Opinion
No. CV 02 0068363
December 18, 2003
MEMORANDUM OF DECISION
On December 5, 2000, the defendant Linda Warner occupied #2 North Walnut Street, Wauregan, Connecticut pursuant to the terms of a lease with Dana Taylor (landlord). At that time, the landlord was covered by a fire insurance policy by the plaintiff, Hartford Insurance Company. The policy granted the plaintiff subrogation rights from its insured.
On December 5, 2000, a fire occurred on the leased premises. The fire was accidental in nature and was caused by the conduct of defendant Scott Warner, a nephew of Linda Warner. As a result of the fire, the plaintiff paid Dana Taylor the property damages in the amount of $43,951 and for loss of rental income in the amount of $3,150. The plaintiff seeks judgment from the defendant for the entire amount paid.
The lease between Taylor and Warner provided in pertinent part:
9. Liability
Landlord is not liable for a loss, expense or damage to any person or property unless it is due to Landlord's negligence. Tenant must pay for damages suffered and money spent by Landlord relating to any claims arising from any act or neglect of Tenant. Tenant is responsible for all acts of Tenant's family, employees, guests and invitees.
The plaintiff claims that this lease language authorizes it to seek subrogation from the tenant. The defendant, Linda Warner, claims there was no express agreement in the lease that authorized the landlord's insurer to seek subrogation from the tenant and therefore under the holding in DiLullo v. Joseph, CT Page 14641 259 Conn. 847, 792 A.2d 819 (2002), the plaintiff's claim is not well founded.
The basis of the plaintiff's claim against Linda Warner is her contractual liability as expressed in the lease agreement. The controlling authority in this case is DiLullo v. Joseph, 259 Conn. 847, 792 A.2d 819 (2002). Based on DiLullo, the court finds that there was no specific agreement that Dana Taylor's fire insurer would have a right of subrogation against Linda Warner.
"Typically, two types of subrogation are distinguished, conventional and equitable . . . Conventional subrogation, which is closely associated with the principle of assignment, arises only by agreement between two parties, after a loss, when a party, under no obligation to do so, pays the debt of another . . . Where, as here, the insurer clearly has an interest in the manner and acquires that interest before the loss occurs, conventional subrogation, it would seem, is not applicable . . .
"In contrast, equitable subrogation arises strictly as a matter of equity, regardless of whether there is an explicit agreement . . . It is designed to promote and to accomplish justice, and is the mode which equity adopts to compel the ultimate payment of a debt by one who, in justice, equity, and good conscience, should pay it . . . In the past, equitable subrogation could be applied in every instance in which one person, not acting as a mere volunteer or intruder, pays [the] debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter." (Citations omitted; internal quotation marks omitted.) Wasko v. Manella, 74 Conn. App. 32, 36, 811 A.2d 727 (2002), cert. granted, 262 Conn. 942, 815 A.2d 674 (2003). DiLullo v. Joseph, 259 Conn. 847, 792 A.2d 819 (2002), as does the present case, involved equitable subrogation.
"In its simplest form, subrogation allows a party who has paid a debt to step into the shoes of another . . . to assume his or her legal rights against a third party to prevent that party's unjust enrichment . . . In that way, an insurance company, for example, can be substituted for the insured in an action against a third-party tortfeasor. The insured, having been paid by the insurer, in essence, transfers his rights against the tortfeasor to the insurer. The insurer, thus, can attempt to collect from the party that caused the loss to the extent expended by the insurer in satisfying the claim." (Citation omitted; internal quotation marks omitted.) Wasko v. Manella, 74 Conn. App. 32, 35-36, 811 A.2d 727 (2002), cert. granted, 262 Conn. 942, 815 A.2d 674 (2003).
Nevertheless, "[a]s DiLullo shows, an insurer is not entitled, in every case, to step into the shoes of the insured. Subrogation is a fluid concept depending upon the particular facts and circumstances of a given case for its applicability. To some facts subrogation will adhere to others it will not." Id., 42-43.
The facts in DiLullo are similar to those in the present case. In DiLullo, there was a tenant, Michael Joseph, whose negligence resulted in a fire that destroyed the landlords,' Michael and Fioretta DiLullo, premises. The de facto plaintiff in DiLullo, Public Service Mutual Insurance Company, was the DiLullos' insurance carrier and paid the DiLullos for some of their losses arising out of the fire. Joseph initially had a one-year contract with the DiLullos and on its termination remained in possession as a month-to-month tenant. In the initial lease, the DiLullos requested that Joseph carry liability insurance on his business contents. Notably, however, "[t]here was no agreement between the parties, either in the lease or otherwise, that the defendant would insure the premises for fire or other casualty . . . The defendant and the DiLullos never discussed the possibility that they would provide insurance coverage for each other, and there was no agreement that the DiLullos would relieve the defendant of liability arising from his own negligence." DiLullo v. Joseph, supra, 259 Conn. 849.
The defendant in DiLullo was a commercial entity, Random Remnants, however, that fact was immaterial in the Supreme Court's holding.
"In DiLullo, the issue was whether, in the absence of a specific agreement between the landlord and tenant, a landlord's fire insurer has a right of subrogation against a tenant for negligently causing a fire that damaged the rented property . . . In particular, the court sought a default rule for when landlords and tenants fail to explicitly allocate their risks in their leases or elsewhere.
"Founding its decision on Connecticut's strong public policy against economic waste, our Supreme Court [in DiLullo] determined that when two (or more) parties have an insurable interest in a premises, it would be economically redundant for them to have identical or overlapping coverage . . . When principles of equity are invoked, such as with subrogation, a court must examine both the public policy implicated and the basic elements of fairness . . . In doing so, the court concluded that it would be inappropriate to create a default rule that would require that every tenant carry sufficient insurance to cover the cost of an entire building that was, presumably, already insured by the landlord . . . This duplication of insurance would, in [the court's] view, constitute economic waste and, in a multiunit building, the waste would be compounded by the number of tenants." (Citations omitted; internal quotation marks omitted.) Wasko v. Manella, supra, 74 Conn. App. 38-39.
"The court in DiLullo recognized that tenants and landlords are always free to allocate their risks and coverages by specific agreements, in their leases or otherwise . . . The court held, however, that in the absence of an express agreement to the contrary, there is no right of subrogation on the part of a landlord's fire insurer against a tenant of the landlord's premises . . . An express agreement is required by DiLullo because, as pointed out by the court, neither landlords nor tenants ordinarily expect that the landlord's insurer would be proceeding against the tenant, unless expert counseling to that effect had forewarned them . . .
"Further, such agreement must be specific as to the landlord's insurer having a right of subrogation against the tenant. The [ DiLullo] trial court found that the parties did not specifically agree with each other . . . regarding whether the landlord's insurer would have a right of subrogation against the tenant. [The Supreme Court] note[d], however, that such an agreement generally may be evidenced by the parties' lease, or by the tenant being named as an additional insured in the landlord's policy." (Citations omitted; emphasis added; internal quotation marks omitted.) Nationwide Mutual Fire Ins. Co. v. Maurillo, Superior Court, judicial district of Meriden, Docket No. CV 00 0273558 (March 14, 2003, Graham, J.) ( 34 Conn. L. Rptr. 299).
Subrogation does not adhere to the facts of the present case. There was neither an express agreement that Taylor's insurer would have a right of subrogation against Warner, nor was there any evidence presented to imply that Warner was named as an additional insured in Taylor's policy. There is, therefore, no right of subrogation on the part of the Hartford Fire Insurance Company.
As to Scott Warner the court makes the following findings. Scott Warner was properly served and based on Linda Warner's testimony, he is not in the military service. Scott has, however, failed to appear. Furthermore, Scott has not taken any action to reverse the court's entry of default on August 19, 2002. Accordingly, the court enters a default judgment against Scott Warner for failure to appear. However, for the same reasons that Hartford Fire does not have a right of subrogation against Linda Warner, it would not have a right of subrogation against Scott Warner. This finding is buttressed by the fact that (1) there was no express agreement between Scott Warner and Dana Taylor regarding the subrogation rights of Taylor's insurer and (2) Scott was Linda Warner's guest and as such would not anticipate that he would become a defendant in an action brought by the insurer of Linda Warner's landlord.
COSGROVE, JUDGE.