21st Century N. Am. Ins. Co. v. Perez

• Decision Date: 07 November 2017
• Docket Number: AC 39060
• Citation: 173 A.3d 64,177 Conn.App. 802
• Parties: 21ST CENTURY NORTH AMERICAN INSURANCE COMPANY v. Glenda PEREZ, et al.
• Court: Connecticut Court of Appeals

177 Conn.App. 802

173 A.3d 64

21ST CENTURY NORTH AMERICAN INSURANCE COMPANY

v.Glenda PEREZ, et al.

AC 39060

Appellate Court of Connecticut.

Argued May 23, 2017

Officially released November 7, 2017

Yelena Akim, for the appellant (plaintiff).

Adam F. Acquarulo, for the appellee (defendant PV Holding Corp.).

John–Henry M. Steele, for the appellee (defendant Gregory C. Norsiegian, Administrator [Estate of Leoner Negron] ).

Prescott, Beach and Mihalakos, Js.

BEACH, J.

This appeal concerns the cancellation of an automobile insurance policy. The plaintiff, 21st Century North America Insurance Company, appeals from the judgment of the trial court in favor of the defendants, Glenda Perez, Ariel Seda,¹ Gregory C. Norsiegian, the administrator of the estate of Leoner Negron (administrator), Orlando Soto, Carmello Pacheco, Edgardo Contreras, Eric Valentin, John Skouloudis, and PV Holding Corporation (corporation). Because it allegedly complied with all applicable cancellation requirements contained in both the insurance policy and the General Statutes, the plaintiff claims that the court improperly failed to conclude that it validly had cancelled that policy. The plaintiff further claims that the court improperly applied the doctrine of substantial compliance to excuse nonpayment of the amount due to avert cancellation. We agree and, accordingly, reverse the judgment of the trial court.

The relevant facts are not in dispute. The insured defendants purchased an automobile liability insurance policy from the plaintiff for a term of six months (policy). They made payments on an installment basis; the payments included a monthly "installment fee" of $5. The insured defendants renewed the policy in May, 2012, and paid their first installment on May 10, 2012.

The second installment of $62.24 was due before June 11, 2012.² When the insured defendants failed to make any payment on that installment, the plaintiff on June 19, 2012, sent them a certified notice of cancellation (cancellation notice).³ That notice conveyed two important messages. First, it advised the insured defendants "that your insurance will cease at and from [12:01 a.m. on July 4, 2012] due to nonpayment of premium." Second, the cancellation notice provided the insured defendants with the opportunity to avert cancellation by making payment of $124.48 prior to the cessation of coverage on July 4, 2012.⁴ The plaintiff at that time also sent the insured defendants a billing invoice stating that $124.48 was due before July 4, 2012.

On June 26, 2012, the insured defendants made a partial payment of $62. In response, the plaintiff sent the insured defendants another billing invoice. That invoice acknowledged receipt of their partial payment and indicated that the remaining balance of $62.48 was "due before" July 4, 2012. The invoice advised the insured defendants in relevant part that "if we do not receive the [remaining balance] by the date shown, your policy will be terminated.... [T]he payment must be received by 12:01 a.m. (one minute after midnight) Standard Time on [July 4, 2012] to avoid cancellation." It is undisputed that the insured defendants made no further payment to the plaintiff prior to that date.

The "Statement of Account" admitted into evidence, which documents activity on the policy, states that the policy was cancelled on July 4, 2012, due to "[n]on [p]ayment [e]ffective 07/04/12." On July 11, 2012, the plaintiff issued a refund of $5.01 to the insured defendants with respect to coverage that had been provided under the policy until July 4, 2012.

On July 18, 2012, the insured defendants sent an additional payment of $62 to the plaintiff. On July 25, 2012, the plaintiff returned that payment to the insured defendants because the policy already had been cancelled.

In the early morning hours of July 28, 2012, Seda was operating a 1996 Honda Accord previously covered under the policy. At approximately 2:26 a.m., Seda's vehicle collided with a 2013 Lincoln MKT near the intersection of Broad Street and Allen Place in Hartford. As a result of that collision, a passenger in the 2013 Lincoln was killed.

On May 15, 2014, the plaintiff filed the present declaratory judgment action, in which it requested a declaration that (1) the policy "had been cancelled by virtue of the non-payment of premiums as of July 4, 2012"⁵ and (2) the plaintiff had no duty to indemnify or to defend the insured defendants. On August 25, 2015, the administrator filed a counterclaim alleging that the cancellation notice was "fatally defective," in that it specified an "amount due" in excess of the $62.24 installment amount that triggered that notice. The administrator also alleged, as a special defense, that the insured defendants "substantially performed all of their obligations under the policy." In answering the administrator's counterclaim, the plaintiff denied all allegations. The plaintiff, the administrator, and the corporation thereafter filed motions for summary judgment, which the court denied.

A trial was held on October 7, 2015. The plaintiff submitted a dozen documents that were admitted into evidence. Among them was a copy of the policy, which provides in relevant part that the plaintiff may cancel the policy due to nonpayment of premiums. The plaintiff also offered the testimony of Diana Yeager, the plaintiff's underwriting staff consultant, who was familiar with the plaintiff's business records and general billing practices. During her testimony, Yeager detailed how the plaintiff arrived at the $124.48 figure as the amount necessary to cure the default and avoid cancellation of the policy, noting the distinction in the plaintiff's billing practices between installment billing cycles and cancellation billing cycles.⁶ Following the conclusion of Yeager's testimony, the plaintiff rested. The defendants did not offer evidence of any kind at trial.

In its subsequent memorandum of decision, the court acknowledged Yeager's explanation of the amount specified on the cancellation notice.⁷ The court nevertheless found that "[t]he [$124.48] amount stated in the [cancellation notice] was not the amount due ...." Rather, the court found that $62.24 "was actually due ...."

The court found that the insured defendants failed to make a payment of $62.24 prior to the expiration of coverage on July 4, 2012. It also found that they made a partial payment of $62 on June 26, 2012. On that basis, the court found that the insured defendants had substantially complied with their obligations under the policy, noting that "incorrect and misleading notices should not be construed to provide an insurer with absolute power that obliterates any rights of the insureds to the coverage for which they had contracted and paid.... [T]he ability to mislead an insured and then revoke coverage for a premium payment that is twenty-four cents less than the amount due does not comport with the fairness our law attempts to extend to all parties in such transactions." (Citations omitted.) Accordingly, the court rendered judgment "against the plaintiff and in favor of the defendants in this declaratory judgment action." From that judgment, the plaintiff appealed to this court.

I

We first address the court's determination that the installment payment of $62.24, rather than the $124.48 listed on the cancellation notice, was the amount "that was actually due" to avoid cancellation of the policy. On appeal, the plaintiff challenges the propriety of that determination. When the trial court has resolved factual disputes that underlie insurance coverage issues, those findings are reviewable on appeal subject to the clearly erroneous standard. National Grange Mutual Ins. Co. v. Santaniello , 290 Conn. 81, 90, 961 A.2d 387 (2009). "Such a finding of fact will not be disturbed unless it is clearly erroneous in view of the evidence and pleadings in the whole record .... [A] finding is clearly erroneous when there is no evidence in the record to support it ... or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Internal quotation marks omitted.) Id.

It is undisputed that the installment payment due before June 11, 2012 was $62.24. It also is undisputed that the insured defendants did not make that payment. The plaintiff subsequently sent the cancellation notice to the insured defendants on June 19, 2012. In that notice, the plaintiff advised them that the policy would be cancelled in fifteen days on July 4, 2012. The cancellation notice also provided the insured defendants with the opportunity to cure their default by making payment of $124.48 prior to July 4, 2012. The corresponding billing invoice sent to the insured defendants explained that payment of that amount was necessary "in order to maintain regular installment billing." At trial, the court heard testimony from the plaintiff's underwriting staff consultant that the $124.48 amount listed on the cancellation notice was necessary to maintain regular installment billing under the policy. In other words, the amount due reflected the $62.24 installment payment that was past due and an additional $62.24 that the insured was obligated to pay for the July installment in order to be current on premiums due pursuant to the installment billing cycle. The defendants did not present any evidence to the contrary.

The court nevertheless found that the amount "that was actually due" by July 4, 2012, to cure the insured defendants' default on their June installment was $62.24. There is no evidence in the record to substantiate that determination. Moreover, the court provided no authority, and we are aware of none, for the proposition that the amount specified as necessary to resume regular installment payments cannot exceed the initial amount of default. In response to the court's memorandum of decision, the plaintiff requested an articulation of the factual and legal bases for ...