Opinion
No. CV 04 4000567
January 6, 2006
MEMORANDUM OF DECISION
This memorandum of decision addresses the Plaintiff's Motion to Strike Defendant's Special Defenses (#113), filed under date of July 14, 2005 and the Defendant's objections thereto, as set forth in its Memorandum of Law in Objection to the Plaintiff's Motion to Strike (#115), filed under date of August 10, 2005. For the reasons set forth below, the court hereby denies the plaintiff's motion insofar as it seeks to strike the defendant's third and fourth special defenses, but grants the motion, as virtually agreed to by the parties, as to the defendant's second special defense.
I. FACTUAL AND PROCEDURAL HISTORY
This litigation arises out of injuries and losses sustained as a result of an automobile accident involving the plaintiff, James Selle (Selle or plaintiff), and an underinsured motorist. On April 4, 2005, the plaintiff filed a three-count amended complaint against his insurance company, the defendant, GEICO General Insurance Company (GEICO or defendant). Therein, the plaintiff generally alleges that the defendant failed to pay underinsured motorist benefits, which were owed to him under his insurance contract with the defendant. Counts one, two and three of the plaintiff's amended complaint sound in breach of contract; breach of implied covenant of good faith and fair dealing; and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110b(a), respectively.
On June 30, 2005, the defendant filed an answer and five special defenses (#112). The first special defense asserts that the defendant's liability "is limited to a maximum amount of $1,000,000" [the policy limits] "minus any amounts paid by or for all persons or organizations liable for the injury." The fifth special defense alleges that the plaintiff failed to mitigate his damages. The plaintiff has not moved to strike either the first or fifth special defenses.
However, on July 15, 2005, the plaintiff filed a motion to strike the defendant's second, third and fourth special defenses. Through the second special defense, GEICO claims that "any amount payable under the provisions of the policy is to be reduced by all amounts paid by or for all persons or organizations liable for the injury." Through the third special defense, GEICO claims that "any amount payable under the provisions of the policy is to be reduced by all amounts paid or payable under any workmen's (sic) compensation law, disability benefits law, or any similar law." Through the fourth special defense, GEICO claims that "any amount payable under the provisions of the policy is to be reduced by all amounts paid or payable under the Bodily Injury Coverage of the policy."
II. RESOLUTION OF THE PARTIES' LEGAL CLAIMS
In reaching its determination of the issues raised by the parties, the court has heeded the applicable case law and practice book provisions. "Whenever any party wishes to contest . . . the legal sufficiency of any answer to any complaint, counterclaim or cross complaint, or any part of that answer including any special defense contained therein, that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book § 10-39. "[A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 400, 876 A.2d 522 (2005). "In . . . ruling on the . . . motion to strike, the trial court recognize[s] its obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency . . ." Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992). "The granting of a motion to strike a special defense is not a final judgment and is therefore not appealable." Mechanics Savings Bank v. Townley Corp., 38 Conn.App. 571, 573, 662 A.2d 815 (1995).
A. MOTION TO STRIKE THE SECOND SPECIAL DEFENSE
Generally, the plaintiff argues that the court should strike the defendant's first, third and fourth special defenses on the grounds that these defenses seek a reduction in any amount payable under the insurance policy that is a collateral source and that is encompassed by the bodily injury coverage of the policy. Insofar as the second special defense is concerned, the defendant apparently acknowledges that this special defense is superfluous as its language is nearly identical to that presented through the first special defense. The court, therefore, grants the plaintiff's motion to strike the second special defense which states: "If the defendant GEICO General Insurance Company is legally obligated to pay underinsured motorist benefits under the terms of the policy with the plaintiff, which the defendant denies, any amount payable under the provisions of the policy is to be reduced by all amounts paid by or for all persons or organizations liable for the injury."
B. MOTION TO STRIKE THE THIRD SPECIAL DEFENSE
With respect to the defendant's third special defense, the plaintiff argues that the court should strike its allegations because Connecticut legislature did not intend for private disability payments, workers' compensation benefits or any other like benefits to be pleaded as a special defense; rather, the plaintiff submits, such benefits are within the scope of collateral source payments as set forth in General Statutes § 52-225b. The plaintiff also maintains that it is improper to assert as a special defense any reparations payments made by the defendant because such payments are also collateral source payments, as Practice Book § 10-78 specifically bars the defendant from pleading them as a special defense. The defendant counters that its third special defense alleges only contractual limitations on liability, which may be reduced by amounts payable under workers' compensation payments, disability benefits and any other similar laws. Thus, the defendant maintains, his third special defense does not allege collateral source payments, but raises issues which must be pleaded to avoid being waived under Bennett v. Automobile Ins. Co. of Hartford, 230 Conn. 795, 646 A.2d 806 (1994) and its interpretation under several Superior Court decisions.
Relevant to the parties' positions in this case, General Statutes § 52-225b provides: "For purposes of sections 52-225a to 52-225c, inclusive: `Collateral sources' means any payments made to the claimant, or on his behalf, by or pursuant to: (1) Any health or sickness insurance, automobile accident insurance that provides health benefits, and any other similar insurance benefits, except life insurance benefits available to the claimant, whether purchased by him or provided by others; or (2) any contract or agreement of any group, organization, partnership or corporation to provide, pay for or reimburse the costs of hospital, medical, dental or other health care services. `Collateral sources' do not include amounts received by a claimant as a settlement."
Practice Book § 10-78 states: "No pleading shall contain any allegations regarding receipt by a party of collateral source payments as described in General Statutes §§ 52-225a and 52-225b."
Thus framed by the parties, the court must determine whether the allegations raised in the defendant's third special defense constitute claims for amounts payable through contractual limitations under the insurance policy at issue, as claimed by the defendant, or whether these allegations implicate collateral source payments, as claimed by the plaintiff. In resolving this issue, the court has been guided by Practice Book § 10-79 which provides in relevant part: "An insurer should raise issues of monetary policy limits, or credits for payments by or on behalf of third party tortfeasors, by special defense." (Emphasis added.) Practice Book § 10-79 implements the law of this state, as expressly enunciated through Bennett v. Automobile Ins. Co. of Hartford, supra, 230 Conn. 806: "[H]enceforth an insurer should raise issues of policy limitation, even when undisputed, by special defense. When a jury determination of the facts raised by special defense is not necessary, the special defense will not be submitted to the jury, but, rather, will be resolved by the trial court prior to the rendering of judgment. Compliance with this procedure will place the trial court and the opposing party on proper notice of the policy limitation issue so that it may be resolved in accordance with [General Statutes] § 38a-336(b)." Similarly, the Appellate Court has held that "[a] limitation of liability, whether contractual or statutory, is, in substance and effect, a partial release of liability and, as such, is properly the subject of a special defense." New England Savings Bank v. FTN Properties Ltd. Partnership, 32 Conn.App. 143, 146, 628 A.2d 30 (1993).
Adopted October 1, 1996 as Practice Book § 195B in response to the holding in Bennett v. Automobile Ins. Co. of Hartford, supra, 230 Conn. 795.
General Statues § 38a-336(b) provides: "An insurance company shall be obligated to make payment to its insured up to the limits of the policy's uninsured and underinsured motorist coverage after the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements, but in no event shall the total amount of recovery from all policies, including any amount recovered under the insured's uninsured and underinsured motorist coverage, exceed the limits of the insured's uninsured and underinsured motorist coverage. In no event shall there be any reduction of uninsured or underinsured motorist coverage limits or benefits payable for amounts received by the insured for Social Security disability benefits paid or payable pursuant to the Social Security Act, 42 USC Section 301, et seq. The limitation on the total amount of recovery from all policies shall not apply to underinsured motorist conversion coverage purchased pursuant to section 38a-336a."
Several well-reasoned Superior Court decision have applied the Bennett ruling to workers' compensation benefits, disability benefits, and payments under similar laws, where allegations concerning such benefits or payments have been properly raised by special defenses to underinsured motorist claims. For instance, as noted by the defendant in the present case, the court in Palmieri v. Nationwide Mutual Ins. Co.; Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV 93 0522478 (February 16, 1994, Corradino, J.) ( 9 C.S.C.R. 248) ( 11 Conn. L. Rptr. 88); denied a plaintiff's motion to strike a special defense which read: "In the event that the trier of fact awards damages for personal injury to compensate the plaintiff, the defendant is entitled to a reduction in any such award by any amount paid by or for any liable parties, and by any sums paid or payable under any workers' compensation, disability benefits, or similar laws." Palmieri v. Nationwide Mutual Ins. Co., supra, 9 C.S.C.R. 248. The Palmieri court approved the defendant's special defenses in compliance with the rule and intention of Bennett v. Automobile Insurance Co., leaving resolution of the legal issue to the trial court prior to entry of judgment.
Simply put, where the proposed reductions in damage awards may be governed by or implicate issues of monetary policy limits, they are pleaded as valid special defenses. See Gallimore v. General Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 98 0358622 (October 6, 1999, Nadeau, J.). A more complex analysis of the same principle, applicable to the facts of the present case, is set forth through the trial court's decision in Garcia v. ITT Hartford Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 98 0579974 (December 8, 1998, Peck, J.) ( 23 Conn. L. Rptr. 450, 452). There, the trial court utilized logical and effective reasoning as follows: "[U]ninsured or underinsured motorist coverage is not controlled by the collateral source rule. [Practice Book § 10-78 and General Statutes § 52-225a.] The singular applicability of the collateral source rule to a claim for uninsured or underinsured motorist coverage is to permit an insurer to reduce the amount of damages sustained by the claimant by the amount of `collateral source payments' received by the claimant . . . [I]n the uninsured and underinsured motorist coverage . . . [Regulation] § 38a-334-6(d) exclusively governs the grounds upon which such uninsured and underinsured insurance may be excluded or limited . . . Section 38a-334-6(d) . . . lists the means by which uninsured policy limits may be reduced . . . [to amounts paid by or on behalf of any person responsible for the injury, under any workers' compensation law, or under the policy in settlement of a liability claim]. See Regs., Conn. State Agencies § 38a-334-6(d) . . . Practice Book § 10-79 [thus] overrides § 10-78 with respect to all issues of policy limitation authorized by § 38a-334-6(d) of the Regulations." (Citations omitted.) Garcia v. ITT Hartford Ins. Co., supra, 23 Conn. L. Rptr. 452.
In Garcia v. ITT Hartford Ins. Co., the trial court denied a plaintiff's motion to strike five special defenses because, "if true, [they would have] serve[d] to reduce the judgment to an amount lower than the potential verdict." Garcia v. ITT Hartford Ins. Co., supra, 23 Conn. L. Rptr. 453. In so ruling, this court opined, "[b]ased on the broad language chosen for § 10-79 and the official commentary, the rule should be read to mean that any mechanisms that serve to reduce a judgment in an insurance case to an amount lower than the verdict should be specially pleaded by the insurer. This will place the parties and the court on notice of the policy limitation issue, thus promoting its proper resolution at the appropriate time." Id., 452. See also, Lynch v. Fisher, Superior Court, judicial district of New Haven, Docket No. CV 99 0423715 (October 1, 1999, Devlin, J.) (25 Conn. L. Rep. 567) (court denied a motion to strike a defendant's special defenses on policy limitations, in the context of underinsured motorist benefits in the insurance contract observing that Practice Book § 10-78 must be viewed in light of Bennett, supra, 230 Conn. 735); Gallimore v. General Ins. Co., supra (denying plaintiff's motion to strike three special defenses because, " Bennett and Practice Book § 10-79 apparently created an exception to the general rule that special defenses must allege that the plaintiff does not have a cause of action").
In the case at bar, the defendant's third special defense states: "If the Defendant GEICO General Insurance Company is legally obligated to pay underinsured motorist benefits under the terms of the policy with the plaintiff, which the defendant denies, any amount payable under the provisions of the policy is to be reduced by all amounts paid or payable under any workmen's compensation law, disability benefits law, or any similar law." Under Practice Book § 10-79 and consistent with both the holding in Bennett and the reasoning of the Superior Court cases cited above, the defendant has pleaded as a special defense contractual limitations which reduce its potential liability in the underinsured motorist context. Accordingly, the court is constrained to deny the plaintiff's motion to strike the defendant's third special defense.
C. MOTION TO STRIKE THE FOURTH SPECIAL DEFENSE
The plaintiff next argues that the court should strike the defendant's fourth special defense, which seeks a reduction in all amounts paid or payable according to the bodily injury coverage of the policy, because he has alleged no facts to support a bodily injury claim. The plaintiff does not, however, dispute the defendant's right to reduce liability by any amounts paid as a result of bodily injury; rather, he argues that there are no such bodily injury payments involved in this case. The defendant counters that the court should deny the motion because an insurer must raise all potential issues of policy limitation by special defense to avoid a waiver of contractually bargained for rights.
In this case, the defendant's fourth special defense specifically raises the issue at hand, stating: "If the Defendant GEICO General Insurance Company is legally obligated to pay underinsured motorist benefits under the terms of the policy with the plaintiff, which the defendant denies, any amount payable under the provisions of the policy is to be reduced by all amounts paid or payable under the Bodily Injury Coverage of the policy." If, as the plaintiff asserts, no amounts have been paid or will be paid under the bodily injury coverage of the policy, then this defense, though arguably unnecessary, is, nevertheless, undisputed. Alternatively, if bodily injury coverage becomes relevant to this case at a later date, the defendant must plead a limitation of liability as a special defense in order to preserve this benefit, which it allegedly bargained for. In Bennett, the court stated that, "an insurer should raise issues of policy limitation, even when undisputed, by special defense." (Emphasis added.) Bennett v. ITT Hartford Ins. Co., supra, 230 Conn. 806. Thus, applying the clear lessons of the Supreme Court's opinion Bennett, the plaintiff's motion to strike the fourth special defense must be denied.
WHEREFORE, for the reasons discussed above, the court hereby DENIES the plaintiff's motion to strike the defendant's third and fourth special defenses, but GRANTS, by agreement of the parties, the plaintiff's motion to strike the defendant's second special defense.