Allstate Ins. Co. v. Mottolese

• Decision Date: 20 August 2002
• Docket Number: (SC 16531)
• Citation: 261 Conn. 521,803 A.2d 311
• Court: Connecticut Supreme Court
• Parties: ALLSTATE INSURANCE COMPANY ET AL. v. HONORABLE A. WILLIAM MOTTOLESE

261 Conn. 521

803 A.2d 311

ALLSTATE INSURANCE COMPANY ET AL. v. HONORABLE A. WILLIAM MOTTOLESE

(SC 16531)

Supreme Court of Connecticut.

Argued March 20, 2002.

Officially released August 20, 2002.

Sullivan, C.J., and Borden, Palmer, Vertefeuille and Zarella, Js. Terence A. Zemetis, for the plaintiffs in error.

Glenn E. Coe, with whom were Joseph B. Burns and, on the brief, Julie D. Blake and Richard F. Banbury, for the defendant in error.

Opinion

SULLIVAN, C.J.

This case is before us on a writ of error brought by the named plaintiff in error, Allstate Insurance Company (plaintiff),¹ the insurer of the defendant in the underlying action, seeking reversal of an order of the trial court, Mottolese, J., the defendant in error (trial court), imposing sanctions against the plaintiff pursuant to Practice Book § 14-13. The dispositive issue in this case is whether a party's proper exercise of its right to a trial de novo in accordance with General Statutes § 52-549z following a nonbinding arbitration proceeding may serve as the grounds for the imposition of sanctions under Practice Book § 14-13. We conclude that it may not, and that the trial court, therefore, improperly sanctioned the plaintiff.² Accordingly, we reverse the order of sanctions.

The plaintiff claims that the trial court's order of sanctions against it is void because it is not a party to the underlying action and never consented to the court's personal jurisdiction over it. Further, the plaintiff contends that: (1) the trial court violated its due process rights by failing to give notice that that court would be considering whether to impose sanctions upon the plaintiff for its refusal to increase its settlement offer; and (2) the order of sanctions was an improper attempt by the trial court to coerce and intimidate the plaintiff to settle the underlying defendant's case and, as such, violated the underlying defendant's constitutional right of access to the courts. We agree that, under the circumstances of this case, the plaintiff's conduct, which was grounded in its insured's exercise of his right to a trial de novo, cannot serve as the basis for an order of sanctions, and we reverse the order sanctioning the plaintiff.

The record discloses the following relevant facts and procedural history. In December, 1997, Robert Morgan filed the underlying action against David Distasio, the plaintiff's insured, to recover damages for injuries sustained in a December 5, 1995 automobile accident.³Morgan v. Distasio, Superior Court, judicial district of Fairfield, Docket No. CV XXXXXXXXX. After a pretrial conference at which no settlement was reached, the trial court referred the case to nonbinding arbitration pursuant to General Statutes § 52-549u,⁴ the court annexed arbitration program. In December, 1999, the arbitrator issued a memorandum of decision in which he found, inter alia, that Distasio negligently had rear-ended Morgan's vehicle, that Morgan had sustained minor physical injuries and property damage, and that judgment should be rendered in favor of Morgan in the amount of $2450. Distasio thereafter timely filed a claim for a trial de novo pursuant to § 52-549z⁵ and Practice Book § 23-66,⁶ requesting that the trial court vacate the arbitration award and restore the case to the jury trial list.

On April 4, 2001, a pretrial conference was held before the trial court, Mottolese, J. The trial court continued the conference to April 11, 2001, with the instruction that Distasio produce his insurance claims representative on that date. On April 11, 2001, Distasio, Morgan and their respective counsel, along with the claims representative for the plaintiff, Stephen Coppa, appeared before the court in accordance with a written notice of pretrial conference. Coppa acknowledged that the plaintiff had made its initial settlement offer of $2050 to Morgan after evaluating the case, and that, at the time the offer was made, he had told Morgan that the offer was final. After discussion, the trial court found that the plaintiff's refusal "to pay anything more than $2050 . . . is conduct which may fairly be characterized as unfair and in bad faith." The trial court further stated that "[t]his court deems [the plaintiff's] refusal to participate in a resolution of this case in a reasonable manner as the functional equivalent of a failure to attend a pretrial," and that "[i]t's unreasonable for any insurance carrier, any tortfeasor, to require judicial resources to be put in place and for thousands and thousands of taxpayers' money to be expended in order to save you, [the plaintiff], $400.00." The trial court held that the plaintiff's conduct was an "unwarranted imposition upon scarce judicial resources . . . a gross abuse of the civil justice system; and [that it made] a mockery of Connecticut's court annexed arbitration program." Accordingly, pursuant to Practice Book § 14-13,⁷ the trial court awarded Morgan attorney's fees of $250 for the April 4 pretrial conference and $250 for the April 11 hearing.

Distasio moved for articulation, requesting that the trial court clarify whether the ruling on attorney's fees was directed at the plaintiff, Distasio or Distasio's counsel. In response, the trial court appointed H. James Pickerstein, an attorney, "as a special master to conduct discovery on behalf of the court and to assist the court in preparing its articulation." The court ordered that the scope of discovery was to include, but not be limited to, the plaintiff's settlement policies and practices as they related to the underlying case, the extent to which Distasio's counsel had participated in the settlement process, and the policies and practices of the court annexed arbitration program and de novo trials.

Distasio moved for appellate review of the trial court's order, arguing that the order did not articulate or clarify the trial court's April 11 decision, as he had requested in the motion for articulation. Distasio further argued that the appointment of a special master to conduct discovery was an improper attempt by the trial court to substitute a new decision or to change the reasoning or basis of the court's April 11 decision.⁸ Thereafter, Distasio filed an appeal in the Appellate Court challenging the appointment of the special master.

In the meantime, the plaintiff moved for permission to amend the writ to address the sanction order. The trial court objected to the motion for permission to amend. We granted the plaintiff's motion for permission to amend the writ of error and allowed the parties to file supplemental briefs. Thereafter, the plaintiff filed its amended writ of error, alleging the prior claims and further contending that the trial court improperly had appointed a special master and that the order of discovery was not an articulation but an attempt to find justification, through rectification of the record, of the sanctions previously imposed. Thereafter, the trial court amended the order by articulating that the sanction of the attorney's fees was directed to the plaintiff, and it vacated the remainder of the order. In light of the amendment of the order, the additional issues raised in the amended writ of error are now moot. Only the order of sanctions remains in dispute.

The plaintiff claims that the order of sanctions was an improper attempt to coerce and intimidate it into settling the matter, thereby violating its constitutional right to a trial by jury. Specifically, the plaintiff argues that Distasio's assertion of his statutory right to a trial de novo following the court-ordered nonbinding arbitration proceeding preserved his right to a trial by jury guaranteed by the Connecticut constitution, and that a party's decision not to be bound by an arbitrator's decision regarding settlement cannot be the basis for the imposition of sanctions under Practice Book § 14-13.

Conversely, the trial court argues that, because the arbitrator's award of $2450 in damages was a mere $400 more than the plaintiff was originally willing to pay, the plaintiff took a defiant approach to the settlement process that was interpreted by the trial court as being disrespectful to it, harmful to the opposing party and implicitly contemptuous. The trial court further argues that it is within that court's inherent authority to sanction all who appear before it whose actions may be characterized as unfair and in bad faith.

We agree with the plaintiff and conclude that Distasio's exercise of his right to file for a trial de novo after the completion of arbitration proceedings cannot provide the basis for sanctions pursuant to Practice Book § 14-13. Accordingly, we conclude that the trial court abused its discretion when it sanctioned the plaintiff.

First, we address the standard of review. The standard of review with regard to a court's decision to impose sanctions is an abuse of discretion standard. Nelson v. Housing Authority, 63 Conn. App. 113, 117, 774 A.2d 1025 (2001). "In reviewing a claim that this discretion has been abused the unquestioned rule is that great weight is due to the action of the trial court and every reasonable presumption should be given in favor of its correctness. . . . [T]he ultimate issue is whether the court could reasonably conclude as it did." (Internal quotation marks omitted.) Connecticut National Bank v. Investors Capital Corp., 29 Conn. App. 48, 54-55, 613 A.2d 1370, cert. denied, 224 Conn. 902, 615 A.2d 1044 (1992).

We begin with a review of the nonbinding arbitration program. Section 52-549u permits the judges of the Superior Court to refer certain civil actions to an arbitrator for nonbinding arbitration. The arbitrator's decision, however, is not binding on the parties and does not limit either party's access to a trial. Shelby Mutual Ins. Co. v. Bishop, Kirk & Saunders, Inc., 13 Conn. App. 189, 193, 535 A.2d 387 (1988). Pursuant to § 52-549z (d) and Practice Book § 23-66 (c), a party that participated in...