Opinion
No. CV02 039 82 49 S
October 16, 2006
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT #139
This action arises out of an automobile accident that occurred on April 14, 2002, between the defendant/third-party plaintiff, Beverly Mathews, and one of the plaintiffs, Zygmunt Paliwoda, who was operating a motor vehicle that was owned by the other plaintiff, Janina Paliwoda. In the underlying complaint, the plaintiffs alleged causes of action against Mathews for negligence and recklessness
On March 23, 2006, Mathews filed a three-count revised third-party complaint against the third-party defendants, the Hartford Insurance Company of the Midwest (Hartford Insurance) and the American Insurance Company (American Insurance). In count one of her complaint, Mathews alleges the following facts: She obtained an automobile insurance policy with Hartford Insurance. After Hartford Insurance issued the policy, Mathews moved. Prior to doing so, she notified Hartford Insurance of her change of address. Hartford Insurance negligently and carelessly failed to update its records. As a result, it did not send Mathews invoices or billing statements after she moved, Mathews did not pay the premium on the policy when it was due, and she did not receive the cancellation notices that Hartford Insurance sent to her because it did not send the notices to her new address. Following the accident, Mathews demanded that Hartford Insurance defend and indemnify her for the plaintiffs' claims. Hartford Insurance refused to do so on the ground that it had already cancelled her policy because she had not paid the premiums. In count two, Mathews alleges that Hartford Insurance is estopped from relying on its assertion that it cancelled the policy because its own negligence led to the cancellation. Mathews seeks damages from Hartford Insurance as well as full indemnification for any liability and damages that she incurs as to the plaintiffs' claims against her. She also asks for a declaratory judgment that her policy with Hartford Insurance was in effect on the date of the accident, and that its cancellation of the policy was ineffective.
Mathews filed the revised third-party complaint pursuant to Practice Book § 10-44, after the court granted American Insurance's motion to strike count three of her previous pleading. Although Mathews filed the revised complaint after Hartford Insurance filed the instant motion for summary judgment as to counts one and two, she did not alter the allegations of counts one and two in the revised pleading. As Mathews filed the revised complaint pursuant to the rules of practice and did not change the allegations against Hartford Insurance, that pleading is the operative third-party complaint for the purposes of this motion for summary judgment.
In count three, Mathews alleges that, on the date of the accident, she had a policy of excess insurance with American Insurance. Following the accident, Mathews asked American Insurance to defend and indemnify her for the plaintiffs' claim, and it refused to do so. Mathews seeks damages from American Insurance as well as a declaratory judgment that her policy covers her liability for any damages that are assessed against her in this action that exceed the limit of her underlying insurance. In the alternative, she asks for a declaratory judgment that her policy provides dropdown coverage for any liability she incurs to the plaintiffs.
Hartford Insurance and American Insurance filed separate answers in which they deny time material allegations of the third-party complaint. As special defenses, Hartford alleges that it is not liable to Mathews because it properly cancelled the policy after Mathews breached the insurance contract by not paying the premiums. In addition, Hartford alleges that Mathews' damages were caused by her contributory negligence in not paying the premiums. As special defenses, American Insurance alleges that it is not liable to Mathews because she did not maintain underlying insurance and she did not give American Insurance timely notice of either the accident or the present action.
Zygmunt Paliwoda's claims against Mathews were tried to the court, Richards, J., on January 6, 2006. The court found that Mathews was negligent and that her negligence was the proximate cause of Zygmunt Paliwoda's injuries. The court awarded him $200,000 in economic damages and $200,000 in noneconomic damages.
On January 9, 2006, after this matter was scheduled for trial, Hartford Insurance moved for permission to file a motion for summary judgment pursuant to Practice Book § 17-44, accompanied by a motion for summary judgment, a memorandum in support, an affidavit and numerous documents. On January 26, 2006, Mathews filed an objection to Hartford Insurance's motion for permission. On February 1, 2006, Hartford Insurance filed a reply to Mathews' objection. On March 7, 2006 Mathews filed a memorandum in opposition to Hartford Insurance's motion for summary judgment, accompanied by an affidavit and several documents. On March 22, 2006, Hartford Insurance filed a reply to Mathews' memorandum in opposition. The court heard oral argument on the motion for summary judgment on March 27, 2006 in order to ensure that the motion for summary judgment was properly before the court, the court heard argument on Hartford Insurance's motion for permission to file the motion for summary judgment on June 5, 2006. The court granted the motion for permission by agreement of the parties.
Aside from the affidavits that they submitted, the parties did not properly authenticate all of the documents that they rely upon. See New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005). Nevertheless, because neither party objects to the admissibility of the other party's documents, and, indeed, they rely on some of the same documents, the court will consider the documents in deciding the present motion.
"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." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 399, 876 A.2d 522 (2005). "[T]he genuine issue aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the [nonmovant] . . . Once the moving party has met its burden . . . the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Martel v. Metropolitan District Commission, 275 Conn. 38, 46-47, 881 A.2d 194 (2005).
Hartford Insurance moves for summary judgment as to counts one and two on the grounds that the evidence establishes the following: Hartford Insurance did not cancel Mathews' insurance policy, rather, her prior policy expired on January 30, 2002, when she failed to renew it by paying the premiums; as a result of her failure to pay this consideration, Mathews did not have an insurance contract with Hartford Insurance on the date of the accident; when Hartford Insurance mailed a new policy to Mathews, it was offering to renew the policy, and Mathews failed to accept the offer in that she did not pay any premiums; and Hartford Insurance properly complied with the renewal notice statute by sending correspondence to Mathews' last known address more than thirty days before the prior policy was due to expire.
Although Mathews concedes that she did not pay any premiums on the new policy, she maintains that Hartford Insurance is not entitled to summary judgment for the following reasons: her failure to pay the premiums was caused by Hartford Insurance's negligence in mishandling the change of address notices that she sent to the insurer; issues of material fact exist as to each element of her claim of estoppel; the material issue of whether Hartford Insurance cancelled the policy or she failed to renew it remains unresolved; the evidence indicates that Hartford Insurance did not follow the applicable statutory and policy provisions to cancel and/or not renew the policy.
In reply, Hartford Insurance argues that Mathews has not adequately pleaded a cause of action for estoppel and that she cannot plead a claim for negligence because she does not seek damages for bodily injury or property damage.
As to Hartford Insurance's initial arguments, the type of notice that it was required to provide to Mathews depends on whether it was cancelling her policy or declining to renew it. As the Appellate Court has explained, "[i]f the defendant cancelled the policy, notice should have been given in accordance with [General Statutes] § 38a-175h [now § 38a-343], but if the defendant gave notice to renew the policy, then such notice should have been given in accordance with General Statutes . . . § 38-185w [now § 38a-323]." Stenson v. Northland Insurance Co., 42 Conn.App. 177, 181, 678 A.2d 1000 (1996). As to cancellations, § 38a-343 provides in relevant part: "(a) No notice of cancellation of a policy . . . may be effective unless sent, by registered or certified mail or by mail evidenced by a certificate of mailing, or delivered by the insurer to the named insured . . . at least forty-five days before the effective day of the cancellation, except that (1) where cancellation is for nonpayment of the first premium of a new policy, at least fifteen days' notice of cancellation accompanied by the reason for the cancellation must be given . . ." The insurance policy provides that the insurer "may cancel by mailing by registered or certified mail or United States Post Office certificate of mailing to the named insured shown in the Declarations at the address shown in this policy . . . [a]t least 10 days notice . . . if cancellation is for nonpayment of premium; or . . . [a]t least 45 days notice in all other cases."
Regarding nonrewals, § 38a-323 provides in relevant part: "[a premium billing] notice shall be so mailed or delivered to the insured not less than thirty days in advance of the policy's renewal or anniversary date . . ." The insurance policy provides that the insurer "will mail or deliver any premium billing notice for renewal or continuation of this policy to the named insured shown in the Declarations at the address shown in this policy not less than 30 days in advance of the renewal date or anniversary date of this policy."
By implication, both the statutes and the policy provisions require the insurer to provide notice to the insured at the insured's last known address. At this stage of the proceedings, the court is not required to determine whether Hartford Insurance cancelled Mathews' policy or declined to renew it, because, regardless of which statute or policy provision applies, issues of fact exist as to whether Hartford Insurance complied with the requirement of sending notice to Mathews at her last known address. According to the evidence, Mathews initially obtained an automobile insurance policy from Hartford Insurance for a one-year term, effective January 30, 1999. At that time, Mathews resided in Stratford, Connecticut, but in September 2000, she moved to Shelton, Connecticut. Before she moved, Mathews completed a United States Postal Service change of address form and sent it to Hartford Insurance. Hartford Insurance continued to send premium invoices to the Stratford address, which the Postal Service forwarded to her Shelton address. From September 2000, through December 2001, each time Mathews paid a premium to Hartford Insurance, she completed the change of address form that was on the back of the invoice, and she checked a box on the envelope to indicate that it contained change of address information. She then returned the invoice to Hartford Insurance with her check, which also listed her Shelton address. Hartford Insurance does not dispute that Mathews provided it with this information.
On December 21, 2001, Hartford Insurance sent a premium bill to Mathews at the Stratford address informing her that her policy would expire on January 30, 2002, and that it would renew the policy if it received payment by that date. On January 31, 2002, Hartford Insurance sent another premium bill to Mathews, again at the Stratford address, informing her that the policy had expired and that it would reinstate the policy if it received payment by February 16, 2002. Mathews testified that neither of these bills were forwarded to her Shelton address, and that she did not receive either of them. The mailbox rule "provides that a properly stamped and addressed letter that is placed into a mailbox . . . raises a rebuttable presumption that it will be received." Echavarria v. National Grange Mutual Ins. Co., 275 Conn. 408, 418, 880 A.2d 882 (2005). Here, issues of fact remain as to whether Hartford Insurance properly addressed its invoices to Mathews, and Mathews presented some evidence to rebut the presumption that she received them. Accordingly, Hartford Insurance has not met its burden of establishing that it is entitled to summary judgment as to counts one and two on this ground.
Although Mathews acknowledged that she received a declarations page, that document does not satisfy the statutory notice requirements.
Hartford Insurance also argues that it is entitled to summary judgment as to count two on the ground that Mathews has not adequately pleaded a cause of action for estoppel. Essentially, Hartford Insurance is challenging the legal sufficiency of count two. "[T]he use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading . . . If it is clear on the face of the complaint that it is legally insufficient and that an opportunity to amend it would not help the plaintiff, we can perceive no reason why the defendant should be prohibited from claiming that he is entitled to judgment as a matter of law and from invoking the only available procedure for raising such a claim after the pleadings are closed." (Citation omitted.) Larobina v. McDonald, supra, 274 Conn. 401-02. The court must examine the allegations in count two to determine whether they are sufficient to state a cause of action for estoppel, and, if not, whether the defendant has established that Mathews could not correct the deficiency by repleading.
"Estoppel has its roots in equity and stems from the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . . as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse." (Internal quotation marks omitted.) Boyce v. Allstate Ins. Co., 236 Conn. 375, 383-84, 673 A.2d 77 (1996). "[E]stoppel always requires proof of two essential elements: the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury." (Internal quotation marks omitted.) Id., 385. "To create an estoppel, facts must be present and known to the insurer, and have been relied upon by the insured to his injury." Mishiloff v. American Central Ins. Co., 102 Conn. 370, 380, 128 A. 33 (1925).
"Moreover, it is the burden of the person claiming the estoppel to show that he exercised due diligence to ascertain the truth and that he not only lacked knowledge of the true state of things but had no convenient means of acquiring that knowledge." (Internal quotation marks omitted.) Boyce v. Allstate Ins. Co., supra, 236 Conn. 385-86.
Hartford Insurance challenges the first two element of Mathews' estoppel claim. Mathews premises her claim on her allegations that Hartford Insurance failed to properly process her change of address notices which, in turn, caused it to fail to send her billing invoices to her correct address. Silence may support a claim of estoppel if the defendant has a duty to speak. Boyce v. Allstate Ins. Co., supra, 236 Conn. 387. As to the elements of reliance, Mathews testified that she did not attempt to obtain insurance coverage from another company between January 30, 2002, and the date of the accident because she believed that she was still covered by her policy with Hartford Insurance. "An estoppel arises when the [insured], because of some act or conduct of the insurer, has been dissuaded from obtaining other insurance upon the property and has proceeded to rely upon the validity of the policy he holds." (Internal quotation marks omitted.) Travelers Property Casualty Co. v. H.A.R.T., Inc., Superior Court, judicial district of New Britain, Docket No. CV 98 0485730 (May 18, 2001, Aurigemma, J.) ( 29 Conn. L. Rptr. 635). Accordingly, Hartford Insurance has not met its burden of establishing that Mathews' estoppel claim is legally insufficient.
Lastly, the court considers Hartford Insurance's contention that Mathews' negligence claim is barred by the economic loss rule because her damages are purely economic. "The economic loss rule is a judicially created doctrine which bars recovery in tort where the relationship between the parties is contractual and the only losses alleged are economic . . . While not expressly holding that the economic loss doctrine has been adopted in Connecticut, the Supreme Court . . . applied the principles supporting the doctrine [to a products liability claim] in Flagg Energy Development Corp. v. General Motors Corp., [ 244 Conn. 126, 153-53, 709 A.2d 1075 (1998)] . . . Since the decision in Flagg, no appellate authority has addressed whether the economic loss doctrine is recognized in Connecticut . . . Consequently, a split has emerged [in the Superior Court] as to whether the ruling in Flagg bars tort claims for economic loss in non-product liability cases . . . [In several cases, the court has found] that the holding in Flagg amounts to a recognition of the doctrine and warrants an extension of the doctrine well beyond product liability cases . . . There is also a line of cases [which is in the majority] that refuses to adopt the economic loss doctrine or adopts the doctrine in limited circumstances . . . "The latter line of cases relies on the following reasoning . . . Upon close examination, [the decision in Flagg] cannot be reasonably read to create a general rule barring all tort claims based in whole or in part upon alleged breaches of contract . . . Instead, it can only be read to bar such claims in the particular circumstances there at issue, to wit: where both the plaintiff and the defendant are sophisticated commercial parties, and their dispute arises from the defendant's allegedly defective performance under a contract for the sale of goods . . . In addition the Connecticut Supreme Court has rejected the argument that `where the controversy concerns purely economic losses allegedly caused . . . during the course of a contractual relationship between businesses, it is contract law, rather than tort law, that should apply.' See Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 579, 657 A.2d 212 (1995). `The [plaintiffs are] not barred from pursuing a negligence claim solely because they also might have had a breach of contract claim' Id. Because the Supreme Court's decision in Flagg is limited to situations involving contracts for the sale of goods, it neither overrules nor conflicts with the Supreme Court's decision in Williams Ford." (Citations omitted; emphasis in original; internal quotation marks omitted.) Diversified Technology Consultants, Inc. v. Sentinel Equities Corp., Superior Court, judicial district of New Haven, Docket No. CV 05 4012618 (August 11, 2006, Silbert, J.) ( 41 Conn. L. Rptr. 813).
The court finds this line of reasoning to be persuasive. In the present case, Mathews is not a sophisticated commercial party, and her dispute with Hartford Insurance does not arise out of a contract for the sale of goods. Therefore, her claims against Hartford Insurance are not barred by the economic loss doctrine. For the foregoing reasons, this court denies Hartford Insurance's motion for summary judgment.