Opinion
No. WWM CV09-6000897S
January 21, 2011
These competing motions deal with the interplay between §§ 10-78 and 10-79 of the Connecticut Practice Book. The plaintiff in the instant matter has received collateral source payments from her underinsured motorist carrier (the defendant). After collecting from the tortfeasor, the plaintiff brought this action for underinsured motorist benefits. The defendant has claimed to be entitled to a reduction in its policy limits to the extent that collateral source payments have been made to the plaintiff as its Third Special Defense. For the reasons set forth herein, the plaintiff's Motion to Strike the defendant's Third Special Defense is granted.
On November 25, 2009, the plaintiff, Karen Carchidi, filed a complaint against the defendant, Liberty Mutual Fire Insurance Company, seeking to recover underinsured motorist benefits. In her complaint, she alleges that she sustained injuries and damages from an automobile accident caused by the tortfeasor Matthew Mayo, on October 3, 2007. She further alleges that the limits of Mayo's liability insurance policy were exhausted by payment to her, but that the payment was inadequate to fully compensate for her injuries and losses. The plaintiff claims that under the terms of the insurance policy, which was issued by the defendant, she is entitled to payment of underinsured motorist coverage benefits and that despite making a demand on the defendant, it has refused to make payment.
On August 27, 2010, the defendant filed an answer and special defenses. The third special defense alleges the receipt of collateral source payments to or on behalf of the plaintiff. On September 1, 2010, the plaintiff filed a motion to strike that special defense on the ground that it is legally invalid. She submitted a memorandum of law in support of the motion. On September 7, 2010, the defendant filed an objection and a memorandum of law in opposition to the motion to strike. The matter was argued before the undersigned on October 12, 2010.
"Whenever any party wishes to contest . . . (5) the legal sufficiency of any answer to any complaint . . . or any part of that answer including any special defense contained therein, that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book § 10-39(a). "The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[A] plaintiff can [move to strike] a special defense . . . Nowak v. Nowak, 175 Conn, 112, 116, 394 A.2d 716 (1978). "In . . . ruling on [a] . . . motion to strike, [a] trial court [recognizes] its obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency." Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992).
The plaintiff argues that pursuant to Practice Book § 10-78, the defendant's special defense regarding collateral source payments is not a valid defense. In relying on that section, the plaintiff maintains that any collateral source payment which falls within General Statutes §§ 52-225a (reduction in economic damages in personal injury and wrongful death actions for collateral source payments) and 52-225b (collateral sources defined) should not be pleaded as a special defense. The defendant counters that in an underinsured motorist case, this special defense is proper as held in Bennett v. Automobile Ins. Co. of Hartford, 230 Conn. 795, 806, 646 A.2d 806 (1994) and codified in Practice Book 10-79.
Practice Book § 10-78 provides: "No pleading shall contain any allegations regarding receipt by a party of collateral source payments as described in General Statutes §§ 52-225a and 52-225b."
Practice Book § 10-79 provides: "An insurer should raise issues of monetary policy limits, or credits for payments by or on behalf of third party tortfeasors, by special defense. When a jury determination of the facts raised by special defense is not necessary, the special defense shall not be submitted to the jury but, rather, shall be resolved by the trial court prior to the rendering of judgment."
In Smith v. Safeco Ins. Co. of America, 225 Conn. 566, 567-68, 624 A.2d 892 (1993), decided before the Bennett case, the court addressed the issue of "whether the provisions of General Statutes § 52-225a governing collateral source payments apply to a claim for underinsured motorist benefits." The court examined the language of the statute to determine if it applied "to insurance contracts so as to reduce the amount of insurance coverage available to claimants who seek recourse to underinsured motorist benefits and who have received collateral source payments." Id., 570. The court concluded that on its face, the statute did not "create a statutory offset against the coverage provided by underinsured motorist benefits." Id. The court then stated that, "even if § 52-225a [did] not operate to reduce underinsured motorist coverage, it [might] nonetheless affect a claimant's underinsured motorist recovery by reducing the amount of the damages that the claimant may collect. We hold that the statute authorizes such a reduction in the amount of compensable damages . . . The relationship between § 52-225a and underinsured motorist protection turns, therefore, on the distinction between the amount of coverage and the amount of damages. A claimant is entitled to the full amount of his or her underinsured motorist coverage if, after the claimant's recovery from the tortfeasor has been reduced by collateral source payments in accordance with § 52-225a, the claimant's uncompensated personal and economic damages exceed the amount of the insurance coverage. A claimant's recourse to his or her underinsured motorist coverage is, however, limited in amount to less than his or her full coverage if the amount of the award against the tortfeasor for personal and economic damages, reduced in accordance with § 52-225a, results in uncompensated damages that are less than the full amount of the underinsured insurance coverage. In other words, while § 52-225a does not authorize collateral source payments to be deducted from a claimant's available underinsured motorist coverage, it does authorize such payments to enter into the calculation of the claimant's compensable injuries and losses." (Citations omitted.) Id., 572-74.
The issues the court resolved in Bennett v. Automobile Ins. Co. of Hartford, supra, 230 Conn. 796 n. 2 included: "Whether the Appellate Court was correct in holding that an insurer, in order to take advantage of a limitation of liability in an insurance policy, must plead the policy limits as a special defense where there is no reference to the policy limits in the complaint . . . and . . . [w]hether the Appellate Court was correct in holding that in an uninsured motorist action in which there are two plaintiffs seeking recovery under a single policy and one plaintiff settles his claim before trial, the defendant must plead the payment of the settled claim as a special defense?" (Internal quotation marks omitted.) The court concluded "that the defendant's failure to plead as a special defense either the $100,000 limit of the policy's uninsured motorist coverage or its settlement of Bennett's claim in the amount of $37,115 did not preclude the trial court from granting the relief sought by the defendant [a remittitur]. The trial court correctly reduced the jury award as required by the plain and undisputed terms of [the driver's] policy in accordance with [General Statutes] § 38a-336(b), and properly rendered judgment for [the plaintiff] in that amount." Id., 805.
General Statutes § 38a-336(b) provides: "An insurance company shall be obligated to make payment to its insured up to the limits of the policy's uninsured and underinsured motorist 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, but in no event shall the total amount of recovery from all policies, including any amount recovered under the insured's uninsured and underinsured motorist coverage, exceed the limits of the insured's uninsured and underinsured motorist coverage. In no event shall there be any reduction of uninsured or underinsured motorist coverage limits or benefits payable for amounts received by the insured for Social Security disability benefits paid or payable pursuant to the Social Security Act, 42 USC Section 301, et seq. The limitation on the total amount of recovery from all policies shall not apply to underinsured motorist conversion coverage purchased pursuant to section 38a-336a."
The court held that "henceforth an insurer should raise issues of policy limitation, even when undisputed, by special defense. When a jury determination of the facts raised by special defense is not necessary, the special defense will not be submitted to the jury but, rather, will be resolved by the trial court prior to the rendering of judgment. Compliance with this procedure will place the trial court and the opposing party on proper notice of the policy limitation issue so that it may be resolved in accordance with § 38a-336(b)." Id., 806. The holding in Bennett addressed only the issue of policy limitations and not collateral source payments.
Since the language from Bennett has been codified in Practice Book § 10-79, the meaning of the phrase `issues of policy limits' or `issues of policy limitations' has caused a split among trial courts in the state. Some courts have held that the decision in Bennett . . . mandates that issues such as credits, reductions and set-offs be raised by special defense, as these qualify as policy limitations . . . However, other courts have read Bennett to refer not to matters of reduction or reimbursement; but rather to specific policy defenses such as, inter alia, the policy holder's lack of cooperation, failure to pay premiums, late notice, or unauthorized use of an insured vehicle . . . Accordingly, these courts hold that matters such as credits or set-offs are not policy limitations which are to be pleaded by special defense . . . Other courts have upheld special defenses based on some of these items but not others . . .
The issue turns on how broadly `issues of policy limitations' should be interpreted. Based on the broad language chosen for § 10-79 and the official commentary, the rule should be read to mean that any mechanisms that serve to reduce a judgment in an insurance case to an amount lower than the verdict should be specially pleaded by the insurer. This will place the parties and the court on notice of the policy limitation issue, thus promoting its proper resolution at the appropriate time . . .
Many of the cases which have stricken special defenses based on credits and reductions have relied on Practice Book § 10-78, which prohibits raising the receipt of collateral source payments pursuant to General Statutes § 52-225a in a pleading . . . The singular applicability of the collateral source rule to a claim for uninsured or underinsured motorist coverage is to permit an insurer to reduce the amount of damages sustained by the claimant by the amount of `collateral source payments' received by the claimant . . . [Regulation] 38a-334-6(d) exclusively governs the grounds upon which such uninsured and underinsured insurance may be excluded or limited [rather than § 52-225a] . . . Practice Book § 10-79 overrides § 10-78 with respect to all issues of policy limitation authorized by § 38a-334-6(d) of the Regulations." (Citations omitted; internal quotation marks omitted.) Garcia v. ITT Hartford Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 98 0579974 (December 8, 1998, Peck, J.) ( 23 Conn. L. Rptr. 450, 452-53).
Regulation 38a-334-6(d) governs limits of insurer liability for protection against uninsured and underinsured motorists.
Thus, Bennett does not require pleading collateral source payments as special defenses because they do not reduce the limits of the policy but instead limit the amount of damages a plaintiff may recover. See Bowersox v. Providian Property, Superior Court, judicial district of Litchfield, Docket No. CV 95 0069711 (April 24, 1996, Pickett, J.). Therefore, where the proposed reductions in damage awards implicate issues of monetary policy limits, they should be pleaded as special defenses. See Selle v. Geico General Ins. Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 4000567 (January 6, 2006, Rubinow, J.) ( 40 Conn. L. Rptr. 573); but see Wicke v. Aetna Casualty Surety Co., Superior Court, judicial district of Fairfield, Docket No. CV 92 0298505 (April 28, 1994, Fuller, J.) ( 11 Conn. L. Rptr. 421, 422) (defendant insurer may plead as a special defense payments received by the plaintiff from the other negligent driver to provide evidence of payments at trial to reduce the amount of contractual liability).
In the present case, the defendant has pleaded as its third special defense that "[a]ny obligation to pay under its policy must be reduced by collateral source payments [made] to or on behalf of the plaintiff." Because the language of the defendant's pleading uses the term "collateral source payments" to reduce the amount of damages the plaintiff would recover, which is clearly prohibited by Practice Book § 10-78, and is not a claim that would reduce the monetary policy limits as required to be raised by the insurer pursuant to Practice Book § 10-79, this court must strike the defendant's Third Special Defense.