Aetna Life and Cas. Co. v. Bulaong

• Court: Connecticut Supreme Court
• Writing for the Court: Before PETERS; BORDEN
• Citation: Aetna Life and Cas. Co. v. Bulaong, 588 A.2d 138, 218 Conn. 51 (Conn. 1991)
• Decision Date: 19 March 1991
• Docket Number: No. 14032,14032
• Parties: AETNA LIFE AND CASUALTY COMPANY v. Irene D. BULAONG et al. Gregory BULAONG v. AETNA LIFE AND CASUALTY COMPANY.

Page 138

588 A.2d 138

218 Conn. 51

AETNA LIFE AND CASUALTY COMPANY v. Irene D. BULAONG et al.

Gregory BULAONG v. AETNA LIFE AND CASUALTY COMPANY.

No. 14032.

Supreme Court of Connecticut.

Argued Jan. 10, 1991.

Decided March 19, 1991.

Marjorie J. Berger, with whom was Kerry R. Callahan, Hartford, for appellant Aetna Life and Cas. Co.

Stuart M. Roth, with whom was Ann M. Siczewicz, Hartford, for appellees Irene D. Bulaong et al. and Gregory Bulaong.

Before PETERS, C.J., and SHEA, GLASS, COVELLO and BORDEN, JJ.

BORDEN, Associate Justice.

In these combined appeals, Aetna Life and Casualty Company (Aetna) appeals from the judgments of the trial court denying its application to vacate an uninsured motorist coverage compulsory arbitration award and granting Gregory Bulaong's application to confirm the same award. ¹ See General Statutes § 38a-336. The arbitration award arose out of a claim by Bulaong for coverage for injuries he sustained while a passenger on a stolen motorcycle. Aetna claims that the trial court improperly (1) construed the phrase in the policy, "using a vehicle," to exclude riding as a passenger, and (2) confirmed the award because to so construe that phrase contravened public policy. We agree with Aetna with respect to its first claim. With respect to its second claim, however, we conclude that this record lacks the necessary factual underpinning and, therefore, that this issue must be determined in a new arbitration proceeding. Accordingly, we reverse the judgments.

Certain facts are not in dispute. On the morning of July 4, 1979, Gregory Bulaong was injured when a motorcycle on which he was riding as a passenger was involved in an accident. Sean Birmingham, the operator of the motorcycle, admitted having stolen it. Bulaong claimed, however, that he did not know that the motorcycle had been stolen.

The Bulaongs thereafter filed a claim with Aetna under the uninsured motorist coverage portion of their family's personal automobile policy, and sought to stack coverage under two other policies they maintained with Aetna. Aetna denied coverage under exclusion A.4 of the uninsured motorists coverage part of the policy for "[u]sing a vehicle without a reasonable belief that the person is entitled to do so." ² Aetna maintained that as a passenger Bulaong was using the stolen motorcycle without a reasonable belief that he was entitled to do so, within the meaning of the exclusion.

The Bulaongs demanded arbitration under the policy, and on January 23, 1989, a hearing was held before three arbitrators. Only Bulaong and Birmingham testified, and at the conclusion of the hearing the parties agreed to brief three issues. ³ On April 17, 1989, the arbitrators wrote to the parties requesting additional briefs on the following issue: "Is the term 'using' as used in this policy more or less restricting than the term 'occupying'?" ⁴

On May 5, 1989, the arbitrators rendered their decision. Two of the arbitrators found as follows: (1) the motorcycle operated by Birmingham was an uninsured motor vehicle under the terms of Aetna's policy with the Bulaongs; (2) there were two other policies that Aetna maintained with the Bulaongs that, when stacked with the policy at issue, provided a total of $120,000 in uninsured motorist coverage to Gregory Bulaong, who was an insured because he was living at home with his parents; and (3) "[t]he claimant [Gregory Bulaong] was not 'using' the motorcycle operated by Sean Birmingham at said date and time within the definition of Exclusion A4 in said policies of insurance." The majority of the panel accordingly awarded Gregory Bulaong $120,000. The third arbitrator dissented as follows: "I hereby dissent from conclusion number 3 of this Finding and Award and would conclude, based upon the evidence offered at said hearing, that the claimant was 'using the vehicle without a reasonable belief that he was entitled to do so' within Exclusion A4."

Thereafter, Aetna filed an application to vacate the award, and Bulaong filed an application to confirm the award. The trial court heard both applications together, upon submission of only the arbitrators' decision, and the parties' memoranda of law and arguments in support thereof.

In its memorandum of law to the trial court, Aetna argued that: (1) the arbitrators' decision was subject to de novo review; (2) the arbitrators improperly construed the term "using" to exclude riding as a passenger; and (3) the award was against public policy because it awarded damages to one who had knowingly been engaged in illegal activity. Aetna's argument that the award was against public policy was based on its assertion that the arbitrators had determined as a factual matter that Bulaong knew the motorcycle had been stolen and, therefore, had been using the vehicle "without a reasonable belief that [he was] entitled to do so." The Bulaongs argued, on the contrary, that: (1) the issue of whether Gregory Bulaong was "using" the motorcycle was an issue of fact, not of law, and not subject to de novo review by the trial court; (2) the arbitrators properly found as a matter of fact that he was not using the vehicle; and (3) the award did not contravene public policy because the arbitrators did not find that he knew the vehicle had been stolen.

The trial court determined that "[t]he arbitrators' decision has created a legal, not a factual, question." The court reasoned that when the arbitrators ruled that Bulaong was not using the vehicle "within the definition of Exclusion A4," they had not found that he was not on the vehicle but "only that his presence on it was not a use under the" policy. That determination, the court concluded, was a legal question subject to de novo review. Undertaking that review, the court further concluded that because the policy differentiated between "occupying" and "using," and because of the accepted rule of construction of insurance contracts that, where there are two reasonable interpretations the court should adopt that which covers the loss, the term "using" did not include riding as a passenger. The court also rejected Aetna's public policy argument, stating that "Aetna has failed to sustain its burden of proof." In this connection, the court stated as follows: "There is no evidence or even argument that Bulaong ever had 'a reasonable belief' that either he or Birmingham had a right to use the stolen vehicle. The arbitrators by focusing on the word 'using' make it clear that a reasonable belief in the right to use was not found." The court, therefore, denied Aetna's application to vacate and granted Bulaong's application to confirm the award. Aetna appealed from the judgment to the Appellate Court and we transferred the appeal to this court pursuant to Practice Book § 4023.

We first consider precisely what the arbitrators and the trial court did and did not decide. Despite Aetna's assertions to the contrary, the arbitrators did not decide the factual question of whether, when Bulaong was a passenger on the motorcycle, he was "without a reasonable belief that [he was] entitled to do so." Although the dissenting arbitrator clearly made such a finding, there is no indication in this record that the two majority arbitrators did so. Their decision was limited to the conclusion that he was not "using" the vehicle within the meaning of the exclusion. They did not address the issue of whether he had a reasonable belief that he was entitled to do so.

Aetna argues that "[t]he trial court explicitly found that Gregory Bulaong never had a 'reasonable belief' that he was entitled to use the motorcycle on which he was riding." We disagree. First, the trial court could not properly have made a finding of such a disputed issue on the basis of the record submitted to it, consisting only of the arbitrators' decision, the parties' memoranda of law, in which Bulaong repeated his contention that the arbitrators had made no such finding, and oral argument by the attorneys. Second, the trial court's brief discussion of the issue in its memorandum of decision, while not perfectly clear, is certainly consistent, as the Bulaongs suggest, with a conclusion that the award was silent with respect to the issue of Bulaong's reasonable belief. It was, of course, incumbent upon Aetna as the appellant to seek to have the trial court clarify any ambiguity in its decision. McLaughlin v. Bronson, 206 Conn. 267, 277-78, 537 A.2d 1004 (1988) (appellant's responsibility to furnish adequate appellate record); see Practice Book § 4061.

Aetna also argues that the conclusion of the arbitrators that Bulaong was not using the vehicle necessarily implies that they found that he had no reasonable belief that he was entitled to do so, because without such a finding they would not have addressed the meaning of the term "using." This argument fails because it is at least equally plausible that, because the arbitrators concluded he was not "using" the vehicle, they determined that it was not necessary to address the issue of whether he had such a reasonable belief. Indeed, the lack of any reference in their decision to whether he had such a reasonable belief makes such a reading of their decision plausible.

We are confronted, therefore, with decisions of both the arbitrators and the trial court limited to the determination that Bulaong, as a passenger on the motorcycle, was not "using" the vehicle within the meaning of the exclusion. Aetna argues, and we agree, that the determination by the arbitrators and the trial court that Bulaong was not "using" the motorcycle presents a legal issue subject to de novo review by this court. ⁵

Questions of law decided by arbitrators in compulsory arbitration proceedings pursuant to General Statutes § 38a-336 are subject to de novo review by the court. American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 191, 530 A.2d 171 (1987). Interpretation of an insurance policy, like the interpretation of other written...