American States Ins. Co. v. Allstate Ins.

• Decision Date: 15 May 2007
• Docket Number: No. 17651.,17651.
• Citation: 282 Conn. 454,922 A.2d 1043
• Court: Connecticut Supreme Court
• Parties: AMERICAN STATES INSURANCE COMPANY v. ALLSTATE INSURANCE COMPANY

922 A.2d 1043

282 Conn. 454

AMERICAN STATES INSURANCE COMPANY v. ALLSTATE INSURANCE COMPANY

No. 17651.

Supreme Court of Connecticut.

Argued February 15, 2007.

Decided May 15, 2007.

John W. Lemega, with whom was Aubrey E. Ruta, Hartford, for the appellant (plaintiff).

William J. Melley II, Hartford, for the appellee (defendant).

BORDEN, NORCOTT, KATZ, VERTEFEUILLE and ZARELLA, Js.

NORCOTT, J.

In this certified appeal, we apply the Restatement (Second) of Conflict of Laws principles adopted in our decision in Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., 243 Conn. 401, 703 A.2d 1132 (1997), on appeal after remand, 252 Conn. 774, 750 A.2d 1051 (2000), to determine which state's law governs an automobile liability insurance policy issued in Florida covering a car principally garaged in, and owned by a domiciliary of, that state, who was injured in an automobile accident during an extended visit with her daughter in Connecticut. The plaintiff, American States Insurance Company, appeals, upon our grant of certification,¹ from the judgment of the Appellate Court reversing the judgment of the trial court that had awarded the plaintiff the sum of $108,851.68 plus interest in the amount of $97,501.03 pursuant to General Statutes § 37-3a. American States Ins. Co. v. Allstate Ins. Co., 94 Conn.App. 79, 81, 891 A.2d 75 (2006). On appeal, the plaintiff claims that the Appellate Court improperly concluded that the insurance policy issued by the defendant, Allstate Insurance Company, is governed by Florida, and not Connecticut, law. Because Florida has the "most significant relationship" with the contract claims in this case, we affirm the judgment of the Appellate Court.

The Appellate Court opinion sets forth the following undisputed facts and procedural history. "On June 14, 1994, Victoria M. O'Neill and Patricia Sargent² were the owners of a 1989 Ford Thunderbird. At that time, the vehicle was registered in Florida and insured under an automobile liability insurance policy issued by the defendant. O'Neill and Sargent were named insureds under the defendant's policy, which had been purchased and issued in Florida. The premium statements for the defendant's policy were mailed to Sargent's address in Connecticut. Sargent was domiciled in Connecticut and held a Connecticut driver's license. O'Neill was domiciled in Florida but, for several years, had spent three to five months each year in Connecticut with Sargent.

"On June 14, 1994, Sargent was operating the Thunderbird in Lebanon with O'Neill as her passenger. Sargent collided with a stationary object, causing injuries to O'Neill. On November 15, 1994, O'Neill brought an action against Sargent in the Connecticut Superior Court (O'Neill action) for the injuries she sustained in the motor vehicle accident. The defendant denied coverage under its policy and refused to defend or indemnify Sargent in the O'Neill action. At that time, Sargent also was insured under a personal umbrella liability insurance policy issued by the plaintiff. The plaintiff provided a defense to Sargent in connection with the O'Neill action. The O'Neill action proceeded to arbitration, which resulted in an award to O'Neill in the amount of $122,500. The arbitration award was neither confirmed nor vacated by the Superior Court. The plaintiff paid the amount of the arbitration award to O'Neill on October 11, 1995.

"In the present action, the plaintiff sought a judgment declaring that the defendant was required to provide a defense and indemnification to Sargent, pursuant to the defendant's liability insurance policy issued to Sargent in 1994, and indemnification to the plaintiff in the amount of the payment it made to O'Neill in satisfaction of the arbitration award entered in O'Neill's favor against Sargent. The plaintiff and the defendant filed motions for summary judgment and submitted a stipulation of facts to the court. The court, Hon. Jerry Wagner, judge trial referee, issued its memorandum of decision on November 13, 2003, granting the plaintiff's motion for summary judgment and denying the defendant's motion for summary judgment. After a hearing in damages, the court, Bryant, J., rendered judgment awarding the plaintiff damages and interest pursuant to § 37-3a." Id., at 81-83, 891 A.2d 75.

The defendant appealed from the judgment of the trial court to the Appellate Court and claimed, inter alia,³ that the trial court improperly chose to apply Connecticut law rather than Florida law to the automobile liability insurance policy, which did not contain a choice of law clause. Id., at 86, 891 A.2d 75. The distinction between Connecticut and Florida law is significant in the present case because "[t]he defendant's policy contains an endorsement that excludes automobile liability insurance coverage for `bodily injury to you or any resident of your household related to you by blood, marriage or adoption.' The definition section of the policy defines `you' as `the policyholder named on the declarations page and that policyholder's resident spouse'"; Id., at 89-90, 891 A.2d 75; and "Sargent and O'Neill are both listed as policyholders on the declarations page." Id., at 90, 891 A.2d 75. The defendant had denied coverage on the basis of this household exclusion which is valid under Florida law,⁴ but was drafted in a manner that likely would not satisfy the requirements of General Statutes § 38a-335(d), which provides in relevant part that "the coverage afforded under the bodily injury liability and property damage liability provisions in any such policy shall apply to the named insured and relatives residing in his household unless any such person is specifically excluded by endorsement." (Emphasis added.) See American States Ins. Co. v. Allstate Ins. Co., supra, 94 Conn.App. at 90, 891 A.2d 75.

The Appellate Court, following the "`most significant relationship'" approach taken by 1 Restatement (Second), Conflict of Laws §§ 193, 188 and 6 (1971), as adopted by our decision in Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., supra, 243 Conn. at 401, 703 A.2d 1132, concluded that Florida law governed the policy because that state was the "principal location of the insured risk" since the Thunderbird was "primarily garaged" there and was in Connecticut less than six months of the year. American States Ins. Co. v. Allstate Ins. Co., supra, 94 Conn.App. at 86-88, 891 A.2d 75. Noting that this created a rebuttable presumption in favor of Florida law, the Appellate Court next concluded that Connecticut's interest was not "sufficiently compelling" to outweigh Florida's interest. Id., at 87-90, 891 A.2d 75.

Finally, the Appellate Court concluded that, "[u]nder Florida law, the defendant was not required to provide a defense and indemnification to Sargent in connection with the O'Neill action and is not required to indemnify the plaintiff for the amount of the payment it made to O'Neill in satisfaction of the arbitration award." Id., at 91, 891 A.2d 75. Accordingly, the Appellate Court reversed the judgment of the trial court and remanded the case with direction to render judgment in favor of the defendant. Id. This certified appeal followed. See footnote 1 of this opinion.

On appeal, the plaintiff claims that the Appellate Court improperly concluded that the policy was governed by Florida law because the parties understood that Connecticut, and not Florida, was the "principal location of the insured risk." Specifically, the plaintiff argues that the Appellate Court gave undue consideration to the fact that the Thunderbird was garaged in Connecticut less than six months a year. The plaintiff further claims that the defendant should have foreseen that, when it issued the policy, the principal location of the risk would be in Connecticut because both O'Neill and Sargent were listed as co-owners of the car and named insureds with a Connecticut mailing address, and the premium statements were mailed to and paid from Connecticut. The plaintiff also claims that, even if Florida is the "principal location of the risk," Connecticut has a "`more significant relationship'" to the transaction in this case because Connecticut has an overriding policy interest in applying its law requiring certain minimum coverage requirements.⁵

In response, the defendant claims that Florida law should apply presumptively because that state was the principal location of the risk as the Thunderbird had been garaged there for the majority of the year, and the policy at issue was clearly labeled as a Florida insurance policy. The defendant then contends that Connecticut's interest is not sufficiently compelling to overcome that presumption because, although their laws are different with respect to household exclusions the public policies of Connecticut and Florida differ only in execution, and not substance. The defendant also emphasizes that insurance underwriting standards, which differ from state to state, reflect the costs of insuring risks under a particular state's laws. We agree with the defendant, and conclude that the Appellate Court properly determined that the policy at issue was governed by Florida law.

We note at the outset that choice of law issues present questions of law over which our review is plenary. See, e.g., Connell v. Riggins, 944 So.2d 1174, 1176 (Fla.App.2006); Morris B. Chapman & Associates, Ltd. v. Kitzman, 307 Ill.App.3d 92, 99, 240 Ill.Dec. 235, 716 N.E.2d 829 (1999), aff'd, 193 Ill.2d 560, 251 Ill.Dec. 141, 739 N.E.2d 1263 (2000); Cudd Pressure Control, Inc. v. Sonat Exploration Co., 202 S.W.3d 901, 904 (Tex.App.2006); Dreher v. Budget Rent-A-Car System, Inc., 272 Va. 390, 395, 634 S.E.2d 324 (2006).

"In Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., [supra, 243 Conn. at 413, 703 A.2d 1132], we abandoned the ancient lex loci contractus approach to choice of law, which looked primarily to the law of the state in which the contract was made. In its...