Opinion
FBTCV196085068S
10-02-2019
Israel ALVAREZ, II et al. v. SAFECO INSURANCE COMPANY OF ILLINOIS
UNPUBLISHED OPINION
OPINION
STEWART, J.
The defendant, Safeco Insurance Company of Illinois, moves for summary judgment on the grounds that the plaintiffs, Israel Alvarez, II and Leslie Ramos, did not sue for underinsured motorist benefits within the time periods of the policy’s limitation of actions clause or its tolling period. The plaintiffs oppose the motion, arguing that there is a disputed issue of material fact as to whether they satisfied the tolling provision by commencing this action within 180 days of the exhaustion of the tortfeasor’s liability policy. For the reasons that follow, the court denies the motion.
UNDISPUTED MATERIAL FACTS
The plaintiffs, along with their minor children, Israel Alvarez, III, Lemany Alvarez, Antonio Alvarez and Leoni Alvarez, were in a vehicle that was struck by the tortfeasor, Nevis Grant, on February 2, 2016. The tortfeasor had a liability policy with limits of $20,000 per person and $40,000 per accident. The plaintiffs and their minor children brought an earlier action against the tortfeasor. On or about August 14, 2018, the plaintiffs signed releases as part of a settlement negotiation with the tortfeasor and his insurance carrier. The action against the tortfeasor was withdrawn on August 31, 2018. See Alvarez v. Grant, Superior Court, judicial district of Fairfield, Docket No. CV-18-6070600-S.
The defendant’s automobile insurance policy issued to the plaintiffs provides uninsured and underinsured motorists coverage in Part C. The policy goes on in Part F to subject any legal action brought against the defendant to certain conditions. Those include the following conditions for a legal action for underinsured motorist benefits:
All claims or suits under Part C of this policy must be brought within three years of the date of the accident. However, in the case of a claim involving an underinsured motor vehicle, the insured may toll any applicable limitation period by:
1. Notifying us prior to expiration of the three year period, in writing, of any claim the insured may have for Underinsured Motorists Coverage; and
2. Commencing suit proceedings not more than 180 days from the date of exhaustion of the limits of liability under all automobile bodily injury bonds or policies applicable at the time of the accident by settlements or final judgments after any appeals.
Exhibit B to No. 103.00.
On or about September 4, 2018, plaintiffs’ counsel notified the defendant of the settlement with the tortfeasor and indicated that the plaintiffs and their children would be claiming underinsured motorists coverage under the policy. The policy does not define "commencing suit proceedings" or "the date of exhaustion."
The complaint in this action is dated March 5, 2019, and the return of service (#100.30) indicates that the marshal made service on the insurance commissioner on behalf of the defendant on March 20, 2019.
DISPUTED MATERIAL FACTS
In addition to the undisputed material facts set forth above, the plaintiffs contend that they received settlement checks for themselves and three of their children on or about September 7, 2018, and that those checks totaled $38,000. They attach a copy of another Omni Insurance Company check, also dated September 7, 2018, in the amount of $2,000 and made payable to "Israel Alvarez and Leslie Ramos as Natural Parent and Guardian of Israel Alvarez and Paoletti & Gusmano." They also attach an affidavit of Christopher Paoletti, who states that, in his capacity as office manager for the plaintiff’s law firm, he received this $2,000 check in the United States mail on October 1, 2018. He also states that he deposited that check in the law firm trust account on October 1, 2018. The copy of the check reflects that deposit date.
LEGAL ANALYSIS
I. SUMMARY JUDGMENT STANDARD
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." Practice Book § 17-49, see also Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007). A "material fact" is one that would make a difference in the outcome of the case. See Hammer v. Lumberman’s Mutual Casualty Co., 214 Conn. 573, 578, 573 A.2d 699 (1990). The burden of showing the nonexistence of any disputed issue of material fact is on the defendant, as the moving party. See Romprey v. Safeco Ins. Co. of America, 310 Conn. 304, 319-20, 77 A.3d 726 (2013). Moreover, in a case such as this, where the moving party is relying upon a limitation of actions permitted by General Statutes § 38a-336(g)(1), the moving party must establish that there is no genuine issue of material fact as to the failure to bring suit within the limitations period and the failure to meet the tolling requirements. Id., 322-23.
"Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Id., 320. It is not enough for the opposing party merely to assert the existence of such a disputed issue. Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554-55, 707 A.2d 15 (1998). The opposing party must demonstrate that he has sufficient counterevidence to raise a genuine issue of material fact as to each of the essential elements of his cause of action against the defendant. See Stuart v. Freiberg, 316 Conn. 809, 822-23, 116 A.3d 1195 (2015).
In deciding this motion, this court must view the evidence in the light most favorable to the nonmoving party, the plaintiff. See Romprey v. Safeco Ins. Co. of America, supra, 310 Conn. 320; see also Vendrella v. Astriab Family Ltd. Partnership, 311 Conn. 301, 313, 87 A.3d 546 (2014). "[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ... [A] summary disposition ... should he on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ... [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).
II. THE TOLLING REQUIREMENTS OF GENERAL STATUTES § 38a-336(g)(1)
The plaintiffs have not brought suit within three years of the accident date of February 2, 2016. They did, however, satisfy the first tolling requirement by providing notice within that three-year period when their counsel wrote to the defendant on or about September 4, 2018. The principal issue is whether the plaintiffs satisfied the second tolling requirement by "commencing suit within 180 days of the date of exhaustion of the limits of liability under all automobile bodily injury bonds or policies applicable at the time of the accident by settlements or final judgments after any appeals."
The defendant also argues that the "plaintiffs are beyond the statute of limitations imposed by General Statutes § 38a-336(g)(1)." That statute, however, does not create a statute of limitations. Instead, it imposes certain conditions on any policy limitation of actions such as the one relied upon by the defendant here. Indeed, our Supreme Court has held that in the absence of such a limitation of actions in the policy, the statute of limitations is the general breach of contract statute of limitations set forth in General Statutes § 52-576. See, e.g., Coelho v. ITT Hartford, 251 Conn. 106, 116, 752 A.2d 1063 (1999).
To determine whether the plaintiffs have satisfied the second tolling requirement, the court must first interpret the policy language. That language is almost identical to General Statutes § 38a-336(g)(1)(B). The entirety of subsection (g)(1) provides: "No insurance company doing business in this state may limit the time within which any suit may be brought against it or any demand for arbitration on a claim may be made on the uninsured or underinsured motorist provisions of an automobile liability insurance policy to a period of less than three years from the date of accident, provided, in the case of an underinsured motorist claim the insured may toll any applicable limitation period (A) by notifying such insurer prior to the expiration of the applicable limitation period, in writing, of any claim which the insured may have for underinsured motorist benefits and (B) by commencing suit or demanding arbitration under the terms of the policy not more than one hundred eighty days from the date of exhaustion of the limits of liability under all automobile bodily injury liability bonds or automobile insurance policies applicable at the time of the accident by settlements or final judgments after any appeals."
III. THE DATE OF COMMENCEMENT OF SUIT
The first issue is the meaning of the policy language "commencing suit proceedings." The plaintiff seems to regard the date in the complaint caption, March 5, 2019, as the date this action commenced. See Pls.’ Mem. in Supp., p. 6. The policy itself is silent as to the meaning of this phrase. The language is similar to the language of § 38a-336(g)(1) that provides: "by commencing suit or demanding arbitration ..." The court interprets this language as having the same meaning as that used in Connecticut common law- an action is commenced on the date of service of process on the defendant. See, e.g., McGaffin v. Roberts, 193 Conn. 393, 401 n.9, 479 A.2d 176 (1984), cert. denied, 470 U.S. 1050, 105 S.Ct. 1747, 84 L.Ed.2d 813 (1985); Broderick v. Jackman, 167 Conn. 96, 99, 355 A.2d 234 (1974). That date of service was March 20, 2019.
180 days from September 7, 2018, the date the plaintiffs say they received their own checks, was March 6, 2019.
IV. THE DATE OF EXHAUSTION
The second issue is the meaning of "the date of exhaustion of the limits of liability under all automobile bodily injury bonds or policies applicable at the time of the accident by settlements or final judgments after any appeals." The defendant argues that the date of exhaustion was when the plaintiffs signed releases in favor of the tortfeasor, August 14, 2018. The plaintiffs claim that the date of exhaustion was when the last dollar of the tortfeasor’s liability was paid, October 1, 2018.
A. Exhaustion Requires Payment
Our Supreme Court and Appellate Court have interpreted a different subsection of General Statutes § 38a-336, subsection (b), as requiring "payment" for exhaustion. Subsection (b) obligates an underinsured motorist carrier to provide coverage "after the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements." Our Supreme Court has interpreted that language to require actual payment to the claimant for exhaustion. See, e.g., Ciarelli v. Commercial Union Ins. Cos., 234 Conn. 807, 663 A.2d 377 (1995); Continental Ins. Co. v. Cebe-Habersky, 214 Conn. 209, 212-13, 571 A.2d 104 (1990).
The date of exhaustion in subsection (b) was further defined by our Appellate Courtin Scalise v. American Employers Ins. Co., 67 Conn.App. 753, 761-62, 789 A.2d 1066 (2002). There, the Appellate Court observed that "the legislature did not define exactly when exhaustion by payment occurs." Id., 759. The court turned to dictionary definitions: "Exhaust is defined as to empty ... to consume entirely ... Payment is defined as the act of paying ... something that is paid." (Internal quotation marks omitted.) Id., quoting Merriam-Webster’s Collegiate Dictionary (10th Ed. 1999). The court went on to analyze whether the date of payment was the date the plaintiff’s attorney received and deposited the check, or the date on which the plaintiff’s attorney argued that the check, which was uncertified, could have cleared. Id., 759-62. The court ultimately concluded that the date of exhaustion was the date that the attorney received and deposited the check. Id., 762.
Unlike subsection (b), the language of subsection (g)(1) and the policy here do not explicitly require "payment." The language of subsection (g)(1) and the policy both toll the policy’s limitations period if suit is commenced "not more than 180 days from the date of exhaustion of the limits of liability under all automobile bodily injury bonds or policies applicable at the time of the accident by settlements or final judgments after any appeals." Although our appellate courts have discussed subsection (g)(1) in several cases, they do not appear to have ruled on what "exhaustion" means for that subsection. See, e.g., Romprey v. Safeco Ins. Co. of America, supra, 310 Conn. 304; Voris v. Middlesex Mutual Assurance Co., 297 Conn. 589, 999 A.2d 741 (2010); Dorchinsky v. Windsor Ins. Co., 90 Conn.App. 557, 877 A.2d 821 (2005).
At least one Superior Court decision has held that the date of exhaustion for purposes of subsection (g)(1) is the date the claimants’ attorney received and deposited the payment. Holick v. Allstate Ins. Co., Superior Court, judicial district of Waterbury, Docket No. CV-04-4000385-S (July 17, 2009, Stevens, J.). That court relied upon Scalise v. American Employers Ins. Co., supra, 67 Conn.App. 753. Other Superior Courts that have considered the subsection have not analyzed what is required for exhaustion. See, e.g., Vargas v. GEICO, Superior Court, judicial district of Fairfield, Docket No. CV-06-5005626-S (May 12, 2008, Hiller, J.) (45 Conn.L.Rptr. 524) (holding that policy that used "or" instead of "and" between the two tolling requirements was ambiguous and therefore did not require suit to be commenced within 180 days of the date of exhaustion if notice was timely provided); Bayusik v. Nationwide Mutual Ins. Co., Superior Court, judicial district of Ansonia-Milford, Docket No. CV-92-0041386-S (October 4, 1993, Jones, J.) (10 Conn.L.Rptr. 226), aff’d on other grounds, 233 Conn . 474, 659 A.2d 1188 (1995) (finding that the plaintiff did not make demand for arbitration within 180 days of the date he settled for the limits of the tortfeasor’s policy without detailing exactly what occurred on that date).
Nevertheless, the reasoning of the subsection (b) cases supports the plaintiffs’ argument that the date of exhaustion in subsection (g)(1) is the payment of the limits, not the signing of releases. Both Continental Ins. Co. v. Cebe-Habersky, supra, 214 Conn. 209, and Scalise v. American Employers Insurance Co., supra, 67 Conn.App. 753, relied on dictionary definitions of "exhaust." Those definitions require the payment of the limits." ‘Exhaust’ means ‘to draw off or let out completely: to use up; [or] wholly expend. ’ (Emphasis in original.) Continental Ins. Co. v. Cebe-Habersky, supra, 214 Conn. 212, quoting Webster, Third New International Dictionary." ‘Exhaust’ is defined as "to empty ... to consume entirely ..." Scalise v. American Employers Insurance Co., 67 Conn.App. 759, quoting Merriam-Webster’s Collegiate Dictionary (10th Ed. 1999). These definitions only make sense in the context of paying the limits. Indeed, the Supreme Court. in Continental Ins. Co. v. Cebe-Habersky, noted that the definition of "exhaust" that it relied upon "accords with the intent of § 38-175c(b)(1), which seems to equate ‘exhaustion’ with the ‘limits of liability.’" Continental Ins. Co. v. Cebe-Habersky, supra, 214 Conn. 213. Similarly, subsection (g)(1) and the policy language at issue here use the language "date of exhaustion of the limits of liability ..." implying that exhaustion requires those limits of liability to actually be paid.
General Statutes § 38-175(b)(1) was the predecessor statute to General Statutes § 38a-336(b).
The defendant’s interpretation that signing releases suffices for exhaustion is inconsistent with the contract interpretation canon that requires the court to give effect to all words in a policy. If the policy language said "date of exhaustion ... by settlements or final judgments after any appeals," the date of exhaustion could be the date releases were signed. However, that ignores the language "of the limits of liability under all automobile bodily injury bonds or policies applicable at the time of the accident" that follows "date of exhaustion." The better interpretation of the whole clause is that the date of payment of the limits of liability in connection with underlying settlements or judgments is the date of exhaustion.
Finally, if the court were to adopt the defendant’s proposed interpretation, it would lead to inconsistency in the law. Although a plaintiff can sue an insurance company for underinsured motorist benefits at an earlier time, it cannot force that company to pay those benefits until all available liability policies have been exhausted. As set forth above, the law is clear that those policies are not exhausted until their limits have been paid. If "exhaustion" in subsection (g)(1) and policies tracking its language were interpreted as only requiring the signing of releases and no payment of money, it would result in plaintiffs being forced to sue when they could not yet enforce their rights to those benefits.
The defendant’s interpretation also would be inconsistent with our Supreme Court’s holding in Coelho v. ITT Hartford, 251 Conn. 106, 111, 752 A.2d 1063 (1999), in which the court held that a cause of action for underinsured motorist benefits "does not accrue until the limits of liability under the tortfeasor’s policy have been exhausted." In that case, there was no policy limitation of action, and the court was ruling on when the breach of contract statute of limitations in General Statutes § 52-576 starts to run. Id., 107. The court reasoned that that statutory limitations period accrues when the plaintiff can enforce his or her right to underinsured motorist benefits. Id., 112. The court further reasoned that the right to enforce requires that the liability limits be paid, based on subsection (b). Id., 111-12. The court concluded that "because the statute of limitations under § 52-576 is based on the accrual of a cause of action for underinsured motorist benefits, and accrual is dependent upon enforcement, the time for commencing such an action begins to run on the date of exhaustion of the tortfeasor’s liability limits." See id., 112. Logically, the "date of exhaustion" for that statutory period and the "date of exhaustion" for the tolling period for a policy’s limitation of actions should be the same event- payment of the limits.
The Coelho court also recognized that subsection (g)(1) "provides a vehicle for contracting out of the six year statutory limitations period by authorizing an insurer to demand written notice of an impending claim within a period that the insurer establishes. In addition, the act limits the viability of an impending claim to 180 days after exhaustion." Coelho v. ITT Hartford, supra, 251 Conn. 117. The court did not state that exhaustion had different meanings in subsections (b) and (g)(1).
B. Exhaustion Requires Payment of All Limits of Liability
This leads to the final issue- is the date of exhaustion here September 7, 2018, when the plaintiffs’ attorney received and deposited these plaintiffs’ checks, or October 1, 2018, when the affidavit and exhibit submitted by the plaintiffs indicate that the final check arrived for their son, who is not a plaintiff in this case. If the date is September 7, 2018, the commencement date of March 20, 2019, was more than 180 days later, and this action is barred by the limitation of actions clause in the policy. However, if the date is October 1, 2018, that limitation of actions clause is tolled. Therefore, if the law requires all of the checks to have been received from the tortfeasor’s insurance carrier for there to be exhaustion, the plaintiffs have raised a disputed issue of material fact.
The statute is silent as to when exhaustion occurs in a multiple victim situation. The parties conceded at oral argument that neither of them had found any on-point authority as to this issue. The court’s research also failed to yield authority directly on point. However, there is authority to guide the court.
When, as here, there are multiple victims, underinsured motorist coverage will not be triggered for an individual claimant unless the aggregate or per accident liability limits of the tortfeasor’s policy are less than the underinsured motorist coverage limits, even if some of that liability coverage went to compensate other victims. Florestal v. Government Employees Ins. Co., 236 Conn. 299, 304, 310-11, 673 A.2d 474 (1996); American Motorists Ins. Co. v. Gould, 213 Conn. 625, 631-34, 569 A.2d 1105 (1990), overruled in part on other grounds by Covenant Ins. Co. v. Coon, 220 Conn. 30, 37, 594 A.2d 977 (1991) (holding that there shall be no stacking of underinsured motorist coverage in making the initial determination as to whether the tortfeasor’s vehicle is underinsured, but leaving intact Gould ’s holding that courts must look at the total amount of liability insurance available to the victims). Thus, for example, in Florestal, the tortfeasor had a liability policy with $20,000 per person and $40,000 per accident limits. See Florestal v. Government Employees Ins. Co., supra, 301. One claimant received $20,000, and four other claimants, including the plaintiffs in the Florestal case, received $5,000 each, for a total of $40,000. See id. The court held that, for purposes of determining whether the vehicle was underinsured, the proper liability coverage amount to use was the $40,000 total liability limit for the accident, even though the individual plaintiffs had received only $5,000 each. See id., 310-11.
In a separate line of cases, our Supreme Court has held that for exhaustion to occur, all of the available limits of the tortfeasor’s liability policy(ies) must be paid. See, e.g., Ciarelli v. Commercial Union Ins. Cos., supra, 234 Conn. 807 (holding that a single plaintiff could not prevail on a claim for underinsured motorist benefits when she had not receive payment of the full policy limits of both the owner and the operator’s liability policies); Continental Ins. Co. v. Cebe-Habersky, supra, 214 Conn. 209 (holding that $17,000 payment of a $20,000 policy did not exhaust that policy); see also Matter of Federal Ins. Co. v. Watnick, 80 N.Y.2d 539, 607 N.E.2d 771, 592 N.Y.S.2d 624 (1992) (holding that New York’s statute that is virtually identical to General Statutes § 38a-336(b) "requires primary insurers to pay every last dollar, and requires plaintiffs to accept no less, prior to the initiation of an underinsurance claim").
This court holds that these two lines of cases require that for exhaustion to occur such that an individual plaintiff may enforce his or her right to underinsurance coverage benefits, all of the limits of the total amount of liability coverage available must be paid. Therefore, payment of the total amount of the $40,000 per accident liability limit had to occur for there to have been exhaustion here. The plaintiffs have raised a disputed issue of material fact as to whether that final payment date was October 1, 2018, such that their commencement of this action on March 20, 2019, was within the 180 days provided by their policy and General Statutes § 38a-336(g)(1)(B). Therefore, the motion for summary judgment is denied.