Opinion
No. CV02-0174638 S
December 19, 2005
MEMORANDUM OF DECISION
On June 26, 2004, Anthony Pacileo (Pacileo), a West Haven policeman, and Gerardina Pacileo, filed an amended six-count complaint against the city of West Haven, TIG Insurance Company (TIG), Eric Barone, Twin City Fire Insurance Company (Twin City), Bironn Wilkes, and Avis Hemingway. This action itself arises out of injuries and losses allegedly sustained on September 11, 2000 as a result of a collision between Pacileo and Barone on Campbell Avenue in West Haven. Pacileo was traveling in a southbound direction on Campbell Avenue and had just passed the intersection of Court Street when Barone traveling in a northbound direction on Campbell Avenue crossed the centerline and struck Pacileo head on. Barone was subsequently struck from behind by Wilkes, which caused Barone to strike Pacileo again. Pacileo suffered physical, emotional and financial injury.
Pacileo was operating a police car owned by West Haven and insured by TIG and by Twin City.
In count one, Pacilco alleges a breach of contractual obligations under West Haven's insurance policy with TIG and statutory obligations under General Statutes § 38a-336 by West Haven and TIG in failing to pay Pacileo the damages to which he is entitled to recover under the policy. In count two, Pacileo alleges a breach of contractual obligation by Twin City in failing to pay Pacileo the damages which he is entitled to recover under his automobile liability policy providing uninsured and/or underinsured (UM/UIM) motorist benefits with Twin City. In counts three and four, Pacileo alleges negligence against Barone and Wilkes respectively. In count four, Pacileo also alleges vicarious liability against Hemingway, the owner of the vehicle Wilkes was permitted to drive. In count five, Gerardina Pacileo alleges negligence against all the defendants. Finally, in count six, the plaintiffs seek a declaratory judgment that West Haven is responsible for providing UM/UIM coverage benefits in an amount up to and including $100,000, excluding set-offs, and that TIG is responsible for paying $900,000 in UM/UIM coverage benefits over and above that amount.
In the alternative, the plaintiff seeks a declaratory judgment, that if West Haven is limited to the payment of $20,000 in UM/UIM coverage benefits, then Twin City must provide UM/UIM coverage benefits in an amount over and above the $20,000 up to and including $100,000, and TIG for the payment of $900,000 in UM/UIM coverage benefits over and above $100,000.
On August, 6, 2004, West Haven objected to Pacileo's request for leave to amend his complaint. On September 17, 2004, Pacileo replied that West Haven's objection is not the proper procedural vehicle, and must be raised on a motion to strike. On December 28, 2004, TIG filed a cross claim against the co-defendant West Haven alleging that West Haven entered into a contract of insurance with TIG in which it agreed to pay on behalf of West Haven any portion of a loss in excess of the retained amount of $100,000. Therefore, TIG alleges that for each occurrence of which it claims there were two, West Haven would be responsible to pay $100,000 and TIG would pay damages above $100,000, not to exceed $900,000.
In addressing whether West Haven was self-insured and how West Haven, TIG and Twin City are financially obligated to pay uninsured/underinsured coverage, the Pacileos requested a declaratory judgment on March 2, 2005. On August 17, 2005, Pacileo made an offer of judgment to settle this claim and to stipulate to a judgment in his favor in the sum of $199,999.
West Haven asserts that at all relevant times it was a self-insured municipality with a self-retention policy for claims in excess of $100,000 up to a limit of $900,000 with TIG. West Haven argues that our Supreme Court identified West Haven as a self-insurer and explained that pursuant to General Statutes § 38a-371(c), West Haven elected to become a self-insurer for its automobile liability including uninsured motorist coverage. Conzo v. Aetna Ins. Co., 243 Conn. 677, 682 (1998). The City further argues that the fact that it had an excess insurance policy with a self-insured retention provision does not void its self-insured status. Serra v. West Haven, Superior Court, judicial district of New Haven, Docket No. No. CV 01 0447771 (January 8, 2002, Robinson, J.) ( 31 Conn. L. Rptr. 210), aff'd, CT Page 16460 77 Conn.App. 267 (2003). West Haven also asserts that, despite its failure not to file a notice with the commissioner that it was self-insured and not to receive a certificate of self-insurance, it is still self-insured. West Haven states that in Serra, the Appellate Court dismissed the plaintiff's argument that West Haven was not self-insured on the grounds that it failed to file a notice with the commissioner and receive a certificate because they "provide[d] no legal analysis as to what effect, if any, this fact would have on his claim . . ." Id., 273-74.
TIG counters that West Haven is not a self-insurer as there is an enforceable insurance contract between West Haven and TIG. Furthermore, it maintains that its insurance policy with West Haven does not contain any language defining the policy as being "excess" coverage. TIG argues that although its coverage is in excess of West Haven's self-insured retention, this arrangement does not automatically cause the coverage to be defined as "excess"; otherwise, every insurance policy in which the insured pays a deductible would be considered "excess" insurance. TIG also counters that the Appellate Court's determination in Serra that West Haven is self-insured is not binding in the present case. Serra v. West Haven, supra, 77 Conn.App. 267. TIG bases this argument on the following: (1) at the time of the Serra trial, Coregis was West Haven's insurer; (2) the trial court determined that West Haven was self-insured and that Coregis's coverage was excess based upon the Coregis policy, which defined West Haven's coverage as a "general liability excess" policy. (Emphasis added.) Serra v. West Haven, supra, 31 Conn. L. Rptr. 213; and (3) West Haven's policy with TIG is not defined as an excess policy, rather it is a "municipal retained amount policy" and, therefore, the identity of the insurer as either an excess or primary insurer is a factually specific issue, contingent upon the defining language of the specific insurance policy at issue.
Pacileo argues that the "concept of self-insurance entails the absence of any insurance." Thus, he avers that because West Haven had an insurance policy on September 11, 2000, it was precluded from receiving a certificate of self-insurance from the Connecticut insurance commissioner, "just as any large commercial business with an insurance policy would be precluded from claiming the status of a self-insurer." Furthermore, he alleges that West Haven never filed a notice in accordance with the mandates of General Statutes § 38a-371(c) that it was a self-insurer with the insurance commissioner, and that when West Haven did provide this notice to the insurance commissioner, it was not until January 17, 2002, well after the date the plaintiff sustained his injuries. Pacileo also asserts that on January 10, 2001, the risk manager of West Haven admitted in a memorandum that the city never filed a notice of self-insurance, and, therefore, even the risk manager understood that, as of September 11, 2000, West Haven could not claim self-insured status.
Section 38a-371 sets out the procedure to be followed for a municipality to become a self-insurer. Subsection (c) provides: "Subject to approval of the Insurance Commissioner the security required by this section, may be provided by self-insurance by filing with the commissioner in satisfactory form: (1) A continuing undertaking by the owner or other appropriate person to perform all obligations imposed by this section; (2) evidence that appropriate provision exists for the prompt and efficient administration of all claims, benefits, and obligations provided by this section; and (3) evidence that reliable financial arrangements, deposits or commitments exist providing assurance for payment of all obligations imposed by this section substantially equivalent to those afforded by a policy of insurance that would comply with this section. A person who provides security under this subsection is a self-insurer. A municipality may provide the security required under this section by filing with the commissioner a notice that it is a self-insurer." (Emphasis added.)
Our Supreme Court said in Conzo v. Aetna Ins. Co., supra, 677, that West Haven was a self-insurer. Conzo involved a West Haven police officer who was injured while occupying a car owned by West Haven, which subsequently denied coverage of the police officer's claim for uninsured motorist benefits. Conzo v. Aetna Ins. Co., supra, 678-79. The court held that West Haven was a self-insurer and, therefore, under General Statutes § 38a-336 liable to provide the police officer with uninsured motorist benefits. The court explained that "West Haven, pursuant to § 38a-371(c), elected to become a self-insurer for its automobile liability including uninsured motorist coverage. Section 38a-371(c) provides that in making the election to become a self-insurer, West Haven must provide assurance for payment of all obligations imposed by this section substantially equivalent to those afforded by a policy of insurance that would comply with this section. Therefore, upon electing to become a self-insurer, West Haven not only became an insurer; General Statutes § 38a-363(b); but also, the functional equivalent of a named insured under § 38a-336(f)." (Internal quotation marks omitted.) Id., 682-83.
General Statutes § 38a-336(a)(1) provides in relevant part: "Each automobile liability insurance policy shall provide insurance herein called uninsured and underinsured motorist coverage, in accordance with the regulations adopted pursuant to section 38a-334, with limits for bodily injury or death not less than those specified in subsection (a) of section 14-112, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and underinsured motor vehicles and insured motor vehicles, the insurer of which becomes insolvent prior to payment of such damages, because of bodily injury, including death resulting therefrom . . ."
General Statutes § 38a-363(b) provides in relevant part: "`Insurer' or `insurance company' includes a self-insurer and a person having the rights and obligations of an insurer under sections 38a-19 and 38a-363 to 38a-388, inclusive, as provided by section 38a-371."
General Statutes § 38a-336(f) provides in relevant part: "Notwithstanding subsection (a) of section 31-284, an employee of a named insured injured while occupying a covered motor vehicle in the course of employment shall be covered by such insured's otherwise applicable uninsured and underinsured motorist coverage."
As cited to previously, a similar situation was addressed by the Superior Court in Serra v. West Haven, supra, 31 Conn. L. Rptr. 210. That case also involved a plaintiff police officer who was injured while occupying an emergency vehicle owned by West Haven. Id., 211. West Haven denied coverage of the police officer's claim for uninsured motorist benefits. Id. After stating the holding, the court explained that West Haven was self-insured at the time of the accident despite the fact that it had a $950,000 insurance policy with a self-retention that covered UM/UIM motorists. Id., 213. The Appellate Court affirmed the trial court's holding that the City was self-insured at the time of the accident and pointed to the chosen language on the declaration page of West Haven's policy with Coregis, which was relied on by the trial court and stated in pertinent part, "that it is a general liability excess policy with a self-insured retention of fifty thousand ($50,000) per occurrence. (Emphasis added.) Id.
The court, pursuant to General Statutes § 38a-334, held that West Haven does have an obligation to provide at least the minimum provisions of UM/UIM motorists benefits for the emergency vehicle. Serra v. West Haven, supra, 31 Conn. L. Rptr. 210. The court also held that West Haven, as a self insurer, did not have to provide written notice of minimum coverage as required in § 38a-334 because "it would make no sense to apply the written request literally, for reason that it would then require the city to give written notice to itself." Id. Section 38a-334 provides in relevant part: "The Insurance Commissioner shall adopt regulations with respect to minimum provisions to be included in automobile liability insurance policies . . . covering private passenger motor vehicles . . ."
In the present case, at all relevant times, West Haven had an insurance policy agreement with TIG. Under this policy, TIG was responsible for claims against West Haven in excess of $100,000 and up to a limit of $900,000. The issue to be resolved is whether this insurance policy agreement, for the purposes of General Statutes § 38a-336, was an automobile liability insurance policy including UM/UIM motorist coverage, or a general liability excess policy with a self-insured retention.
West Haven, as a municipality, chose not to file notice of self-insurance with the commissioner of insurance by or before the time of the accident in the present case. In fact, West Haven did not file the requisite notice until January 17, 2002, two years and four months after Pacileo's accident. As argued by Pacileo, West Haven's risk manager admitted in a memorandum on January 10, 2001, that the city did not have a letter of notice of self-insurance on file with the state of Connecticut. The risk manager also indicated that in the opinion of West Haven's former finance director, the city was not a self-insured municipality, rather the city only carried a self-insured deductible on its insurance policy. Based on the risk manager's memorandum and her subsequent action of filing a notice of self-insurance with the state on January 17, 2002, it is evident that West Haven understood it could not claim self-insured status before January 17, 2002. Because it had not filed the proper notice with the state, West Haven had not elected to become a self-insurer for its automobile liability as required by § 38a-371(c).
Submitted with the plaintiff's brief dated March 2, 2005, is a letter from Lorusso to the State of Connecticut Insurance Department dated January 17, 2002. The letter states that "[t]his . . . is to notify you that the City of West Haven is a self-insurer for the Uninsured/Underinsured Motorist Coverage that is required under statutory limits of the State of Connecticut. The city maintains a self-insured retention of $100,000 on our Auto Liability Policy which went into effect on 7/01/01-7/01/02." This notice was received by the insurance department on January 22, 2002.
The letter was submitted with the plaintiffs' brief dated March 2, 2005.
Lastly, in Serra, the court's conclusion that West Haven was self-insured and its insurance coverage was excess, was based upon it defining West Haven's coverage as a "general liability excess" policy. (Emphasis added.) Serra v. West Haven, supra, 31 Conn. L. Rptr. 213. West Haven's policy with TIG is not defined as an excess policy, rather it is a "municipal retained amount policy." Therefore, Serra cannot be a binding precedent on the present case.
As a result, West Haven had an automobile liability insurance policy and not a general liability excess policy with a self-insured retention. Thus, West Haven was not self-insured at the time of the plaintiff's accident on September 11, 2000, and did not become self-insured until January 17, 2002, more than two years thereafter.
Assuming arguendo that West Haven was self-insured, then it must be resolved whether the terms of the insurance policy between West Haven and TIG require West Haven to provide more than the mandatory UM/UIM statutory minimum under General Statutes § 14-112. Section 14-112 provides in relevant part: "To entitle any person to receive or retain a motor vehicle operator's license or a certificate of registration of any motor vehicle . . . the commissioner shall require from such person proof of financial responsibility to satisfy any claim for damages by reason of personal injury to, or the death of any one person, of twenty thousand dollars, or by reason of personal injury to, or the death of, more than one person on account of any accident, of at least forty thousand dollars . . ."
West Haven asserts that based on Boynton v. New Haven, 63 Conn.App. 815, 779 A.2d 186, cert. denied, 258 Conn. 905, 782 A.2d 136 (2001) and Serra v. West Haven, supra, 267, it was not required to provide UM/UIM coverage in excess of the statutory minimum because the Serra court applying the reasoning of Boynton stated that "[t]he fact that West Haven has a $50,000 self-insured retention policy does not remove the presumption that a self-insured municipality elects the statutory minimum amount of coverage in the absence of a writing to the commissioner stating otherwise." Serra v. West Haven, supra, 273. West Haven also argues that nothing in its policy with TIG requires it to provide more than the statutory minimum liability insurance of $20,000.
Pacileo counters in response that according to the express Connecticut UM/UIM motorists coverage of endorsement in the applicable insurance policy, TIG agreed to pay UM/UIM benefit, with a limit of $900,000 for each occurrence, over and above West Haven's retained amount of $100,000. Thus, Pacileo concludes that the statutory minimum UM/UIM coverage requirements are irrelevant since these minimum requirements are the default that must be applied when an insurance policy, or a self-insurer that does not have a policy, does not otherwise provide for such coverage. Pacileo further asserts that inasmuch as West Haven's retained amount of UM/UIM coverage benefits exceeds the statutory minimum UM/UIM requirements, the retained amount governs the level of coverage that it must afford to the plaintiff. See also Brown v. ITT Hartford Life Annuity Ins. Co., Superior Court, judicial district of Waterbury, Docket No. CV 97 0158294 (April 17, 2001, Holzberg, J.); Travelers Indemnity Co. v. Malec, 215 Conn. 399 (1990). As a result, Pacileo maintains that West Haven has a direct obligation to provide $100,000 in UM/UIM coverage to him, and TIG's responsibility will be for the city's uninsured liability up to and including one million dollars.
Pacileo argues that section 38a-334-4 of the Regulations of Connecticut State Agencies implicitly provides that when the "retained limit of self-insurance" exceeds the minimum statutory UM/UIM coverage, the statutes and regulations regarding minimum UM/UIM coverage do not apply. Section 38a-334-4 of the Regulations of Connecticut State Agencies provides: "Exceptions. These regulations do not apply to the insurance afforded under any policy: (1) to the extent that the insurance afforded exceeds the limits specified in subsection (a) of section 14-112 of the General Statutes or (2) if the policy contains an underlying insurance requirement or provides for a retained limit of self-insurance equal to or greater than the limits specified in said subsection (a) of section 14-112."
TIG argues, on the other hand, that if West Haven is correct that its self insured retention provision qualifies it as a self-insured and TIG is an excess insurer, then West Haven is obligated to comply with all the same requirements as a commercial insured. Piersa v. Phoenix Ins. Co., 273 Conn. 519, 528 (2005). Therefore, TIG concludes that West Haven's UM/UIM limits are $100,000 and to allow West Haven to limit its liability to $20,000, in light of its policy with TIG, would make the city not a "functional equivalent of commercial insurers; they would, instead, be the functional superiors of commercial insurers." TIG further argues that "[t]hose who elect to be covered by commercial insurance often elect greater coverage than the minimum; we see no reason for the law to attribute to a self-insurer a presumption that its silence necessarily means an election of only the minimum coverage." Piersa v. Phoenix Ins. Co., 530.
Section 38a-334-6 of the Regulations of Connecticut State Agencies provides in relevant part: "Minimum provision for protection against uninsured motorists. Exceptions. (a) Coverage. CT Page 16465 The insurer shall undertake to pay on behalf of the insured all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured or underinsured motor vehicle because of bodily injury sustained by the insured caused by an accident involving the uninsured or underinsured motor vehicle. This coverage shall insure the occupants of every motor vehicle to which the bodily injury liability coverage applies. `Uninsured motor vehicle' includes a motor vehicle insured against liability by an insurer that is or becomes insolvent . . . (d) Limits of liability. (1) The limit of the insurer's liability may not be less than the applicable limits for bodily injury liability specified in subsection (a) of section 14-112 of the General Statutes, except that the policy may provide for the reduction of limits to the extent that damages have been (A) paid by or on behalf of any person responsible for the injury, (B) paid or are payable under any workers' compensation law, or (C) paid under the policy in settlement of a liability claim. (2) The policy may also provide that any direct indemnity for medical expense paid or payable under the policy will reduce the damages which the insured may recover under this coverage. (3) Any payment under these coverages shall reduce the company's obligation under the bodily injury liability coverage to the extent of the payment. (4) This subsection shall not apply to underinsured motorist conversion coverage except that no payment under a policy providing underinsured motorist conversion coverage shall duplicate payment from any other source . . ." (Emphasis added.).
General Statutes § 38a-334, minimum provisions in automobile liability policies, is the enabling statute for section 38a-334-6 of the Regulations of Connecticut State Agencies.
General Statutes § 14-112 provides in relevant part: "Proof of financial responsibility. (a) When commissioner shall require. To entitle any person to receive or retain a motor vehicle operator's license or a certificate of registration of any motor vehicle when, in the opinion of the commissioner, such person has a record on file with the commissioner which is sufficient, in the opinion of the commissioner, to require evidence of financial responsibility for the reasonable protection of other persons, the commissioner shall require from such person proof of financial responsibility to satisfy any claim for damages by reason of personal injury to, or the death of, any one person, of twenty thousand dollars, or by reason of personal injury to, or the death of, more than one person on account of any accident, of at least forty thousand dollars, and for damage to property of at least ten thousand dollars . . ."(Emphasis added.)
Our Supreme Court discussed uninsured motorist coverage of a self-insured municipality in Piersa v. Phoenix Ins. Co., supra, 519. Piersa involved a police officer who sustained injuries after colliding with an uninsured motorist in an automobile owned and insured by the city of Hartford. Piersa received more than $42,000 in workers' compensation benefits for his injuries from Hartford. He also sought uninsured motorist benefits from Hartford, a self-insured municipality. Hartford refused such benefits claiming that its coverage was limited to $20,000 per person and $40,000 per occurrence and that Piersa's receipt of workers' compensation benefits in excess of $20,000 precluded his right to further recovery. The trial court and, subsequently, the Appellate Court found for the city concluding that Hartford was not required to create a writing to reduce its uninsured motorist coverage by the amount of workers' compensation benefits paid. See Piersa v. Phoenix Ins. Co., supra, 521-22 (2004).
The Supreme Court reversed the decision and held in Piersa v. Phoenix Ins. Co., supra, 273 Conn. 519, that the proper construction of the language of § 38a-334-6(d)(1)(B) providing that a municipal self-insurer may reduce the limits of its uninsured motorist coverage by the amount of workers' compensation benefits paid did require the city to provide a written document indicating that limitation on benefits. The Court also noted that the legislative intent to create a uniform scheme of uninsured motorist coverage applicable to self-insurers as well as commercial insurers imposes on self-insurers the same obligations that commercial insurers have with respect to uninsured motorist laws. Therefore, self-insurers, like commercial insurers, are required to provide written documentation specifying the insurers selected reductions in limits and the city's notification to the state insurance commissioner of its election to be self-insured and its selection of minimum coverage does not automatically constitute notice of all permitted reductions in limits.
In reaching this decision, the court concluded that "the language of the regulation must be interpreted so as to require a municipal self-insurer that wishes to impose permitted limits on its obligations as such to do so by a written document that appropriately provides for reduction of limits." Piersa v. Phoenix Ins. Co., supra, 527. The court indicated that it reached this conclusion for several reasons. First a self-insured municipality has a "dual role of insurer and insured" and assumes "the obligations of an insurer and the rights of an insured. One of its obligations as an insurer is that it provide assurance for payment of all obligations imposed by [§ 38a-371(c)] substantially equivalent to those afforded by a policy of insurance that would comply with [that] section." (Internal quotations omitted.) Id., 528. Furthermore, "the legislature intended to create a uniform scheme of uninsured motorist insurance coverage applicable to self-insurers as well as commercial insurance carriers . . . and . . . that self-insurers have the same obligation as commercial insurers with respect to uninsured motorist laws." (Internal quotation marks omitted.) Second, to allow self-insurers to take advantage of the limits specified in the regulation issued pursuant to § 38a-336 "by using no language at all — to do so by silence . . . would not be to create a uniform scheme governing commercial and self-insurers; it would, instead, be to create a scheme that gave self-insurers vastly more leeway to reduce their limits than their commercial insurer counterparts. Put another way, under such a scheme, self-insurers would not be the functional equivalent of commercial insurers; they would, instead, be the functional superiors of commercial insurers." Piersa v. Phoenix Ins. Co., supra, 529-30.
If West Haven is deemed a self-insurer in the present case, then the terms of the insurance policy between it and TIG require West Haven to provide more than the statutory minimum liability insurance of $20,000 per person and $40,000 per occurrence. West Haven admits that it did not notify TIG or the state of Connecticut by a written document of any intention "to impose permitted limits on its obligations" as a self-insurer. See Piersa v. Phoenix Ins. Co., supra, 527-28. As a result it failed to meet its obligations with respect to uninsured motorist laws by not providing "written documen[tation] specifying its selected reductions in limits . . ."
For the foregoing reasons, the explicit terms of the insurance policy between West Haven and TIG require West Haven to provide more than the statutory is minimum in § 14-112 for its minimum liability insurance of $20,000, and, therefore, West Haven must provide the first $100,000 of UM/UIM coverage.