Dairyland Ins. Co. v. Mitchell

320 Conn. 205

128 A.3d 931

DAIRYLAND INSURANCE COMPANY

v.Maureen K. MITCHELL, Executrix (Estate of John Mooney, Jr.), et al.

No. 19482.

Supreme Court of Connecticut.

Argued Oct. 7, 2015.

Decided Jan. 19, 2016.

William M. O'Donnell III, with whom, on the brief, were Lauren J. Taylor, Waterbury, and S. Sherry Xia, for the appellant (named defendant).

Cristin E. Sheehan, with whom was Cara D. Joyce, Hartford, for the appellee (plaintiff).

ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA and ROBINSON, Js.

ROGERS, C.J.

This appeal presents the question of whether General Statutes (Rev. to 2009) § 38a–335 (d)¹ bars automobile liability insurers from excluding coverage for personal injuries caused to a named insured unless the exclusion is set forth in a separate endorsement to the policy. The named defendant, Maureen K. Mitchell, in her capacity as executrix of the estate of John Mooney, Jr. (decedent), appeals from the trial court's summary judgment rendered in favor of the plaintiff, Dairyland Insurance Company, in this declaratory judgment action brought to determine the scope of coverage provided by an automobile insurance policy and the associated duty to defend. She argues that the trial court's ruling was improper because the exclusion at issue was void and unenforceable due to its failure to comply with the clear and unambiguous requirements of § 38a–335 (d). We agree and reverse the judgment of the trial court.

The following undisputed facts and procedural history are relevant to the appeal. The decedent died in an automobile accident on April 24, 2010, while riding in his own motor vehicle as a passenger. The vehicle was being driven, with the decedent's permission, by the decedent's friend, Robert Atherton,² when it struck a parked tractor trailer. At the time, the vehicle was insured by the plaintiff under a personal automobile policy (policy). Atherton was a covered permissive driver under the policy.

On or about April 12, 2012, the defendant filed a wrongful death action against Atherton, seeking various damages on behalf of the decedent's estate. On June 25, 2012, the plaintiff filed a one count declaratory judgment action³ against the defendant and Atherton, seeking a ruling that the policy did not provide coverage for the defendant's claims against Atherton and that the plaintiff had no duty to defend Atherton. Specifically, the plaintiff claimed that, although Atherton generally was covered as a driver, exclusion 11 of the policy precluded coverage for claims of bodily injury to the named insured, i.e., the decedent.⁴

Thereafter, the plaintiff filed a motion for summary judgment on the basis of that exclusion, arguing that it unambiguously barred coverage for the defendant's claims and, therefore, that the plaintiff had no duty to defend or indemnify Atherton. The defendant objected to the plaintiff's motion, arguing that exclusion 11 violated § 38a–335 (d) and, therefore, was void. Specifically, the defendant contended, § 38a–335 (d) required that an exclusion, such as exclusion 11, be set forth separately in an endorsement to the policy that specifically names the individual excluded from coverage. Exclusion 11, to the contrary, is located within the body of the policy. The defendant argued further that, because exclusion 11 failed to comply with the statute, it was void and unenforceable as against public policy. Consequently, according to the defendant, the plaintiff had a duty to defend Atherton and, potentially, to indemnify him if he ultimately were to be held liable for the decedent's death. In response, the plaintiff contended, inter alia, that exclusion 11 was valid, consistent with Connecticut's public policy and specific enough to satisfy the parameters of § 38a–335 (d).

After surveying the various appellate and Superior Court case law applying § 38a–335 (d), the trial court concluded that exclusion 11 did not violate that statute and, further, unambiguously barred the defendant's claims against Atherton.⁵ Accordingly, the court rendered summary judgment in favor of the plaintiff. The defendant's appeal followed.⁶

The defendant claims that the trial court improperly granted the plaintiff's motion for summary judgment because exclusion 11, although permitted by § 38a–335 (d), nevertheless is invalid because it fails to comply with the plain and unambiguous strictures of that statute, namely, the requirements that the exclusion be both sufficiently specific and set forth in a separate endorsement to the policy. According to the defendant, these requirements must be met in order to create a valid exception from coverage, because such an exception would not be expected by the ordinary consumer and, therefore, must be set forth in a manner that is more likely to be noticed.⁷ The plaintiff contends, in response, that the exclusion's location in the body of the policy, rather than in an endorsement, "unquestionably" complies with § 38a–335 (d), and that the exclusion clearly and unambiguously disallowed liability coverage for the decedent. According to the plaintiff, it would be "illogical" to conclude that the exclusion, which specifically is authorized by § 38a–335 (d), is invalid simply because it was part of the original terms of the policy rather than set forth in an amendatory endorsement. We agree with the defendant that exclusion 11 is invalid because it was not set forth in a separate endorsement to the policy.⁸

We begin with the standard of review. "Summary judgment shall be rendered forthwith if the pleadings, affidavits and 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.... The scope of our appellate review depends upon the proper characterization of the rulings made by the trial court.... When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record." (Internal quotation marks omitted.) Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn. 29, 37, 84 A.3d 1167 (2014).

The parties do not dispute that exclusion 11, by its terms, precludes recovery under the policy. See footnote 4 of this opinion. They contest only whether that exclusion, as it appears in the body of the policy, is authorized by § 38a–335 (d) and, therefore, is valid. Because the trial court's conclusion in this regard required it to determine the meaning and applicability of a statute, our review is plenary. Lexington Ins. Co. v. Lexington Healthcare Group, Inc., supra, 311 Conn. at 37, 84 A.3d 1167 ; see also Joseph General Contracting, Inc. v. Couto, 317 Conn. 565, 586, 119 A.3d 570 (2015) (statutory interpretation presents question of law). In reviewing the trial court's construction of § 38a–335 (d), we adhere to the strictures of General Statutes § 1–2z.⁹

Section 38a–335 governs the general requirements for automobile liability insurance policies in Connecticut. At the time of the accident when the insurance policy at issue was in effect, subsection (d) provided: "With respect to the insured motor vehicle, the coverage afforded under the bodily injury liability and property damage liability provisions in any [automobile liability insurance] policy shall apply to the named insured and relatives residing in his household unless any such person is specifically excluded by endorsement."¹⁰ General Statutes (Rev. to 2009) § 38a–335 (d). This court had occasion to construe this subsection in American States Ins. Co. v. Allstate Ins. Co., 282 Conn. 454, 922 A.2d 1043 (2007), a conflict of laws case in which an insurer sought to exclude liability coverage for injuries caused to a named insured under a policy provision similar to exclusion 11.¹¹ As part of a multifactor test used to determine whether Connecticut or Florida law should govern the dispute, we weighed the public policy interests of the conflicting forums. We concluded that § 38a–335 (d) did not create "an absolute prohibition on such exclusions, but merely require[d] notice and acceptance by the insured of an endorsement that specifically exclude[s] the [named insured and] relatives residing in the household of the named insured." (Emphasis added; internal quotation marks omitted.) Id., at 475, 922 A.2d 1043. Stated otherwise, the statute "prescribes a process by which such exclusions must be executed [in order] to be valid." Id.

In the insurance context, "endorsement" is a term of art. It is defined as "a writing added or attached to a policy or certificate of insurance which expands or restricts its benefits or excludes certain conditions from coverage.... When properly incorporated into the policy, the policy and the ... endorsement together constitute the contract of insurance, and are to be read together to determine the contract actually intended by the parties." (Emphasis added; internal quotation marks omitted.) Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 806, 967 A.2d 1 (2009) ; see also id. (endorsement is "[a] written or printed form attached to the policy which alters provisions of the contract" [emphasis added; internal quotation marks omitted] ).

When an insurer seeks to limit its liability based on a statute, "it should only be permitted to do so to the extent that the statute expressly authorizes." Chmielewski v. Aetna Casualty & Surety Co., 218 Conn. 646, 674, 591 A.2d 101 (1991). "In order for a policy exclusion to be expressly authorized by [a] statute [or regulation], there must be substantial congruence between the statutory [or regulatory] provision and the policy provision." (Internal quotation marks omitted.) Piersa v. Phoenix Ins. Co., 273 Conn. 519, 529, 871 A.2d 992 (2005) ; see also Lowrey v. Valley Forge Ins. Co., 224 Conn. 152, 156, 617 A.2d 454 (1992). This requirement pertains to matters of both substance and form. See 2 G. Couch,...