Opinion
No. CV01-0456771
May 15, 2003
MEMORANDUM OF DECISION
On May 17, 2002, the plaintiff, Southern New England Telecommunications Corporation, ("SNET"), filed an amended complaint against the defendant, Zurich American Insurance Company, ("Zurich"), alleging failure on the part of the defendant to indemnify the plaintiff pursuant to the terms of a business automobile policy issued by the defendant to the plaintiff. On November 4, 2002, the defendant filed a motion for summary judgment and a memorandum of law in support of the motion arguing that it is entitled to judgment because the plaintiff did not timely notify it of the lawsuit for which SNET is seeking indemnification; and because SNET has failed to demonstrate that this untimely notice did not prejudice the defendant. The plaintiff filed a memorandum in opposition on December 24, 2002, admitting that it failed to timely notify the defendant, but contesting that the defendant was materially prejudiced by the untimely notice.
The issue for this court to resolve is: whether the defendant was materially prejudiced by the late notice, thus necessitating the granting of the defendant's motion for summary judgment. For reasons more fully set forth below, this court finds that the plaintiff has failed to rebut the legal presumption of prejudice. Therefore, the court grants the defendant's motion for summary judgment.
I. FACTS
The essential facts in this case are not in dispute. On October 2, 1995, a vehicle owned by the plaintiff and operated by Donald Zak, the plaintiff's employee, was involved in a car accident with a vehicle operated by Lee Drapkin. William Walsh was a passenger in Drapkin vehicle. Drapkin and Walsh initiated separate suits returnable on April 22, 1997, and October 27, 1997, respectively, against Zak and the plaintiff. The defendant provided an insurance policy to the plaintiff. The policy issued by the defendant to the plaintiff states that the defendant will be liable for the amount of damage in excess of $250,000. The policy required that the plaintiff "must see to it that [the plaintiff] or the authorized claimed service provider notify [the defendant] promptly of an occurrence or offense which may result in a claim under this policy." (Emphasis added.) On or about May 23, 2001, seven days before a pretrial conference, the plaintiff gave notice to the defendant of the pendency of the claims and requested that the defendant assist in and provide a defense for the plaintiff pursuant to the terms of the insurance policy. The defendant sent a representative to the pretrial conference. At the pretrial conference, counsel for the defendant requested a 45 day continuance. The presiding judge continued the matter to June 5, 2001. Jury selection began in June 2001. Evidence was scheduled to begin July 9, 2001. On June 14, 2001, the defendant notified the plaintiff that it would not assist in nor provide coverage or indemnification to the plaintiff for any possible damages that the plaintiff incurred as a result of the claims brought by Drapkin and Walsh. The plaintiff settled Walsh's claim for $42,500 in June 2001 and Drapkin's claim for $475,000 in July 2001. The settlement figures were lower than the amounts placed on the files by the two judges who pretried the matters. The plaintiff subsequently demanded reimbursement from the defendant in the amount of $299,274.91 pursuant to the terms of the insurance policy. The defendant denied this request.
According to correspondence regarding the settlement negotiations, Judge Silbert, who initially pretried the cases placed a settlement value of $45,000 on the Walsh file and $560,000 on the Drapkin file. Subsequently, Judge Lager, the trial judge placed the figure of $560,000 on the Drapkin file, the only file that remained.
II. DISCUSSION
"The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "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 seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . ." (Citations omitted, internal quotation marks omitted.) Gaynor v. Payne, 261 Conn. 585, 590-91, 804 A.2d 170 (2002). "In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). Summary judgment "is appropriate only if a fair and reasonable person could conclude only one way." Miller v. United Technologies Corp., 233 Conn. 732, 751, 660 A.2d 810 (1995).
A. Untimely Notice
The defendant moves for summary judgment on the ground that the plaintiff's failure to give prompt notice materially prejudiced its ability to adequately defend a defensible claim. Though the plaintiff concedes that it should have provided the defendant with notice prior to May 23, 2001, it does not believe that the late notice materially prejudiced the defendant.
The fact that notice of a lawsuit is untimely does not entitle the defendant to a judgment, as a matter of law. "While an insured's untimely filing of notice of a claim with the insurer may constitute a failure to comply with a condition under the insurance contract, such a failure does not automatically discharge the insurer from liability on its insurance contract." Giuliano v. Aetna Casualty Surety, Superior Court, judicial district of Fairfield at Bridgeport, CV 93 0300699 (July 19, 1996, Moran, J.). "[T]he failure of an insured to meet a contractual time limitation with respect to a notice of claim may be excused if the insurer suffered no material prejudice from the delay . . ." (Internal quotation marks omitted.) Hotkowski v. Aetna Life Casualty Co., 224 Conn. 145, 148, 617 A.2d 451 (1992).
The appropriate inquiry next requires a determination of whether the party who received the untimely notice was materially prejudiced by such notice. "[A] proper balance between the interests of the insurer and the insured requires a factual inquiry into whether, in the circumstances of a particular case, an insurer has been prejudiced by its insured's delay in giving notice of an event triggering insurance coverage. If it can be shown that the insurer suffered no material prejudice from the delay, the nonoccurrence of the condition of timely notice may be excused because it is not, in Restatement terms, a material part of the agreed exchange. Literal enforcement of notice provisions when there is no prejudice is no more appropriate than literal enforcement of liquidated damages clauses when there are no damages." (Internal quotation marks omitted.) Aetna Casualty Surety Co. v. Murphy, 206 Conn. 409, 417-18, 538 A.2d 219 (1988).
Prejudice to the insurer is presumed, as a matter of law. Hotkowski, 224 Conn. at 148-49. The insured bears the burden of proving the lack of prejudice. "[T]he existence or nonexistence of prejudice from delayed notice should be determined on a factual basis, [with] the burden of establishing lack of prejudice . . . borne by the insured." Aetna v. Murphy, 206 Conn. at 419.
Though the burden of proof rests with the plaintiff to establish a lack of prejudice, the court will first set forth the claims of prejudice advanced by the defendant. The defendant claims that it was prejudiced (primarily in the Drapkin case) by the late notice because during the pendency of the case the plaintiff failed to depose Raymond Knapp, an eye witness of ill health who had given a statement of the events leading up to the accident, but died before he was deposed by the plaintiff; the plaintiff failed to conduct an independent neurological medical exam (IME) or surveillance of Drapkin; plaintiff's counsel, Edward B. FitzGerald, failed to respond to requests for documents from Crawford Company, the plaintiff's third party administrator; and the plaintiff's accident reconstruction expert, Edmund R. Sullivan, incorrectly replicated the accident rendering the replication virtually useless. All of these failures, the defendant argues, support a finding that it was materially prejudiced.
Raymond Knapp's statement is uncertified and therefore will not be considered in determining this motion for summary judgment. "Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment." (Internal quotation marks omitted.) Great Country Bank v. Pastore, 241 Conn. 423, 436, 696 A.2d 1254 (1997). The parties have represented that in the uncertified statement, Knapp provided a version of the facts that was helpful to SNET. For purposes of this motion, however, the substance of that statement is not pertinent.
In support of its motion, the defendant has submitted numerous exhibits, which include: a letter from Crawford and Company to FitzGerald regarding Knapp's statement to police and his ill health (Exhibit 5); Crawford and Company's claims progress notes showing FitzGerald's failure to respond to requests for information from Crawford and Company for approximately two years (Exhibit 3, pgs. 19, 21-22); defendant's letter, dated May 29, 2001, to the plaintiff, acknowledging receipt of the Drapkin and Walsh complaints (Exhibit 20); defendant's letter to the plaintiff explaining that it was denying coverage because of the plaintiff's failure to give prompt notice and the resulting prejudice (Exhibit 22).
The plaintiff attempts to meet its burden of proving that the defendant was not materially prejudiced by the late notification by relying on several exhibits. These include: correspondence between FitzGerald and the plaintiff (Exhibit 1A); an affidavit of Harold C. Donegan, Esq. (Exhibit 2); deposition of Lee Drapkin (Plaintiff's Memorandum, Exhibit 37); Crawford and Company Pre Trial Report (Exhibit 55); and deposition of Edmund Sullivan (Exhibit 57).
The plaintiff argues that "Attorney FitzGerald's representation of SNET's interests was competent, professional and not deficient." (Plaintiff's Memorandum of Law in Opposition to the Motion for Summary Judgment, Exhibit 2, p. 4.) Furthermore, once the defendant was notified of the Walsh and Drapkin claims, the plaintiff argues that it had an opportunity to engage in additional discovery and investigation but voluntarily chose not to. The plaintiff further argues: that Knapp's statement was unreliable because he was ill at the time he gave it and because the statement was given more than one year after the accident occurred (Plaintiff's Memorandum, p. 37-38.); that its decision not to conduct an IME regarding Drapkin's claimed neurologic injuries was proper because that exam might have confirmed the claims (Plaintiff's Memorandum, Exhibit 55, p. 6); that the defendant unjustifiably relies upon the communication between the plaintiff and the third party administrator when the third party administrator was not the client and when the communication referred to by the defendant was not necessary or required; and that Sullivan's testimony regarding the accident reconstruction could have been rehabilitated (Plaintiff's Memorandum, p. 44).
The question for this court is: are these arguments of the plaintiff and is its proof enough to rebut the presumption of prejudice?
B. Court's Findings of Material Prejudice
In this case, we begin with the legal presumption of prejudice. It is the plaintiff's burden to overcome it. Though all of the plaintiff's assertions regarding the witness statement, the decisions about the IME and surveillance, and the preparedness and thoroughness of the reconstruction expert are interesting, and would possibly be persuasive in a case in which the insurer was notified a reasonable time before trial, in this case, they fail to rebut the legal presumption of prejudice. It bears noting that, given what is before this court, a motion for summary judgment, if the plaintiff had put certain facts regarding prejudice sufficiently in dispute, this court would have been required, by law, to deny the motion. Only because the court finds that the plaintiff failed to meet its burden, and also failed to put the material facts in dispute regarding prejudice, does this court grant the motion. The uncontested facts, alone, support the legal conclusion that the defendant was materially prejudiced.
In the present case, the plaintiff waited four years and three months from the time that Drapkin commenced his action (February 24, 1997) and the three and one-half years from the time Walsh commenced his action (September 17, 2001) before notifying the defendant of these claims on May 23, 2001. This violated the notification provision of the insurance policy. This, also, amply supports a conclusion that the defendant was materially prejudiced, as a matter of law. The plaintiff is allowed to proceed only upon showing that this legal conclusion is not, in fact, the case in the instant matter. To do this the plaintiff must show, not that it is possible that the defendant was not prejudiced (by arguing such things as: the witness statement may not have been helpful or reliable because the witness was ill and the statement was given a year after the accident; or by arguing that the IME might have confirmed the plaintiff's injuries) but that the facts demonstrate that the defendant was not materially prejudiced.
Given the amount of time that elapsed before the defendant was notified, and given the important and pivotal decisions which were made during that time, the plaintiff has failed to prove that the defendant was not materially prejudiced, and thus failed to sustain its burden to defeat this motion for judgment. More than three years passed from initiation of lawsuits to notification of the defendant. In most civil cases that is a long time. That is time during which discovery is conducted, investigations are undertaken and strategic decisions are made. Once those things occur, the positions of the parties become fixed. The late notice meant that the defendant did not have the opportunity to assist the plaintiff in making any tactical decisions in preparation for trial or to prepare any of its own evidence. Had the insured provided notice within the first year, this would be a different case. Notification in the second year would have still allowed time for depositions and relevant Independent Medical Examinations. By year three, however, the case was on track for trial, and discovery opportunities were long gone. Additionally, the fact that the trial date had been set at the time of notification precludes opportunities, otherwise available to the parties to develop the case.
Further, as a result of the late disclosure, testimony of an important witness was lost. Once a witness dies, his un-preserved testimony is lost, forever. If that witness had offered statements prior to his death supporting one party's version of the facts, the loss of those statements hurts the case. The failure to depose Knapp is an important factor in this court's decision. Without overstating his role in the case, it is clear that he provided an independent version of the facts, even if his credibility was subject to attack for various reasons. Though the plaintiff had his statement, the defendant was never given the opportunity to decide whether to depose Knapp, a decision that would have affected the posture of the parties in settlement negotiations and thus, could have affected the outcome of the case. Had Knapp's deposition testimony been favorable, the plaintiff might not have settled the case or might have settled the case for less. Had Knapp's deposition testimony been unfavorable, the parties might have settled the case earlier. Though this court cannot predict the way in which the testimony would have affected the case, there is no doubt that it would have affected it. It is enough that the defendant did not have an opportunity to evaluate the usefulness of the witness to the case. Thus, the missed opportunity to evaluate and/or preserve the testimony prejudiced the defendant.
Finally, the decisions about the independent medical examination and the surveillance were important ones. Though the plaintiff provided legitimate reasons for making its decision, this does not alter the fact that the defendant was deprived, forever, of the opportunity to take part in that process. The injuries to Drapkin were severe and serious. It is possible that after reviewing the file contemporaneously, the defendant would have concurred with SNET. But, without contemporaneous review, it is impossible to say which perspective would have prevailed. An IME could have changed or altered the case or it could have strengthened the case of the injured party. It is not so much the specific results or findings of the IME, as the missed opportunity to discuss and consider its advantages and disadvantages that causes the prejudice. The same is true for the issue of surveillance.
When the plaintiff failed to notify the defendant of the pending cases until the eve of trial, it forfeit the defendant's opportunity to meaningfully participate in the preparation of the case. The plaintiff's argument that the defendant had "an opportunity to engage in discovery, investigation, or preparation it deemed necessary" is a bit surprising. This time, to which the plaintiff refers, was less than two months. Having itself had over three years to prepare the case, this court cannot readily accept the plaintiff's blithe claim that less than two months would have been sufficient to prepare. These were not small or insignificant cases. Hundreds of thousands of dollars were at stake. Before deciding whether to pay that kind of money or to defend, parties have the right to fully prepare and to completely understand the relevant (and even irrelevant) issues.
Finally, it bears noting that the court makes no conclusion as to the competency or efficiency of representation afforded the plaintiff in the two underlying personal injury actions. Notwithstanding the plaintiff's position that "claims of material prejudice made by Zurich depend totally upon proving that the defense [of SNET] was deficient and contrary to how competent counsel would have performed," this court does not believe that it need reach or decide the issue of professional competence to rule on this matter in this case. There is no greater sport than "Monday-morning quarter-backing." Zurich engaged in a fair amount of it in its brief by second-guessing decisions of SNET's counsel and detailing perceived mistakes in the handling of the file. The plaintiff invites this court to engage in more. The court does not reach the conclusion that the assertions of mishandling are meritorious in finding that the plaintiff failed to carry its burden to rebut. It is possible, and the court does not find otherwise, that the representation to SNET was competent and adequate, and the defendant was still prejudiced by the late disclosure. For this court, the lateness of the disclosure and the loss of opportunities decide this issue. They require that the court grant the defendant's motion. This case is about lost time and lost opportunity, not about competency of legal representation.
Plaintiff's Memorandum in Opposition, p. 33.
For the foregoing reasons, the court grants the defendant's motion for summary judgment.
Angela Robinson-Thomas, Judge