Doucette v. Pomes, (SC 15849)

• Decision Date: 26 January 1999
• Docket Number: (SC 15849)
• Court: Connecticut Supreme Court
• Parties: GERALD DOUCETTE, JR. v. TAMARA J. POMES ET AL.

247 Conn. 442

724 A.2d 481

GERALD DOUCETTE, JR. v. TAMARA J. POMES ET AL.

(SC 15849)

Supreme Court of Connecticut.

Argued October 28, 1998.

Officially released January 26, 1999.

Callahan, C. J., and Berdon, Norcott, Katz and Palmer, JS. Peter J. Casey, for the appellants (named defendant et al.).

Joseph C. Tanski, pro hac vice, with whom were Henry K. Snyder and, on the brief, Alan J. Cooke, pro hac vice, for the appellant (defendant Connecticut Insurance Guaranty Association).

Anne Kelly Zovas, for the appellee (intervening plaintiff).

Opinion

KATZ, J.

The principal issue in this appeal is whether the intervening plaintiff, Metropolitan District Commission (Metropolitan), as a self-insurer under the Workers' Compensation Act; General Statutes § 31-275 et seq.; is an "insurer" under General Statutes § 38a-838 (6),¹ thereby precluding it from recovering from the defendant Connecticut Insurance Guaranty Association (association)² pursuant to the Connecticut Insurance Guaranty Association Act (guaranty act).³ We conclude that Metropolitan is not an insurer and therefore that it may assert a valid claim under the guaranty act.

The record discloses the following facts and procedural history. On or about June 13, 1989, during the course of his employment, the plaintiff, Gerald Doucette, Jr., was a passenger in a truck operated by Frank Palmer when the truck was involved in an accident with a motor vehicle operated by the named defendant, Tamara J. Pomes, and owned by the defendant Askel Jensen, Pomes' father. As a result of the accident, Doucette sustained personal injuries and thereafter instituted an action, against Pomes and Jensen, pursuant to General Statutes § 31-293,⁴ which authorizes an injured employee to seek recovery from a third party, other than the employer, for work-related injuries caused by that third party. Pomes admitted liability in the amount of $15,000. At the time of the accident, Doucette carried at least $20,000⁵ of uninsured motorist coverage under his parents' automobile insurance policy with Shelby Insurance Group (Shelby). He brought a claim under the policy that resulted in Shelby paying him $13,000 in uninsured motorist benefits.

Doucette also notified his employer, Metropolitan, of the accident. Because Doucette was injured during the course of his employment, Metropolitan, which had chosen to meet its statutory workers' compensation coverage obligation through self-insurance,⁶ paid Doucette's medical expenses in the amount of $3802.72 and compensation benefits in the amount of $8995.45, for a total payment of $12,798.17. Further, Metropolitan has stipulated that Doucette's future medical and compensation payments that may be awarded by the workers' compensation commissioner total $2201.83.

At the time of the accident, Pomes and Jensen carried liability insurance coverage through American Universal Insurance Company (American), which subsequently was determined to be insolvent. Consequently, pursuant to General Statutes § 38a-841⁷ of the guaranty act, the association became liable for covered claims¹ arising under American's policies.² Metropolitan intervened as a plaintiff in Doucette's action, seeking a $15,000 judgment against Pomes and Jensen to recover for the payments already made and the future anticipated payments that might be awarded to Doucette. On December 10, 1992, having received $13,000 from Shelby and $12,798.17 from Metropolitan, Doucette withdrew his complaint against Pomes and Jensen.

Pomes and Jensen responded to Metropolitan's intervening complaint by asserting as a special defense that Metropolitan is an insurer within the meaning of the guaranty act and is therefore precluded from recovering from the association because § 38a-838 (6) excludes from "covered claims" "any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise ...."³ (Emphasis added.) Metropolitan replied to the special defense by denying every allegation contained therein. On August 9, 1996, Metropolitan moved for summary judgment. It amended its motion on September 9, 1996, asserting that it was not an insurer under § 38a-838 (6). On October 11, 1996, Pomes and Jensen filed a cross motion for summary judgment based upon the claim that Metropolitan is an insurer. Thereafter, the trial court concluded that Metropolitan is not an insurer and denied the cross motion. The trial court's reasoning is fully set forth in its July 24, 1997 memorandum of decision on the defendants' motion to reconsider, in which the court again concluded that Metropolitan, as a selfinsurer, was not an insurer for purposes of the guaranty act. Additionally, the court rejected the claim that Metropolitan is barred from recovering because Doucette had failed to exhaust the policy limits of his uninsured motorist policy. Consequently, on September 26, 1997, the court rendered judgment in favor of Metropolitan in the amount of $15,000. On October 15, 1997, the defendants appealed from the judgment to the Appellate Court. Pursuant to Practice Book § 65-1, formerly § 4023, and General Statutes § 51-199 (c), we transferred the appeal to this court.

The defendants raise several issues on appeal. First, they claim that Metropolitan, as a self-insurer, is an insurer for purposes of the guaranty act and, therefore, is precluded from recovering from the association pursuant to § 38a-838 (6). Second, the defendants contend that, even if Metropolitan is not an insurer under the guaranty act, any recovery it obtains from the defendants should be reduced by the limits of Doucette's uninsured motorist policy because Doucette failed to exhaust the policy limits, as required by General Statutes § 38a-845. Third, the defendants claim that any recovery by Metropolitan should be reduced by the amount of workers' compensation benefits received by Doucette or the amount of uninsured motorist benefits he received from his insurance company. Finally, Pomes and Jensen claim that any recovery Metropolitan obtains must be reduced by any amounts Shelby paid to Doucette. We disagree with the defendants.

Before turning to the merits of the case, we set forth the well established standard of review for a denial of summary judgment. "Summary judgment `shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Home Ins. Co. v. Aetna Life & Casualty Co., 235 Conn. 185, 202, 663 A.2d 1001 (1996), quoting Practice Book § 384, what is now § 17-49. The trial court was presented with cross motions for summary judgment based on stipulated facts. Therefore, our review is plenary and we must determine whether the trial court's conclusions of law "are legally and logically correct" and find support in the stipulated facts. SLI International Corp. v. Crystal, 236 Conn. 156, 163, 671 A.2d 813 (1996), citing Practice Book § 4061, what is now § 60-5.

I

The defendants' first claim, that Metropolitan's status as self-insurer of its employees' workers' compensation claims renders it an insurer for purposes of the guaranty act, raises an issue of first impression for this court.⁴ At the time of the accident in 1989, as it does today, § 31-284b (b) authorized an employer to meet its workers' compensation obligations under chapter 568 by one of three enumerated methods, or any combination of those methods, one of which was self-insurance.⁵ To become a self-insured employer, an employer must provide to the chairman of the workers' compensation commission "satisfactory proof of his solvency and financial ability to pay directly to injured employees" compensation provided for in the Workers' Compensation Act. General Statutes § 31-284 (b). As noted, Metropolitan chose to self-insure its risk rather than contract for coverage with a workers' compensation insurance provider.

The defendants argue that, as a self-insurer, Metropolitan is barred from recovering from the association. Before addressing the merits of this claim, we discuss briefly the association itself. "The association was established for the purpose of providing a limited form of protection for policyholders and claimants in the event of insurer insolvency. The protection it provides is limited based upon its status as a nonprofit entity and the method by which it is funded. Specifically, the association is a nonprofit legal entity created by statute to which all persons licensed to transact insurance in the state must belong. See General Statutes §§ 38a-838 (8) and 38a-839. When an insurer is determined to be insolvent under § 38a-838 (7), the association becomes obligated pursuant to § 38a-841, to the extent of covered claims within certain limits." Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438, 451, 705 A.2d 1012 (1997). The amounts paid to claimants are funded by assessments made on "member insurers"; General Statutes § 38a-841;⁶ who are obligated to be members of the association as a requirement of transacting insurance business in the state. General Statutes § 38a-838 (8).⁷

"Pursuant to ... § 38a-841, the association is authorized to pay only covered claims, and must deny all other claims. In order to be reimbursable by the association, a claim against the association must be encompassed within the definition of a covered claim contained in § 38a-838 (6)." Hunnihan v. Mattatuck Mfg. Co., supra, 243 Conn. 449-50. Section 38a-838 (6), which defines terms in the guaranty act, excludes from the definition of a covered claim "any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise...." (Emphasis added.) We must determine, therefore, whether Metropolitan, as a self-insurer, is an insurer for purposes of the guaranty act and, consequently, is precluded by § 38a-838 (6) from recovering from the association.

A

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