Black v. Goodwin, Loomis and Britton, Inc.

• Decision Date: 20 August 1996
• Docket Number: No. 15361,15361
• Citation: Black v. Goodwin, Loomis and Britton, Inc., 681 A.2d 293, 239 Conn. 144 (Conn. 1996)
• Court: Connecticut Supreme Court
• Parties: Charles BLACK, Administrator (Estate of Dewitt C. Black) v. GOODWIN, LOOMIS AND BRITTON, INC., et al.

Page 293

681 A.2d 293

239 Conn. 144

Charles BLACK, Administrator (Estate of Dewitt C. Black) v.GOODWIN, LOOMIS AND BRITTON, INC., et al.

No. 15361.

Supreme Court of Connecticut.

Argued April 23, 1996.

Decided Aug. 20, 1996.

Joel J. Rottner, West Hartford, with whom, on the brief, were Joseph F. Skelley, Jr., Brad N. Mondschein, Hartford, and Edward W. Gasser, West Hartford, for appellant-appellee(defendantMaryland Casualty Company).

Thomas A. Cloutier, Old Saybrook, with whom was Conrad Ost Seifert, Old Lyme, for appellee-appellant(plaintiff).

Douglas W. Hammond, Hartford, and Joram Hirsch, Bridgeport, filed a brief, for Connecticut Trial Lawyers Association as amicus curiae.

Before PETERS, C.J., and BORDEN, NORCOTT and PALMER, JJ.¹

PALMER, Associate Justice.

This appeal requires us to determine the enforceability of a stipulated judgment under which an insured has assigned to an injured party any claims that the insured has against its insurer in exchange for the injured party's agreement to seek satisfaction of the judgment solely against the insurer.The plaintiff, Charles Black, the administrator of the estate of DeWitt C. Black(decedent), ² initiated a wrongful death action against White, Wheeler and Company(White).White's insurance carrier, the defendantMaryland Casualty Company(Maryland Casualty), denied coverage and refused to defend White.The plaintiff and White thereupon stipulated to a judgment under which White assigned to the plaintiff any claims that it had against Maryland Casualty in return for the plaintiff's promise to seek satisfaction of the judgment against Maryland Casualty and not against White.The plaintiff then instituted this action against Maryland Casualty.³At the conclusion of the trial, a jury returned a verdict in favor of the plaintiff and the trial court rendered judgment accordingly.Maryland Casualty appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book§ 4023andGeneral Statutes § 51-199(c).We affirm the judgment of the trial court.

The facts relevant to this appeal are undisputed.On June 26, 1989, White, a framing contractor, obtained an insurance binder from Goodwin, Loomis and Britton, Inc.(Goodwin), for a general commercial liability policy with coverage in the amount of $500,000.The insurance binder listed Maryland Casualty as the insurance carrier retained to provide liability coverage for White.

On August 14, 1989, the decedent was employed as a house framer for White.While working on the second floor of a partially completed dwelling, the decedent slipped and fell through an uncovered chimney shaft, striking his head on a concrete floor eighteen feet below.The decedent died the next day from the injuries that he had sustained as a result of the fall.

In December, 1989, the plaintiff filed a wrongful death action against White and the owners of the home, Barbara and George Backman.⁴In accordance with the insurance binder, Goodwin made a demand on Maryland Casualty to defend White in the wrongful death action.Maryland Casualty, however, denied coverage and, further, refused to defend the suit.⁵

Thereafter, on June 10, 1991, the plaintiff and White, through its president, William Wall, entered into a stipulation in settlement of the plaintiff's wrongful death action against White.Under the terms of the stipulation, White stipulated to liability in the plaintiff's action in the amount of $500,000, plus interest, for damages resulting from the decedent's death.In addition, White assigned to the plaintiff any and all rights that it had against Maryland Casualty resulting from the denial of coverage and refusal to defend it in the plaintiff's action.In return for the assignment of rights from White, the plaintiff agreed to seek satisfaction of the judgment solely against Maryland Casualty and, accordingly, the plaintiff released White "from further liability regarding the payment and satisfaction of this judgment."⁶The trial court rendered judgment in accordance with the parties' stipulation.

Thereafter, on June 19, 1991, the plaintiff brought this action seeking satisfaction of the stipulated judgment, plus interest and other damages.The plaintiff's amended five count complaint contained three common law claims, breach of contract, negligence and bad faith, and two statutory claims, one for violation of General Statutes § 38a-321⁷ and a second for violations of the Connecticut Unfair Trade Practices Act (CUTPA);General Statutes § 42-110a et seq.; and the Connecticut Unfair Insurance Practices Act (CUIPA).General Statutes § 38a-815 et seq.⁸Each of these claims stemmed from Maryland Casualty's denial of insurance coverage to White and its failure to defend White in connection with the plaintiff's wrongful death action.Maryland Casualty, in response, claimed as one of its special defenses that the plaintiff's agreement not to seek satisfaction of the stipulated judgment against White created "no enforceable rights [in the plaintiff] to the assignment or judgment" and that "the assignment and judgment are void and against public policy as they were obtained by collusion" between the plaintiff and White.On August 30, 1991, the plaintiff filed an offer of judgment pursuant to General Statutes § 52-192a⁹ in the amount of $500,000.

After a trial, the jury returned a verdict in favor of the plaintiff on all counts ¹⁰ and awarded the plaintiff $500,000 in damages, plus interest under General Statutes § 37-3a.¹¹Thereafter, the trial court denied Maryland Casualty's motions to set aside the verdict and for a remittitur, and rendered judgment in favor of the plaintiff in the amount of $1,009,833.40.This amount consisted of the $500,000 in damages that had been stipulated to by the plaintiff and White, interest under § 37-3a in the amount of $191,666.70, and interest under § 52-192a in the amount of $318,166.70 pursuant to the plaintiff's $500,000 offer of judgment.

On appeal, Maryland Casualty claims that: (1) the stipulated judgment is contrary to public policy and, therefore, void as a matter of law; (2)the trial court improperly denied its motion to set aside the verdict because the plaintiff failed to establish the reasonableness of the stipulated judgment and, further, that the trial court improperly prevented Maryland Casualty from presenting evidence that the stipulated judgment was unreasonable; (3)the trial court improperly instructed the jury that Maryland Casualty was required to prove collusion between White and the plaintiff by clear and convincing evidence; (4)the trial court's award under § 52-192a violated Maryland Casualty's constitutional rights to a jury trial and to due process of law; and (5)the trial court improperly denied Maryland Casualty's request for a remittitur in light of the sums already paid to the plaintiff by Goodwin and by Barbara and George Backman.We are not persuaded by any of these claims and, therefore, affirm the judgment of the trial court.¹²

I

Maryland Casualty maintains that a stipulated judgment is contrary to public policy, and hence unenforceable, when, as here, the judgment contains a provision under which an insured assigns to an injured party all rights that the insured has against its insurer in exchange for the injured party's agreement that it will seek to satisfy the judgment only against the insurer.We disagree.

It is well settled that an insurer who maintains that a claim is not covered under its insurance policy can "either refuse to defend or it [can] defend under a reservation of its right to contest coverage under the various avenues which would subsequently be open to it for that purpose."Missionaries of the Company of Mary, Inc. v. Aetna Casualty & Surety Co., 155 Conn. 104, 113, 230 A.2d 21(1967)(Missionaries ).An insurer who chooses not to provide its insured with a defense and who is subsequently found to have breached its duty to do so must bear the consequences of its decision, including the payment of any reasonable settlement agreed to by the plaintiff and the insured.Alderman v. Hanover Ins. Group., 169 Conn. 603, 611, 363 A.2d 1102(1975);Missionaries, supra, at 114, 230 A.2d 21.Moreover, an insurer, "after breaking the contract by its unqualified refusal to defend, should not thereafter be permitted to seek the protection of that contract in avoidance of its indemnity provisions.Nor should [the insurer] be permitted, by its breach of the contract, to cast upon the [insured] the difficult burden of proving a causal relation between the [insurer]'s breach of the duty to defend and the results which are claimed to have flowed from it."Missionaries, supra, at 114, 230 A.2d 21.

In both Missionaries and Alderman, the action against the insurance carrier alleging wrongful failure to defend and breach of the insurance contract had been brought by the insured.The present case requires us to decide whether, in connection with a stipulated settlement between an injured party and an insured, the insured may assign to the injured party all rights that it may have against its insurer in exchange for the injured party's agreement to seek satisfaction of the judgment solely under the assignment.Maryland Casualty argues that to enforce such a stipulated judgment would promote fraud or collusion between the injured party and the insured and, therefore, that we should adopt a per se rule rejecting all such settlement agreements as against public policy.

The weight of authority is to the contrary.The "majority rule is based on the rationale that when an insurer has refused to defend its insured, it is in no position to argue that the steps the insured took to protect himself should inure to the insurer's benefit."Greer v. Northwestern National Ins. Co., 109 Wash.2d 191, 204, 743 P.2d 1244(1987);see alsoRed Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 534(...