Opinion
No. X10 UWY-CV-05-5001417 S(CLD)
August 18, 2006
MEMORANDUM OF DECISION
Before the court is a motion for summary judgment filed by the defendants Homowy Hi Cheung and Eric Cheung d/b/a Happy Family Chinese Restaurant (the "defendants"). These defendants seek judgment in their favor on the eighth and ninth counts of the plaintiffs' complaint. For the reasons set forth herein, the motion for summary judgment is granted.
The motion before the court does not implicate the defendants Eastern Land Management, Inc., The Hartford Casualty Insurance Company, or D.L.S. Enterprises, Inc. Therefore, the term "defendants" as used herein refers only to the defendants Homowy Hi Cheung and Eric Cheung d/b/a Happy Family Chinese Restaurant.
The following facts are not in dispute. On or about December 24, 1998, Mr. Won Chin Wu ("Wu") (not a party to the present action) fell in the parking area of the premises commonly known as 872 Bridgeport Avenue, Shelton, Connecticut, which premises was and is owned by the plaintiff Shelton Square Limited Partnership ("Shelton Square"). Thereafter, Wu brought an action in the New York Supreme Court against, inter alia, Shelton Square, for damages resulting from personal injuries sustained by Wu in the fall. This action was defended by OneBeacon Insurance Co., ("OneBeacon"), an insurance carrier which at the time of Wu's injury provided comprehensive general liability insurance for Shelton Square. The parties have reached a "tentative" agreement to settle the New York action for $825,000.
Shelton Square and OneBeacon, along with Shelton Square's property manager (Related Properties Corp, Inc. and its parent entity, The Related Companies, Inc.) subsequently commenced this action against, inter alia, the defendants Homowy Hi Cheung and Eric Cheung d/b/a Happy Family Chinese Restaurant.
The plaintiff has alleged (although this has been vigorously disputed by the defendants) that at the time of Wu's injury the defendants were tenants of Shelton Square under a certain lease agreement entered into by Shelton Square and the defendants dated September 27, 1983. In the eighth count of their complaint, the plaintiffs seek indemnification from the defendants pursuant to Article IX, section 9.1 of the lease, which requires, inter alia, the defendants "to save the Landlord harmless and indemnified from all injury, loss, claims or damage to personal property while on the Premises . . ." In the ninth count, the plaintiffs allege that the defendants breached the lease agreement by failing to procure insurance for the portion of the premises upon which Wu's injuries occurred. In each of these counts, the plaintiffs seek to be made whole from these defendants for the liability they have incurred for the Wu settlement, as well as for the costs incurred by OneBeacon defending the New York action on behalf of Shelton Square.
The defendants now seek summary judgment in their favor on the eighth and ninth counts. "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 . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law . . ." (Internal citations and quotation marks omitted.) Cantonbury Heights Condominium Ass'n, Inc. v. Local Land Development, LLC, 273 Conn. 724, 733, 873 A.2d 898 (Conn. 2005).
The defendants make several arguments in support of their motion for summary judgment. They contend that Mr. Wu's fall occurred in the parking area, rather than on the leased premises, such that they had no obligation to provide insurance or indemnification under the lease; that they were no longer tenants of the premises at the time of Wu's injury; and that the plaintiffs' claims are barred by a waiver of subrogation clause contained within the lease between Shelton Square and the defendants. The court concludes that defendants are entitled to summary judgment in their favor on the latter ground, namely, upon the basis of the waiver of subrogation clause contained in the lease. Therefore, it need not consider the other grounds proffered by the defendants at this time.
The court's analysis of the lease is governed by well-established principles. "As a contract, a lease is subject to the same rules of construction as other contracts. In construing a written lease, which constitutes a written contract, three elementary principles must be kept constantly in mind: (1) The intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible." (Citations omitted; internal quotation marks omitted.) Middlesex Mutual Assurance Co. v. Vaszil, 279 Conn. 28, 35-36, 900 A.2d 513 (2006).
Article XIII, section 13.17 of the lease between Shelton Square and the defendants is captioned "Waiver of Subrogation" and provides in pertinent part:
the landlord and tenant mutually agree that with respect to any loss which is covered by insurance then being carried by them respectively, the one carrying such insurance and suffering said loss releases the other of and from any and all claims with respect to such loss to the extent that payment has been received from the insurer; and each further mutually agrees that their respective insurance companies shall have no right of subrogation against the other on account thereof.
It is undisputed that the loss in question — namely, the damages flowing from Wu's injury — is covered by insurance carried by Shelton Square, and that Shelton Square's insurance carrier, OneBeacon, has incurred liability as a result of this claim. See complaint, first count, ¶ 15 (Alleging that "[t]he plaintiff, OneBeacon, by reason of the claim asserted by Wu against Shelton Square and the Related Companies is obligated by way of its Commercial General Liability Policy to indemnify its insured for any liability, as well as the related cost of defense by reason of the claim"); eighth count, ¶ 24 (Alleging that "As a consequence of Happy Family's breach of its contractual responsibilities for indemnification and to hold Shelton Square harmless from the claim made by Mr. Wu, Shelton Square and its insurer, OneBeacon, has incurred the financial expense associated with the defense of the claim made by Mr. Wu and also incurs the resultant liability embodied in the settlement agreement arising from the claim."). The plaintiffs' claims in the present action clearly have arisen out of a claim for loss that has been covered by OneBeacon as Shelton Square's insurer.
The extent to which OneBeacon has to date paid the amount of the settlement, or indemnified Shelton Square therefore, has not been made clear to the court.
Therefore, on its face, the plain language of the waiver of subrogation clause bars the plaintiffs' claim against the defendants, by releasing the defendants from "any and all claims with respect to such loss." The plaintiffs, however, have made several arguments in an attempt to avoid the applicability of the waiver of subrogation clause. The court will address these arguments in turn.
First, the plaintiffs contend that the waiver clause is ineffective because the defendants are in breach of the lease agreement, and therefore, cannot have recourse thereto. Specifically, according to the plaintiffs, the defendants have breached the lease by, among other things, failing to procure liability insurance for the area in which Wu fell, as required by Article 9, section 9.1(i) of the lease. The court disagrees. The language of the waiver of subrogation clause operates to release the defendants from any and all claims arising out of any loss covered by insurance. As previously articulated, there is no dispute that the claims against the defendants, both of which sound in breach of contract, flow directly from a loss covered by the insurance of Shelton Square, and therefore fall within the ambit of the waiver of subrogation clause. The court can discern no room for construction of that clause, which utilizes language — "any and all" — of the broadest possible scope. If the court were to hold otherwise, it would effectively graft an exception onto contractual language that is clear and unequivocal, which is an impermissible result under well-established rules of contractual interpretation. "Where the language is unambiguous, we must give the contract effect according to its terms." Cantonbury Heights Condominium Ass'n v. Local Land Development, LLC, supra, 273 Conn. 735. Moreover, the plaintiffs' argument, if accepted, would effectively nullify the waiver of subrogation clause as applied to the defendants, by permitting Shelton Square to assert a claim for indemnification under section 9.1(i) of the lease even in situations like the present one where the loss is covered by Shelton Square's insurance.
The plaintiffs next contend that that the waiver of subrogation clause does not apply because the plaintiffs Shelton Square and the Related Companies are bringing breach of contract claims in their own right and, as such, these claims cannot be characterized as subrogation claims. This contention, like the plaintiffs' previous argument, cannot stand in the face of the broad mutual releases conferred upon the parties to the lease by the waiver of subrogation clause. Although that clause is titled "waiver of subrogation" (and, in language not applicable to the matter at hand, bars subrogation between the parties' respective insurers) it broadly releases the defendants from "any and all claims" arising out of a loss covered by the insurance of one of the parties' insurance. The plaintiffs have supplied, and the court can deduce, no basis for limiting the operation of this language to subrogation claims.
The court questions the validity of this argument in any event given OneBeacon's allegation that it is obligated to indemnify Shelton Square for damages arising out of Wu's injuries.
Article XIII, section 13.15 of the lease provides in pertinent part that "the titles of the several Articles and Sections contained herein are for convenience only and shall not be considered in construing this Lease." Therefore although the clause in question is entitled "Waiver of Subrogation," that moniker is not probative of the meaning of the text of the clause and provides no support for a construction that would limit the operation of the clause to subrogation claims.
Finally, relying upon the decision of the Connecticut Supreme Court in Berlinski v. Ovelette, 164 Conn. 482, 325 A.2d 239 (1973), the plaintiffs contend that subrogation for personal injury claims was not permissible under Connecticut law at the time the lease was executed. Therefore, according to the plaintiffs, the parties to the lease agreement could not have intended the waiver of subrogation clause to bar a claim for subrogation involving personal injuries.
In opposition to this argument, the defendants point out that Berlinski was expressly overruled by the Supreme Court in Westchester Fire Ins. Co. v. Allstate Ins. Co., 236 Conn. 362, 672 A.2d 939 (1996), and that the plaintiff's claim arose after that time, such that the waiver of subrogation clause should be interpreted in light of that decision, rather than Berlinski. These arguments appear to raise the question of whether the Westchester Fire decision is to be given retroactive effect in construing the lease, which was executed in 1983 (or whether that case supplies the rule of decision because it was the law at the time of the accrual of the plaintiffs' cause of action). The court need not decide these issues, however. Even assuming, arguendo, that the Berlinski rule applies, the court concludes that the type of claim presented by the plaintiffs here does not fall within the Berlinski rule.
In Berlinski, the plaintiff was injured in an automobile accident with the defendant, who was uninsured. The plaintiff's insurer compensated the plaintiff for his injuries, in exchange for a so-called "trust agreement," the substance of which was that plaintiff assigned to his insurer his right to recover for his injuries. At the outset of its analysis, the Supreme Court reviewed the general common-law rule against the assignment of personal injury claims:
The reasons underlying the rule have been variously stated: unscrupulous interlopers and litigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees; actions for injuries that in the absence of statute did not survive the death of the victim were deemed too personal in nature to be assignable; a tort-feasor was not to be held liable to a party unharmed by him; and excessive litigation was thought to be reduced. The more modern cases suggest that such an assignment directly or indirectly serves to prejudice the ultimate ability of the injured person to be compensated fully.
Berlinski v. Ovelette, supra, 164 Conn. 486. After equating subrogation with the assignment of personal injury actions, the court went on to hold that the common-law rule prohibiting the assignment of personal injury claims barred the claim made by the plaintiff's insurer. See id. at 489-90.
In Berlinski, then, the assignment/subrogation in question occurred directly between the injured claimant and his insurer on the basis of a contractual relationship, namely, the trust agreement. The authorities upon which Berlinski primarily relied addressed similar relationships between the personal injury claimant and the insurer seeking redress from the tortfeasor, and also equated the assignment of a personal injury claim with subrogation. See Hardware Dealers Mutual Fire Ins. Co. v. Krueger, 486 P.2d 737, 738 (Okla. 1971); Fifield Manor v. Finston, 354 P.2d 1073 (Cal. 1960).
This is not to say that the subrogation at issue in Berlinski was contractual in nature; in fact it was of the equitable variety. It was, however, the assignment of the claim pursuant to the trust agreement that gave rise to the public policy issues that concerned the Berlinski court.
By contrast, in the present case, the injured party (Wu) has already litigated and resolved his claim in an unrelated action. Wu has no relationship whatsoever with OneBeacon, except to the extent that OneBeacon is ultimately responsible, as Shelton Square's insurer, to compensate Wu pursuant to the settlement agreement resolving the New York action. Therefore, OneBeacon's claims are not based upon any subrogation to or assignment of Wu's rights, but rather have their genesis in the lease agreement between Shelton Square and the defendants. In other words, OneBeacon is subrogated to the rights of Shelton Square (to "stand in the shoes" of Shelton Square) with respect to Shelton Square's breach of contract claims against the defendants, CT Page 15249 see complaint, ¶ 15 (averring that OneBeacon "is subrogated to the rights of its insured"), rather than to Wu's rights as a personal injury claimant.
Because there has been no subrogation to (or assignment of) the rights of Wu, it simply does not make sense to equate any right of subrogation possessed by OneBeacon with a contractual assignment of a personal injury claim, as the court did in Berlinski. To reiterate, the holding in Berlinski was based upon common-law doctrine prohibiting the assignment of personal injury claims as a matter of public policy. Such doctrine has no place in the present matter because OneBeacon's claims do not derive from any assignment or subrogation between the personal injury claimant and OneBeacon.
Further, because the subrogation relationship in the present case is fundamentally different from that in Berlinski, the policy considerations cited by that court are inapposite in the present context. OneBeacon's claims are not based upon any subrogation or assignment between it and the injured party. Therefore, it cannot reasonably be argued that the public policy against champerty (the unscrupulous trafficking of personal injury claims) is implicated by the present action. In fact as is discussed above, Wu litigated and resolved his claim, on his own behalf, in the New York action.
For similar reasons, there is no concern in the present case that the injured party was somehow prejudiced in his ability to be fully compensated because of the assignment of his claim. Again, Wu has already litigated and resolved his claim for personal injuries in an entirely unrelated action.
Accordingly, the court concludes that the decision in Berlinski is inapplicable on its own terms, regardless of the retroactive applicability of Westchester Fire to the lease. Therefore, Berlinski presents no obstacle to the enforcement of the waiver of subrogation clause in the present case.
The defendants' motion for summary judgment is granted.