Opinion
No. CV-04-4004572 S
December 12, 2005
MEMORANDUM OF DECISION
On April 17, 2003, the plaintiff, Ronald Adams filed a complaint against Danis Transportation Company, Inc. (Danis) to recover for the injuries he alleges he suffered from an accident with its employee on April 9, 2001. In Adams v. Danis Transportation Co., Superior Court, judicial district of New Haven, Docket No. CV 03 0477787 (February 10, 2004, Jones, J.), Adams recovered a final judgment against Danis in the amount of $200,000. Because the judgment remains unpaid, Adams brought this direct action pursuant to General Statutes § 38a-321 against the defendant, CNA Insurance Company (CNA), Danis' liability insurer.
General Statutes § 38a-321 provides: "Each insurance company which issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become absolutely liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty. No such contract of-insurance shall be cancelled or annulled by any agreement between the insurance company and the assured after the assured has become responsible for such loss or damage, and any such cancellation or annulment shall be void. Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment."
On May 13, 2005, CNA filed an amended answer, without objection from Adams, admitting that a motor carrier liability policy issued by CNA to Danis was operative on April 9, 2001, the day of the accident. The amended answer further alleges the following three special defenses: first, that Danis breached the notice provisions of the insurance policy discharging CNA's obligation to provide coverage; second, that Adams' claims are subject to the terms of the insurance policy; and finally, that Adams' lawsuit against Danis violated Rhode Island law because Danis was in receivership there at the time the suit commenced.
On June 17, 2005, Adams filed a motion for summary judgment on the ground that CNA should be held absolutely liable under § 38a-321 for payment of the judgment against Danis. Adams did not file a separate memorandum in support of his motion, but included a summary of the facts, his argument, and citation to the applicable law in the body of the motion along with five documentary exhibits.
Ordinarily, the movant must file and serve a memorandum of law with the motion for summary judgment, briefly outlining the legal claims and pertinent authority. Practice Book § 11-10. Although Adams did not file a separate memorandum, he did include within his motion legal analysis and reference to statutory authority.
In response, CNA filed a memorandum of law in opposition and a cross motion for summary judgment claiming that Danis breached its contract by failing to notify CNA of Adams' complaint, and, therefore, it is entitled to judgment as a matter of law. CNA submitted seven exhibits in support of its motion. Thereafter, Adams filed a reply brief accompanied by an affidavit of his attorney, David Doyle, asserting that he mailed a copy of the writ, summons, and complaint in the case of Adams v. Danis Transportation Co. to Crawford, CNA's investigator, as a courtesy. On October 11, 2005, Adams filed a supplementary memorandum to his motion for summary judgment along with five additional exhibits. Then, on October 31, 2005, CNA filed a response to Adams' supplementary memorandum.
Adams' Motion for Summary Judgment
"Summary judgment is a method of resolving litigation when 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." Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law." (Internal quotation marks omitted.) Martel v. Metropolitan District Commission, 275 Conn. 38, 46, 881 A.2d 194 (2005). "The courts hold the [summary judgment] movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Id., 46-47.
Adams argues that there are no genuine issues of material fact and that CNA should be held absolutely liable under § 38a-321 for the judgment rendered against Danis because Danis' employee caused his bodily injuries during the time when Danis was covered by a motor carrier's liability policy issued by CNA. In response, CNA argues that both Danis and Adams, as subrogee, violated the notice provisions of the insurance contract discharging CNA's obligation to pay. Furthermore, as in its third special defense, CNA argues that the prior action between Adams and Danis is invalid as a matter of law because it was instituted in violation of a Rhode Island Superior Court order in a receivership proceeding, which prohibited actions against Danis.
"A party subrogated to the rights of an assured under [§ 38a-321] obtains no different or greater rights against the insurer than the insured possesses and is equally subject to any defense the insurer may have against the assured under the policy . . . Consequently, in order for one to proceed under [§ 38a-321], the insured must have had a viable statutory or contractual claim against the insurer . . . and where the insurer has raised the special defense that the insured materially breached the provisions of the contract of insurance, the judgment creditor suing under [§ 38a-321] bears the burden of proving that the insured complied with his or her obligations contained therein." (Citations omitted.) Brown v. Employer's Reinsurance Corp., 206 Conn. 668, 673, 539 A.2d 138 (1988). In the present case, CNA, in its first special defense, alleges that Danis materially breached the notice provisions of the contract of insurance. Pursuant to Brown, the law places the burden on Adams, as movant, to prove that any condition precedent to CNA's performance obligation was satisfied.
There are two relevant notice provisions in the contract, which if violated would limit CNA's obligations under the terms of the contract and result in a material breach. First, the contract requires that the insured provide prompt notice of accident or loss. CNA admits, both in its answers to the plaintiff's request for admissions and in its memorandum of law, that it had notice of the insurance claim made against the policy. Second, the contract requires that the insured must immediately send the insurer copies of any request, demand, order, notice, summons, or legal paper received concerning the claim or suit.
Prior to 1988, "absent waiver, an unexcused, unreasonable delay in notification constitute[d] a failure of condition that entirely discharge[d] an insurance carrier from any further liability on its insurance contract." Aetna Casualty Surety Co. v. Murphy, 206 Conn. 409, 412, 538 A.2d 219 (1988). In Aetna Casualty Surety Co., the Connecticut Supreme Court confronted the conflict between this traditional rule regarding unreasonable delay in notification and the recognition that "in appropriate circumstances, a contracting party, despite his own default, may be entitled to relief from the rigorous enforcement of contract provisions that would otherwise amount to a forfeiture." Id., 414. "In determining whether an insured is entitled to relief from such a disproportionate forfeiture, loss of coverage must be weighed against an insurer's legitimate interest in protection from stale claims." Id., 417. "In our judgment, a proper balance between the interests of the insurer and the insured requires a factual inquiry into whether, in the circumstances of a particular case, an insurer has been prejudiced by its insured's delay in giving notice of an event triggering insurance coverage. If it can be shown that the insurer suffered no material prejudice from the delay, the nonoccurrence of the condition of timely notice may be excused because it is not, in Restatement terms, a material part of the agreed exchange. Literal enforcement of notice provisions when there is no prejudice is no more appropriate than literal enforcement of liquidated damages clauses when there are no damages." (Internal quotation marks omitted.) Id., 417-18. In Connecticut, "the burden of establishing lack of prejudice must be borne by the insured. It is the insured who is seeking to be excused from the consequences of a contract provision with which he has concededly failed to comply." Id., 419-20.
To prevail on his motion for summary judgment under § 38a-321, Adams must demonstrate the absence of a genuine issue of material fact as to his or Danis' compliance with the notice provisions of the contract with CNA or its agent or that CNA suffered no material prejudice from lack of notice of the underlying action. On the contrary, the evidence submitted by Adams raises issues of fact material to the resolution of this dispute. For example, it remains unclear whether Crawford, with whom Adams had contact by letters, was an agent of CNA and whether CNA suffered any material prejudice.
No evidence has been submitted by Adams to show that he or Danis sent copies of the writ, summons, and complaint directly to CNA.
"Ordinarily, the question of agency is one of fact to be determined by the trier of fact." West Haven Sound Development Corp. v. West Haven, 201 Conn. 305, 311, 514 A.2d 735 (1986). An agency exists when the following three elements characterize the relationship: "(1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking." (Internal quotation marks omitted.) Hall v. Peacock Fixture Electric Co., 193 Conn. 290, 294, 475 A.2d 1100 (1984).
In the present case, the affidavit of Cahill demonstrates only that Crawford investigated Adams' insurance claim. None of the other evidence submitted by Adams indicates whether CNA had the right to control the actions of Crawford or its employees or whether Crawford was acting merely as an independent contractor. Because genuine issues of fact exist regarding Crawford's relationship with CNA, Adams can only prevail by producing evidence that CNA did not suffer material prejudice. Adams, however, has not submitted any evidence of the lack of prejudice suffered by CNA. Therefore, Adams has not met his burden of presenting evidence to show the absence of any genuine issue of fact material to the determination of the parties' rights under their insurance contract.
CNA's Motion for Summary Judgment
CNA also moves for summary judgment claiming that there are no genuine issues of material fact and that it, rather than Adams, is entitled to judgment as a matter of law. First, CNA argues that it has no duty to provide coverage under the policy because it did not receive notice of the underlying action and, as a result, suffered material prejudice. Next, CNA argues that notice given to Crawford, even if it is constructive notice, is insufficient to surmount the prejudice experienced by CNA. Third, CNA argues that the judgment rendered in Adams v. Danis Transportation Co., supra, Superior Court, Docket No. CV 03 0477787 is invalid as a matter of law because it violated a Rhode Island Superior Court order, which enjoined further litigation against Danis in any court.
CNA alleges in its third special defense that the underlying case of Adams v. Danis Transportation Co., supra, Superior Court, Docket No. CV 03 0477787 brought in Connecticut violated the laws of Rhode Island because Danis was in receivership in that state. On December 12, 2002, the Rhode Island Superior Court issued an order in HNY Holding Company Inc. v. Danis Transportation, Inc. appointing a receiver for Danis and enjoining further claims against Danis except those approved by that court. Citing to the full faith and credit clause, CNA argues that by commencing an action against Danis in April 2003 in the Connecticut courts, Adams violated the Rhode Island order rendering the Connecticut judgment against Danis invalid as a matter of law.
CNA's memorandum relies on Corbin v. Corbin, 26 Conn.Sup. 443, 226 A.2d 799 (1967) for the proposition that Rhode Island courts have the "power, to protect [their] jurisdiction over a controversy in order to decree complete and final justice between the parties and may issue an injunction for that purpose, restraining proceedings in other courts." (Internal quotation marks omitted.) Id., 450. In Corbin, a decision regarding a foreign divorce decree, the plaintiff wife called upon the Connecticut Superior Court to modify a child support and visitation decree entered by a West Virginia court. Id., 444. In response, the defendant husband petitioned the West Virginia court to reaffirm its original decree and enjoin the plaintiff from prosecuting her case in Connecticut. Id., 445. The West Virginia court ordered the injunction, and the defendant sought a stay of the proceedings in Connecticut. Id. The Connecticut Superior Court granted the stay and cited multiple authorities for the proposition that a state may enforce another state's injunction against out-of-state litigation when the state that ordered the injunction had already established jurisdiction over the party to be enjoined. Id., 447-49.
"The full faith and credit clause does not automatically transform a foreign judgment into a valid judgment in this state . . . In order for a foreign judgment to constitute a valid judgment, it must be made a judgment in this state." (Citation omitted.) Cahn v. Cahn, 26 Conn.App. 720, 730, 603 A.2d 759 (1992), aff'd, 225 Conn. 666, 626 A.2d 296 (1993). "Whether a foreign judgment is to be recognized under the full faith and credit clause of the Constitution of the United States or as a matter of comity it must first appear that the judgment itself is valid." Krueger v. Krueger, 179 Conn. 488, 493, 427 A.2d 400 (1980). "A court is without power to render a judgment if it lacks jurisdiction of the parties or of the subject matter, one or both. In such cases, the judgment is void, has no authority and may be impeached." (Internal quotation marks omitted.) Marshall v. Clark, 170 Conn. 199, 205, 365 A.2d 1202 (1976).
Connecticut has not adopted the Rhode Island order, and Connecticut should not adopt the order because Rhode Island did not have jurisdiction to restrain Adams from pursuing his claim in Connecticut. Further, it does not appear that Adams was either a party to the Rhode Island litigation, or received notice of that court's order. In addition, CNA did not present evidence that Rhode Island obtained jurisdiction over Adams in the Rhode Island case. Without such evidence, there can be no basis upon which the court can decide whether to adopt the order or recognize it based on principles of comity. Therefore, the judgment against Danis is not invalid as a matter of law and that it is appropriate to address CNA's two other arguments.
Constructive Notice Satisfies the Notice Provisions in the Contract and Prevents a Breach.
"It is the general rule, settled by an unbroken current of authority, that notice to, or knowledge of, an agent while acting within the scope of his authority and in reference to a matter over which his authority extends, as notice to, or knowledge of, the principal." (Internal quotations marks omitted.) West Haven v. U.S. Fidelity Guaranty Co., 174 Conn. 392, 395, 389 A.2d 741 (1978). If an agent of CNA received notice of the accident, then there would no breach of the insurance policy, and, consequently, the constructive notice would be sufficient to overcome any prejudice that CNA claims it might have suffered. Therefore, CNA must present evidence sufficient to show the absence of any genuine issue of material fact as to Adams' breach of the insurance contract in addition to any evidence demonstrating the absence of any genuine issue of material fact that CNA suffered material prejudice.
Genuine Issues of Material Fact Exist Regarding The Relationship Between CNA and Crawford
Adams does not contend that CNA received the writ directly, and CNA does not claim that Crawford never received the appropriate notification of Adams' accident. Therefore, to succeed on its motion for summary judgment, CNA must demonstrate that either Crawford did not receive timely notice or that at the time it did receive the notice it was not an agent of CNA. CNA attempted to show the nonexistence of an agency relationship with Crawford by submitting a letter dated January 10, 2002 from Michanczyk to Eakins. The letter suggests that Crawford closed its file regarding Danis and Adams before May 9, 2003, when Adams' attorney, Doyle, claims to have sent notice of the prior action against Danis. The letter is not an affidavit, and the statements made in the letter were not made under oath. Furthermore, the letter is not accompanied by an affidavit attesting to the reliability of the statements made therein. Therefore, this evidence is unreliable for the purpose of resolving issues of fact on a motion for summary judgment.
Furthermore, none of the other exhibits submitted by CNA reveals anything about the nature of its relationship with Crawford that would resolve material questions of fact regarding the existence and duration of an agency.
CONCLUSION
Because the Connecticut Superior Court did not adopt the Rhode Island order, which enjoined litigation against Danis and proceeded to a valid final judgment in Adams v. Danis Transportation Co., supra, Superior Court, Docket No. CV 03 0477787, CNA is not entitled to judgment as a matter of law based on the out of state order alone. Furthermore, the parties have raised issues of fact as to whether there was a breach of the insurance contract in question. In addition, genuine issues of material fact exist regarding compliance with the notice provisions of the policy and the relationship between CNA and its insurance investigator, Crawford. Therefore, both motions for summary judgment are denied.