Opinion
No. CV 06 5002440
August 10, 2009
MOTION FOR SUMMARY JUDGMENT #128
FACTS
On September 18, 2006, the plaintiff, Nationwide Insurance Company, commenced this action by service of process against the defendant, Greater New York Insurance Company. In its two-count amended complaint, the plaintiff is seeking a declaratory judgment as to its liability to pay insurance for a fire that occurred at Coachlight Condominiums Complex on May 1, 2006. On May 1, 2005, the plaintiff issued a renewal insurance policy to Coachlight with coverage for property damage and an expiration date of May 1, 2006 at 12:01 a.m. During April 2006, the plaintiff informed Coachlight that it would be increasing the premium for the May 1, 2006 renewal of the plaintiff's policy due to increased coverage limits. The plaintiff, subsequently, on April 5, 2006, issued a commercial billing statement to Coachlight, reflecting the price increase and requiring a payment of $10,715 by May 9, 2006. On May 1, 2006, at 9:43 a.m., Greater New York Insurance Company, the defendant, bound coverage to Coachlight for new insurance policy at a lower premium. That policy became effective on May 1, 2006 at 12:01 a.m. As fate would have it, on the afternoon of May 1, 2006, a fire occurred at the complex. After May 1 and by May 9, 2006, the plaintiff Nationwide Property Casualty Insurance Company received a check from Coachlight in the amount of $10,715.00.
In count one of its complaint, the plaintiff alleges that Coachlight, by purchasing the defendant's policy, elected not to renew its policy with the plaintiff and therefore the plaintiff's policy was no longer in effect at the time of the fire. The plaintiff further alleges that Coachlight: (1) had no intention of renewing its policy with the plaintiff; (2) accepted the defendant's policy with the intention that it would replace its current policy with the plaintiff and, (3) only sought to renew its policy with the plaintiff after the fire occurred. In count two of the complaint, the plaintiff alleges that in the event that the court finds that the plaintiff is liable, the plaintiff is only obligated to provide excess coverage after the defendant's policy has been exhausted. The plaintiff is seeking a declaratory judgment as to these claims.
The defendant filed an answer, special defenses and a counterclaim. In its counterclaim, the defendant alleges the following: (1) the plaintiff was required to send its renewal policy within thirty days and because it failed to do so, under General Statutes § 38a-323, the policy automatically renews; (2) Coachlight, by sending payment to the plaintiff before May 9, 2006, renewed its policy with the plaintiff; and, (3) based upon the two parties' respective policies, the plaintiff is required to pay a pro rata share of loss.
On September 30, 2006, the defendant filed a motion for summary judgment. Memoranda in support and in opposition have been filed and the matter, having been heard, is now before the court.
DISCUSSION A Motion for Summary Judgment Standard
"Practice Book § 17-49 provides that 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. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).
B Liability Under General Statutes § 38a-323
The defendant first argues that it is entitled to summary judgment as to count one as a matter of law because the plaintiff failed to issue its renewal notice within thirty days of the anniversary of the policy date as required by General Statutes § 38a-323. The defendant argues that because the plaintiff failed to abide by the statutory notice requirement, the policy automatically renews. The defendant further argues that the plaintiff's attempt to extend the insured's renewal time period by allowing the insured to accept the offer to renew by May 9, 2006, eight days after the anniversary policy and more than thirty days from the date in which the renewal notice was issued, does not cure the statutory violation.
The plaintiff counters that § 38a-323 is inapplicable to the present case because the defendant does not fall within the class of persons that the statute was intended to protect. First, § 38a-323 is simply a notice statute that was enacted to protect the insured from suffering a lapse in insurance coverage in the event the insured did not receive sufficient notice of their insurer's intent not to renew. Because, in the present case, there was no lapse in the insured's coverage, § 38a-323 is inapplicable. The plaintiff also argues that the legislature never intended to protect other insurance companies from losses incurred as the result of the failure of another insurer to give adequate notice to its insured. The plaintiff next contends that the notice requirement under § 38a-323 is inapplicable in the present case because the plaintiff's changes to the policy did not result in an actual increase in the premium. Because the policy's overall coverage was increased, there was no actual increase in the amount of premium per dollar coverage and no real increase in premium warranting notice under the statute.
"It is well established that [i]n order to establish liability as a result of a statutory violation, a plaintiff must satisfy two conditions. First, the plaintiff must be within the class of persons protected by the statute . . . Second, the injury must be of the type which the statute was intended to prevent." (Citations omitted; internal quotation marks omitted.) Gore v. People's Savings Bank, 235 Conn. 360, 375-76, 665 A.2d 1341 (1995). The inquiry into whether the plaintiff is within the class of persons protected by the statute is "ordinarily a question of law for the court . . ." Coughlin v. Peters, 153 Conn. 99, 101 214 A.2d 127 (1965).
General Statutes § 38a-323(b)(1), provides in relevant part that "a premium billing notice for any policy subject to the requirements of sections 381-663 to 38a-696, inclusive . . . shall be mailed or delivered to the insured by the insurer or its agent not less than . . . thirty days in advance of the policy's renewal or anniversary date . . . such notice shall not be required for a commercial risk policy if the premium for the ensuing policy period is to increase less than ten per cent on an annual basis." Additionally, § 38a-323(c) provides in relevant part that the "[f]ailure of the insurer or its agent to provide the insured with the required notice of nonrenewal or premium billing shall entitle the insured to: (1) Renewal of the policy for a term of not less than one year . . ."
The Superior Court has concluded that in an action brought by the insured, where an insurer fails to give adequate notice under § 38a-323(c), the insured is entitled to a policy renewal. See, e.g., Wallison v. Metropolitan Property Casualty Ins. Co., Superior Court, judicial district of Litchfield, Docket No. CV 97 0075547 (July 29, 2002, Moraghan, J.T.R.) ( 32 Conn. L. Rptr. 622). Neither the appellate courts nor the Superior Court have ever determined whether an insurer is within the protected class of the statute and is similarly entitled to bring an action under the statute. A review of caselaw from other jurisdictions does not reveal any other decisions in which a similar question is presented. Thus, this issue is a matter of first impression for the court.
"It is well established that [t]he meaning to be given a statute is determined by legislative intent and that legislative intent must be determined by language actually used in the legislation. Eason v. Welfare Commissioner, 171 Conn. 630, 634, 370 A.2d 1082 (1976), cert. denied, 432 U.S. 907, 97 S.Ct. 2953, 53 L.Ed.2d 1079 (1977). When the language of a statute is plain and unambiguous, we need look no further than the words themselves because we assume that the language expresses the legislature's intent. American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 193, A.2d 171 (1987)." (Internal quotation marks omitted.) Stetson v. Northland Ins. Co., 42 Conn.App. 177, 183, 678 A.2d 1000 (1996). The plain language of § 38a-323(c) states in no uncertain terms that is the insured who is entitled to a renewal of his policy. Nothing in the statute indicates that an insurance company or an individual other than the insured is within the class of persons protected by the statute or has a right to recovery under the statute.
Not only must the plaintiff be within the class of persons protected by the statute, but the injury must be of the type which the statute was intended to prevent. When § 38a-323 was enacted, in 1985, there was a driving concern about the escalation of insurance rates and the inability of the consumer to afford and maintain insurance. 29 H.R. Proc. Pt. 5, supra, p. 1436, remarks of Representative Morag L. Vance. In 1986, the legislature increased the notice requirement from thirty days to forty-five days for the following year only with the goal of giving consumers adequate notice "so that if the price should be beyond [the insured's] means, [the insured has] necessary time to hopefully shop and find an alternative." 29 H.R. Proc. Pt. 5, supra, p. 1437-38, remarks of Representative Morag L. Vance. Thus, the purpose of the statute is not to ensure that the insured carries insurance at all times, but only to ensure that the insured has adequate notice so that it may find suitable alternative insurance. Lack of sufficient time to find suitable alternative insurance is the harm the legislature intended to address. Thus, where sufficient notice is given and the insured fails to renew, the insurance company is not liable despite the fact that the insured may be left without insurance. Progressive Northwestern Ins. Co. v. Torres, Superior Court, judicial district of New Britain, Docket No. CV 98 49585 (October 5, 1999, Kremski, J.T.R.); see also Babis v. Guardier, Superior Court, judicial district of Fairfield, Docket No. CV 90 277440 (December 6, 1993, Belinkie, J.). In Commercial Union Ins. Co. v. Connors, 44 Mass.App. 538, 542, 679 N.E.2d 1012 (1997) the court concluded that failure of the defendant insurance company to comply with the thirty-day nonrenewal notice requirement in the insured's policy did not make the insurance company liable for the plaintiff's loss because the plaintiff had sought insurance elsewhere and a nonrenewal notice would have been superfluous. "The purpose of the notice clause, in other words, is to alert the insured of an impending termination of coverage so that he or she will have reasonable time to procure a replacement policy." Id., 541.
Additionally, in 1985, the statute was amended to reflect that in the case of automobile insurance, the renewal provision would still apply even if the insured had obtained new insurance. Notably, that provision is no longer in the statute, and specifically applied only to automobile insurance policies. 28 H.R. Proc. Pt. 3, 1985 Sess., p. 3185-86, Remarks of Representative Morag L. Vance.
In the present case, the defendant, the insured's insurance company at the time of the loss on May 1, 2006, is bringing its counterclaim action under General Statutes § 38a-323(b)(1) and (c) on its own behalf to recover from the insured's allegedly former insurance company. Unlike the plaintiff in Wallison v. Metropolitan Property Casualty Ins. Co., supra, 32 Conn. L. Rptr. 622, the insured in the present case had knowledge of the increase in premium, was able to find alternative coverage, and most importantly is not the party in the action seeking recovery under the statute. Thus, unlike the plaintiff in Wallison, the defendant in the present case, does not fall within the class of persons that the statute is intended to protect and does not claim injury of the nature protected by the statute. The defendant has no right to recovery under § 38a-323(b)(1) and (c) and the statute is inapplicable to the present case.
C Liability Under Contract Principles
The defendant argues that the plaintiff is still liable because in sending its renewal premium, the plaintiff extended an offer of insurance to Coachlight and Coachlight, by remitting payment before May 9, 2006, accepted this offer. In support of its argument, the defendant has attached a copy of the check issued by Coachlight, dated April 24, 2006.
The plaintiff counters that Coachlight rejected its offer by: (1) communicating to the plaintiff that it would be "going with Greater New York;" (2) notifying the defendant of the loss instead of the plaintiff and, in doing so, referring to the plaintiff's policy as its prior insurance provider; and, (3) obtaining a new policy of insurance with the intention of replacing the plaintiff's policy." In support, the plaintiff attaches the certified deposition transcripts of Coachlight's property manager, James Banno, Coachlight's president, Joyce Dollman, and its secretary, Joan Hartmen.
Banno states that he had indicated to the plaintiff's agent that Coachlight would not be renewing its policy and would be "going with" the defendant for its insurance needs. Banno also states that in filling out the defendant's application for insurance, he listed the plaintiff as Coachlight's "prior" insurer and believed at the time that it would be the prior insurer. Hartmen testified at deposition that the association had no intention of having two policies because it was not financially feasible. Banno, also testified that Coachlight had no intention of having two insurance policies at the time of loss, and it was not until after the loss occurred that Coachlight considered having two policies.
The defendant, however, contends that Coachlight intended to and accepted the plaintiff's renewal offer. In support of this argument, the defendant points to Coachlight's check dated April 25, 2006, and Coachlight's payment to the plaintiff by May 9, 2006. The defendant also relies on the meeting minutes of Coachlight's board dated April 24, 2006 to show that the board authorized Banno to accept the plaintiff's renewal offer and remit payment to the plaintiff. In his deposition, Banno does state that on the day of loss he did not intend to cancel Coachlight's policy with the plaintiff and that even though Coachlight accepted the defendant's offer of insurance, he wanted to keep the policy for the time being.
"The existence of a contract is a question of fact to be determined by the trier on the basis of all the evidence . . . To form a valid and binding contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between the parties . . . To constitute an offer and acceptance sufficient to create an enforceable contract, each must be found to have been based on an identical understanding by the parties." (Citations omitted; internal quotation marks omitted.) L R Realty v. Connecticut National Bank, 53 Conn.App 524, 534, 732 A.2d 181, cert. denied, 250 Conn. 901, 734 A.2d 984 (1999). Whether an agreement is reached depends upon "[t]he intention of the parties manifested by their words and acts." Hess v. Dumouchel Paper Co., 154 Conn. 343, 347, 225 A.2d 797 (1966).
"A renewal policy is a separate contract, independent of the original policy, requiring its own elements of offer and acceptance." (Internal quotation marks omitted.) Carter v. Harleysville Worcester Ins. Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 0286830 (October 11, 2005, Shluger, J.) [ 40 Conn. L. Rptr. 121]; Phelan v. Everlith, 22 Conn.Sup. 377, 379, 173 A.2d 601, 1 Conn. Cir.Ct. 43 (1961). "In order for the renewal of an insurance policy to be effective, there must be an offer to renew and acceptance thereof." 2 G. Couch, Insurance, (3d Ed. 1995) § 29:16 p. 29-23.
"The acceptance of a proposal for insurance must be evidenced by some act that binds the party accepting. A mental resolution, that can be changed is not sufficient." Hodge v. National Fidelity Ins. Co., 221 S.C. 33, 68 S.E.2d 636 (1952). For example, "the remittance by the insured of his or her personal check to the [insurer] for the correct amount of the premium constitutes an acceptance of an offer to reinstate the policy." 2 G. Couch, Insurance, (3d Ed. 1995) § 29:18 p. 29-25.
In this case there is a genuine issue of material fact exists as to whether Coachlight accepted or rejected the plaintiff's renewal offer. The defendant has provided evidence showing that Coachlight remitted payment to the plaintiff and manifested an intent to keep the policy at the time it accepted the defendant's policy. The plaintiff, on the other hand, has provided evidence indicating that Coachlight did not intend to renew its policy with the plaintiff and intended to replace the plaintiff's policy with the defendant's policy. Additionally, the plaintiff has introduced evidence indicating that Coachlight rejected the defendant's renewal offer by expressing to its agent that it was going with the defendant and subsequently obtaining an insurance policy from the defendant. Therefore, a genuine issue of material fact exists as to whether Coachlight's actions are indicative of an intent to accept or reject the plaintiff's renewal offer. Consequently, the defendant has not met its burden of establishing the absence of genuine issues of material fact.
Known Loss Doctrine
Because an issue of material fact remains as to whether Coachlight rejected the offer to renew prior to the loss, the court need not reach the plaintiff's argument that Coachlight is barred from accepting the plaintiff's offer to renew under the known loss doctrine.
The plaintiff relies on the certified deposition testimony of Banno that he signed the Coachlight check and placed it in the mail after the loss date of May 1, 2006. The defendant counters that Coachlight intended to accept the renewal offer, took steps to accept the renewal offer, and ultimately accepted the offer prior to the loss date and points to Coachlight's check dated April 25, 2006. The defendant argues that the date appearing on the check shows that the check was issued prior to the fire. The defendant also points to Banno's statement that the check for the renewal payment was issued prior to the fire and to the minutes of the April 26 meeting of Coachlight's board of directors authorizing payment to the plaintiff prior to the fire.
"A mere offer to renew the policy, in order to bind the insurance company, must be accepted before a loss thereunder has occurred." 2 G. Couch, Insurance, (3d Ed. 1995) § 29:18 p. 29-25. This concept coined as the known loss doctrine "provides that one may not obtain insurance for loss that either already has taken place or is in progress." Travelers Property Casualty v. H.A.R.T., Superior Court, judicial district of New Britain, CV 98 0485730 (May 18, 2001, Aurigemma, J.) [ 29 Conn. L. Rptr. 635]. Thus, "in its most simplistic formulation, [the doctrine] states that one may not insure against loss of building after the building has burned down." Steadfast Ins. Co v. Purdue Frederick Co., Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 02 0191697 (April 11, 2006, Taggart, J.) ( 41 Conn. L. Rptr. 183, 184).
"[Our Appellate] courts have not addressed the known loss or loss in progress doctrine." (Internal quotation marks omitted.) Peck v. Public Service Mutual Ins. Co., 363 F.Sup.2d 137, 145 (D.Conn. 2005). "[T]he United States District Court for the District of Connecticut, faced with the issue under Connecticut law, has concluded that the Connecticut Supreme Court would adopt a narrow construction of the doctrine." Steadfast Ins. Co. v. Purdue Frederick Co., supra, 41 Conn. L. Rptr 183, 184. Thus, insurance coverage would be precluded "for damage deliberately done before the inception of insurance, or for damage that has been fraudulently concealed from the insurer prior to the purchase of the insurance policy." (Internal quotation marks omitted.) Peck v. Public Service Mutual Ins. Co., supra, 363 F.Sup.2d 145 (D.Conn. 2005). In short, insurance coverage is precluded where the insured was aware of "actual losses," not "potential losses." Id., 146. Superior courts have addressed the known loss doctrine and, in interpreting the doctrine, have similarly applied the same narrow construction In Travelers Property Casualty v. H.A.R.T, supra, Superior Court, judicial district of New Britain, CV 98 0485730, the court concluded that the known loss doctrine barred coverage where the insured sought to reinstate its policy after learning that a fatal accident occurred as the result of its negligence and misrepresented to the insurer that it was seeking coverage because of an impending road trip. The court concluded that because the insured's "knowledge of the loss was clear and unequivocal," the "accident is uninsurable as a matter of law" and a "known loss." Id. In Steadfast Ins. Co. v. Purdue Frederick Co., supra, 41 Conn. L. Rptr. 183, 184, the court declined to apply the known loss doctrine to claims stemming from the ingestion of oxycontin where the insured knew before the inception of the insurance the deleterious effects of the drug but not a single case had been filed against the insured until after the inception of the policy. Id. The court concluded there were no known losses that would invoke the known loss doctrine under Connecticut law. Id.
The known loss doctrine may well apply in the present case. Whether it does depends on unresolved questions of material fact going to the plaintiff's ability to prove that Coachlight accepted its offer after the loss occurred, that is after May 1, 2006.
For the reasons discussed above, a genuine issue of fact exists as to whether the plaintiff accepted the insurance prior to or after the loss. There is evidence that the check issued to the plaintiff was dated and authorized prior to the loss but also evidence that Banno did not receive the check or place it in the mail until after the loss date. Banno indicated that on the morning of the loss, he did not intend to reject the plaintiff's renewal offer and wanted to hold onto the policy for the time being. On the other hand, he also indicated that the morning before the loss, he was authorized to accept the defendant's offer of insurance and that it was never the intention of Coachlight to have two insurance policies. He further stated that it was not until after the loss that Coachlight considered carrying two policies to cover the complex. Thus, a genuine issue of material fact exists as to whether Coachlight accepted the plaintiff's offer of insurance or intended to accept the offer prior to the loss.
D Excess Insurance Provision
The defendant claims that in both the plaintiff and the defendant's policies, the plaintiff must pay a pro rata share of the loss. The plaintiff argues that it is only required to pay the excess of the amount not covered by the defendant's policy. Because genuine issues of material fact exist as to whether the plaintiff is at all liable to the defendant for losses sustained by Coachlight, the court will not address this issue at this juncture. It is more appropriate for the factual issues as to liability be disposed of before the court reaches the issue as to the requisite amount of damages.
CONCLUSION
In summary, 1) General Statutes § 38a-323 does not provide Greater New York Mutual Insurance Company, plaintiff on the counterclaim, with a right of action against Nationwide Property Casualty Insurance Company, and 2) there are genuine issues of fact as to whether and/or when Coachlight, the insured, accepted the offer of Nationwide to renew the insurance policy to cover property damage.
For the foregoing reasons, the motion for summary judgment of Greater New York Mutual Insurance Company is denied.