME shall be excess over any other applicable insurance." (Progressive Insurance Policy, Motorhome Policy Contract, Section C — Uninsured Motorists Coverage, p. 7.)
The Providence policy provides:
"OTHER INSURANCE is replaced by the following: If other similar insurance applies we will not duplicate any payment made under that other insurance. If other similar insurance applies to an `auto' you do not own, the insurance provided by this Coverage Form is excess to that other insurance." Connecticut Uninsured Motorists Coverage, par. E "Changes in Conditions," p. 2 of 3.
"An excess clause is one which provides that if there is other collectable insurance covering the loss the writer's policy is applicable if the total loss exceeds the limits of the primary policy. 8A Appleman, Insurance Law and Practice §§ 4906, 4909 and 4910." Aetna Casualty Surety Co. v. CNA Ins. Co., supra. "When the clauses in the policies are in conflict the court must first determine their intent and then, if possible, reconcile the two policies." Id.
In the present case, the intent of the two insurers is to be "excess", not the primary insurer. "Because both [insurance clauses] are in total conflict the best solution is to treat both as primary and prorate the loss." Id., citing Atlantic Mutual Ins. Co. v. Trust Ins. Exchange, 797 F.2d 1288, 1294-99, (5th Cir. 1986). Furthermore, the parties stipulated as to proration of the award at the hearing.
Accordingly, the limits of uninsured/underinsured motorist coverage under the Progressive policy is $100,000 per person and the limits of uninsured motorist coverage under the Providence policy is $500,000 per accident, for total coverage of $600,000. Thus, Progressive shall pay the plaintiff one-sixth ($100,000/$600,000) of the balance of loss, or $21,667 (one-sixth of $124,500), and Providence shall pay the plaintiff five-sixth ($500,000/$600,000) of the balance of loss (five-sixth of $124,500), or $108,333.
CONCLUSION
The court hereby confirms the arbitration panel's award as to the defendant, Progressive Casualty Company, with modifications, and grants the plaintiff's and Progressive Casualty Company's motions to vacate the arbitration decision as to the defendant, Providence Washington Insurance Company. The balance of the damages sustained by the plaintiff, after deducting the underinsured motorist's payment and the collateral source payment are to be prorated between the two defendants as follows: one-sixth to be paid by Progressive, $21,667; and five-sixths to be paid by Providence, $108,333 for a total of $124,500.
D. Michael Hurley Judge Trial Referee