Opinion
No. X01 UWY CV08 5008897S
January 10, 2011
MEMORANDUM OF DECISION
PROCEDURAL HISTORY
Through her fourth revised amended complaint (#289), the plaintiff brought an action against the defendants Gerald Terry (Terry), Jason Hylton (Hylton) Transportation General, Inc. (TGI), Metropolitan Livery, Inc. (MLI) and LogistiCare Solutions, LLC (LogistiCare) seeking damages relative to a physical and sexual assault against the plaintiff's minor by the operator of a taxicab. The plaintiff alleged negligence on the part of Hylton and TGI, wanton and willful conduct on the part of Terry and TGI, breach of contract on the part of TGI, and that MLI was the corporate alter ego of TGI and therefore equally responsible for the plaintiff's damages. The defendant LogistiCare filed a five-count cross claim against MLI and Hylton. The first two counts alleged contractual indemnification and common-law indemnification, respectively, as to MLI. The third, fourth and fifth counts directed to Hylton sounded in common-law indemnification, negligence and negligence per se. LogistiCare also filed a two-count third-party complaint against TGI. The two counts alleged contractual indemnification and common law indemnification, respectively.
Following the filing of an offer of compromise by the plaintiff, the defendant LogistiCare elected to settle the plaintiff's claim in the amount of $300,000. The plaintiff thereafter withdrew the complaint against LogistiCare and proceeded to trial against the remaining defendants. The plaintiff presented her complaint to a jury which returned a verdict in favor of the plaintiff in the amount of $1,027,256.12 against the defendants. Subsequent to the verdict, the defendant LogistiCare prosecuted the claims set forth in its cross claim and third-party complaint against the other defendants. Essentially, LogistiCare argues that pursuant to a contractual agreement between the parties, as well as under common law, the defendants TGI and MLI were obligated to indemnify LogistiCare for both the amount of the settlement paid to plaintiff as well as the costs of defending the action. The defendant Hylton was defaulted for failure to appear for trial. The claims were tried to the court over two days and the parties have filed post-trial briefs and memoranda as requested by the court.
The defendant Jason Hylton was defaulted for failure to appear for trial.
Hence, the only claims remaining in dispute are the first and second counts of the cross claim as to MLI and the first and second counts of the third-party complaint as to TGI.
II FACTS
After considering the weight and credibility of the testimony of the witnesses as well as the documentary evidence presented, the court finds the following facts. As of October 19, 2007, the minor plaintiff, Jane Doe, was a sixteen-year-old mentally challenged minor who resided with her mother Mary Doe. Three times a week Jane Doe attended classes at the Behavioral Management Facility in North Haven, Connecticut. Transportation between the facility and her home was arranged by LogistiCare who contracted with TGI d/b/a Metro Taxi and MLI to provide non-emergency transportation for individuals receiving Medicaid benefits. The contractual agreements authorizing such transportation and in effect as of that date are embodied in Exhibits 2 (as to TGI d/b/a Metro Taxi) and 3 (as to MLI) which are dated May 9, 2006 and August 2007, respectively.
TGI and MLI both conducted business under the name of "Metro Taxi" and have admitted to the use of the name in answers to the pleadings thereby constituting judicial admissions. See defendants' answers to paragraphs 4 and 5 of counts one and two of LogistiCare's cross claim and its third-party complaint. Exhibits 18 and 20. Evidence was also presented at trial that the two companies used the same tax ID number in the Transportation Agreements set forth in Exhibits 2 and 3, both had the same physical address, William Scalzi was and is the president of both companies and was and is the only officer as to each. Moreover, MLI has no employees. Its telephones are answered by TGI employees, its drivers are trained by TGI trainers, and the same drivers drive for both companies. MLI pays a service fee to TGI for these purposes. The only real difference between the two companies was that TGI offered transport through taxicabs while MLI provided livery service. The companies were effectively alter-egos of one another. For purposes of this decision, the reference to "Metro Taxi" where found shall include both TGI and MLI unless otherwise noted.
On October 19, 2007, Hylton was an independent contractor driving for Metro Taxi. Exhibit I. On that date he was the driver of the vehicle assigned to transport Jane Doe from the Behavioral Management Facility to her home. Though there was no authority for him to do so, Hylton allowed Terry to accompany him in the taxicab at the time Jane Doe was picked up. Exhibits I, K, L, M. Afterward, Hylton drove to New Haven where he exited the taxicab and directed Terry to complete the transportation of Doe to her residence. Rather than drive her to her residence, Terry drove the vehicle to another location where he sexually and physically assaulted Jane Doe in the taxicab.
At trial of the instant matter, the parties agreed that the court could take judicial notice of the jury's findings in the underlying matter that: (1) Hylton was negligent in one or more of the ways alleged in Jane Doe's complaint and that his negligence was a substantial factor in causing Jane Doe's injuries and damages; (2) when Hylton gave the taxicab to Terry, he (Hylton) was acting as an agent for TGI and Hylton's negligence was a substantial factor in causing Jane Doe's injuries and damages; (3) Jane Doe was a third-party beneficiary of the May 2006 Transportation Agreement between LogistiCare and TGI
In early January 2008, LogistiCare received correspondence from Jane Doe's counsel relative to her potential claim for damages against LogistiCare. Exhibit 6. By letter dated February 15, 2008 addressed to William Scalzi (Scalzi), president of Metro Taxi, LogistiCare requested that Metro Taxi defend and indemnify LogistiCare in connection with Jane Doe's claims against it. Exhibit 7. By February 20, 2008, TGI d/b/a Metro Taxi, through their counsel, acknowledged receipt of LogistiCare's demand. Exhibit 8. Subsequently, in early May of 2008, Jane Doe filed her original complaint including LogistiCare as a defendant. Exhibit 9. LogistiCare's insurance carrier, Hanover Insurance Group (Hanover), wrote to Scalzi and asked that Metro Taxi defend LogistiCare in the action. Exhibit 11. On June 20, 2008, five months after the original request for defense and indemnification, TGI d/b/a Metro Taxi denied the request. Exhibit 14. On September 4, 2008 and December 19, 2008, as the plaintiff's claim proceeded, LogistiCare renewed its request that Metro Taxi defend and indemnify LogistiCare. Exhibits 15 and 21. On January 5, 2009, counsel for TGI d/b/a Metro Taxi acknowledged receipt of the December 19, 2008 letter but did not address the demand as they continued to investigate and believed that the allegations by Jane Doe, as they related to LogistiCare, were baseless. Exhibit 22. On March 12, 2009, over a year after LogistiCare's first demand for defense and indemnification, TGI made an offer to do so but conditioned the offer on LogistiCare agreeing to be represented by the same counsel acting on behalf of TGI, waiving any potential conflict of interest that might exist from such representation, dropping any claim for reimbursement of attorneys fees that had been incurred up to that point, and various other conditions. Exhibit 23. After exchanging further correspondence on the subject, LogistiCare refused the conditional offer on April 29, 2009 finding its terms unacceptable and inconsistent with the indemnification provision in the agreement. It then embarked on direct settlement negotiations with the plaintiff which resulted in payment of $300,000 by LogistiCare's insurance carrier (Hanover) for the release of all claims. Exhibits 24, 25, 26, 38, 39, 40, 41, 42, 43. TGI and MLI (Metro Taxi) refused to indemnify LogistiCare for the payment of the settlement and any costs associated therewith. Exhibits 37 through 40.
On October 30, 2009, Jane Doe withdrew her claim against LogistiCare. Exhibit 44. Thereafter, on February 17, 2010, the jury returned a verdict in favor of Jane Doe against the remaining defendants in the amount of $1,027,256.12. The jury concluded, as evidenced through jury verdict forms and interrogatories, that: Hylton and TGI d/b/a Metro Taxi were each fifty percent (50%) negligent; TGI and MLI were alter-ego entities, Hylton was the agent of TGI d/b/a Metro Taxi, and, that punitive damages should be awarded. Exhibits 50, 51. The defendants TGI and MLI have filed an appeal of the verdict which is pending. Exhibit 59.
During the course of the negotiations and proceedings involving LogistiCare, its insurance carrier, Hanover, agreed to retain the law office of Litchfield Cavo to represent LogistiCare. The hourly rate for representation was $180 per hour and its total fees, not including the trial of the instant matter are at least $188,388.75. LogistiCare also had representation for a brief period of time through the law office of Charlene Russo which charged fees of $18,169.66. Exhibits 61, 62, 67, 70.
The defendants TGI and MLI filed a written objection to the submission of Exhibits 50, 51, 59, 61 and 62 referenced above as full exhibits. The objection to those exhibits is overruled.
Additional facts will be presented as necessary.
III DISCUSSION A. Indemnification
As noted above, LogistiCare seeks contractual and common-law indemnification from TGI and MLI. The Transportation Agreements executed by TGI d/b/a Metro Taxi and MLI contained identical provisions relative to the defense and indemnification of LogistiCare. Paragraph 3(i)(vi) of both agreements stated in part that the company would ". . . indemnify, protect, and hold [LogistiCare] . . . harmless from and against any and all claims, and/or liabilities of any kind or nature whatsoever arising from actions connected with services provided by or at the direction of [TGI/MLI], including the cost of reasonable attorney fees and other expenses incurred by or assessed against [LogistiCare] . . ." Generally, the issues of duty to defend and indemnification arise in the context of a contract of insurance. There the duty to defend is significantly broader than the duty to indemnify. DaCruz v. State Farm Fire Casualty Co., 268 Conn. 675, 687-88, 846 A.2d 849 (2004); R.T. Vanderbilt Co. v. Continental Casualty Co., CT Page 2557 273 Conn. 448, 470, 870 A.2d 1048 (2005); QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 382, 773 A 2d 906 (2001). A duty to defend may exist, even if the claim which is defended is ultimately determined to be without merit. Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 256, 819 A.2d 773 (2003); QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 353, 352, 773 A.2d 906 (2001). A traditional contract law analysis is used to construe whether an indemnity agreement would cover such losses as those that appear to have been intended by the parties. Leonard Concrete Pipe Co. v. C.W. Blakeslee Sons, Inc., 178 Conn. 594, 597, 424 A.2d 277 (1979). "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction." (Internal quotation marks omitted.) Pesino v. Atlantic Bank of New York, 244 Conn. 85, 91, 709 A.2d 540 (1998).
There is no reason why a different rule of construction should apply, where, as here, there exists a detailed contract which was negotiated at arms length between private, sophisticated, business parties concerning issues relative to the transportation of individuals with various needs. The obligation to defend does not depend upon whether the party to whom a defense is provided ultimately prevails in the underlying cause of action. Instead, it depends upon whether the allegations in the complaint bring the injury within the coverage. Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 274 Conn. 457, 463, 876 A.2d 1139 (2005); Flint v. Universal Machine Co., 238 Conn. 637, 646-47, 679 A.2d 929 (1996); Turner Construction Co. v. Zurich American Insurance, Co., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 07 5004719S (April 9, 2009, Radcliffe, J.). "If an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured." (Internal quotation marks omitted.) Moore v. Continental Casualty Co., 252 Conn. 405, 409, 746 A.2d 1252 (2000); see also, Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., supra, 274 Conn. 463.
Scalzi, as the president of TGI and MLI, testified that from the period of February 2008 to March 2009, the companies investigated and assessed the allegations in Doe's complaint. Exhibits 7, 23. The companies refused to defend or to indemnify LogistiCare during this time because of the ongoing investigation and because they believed the allegations as to LogistiCare were baseless. They also contended the allegations did not come within the indemnity provisions of the transportation agreements. Despite this, a conditional offer to defend and indemnify was ultimately made on March 12, 2009, over a year after the initial demand for defense. Exhibit 23. Scalzi testified that this was done as a "business decision" despite the belief that Doe's claims as to LogistiCare remained baseless. That offer, which in part called for LogistiCare to accept legal representation by the same counsel that was representing TGI and MLI, was rejected by LogistiCare. Exhibit 24.
A reading of the above-referenced cases makes clear that the opinion of TGI and MLI as to the merits of Doe's claim, alone, does not justify the failure to defend and indemnify. With the agreement of the parties, the court has already taken judicial notice that Hylton was negligent in one or more of the ways alleged in Doe's complaint, that his negligence was a substantial factor in causing Jane Doe's injuries and damages, that when Hylton gave the taxicab to Terry, he (Hylton) was acting as an agent for TGI, and that Doe was a third-party beneficiary of the May 9, 2006 Transportation Agreement between LogistiCare and TGI.
The indemnification language employed by the parties in the two agreements was quite broad. Phrases such as "any and all claims" and "arising from" can give rise to an obligation of indemnity where the claims are connected to, growing out of, or having their origins in the services provided by the indemnitor. Burkle v. Car and Truck Leasing Co., Inc., 1 Conn.App. 54, 467 A.2d 1255 (1983). There, the court found that: "The language of the contract provision in this case clearly unqualifiedly, and unequivocally states that the Seller agrees to indemnify and protect Buyer against all liabilities, claims or demands . . . growing out of the performance of this contract . . . There cannot be any broader classification than the word all . . . In its ordinary and natural meaning, the word `all' leaves no room for exceptions . . . The plain meaning of the words employed in the contract fairly includes a promise to indemnify even the negligent indemnitee. There is no reason why more should be required to establish the unmistakable intent of the parties." (Emphasis in original, citations omitted; internal quotation marks omitted.) Id., 56-7.
Notably, although paragraph 3(i)(vi) of the Transportation Agreements contains broad language regarding indemnification, it does not make any specific reference to a "duty to defend." Nonetheless, the presentation of the evidence makes clear, along with the pre-trial pleadings and post-trial briefs, that both parties have always considered it to be an issue and have addressed the duty to defend as part and parcel of the language of that paragraph thereby making it part of the ultimate issue for the court to decide.
In Ocsai v. Exit 88 Hotel, LLC, Superior Court, judicial district of New London, Docket No. CV 06 5000605, (Dec. 23, 2008, Peck, J.), the court addressed a summary judgment motion that required a review of a third-party complaint relative to a labor and services contract between two private parties that contained broad indemnification language. There, a contractor was obligated to "at its own cost and expense, defend, indemnify and hold Owner . . . harmless, from, and against any and all claims, loss (including attorneys fees, witnesses' fee and all court cost), damages, expense and liability . . . arising out of negligent or wrongful act, error, or omission or breach of contract, in connection with the operations of the contractor or its subcontractors." (Emphasis in original; internal quotation marks omitted.) The court went on to note that "[b]ased on this language, the only requirement [was] that a negligent or wrongful act or omission occur in connection with the operations of HSC, or its subcontractors. It is therefore not necessary to determine whose wrongful or negligent act actually caused the injury, only that one occurred and a claim for `negligence or wrongful act' has been made against [the indemnitee]"). Id.
Other cases have broadly interpreted the contractual provisions that contain the phrases "arising out of" or "arising from." "[I]t is generally understood that for liability for an accident or an injury to be said to arise out of [an occurrence or offense], it is sufficient to show only that the accident or injury was connected with, had its origins in, grew out of, flowed from, or was incident to [that occurrence or offense] . . . To arise out of means to originate from a specified source. The phrase arising out of is usually interpreted as indicating a causal connection." (Citations omitted; internal quotation marks omitted.) Royal Indemnity Co. v. Terra Firma, Inc., 50 Conn.Sup. 563, 574, 948 A.2d 1101 [ 41 Conn. L. Rptr. 761] (2006), aff'd, 287 Conn. 183, 947 A.2d 913 (2008).
The phrase "in connection with" has also been construed in a very broad fashion. In Key Air, Inc. v. Commissioner of Revenue Services, 294 Conn. 225, 983 A.2d 1 (2009), the Supreme Court addressed the meaning of the phrase in the context of a tax appeal, but its description of the meaning of the phrase is equally applicable in the instant case. "The dictionary defines the word `connection' as, inter alia, a `causal or logical relation or sequence . . . contextual relation or association . . . [or] relationship in fact . . .' Accordingly, the plain meaning of the statutory phrase `in connection with' necessarily includes any factual, contextual or causal relationship." (Emphasis in original.) Id., 235, citing, Merriam-Webster's Collegiate Dictionary (10th Ed. 1993). The court also noted that the phrase has been construed broadly outside of the tax context. Id., 237 n. 11.
While much of the evidence presented focused primarily on the obligation and responses of TGI d/b/a Metro Taxi specifically without further reference to MLI, there was sufficient evidence to reasonably conclude that both parties were obligated to comply with the identical indemnification provisions within their respective Transportation Agreements. First and foremost is the admission of the defendants in their answers to the cross claim and third-party complaint as referenced in footnote 3 above that both TGI and MLI did business under the name of Metro Taxi. The Transportation Agreements contained the same tax identification number and operator number. Robin Hamilton, the general manager of LogistiCare credibly testified that LogistiCare had always considered Metro Taxi as one company. Although she realized there was a difference between the livery service and a taxi company, once the job was dispatched, it was up to Metro Taxi to determine whether a taxicab or a livery vehicle would be sent out for transport. Finally, there was the judicially noticed finding in the jury interrogatories from the underlying action that TGI and MLI were alter-egos. Scalzi testified that the recitation of the identical tax identification numbers in both agreements was an error as were the answers to the cross claim and third-party complaint which referenced Metropolitan Livery, Inc as "d/b/a Metro Taxi." Such a claim is unavailing. Scalzi himself executed both agreements and presumably was aware of the contents. The answers filed are judicial admissions and were never amended at any point in the proceedings.
Given the breadth of the indemnification language, the facts as found above, and the credible testimony and evidence submitted by LogistiCare, the court concludes that the claims of the plaintiff against LogistiCare, TGI and MLI and the subsequent settlement of those claims by LogistiCare arose out of the actions connected with the services provided by or at the direction of Metro Taxi. Hence, there existed a contractual duty on the part of both TGI and MLI to defend and indemnify LogistiCare under paragraph 3(i)(vi) of the Transportation Agreements. Doe's transportation on the night of the incident, and ultimately her injuries, arose from actions connected with the contractual services agreement between LogistiCare and Metro Taxi as well as the actions of Hylton who was an agent of TGI d/b/a Metro Taxi. The evidence presented at trial also included the acknowledgment of Metro Taxi's president that the incident arose out of the relationship between LogistiCare and Metro Taxi.
LogistiCare presented the August 27, 2009 deposition testimony of William Scalzi which included the following:
Q: Now would you agree that the incident that happened on October 19, 2007, it arose out of the relationship between LogistiCare and Metro Taxi, that is, the Plaintiff was a medical transport that was referred to Metro Taxi by LogistiCare?
A: Yes. It was a LogistiCare passenger we were transporting.
Q: So the incident itself arose out of the relationship between LogistiCare and Metro Taxi?
A: Yes.
Exhibit #63, p. 187, lines 3-13.
Based on the same facts and findings made above, the court finds that LogistiCare has also established its common-law claim for indemnification in that it has shown that: (1) TGI, and MLI as an alter-ego of TGI, were negligent; (2) TGI and MLI's negligence, rather than any negligence of LogistiCare, was the cause of Doe's injuries; (3) TGI, and MLI as an alter-ego of TGI, were in control of the situation to the exclusion of LogistiCare; and (4) LogistiCare did not know of TGI and MLI's negligence, had no reason to anticipate it, and could reasonably rely on TGI and MLI not to be negligent. See Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 416, 207 A.2d 732 (1965).
B. Fees and Expenses
Having reached such a conclusion, the court must now turn to the issue of the nature and amount of damages claimed by LogistiCare. Specifically, it claims that TGI and MLI must indemnify it for the $300,000 paid to settle Doe's claim along with the attorneys fees expended both in defense of the claim and the pursuit of the cross-claim and third-party complaint. To this end, LogistiCare submitted exhibits showing the $300,000 payment as well as the billing invoices for attorneys fees. Exhibits 42, 43, 61, 62, 67 and 70.
TGI and MLI have made several contentions with regard to the $300,000 payment. They alternatively argue that the settlement amount was unreasonable, that it should not have been paid at all, or the amount should have been mitigated by other actions LogistiCare could have taken in defense of the action, but failed to do so. As to the claim for attorneys fees, it argues that the amount of the fees claimed are unreasonable and that any fees for the prosecution of the cross claim and third-party claim are outside the scope of the indemnification provision. Finally, they argue in general as to both claims, that no amounts are due LogistiCare as it in fact incurred no such expenses as all of the amounts claimed were paid by LogistiCare's insurance carrier, Hanover.
To begin, the court notes that in an insurance contract setting analogous to the situation now before it, "[a]n insurer who chooses not to provide its insured with a defense and who is subsequently found to have breached its duty to do so must bear the consequences of its decision, including the payment of any reasonable settlement agreed to by the plaintiff and the insured." (Citation omitted.) CT Page 2562 Black v. Goodwin, Loomis Britton, Inc., 239 Conn. 144, 153, 681 A.2d 293 (1996). "[W]hen an insurer breaches its contractual duty to defend and, as a result improperly leaves its insured to fend for itself, the insurer will not be heard to complain when the insured enters into a settlement agreement so long as the insured acts in good faith, and without fraud." (Citations omitted, internal quotation marks omitted.) Id., 154. The court finds that LogistiCare acted in good faith and without fraud in moving to settle Doe's claim against it. After receiving notice of the potential claim by Doe in February 2008, and Metro Taxi's rejection of its request for defense and indemnification, LogistiCare was in need of legal representation. The serious nature of Doe's claim, the possibility of exposure to significant liability, the potential for a default or judgment for lack of a responsive pleading, the anticipated cost of the litigation, the filing of an offer of compromise by Doe in the amount of $400,000 with the risk of postjudgment interest being added, and the continued resistance by Metro Taxi to assist in the defense, were all legitimate reasons for LogistiCare to move toward a settlement of the claims in the amount of $300,000. The jury's ultimate verdict against the remaining defendants in an amount of more than $1,000,000 underscores the extent of the potential liability LogistiCare may have faced had it remained a defendant. The court finds that under the circumstances that existed at that time, it was reasonable for LogistiCare to act as it did.
Despite the reasonableness of entering into the settlement agreement, that does not close the issue of indemnification for the settlement amount. The general release executed by Doe released LogistiCare for payment of $300,000 "paid by LogistiCare Solutions, LLC." Exhibit 42. However, that amount was in fact paid by a check drawn and issued by LogistiCare's insurance carrier, Hanover. Exhibit 43. No other documentary evidence or testimony was presented to the court establishing that LogistiCare expended $300,000, or any amount for that matter, in settlement of the claim. In footnote 2 of its post-trial brief, LogistiCare claims for the first time that it "brings this action for recovery of defense and indemnification on behalf of Hanover, the real party in interest," citing Best Friends Pet Care, Inc. v. Design Learned, Inc., 77 Conn.App. 167, 169 n. 2, 823 A.2d 329 (2003). That case is not persuasive as that was a subrogation action brought under a subrogation clause in a standard American Institute of Architects contract relative to the construction of a building. In fact, the subrogation clause there was found "not to fit the description of an agreement to hold harmless or indemnify." Id., 175. The defendant's claim that it was acting on behalf of Hanover as the real party in interest is unavailing as it was never raised at trial, and even if it had been so raised, has been inadequately briefed. Though not specifically making reference to such, LogistiCare is in effect arguing that it is making its claim through equitable subrogation. A court is "not required to review issues that have been improperly presented . . . through an inadequate brief." Connecticut National Bank v. Giacomi, 242 Conn. 17, 44-45, 699 A.2d 101 (1997). "Where a claim receives only cursory attention in the brief without substantive discussion, it is deemed to be abandoned." (Internal quotation marks omitted.) Golden v. Johnson Memorial Hospital, Inc., 66 Conn.App. 518, 538, 785 A.2d 234, cert. denied, 259 Conn. 902, 789 A.2d 990 (2001). Moreover, and more importantly, LogistiCare's cross claim and third-party complaint make no allegation as to it acting on behalf of Hanover as the real party in interest. See Practice Book § 9-23. Hanover was never made a party to these proceedings through any pleading by any party. In order to proceed on such a theory the allegations should have been specifically pleaded. See Couch on Insurance § 222:24; Practice Book § 10-27.
Equitable subrogation is not equivalent to indemnification. "It is well established that subrogation is different from either indemnity or contribution . . . While the principle of indemnity underlies subrogation, actions based on subrogation are separate and independent from those based on indemnity. (Citation omitted.) Banks Tower Communications Ltd. v. Home Ins. Co., 590 F.Sup. 1038, 1040 (D.Pa. 1984), citing Great American Insurance Co. v. United States, CT Page 2567 575 F.2d 1031, 1034 (2d Cir. 1978)." Chiulli Sons, Inc. v. Hanover Insurance Company, Superior Court, judicial district of Hartford, Docket No. CV06 5002478 (November 14, 2007; Elgo, J.) ( 44 Conn. L. Rptr. 519).
Our Appellate Court has addressed circumstances where equitable subrogation was not specifically pleaded but nonetheless allowed a claim to go forward on that basis. In Warning Lights and Scaffold Service, Inc. v. O and G Industries, Inc., 102 Conn.App. 267, 274-75 (2007), the Appellate Court noted the complaint in that matter did not expressly state a claim of equitable subrogation. The complaint did allege, as in this case, that the defendant breached its contractual duty to defend and indemnify the plaintiff and requested an award of money damages. In reviewing the complaint the court stated that "[w]e conclude that the plaintiff's complaint sufficiently stated a cause of action for equitable subrogation . . . Notably, the plaintiff's prayer for relief requested an award of, inter alia, `any other relief that the court deems just and equitable.' Because the complaint specifically requested that the court apply the principles of equity when fashioning a remedy, the plaintiff's complaint could be considered reasonably to encompass a claim of equitable subrogation . . ."
"As long as the pleadings provide sufficient notice of the facts claimed and the issues to be tried and do not surprise or prejudice the opposing party, we will not conclude that the complaint is insufficient to allow recovery. Here, the defendant has not claimed, and the record does not reflect, that it was surprised or prejudiced by the plaintiff's failure to allege expressly an entitlement to recovery through equitable subrogation. As such, we conclude that the complaint stated a cognizable claim of equitable subrogation." (Citations omitted; internal quotation marks omitted.) In a footnote, the court went on to point out that "[i]ndeed, on the first day of trial, the defendant presented several arguments, with accompanying citations to cases, concerning the propriety and merits of an equitable subrogation claim in this case. It later briefed the issue extensively in its memorandum of law in support of its motion for a directed verdict." Warning Lights and Scaffold Service, Inc. v. O and G Industries, Inc., supra, 102 Conn.App. 275, n. 3. In a subsequent footnote, that court also noted that the plaintiff had, during the trial, attempted to substitute the insurance company as a plaintiff in the action. Id., n. 4.
While not the basis for the court's conclusions in this matter, it is noteworthy that, LogistiCare has in both its cross-complaint and third-party complaint asked for "such other relief, in law or in equity, that the Court deems appropriate." However, unlike in Warning Lights and Scaffold Service, Inc. v. O and G Industries, Inc., it cannot be said that the defendant was apprised of LogistiCare's potential claim for equitable subrogation so as to avoid surprise or prejudice. During this trial, there were no factual allegations, arguments or case citations to alert the defendant of such an issue or claim by LogistiCare. As noted above, the matter was not briefed by LogistiCare in its initial post-trial brief (#375) except in the form of a footnote. Nor was there any attempt by LogistiCare to substitute the insurer for LogistiCare or to implead Hanover. In § D of its response to the defendant's post-trial brief, LogistiCare makes a very brief argument that it seeks recovery on behalf of Hanover as the real party in interest simply citing, again, Best Friends Pet Care, Inc. v. Design Learned, Inc., supra, 77 Conn.App. 167 which this court finds inapplicable. LogistiCare also added that "Connecticut case law is clear that an insurer may bring an action in the name of its insured to recover the costs and fees expended by the insurer." (Emphasis added.) See, Post-Trial Response of LogistiCare Solutions, LLC (#381) dated November 10, 2010. While this statement of the law is accurate, it does not fit the facts and circumstances of this case as it is the insured, LogistiCare, who has brought the suit and not the insurer, Hanover. Based on the facts above, "any equitable subrogation action against the defendant could have been brought only by the insurance company, because [u]pon . . . payment, the insurer became subrogated to any rights that its insured might have had against the party who had caused the loss." (Citations omitted; internal quotation marks omitted.) Warning Lights and Scaffold Service, Inc. v. O and G Industries, Inc., supra, 102 Conn.App. 276.
Because LogistiCare never actually expended any of the funds for the settlement of the claim with Doe, it is not entitled to the $300,000 whether the claim is based upon contractual or common-law indemnification.
As with the settlement amount, LogistiCare also seeks indemnification for the cost of the attorneys fees relative to the defense of the underlying action brought by Doe as well as the litigation to establish TGI and MLI's duty to defend and indemnify. This claim too fails as LogistiCare has not provided any evidence that it actually expended funds in this regard. Exhibits 61, 62, 67 and 70 were submitted by LogistiCare to establish the amount of the fees charged by attorneys who had represented it during the course of the claim and the litigation. Because TGI and MLI (Metro Taxi) had refused to provide a defense and indemnification consistent with the terms of the agreements, on May 28, 2008 Hanover agreed to defend LogistiCare. It was Hanover, not LogistiCare, that retained the attorney's office of Litchfield Cavo as defense counsel. Exhibit 12. A review of Exhibit 61 shows a charge of attorneys fees and disbursements by Litchfield Cavo in the amount of $188,388.75 relative to the "Logisticare Solutions Claim." The "client name" is listed as "Hanover Insurance Company." There is nothing on this document reflecting any payment amounts. Exhibit 62 is a copy of a partially redacted "financial activity screen" which the court can reasonably infer is a record of payments by Hanover to Litchfield Cavo for its representation of LogistiCare in this matter. While the document does not specifically identify LogistiCare, it does refer to payments to Litchfield Cavo, several of which match the billing time period and amounts referenced in the invoice journal produced by Litchfield Cavo as embodied in Exhibit 61. It also refers to "Total Loss payments $300,000" which was the amount of the settlement entered into with Doe by LogistiCare. It then references, "current loss reserve," "current expense reserve," "open loss reserve" of $50,000 and then a "Reserve Change of $100,000." These are all terms consistent with those used by insurers when handling claims.
The May 28, 2008 correspondence was addressed to LogistiCare and reviewed the allegations of Doe's complaint as well as the potential obligations of Hanover to LogistiCare as its insurer. It then stated in part: ". . . Hanover agrees to provide a defense of this lawsuit and has retained the services of Litchfield Cavo to defend the interests of your company in this matter." The appearance subsequently filed by that office was on behalf of LogistiCare. Exhibit 13.
Exhibit 67 is an itemization of fees charged by Litchfield Cavo which were billed directly to Hanover. There is no evidence of these bills having been submitted to LogistiCare. Exhibit 70 is a copy of an itemized billing and summary from the Law Office of Charlene Russo relative to that office's fees of $18,169 for work on issues related to this matter as well as billing from the Law Offices of Horn Lauretti of Boston, Massachusetts for approximately $3,000. There is nothing in this exhibit that shows those amounts being billed to, or paid by, LogistiCare. Rather, these two bills were sent to Litchfield Cavo's office.
LogistiCare has failed to establish by a preponderance of the evidence that it was liable for these expenses or that it paid them out of its own funds. Accordingly, it cannot be indemnified for an expense that it did not incur. From the evidence presented, the court concludes that these expenses were paid by Hanover.
This result is analogous to that found in Warning Lights and Scaffold Service, Inc. v. O and G Industries, Inc., wherein the Appellate Court held that while a claim of equitable subrogation was viable, "the [trial] court properly determined, . . . that the lack of evidence establishing that the plaintiff personally expended any money in its defense was fatal to its equitable subrogation claim." Id., 275.
To order TGI and MLI to make payment to LogistiCare of both the settlement amount and the attorneys fees and expenses, would create a windfall of nearly a half million dollars to LogistiCare. The plaintiff has not provided the court with any reference to specific contractual provisions or other evidence creating a contractual obligation on the part of LogistiCare to turn over the recovery of any such expenses to its insurance carrier. The plaintiff had the option of seeking compensation for the costs of its defense from the defendants pursuant to the Transportation Agreements; or, from Hanover under its own insurance policy. By choosing the latter, it received the benefit of full indemnification from Hanover and cannot now attempt to effectuate what would amount to a double recovery by pursuing its original breach of contract claim against TGI and MLI. While Hanover may have the ability or right to seek the recovery of these funds from TGI or MLI through subrogation or some other vehicle, that issue has not been put before this court and the court elects not to extend its reach that far.
IV CONCLUSION
LogistiCare has failed to establish by a preponderance of the evidence the suffering of damages relative to its claims for indemnification from TGI and MLI. It has not presented evidence of any actual loss or expenses with respect to the payment of the $300,000 settlement or the attorneys fees relative to the matter.
As to Jason Hylton, having been defaulted for failure to appear for trial, the motion for judgment as to counts three, four and five of the cross claim is granted in favor of LogistiCare. The court awards $1.00 in nominal damages relative to the claim against that defendant.
So ordered.