Fusco v. Allstate Ins. Co., No. 377108 (CT 4/13/2004)

• Decision Date: 13 April 2004
• Docket Number: No. 377108,377108
• Parties: Barbara Fusco v. Allstate Insurance Co. et al.
• Court: Connecticut Supreme Court

Page 1

Unpublished Opinion

Barbara Fusco v. Allstate Insurance Co. et al.

No. 377108

Superior Court of Connecticut

Judicial District of Fairfield at Bridgeport

April 13, 2004

MEMORANDUM OF DECISION ON MOTION TO RECONSIDER AND REARGUE

LEVIN, JUDGE.

The plaintiff, Barbara Fusco, filed an application to vacate, modify or correct the awards in two related underinsured motorist arbitrations. The defendants, Allstate Insurance Company (Allstate) and Liberty Mutual Insurance Company (Liberty Mutual), filed motions to confirm the awards. After a hearing, the court modified the awards. Allstate has now filed a motion to reargue and reconsider the modification. The court affirms its earlier decision.

These proceedings arise out of a February 3, 1986 motor vehicle collision in which the plaintiff sustained injuries when an underinsured motor vehicle struck the vehicle operated by the plaintiff. The plaintiff's husband owned the vehicle and Allstate insured that vehicle. Liberty Mutual, which insured a vehicle owned by the plaintiff, paid her $25,233.23 in "no-fault" basic reparation benefits. That vehicle was not involved in the accident. The tortfeasor's insurance carrier paid the plaintiff $50,000 in damages. The plaintiff made demands on the defendants for underinsured motorist benefits. For reasons unrelated to the issues before the court, the arbitration of the claims against the defendants was delayed.

Two separate panels arbitrated the claims against Allstate and Liberty Mutual, respectively. On July 26, 2000, both panels issued their awards. Both panels found that the plaintiff's injuries and damages were caused solely by the negligence of the tortfeasor. The Allstate panel found that the plaintiff had $100,000 in underinsured motorist coverage under Allstate's policy. The Liberty Mutual panel found that the plaintiff had $300,000 in underinsured motorist coverage under Liberty Mutual's policy. Both panels found that the plaintiff's social security disability did not result from the injuries she sustained in the accident and that the defendants were not entitled to a credit for social security disability payments.

The Allstate panel further found: "Taking into consideration all offsets, credits and collateral sources to which the respondent is entitled, the plaintiff is awarded the sum of $13,750.00." The Liberty Mutual panel found: "Taking into consideration all offsets, credits and collateral sources to which the respondent is entitled, the plaintiff is awarded the sum of $16,016,67."

In her application to vacate, the plaintiff claimed that the court should vacate the awards because they were rendered in an untimely manner. The plaintiff also argued that the awards failed to conform to the submissions because the arbitrators did not state the plaintiff's gross damages before applying offsets and credits. Additionally, the plaintiff argued that the arbitrators improperly deducted from her available coverage or from the awards, collateral sources other than those permitted to be deducted under the policies.

In its original decision of December 12, 2003, the court ruled that the awards were not untimely. Also, the court held that the policies required the arbitrators to determine whether and to what extent to plaintiff was "legally entitled to recover damages." Further, the court concluded that the phrase "legally entitled to recover damages" connoted an unrestricted submission. Carroll v. Aetna Casualty & Surety Co., 189 Conn. 16, 19 n.5, 20, 453 A.2d 1158 (1983); United States Fidelity & Guaranty Co. v. Hutchinson, 244 Conn. 513, 520-21, 710 A.2d 1343 (1998). Accordingly, the court held that the arbitrators were not required to separately determine the damages caused by the tortfeasor. See J. Berk & M. Jainchill, Connecticut Law of Uninsured and Underinsured Motorist Coverage (2d Ed. 1999) §7.7.2., p. 438.

With respect to the plaintiff's claim that the arbitrators improperly reduced the awards by collateral sources, the court observed that when the accident occurred, Connecticut subscribed to the common-law "collateral source rule, which provides that benefits received by a plaintiff from a source wholly collateral to and independent of the tortfeasor will not diminish the damages otherwise recoverable." Gorham v. Farmington Motor Inn, Inc., 159 Conn. 576, 579, 271 A.2d 94 (1970).¹ Because the collateral source rule focuses on damages recoverable from the tortfeasor, it is not a coverage issue and is not afforded de novo review under the test articulated by the court in Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 239, 772 A.2d 577 (2001). Further, since the submissions were unrestricted, the arbitrators' decisions with respect to the collateral source rule are "considered final and binding; thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact." American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 186, 530 A.2d 171 (1987). For this reason, the court rejected the plaintiff's claim that the arbitrators improperly reduced her coverage or awards by collateral sources.

The plaintiff's principle claim in its application to vacate was that the arbitrators improperly construed the policies' "other insurance" provisions and failed to determine which insurance policy was primary and which was excess. The court agreed with this claim. The court determined that the arbitrators had misconstrued the "other insurance" provisions and that, when properly construed, the Allstate policy was primary and Liberty Mutual policy was excess. The court further determined that, had the arbitrators properly applied the other insurance provisions and available credits, they would have awarded the plaintiff 50,000 dollars from Allstate and zero dollars from Liberty Mutual. The court modified the awards accordingly.

In its motion to reargue and reconsider, Allstate argues that the court erred in holding that (1) the arbitrators misconstrued the "other insurance" provisions, and (2) that Allstate was not entitled to an offset in underinsured motorist benefits for Liberty Mutual's payment of no-fault benefits.² The court disagrees with both contentions.³

I

The court first addresses Allstate's claim that the court misconstrued the "other insurance" clauses in the defendants' policies.

As the court discussed in its earlier memorandum of decision, the issue of whether the arbitrators had properly interpreted and applied the other insurance provisions was a question of law and required the court to engage in de novo review of the arbitrators' decision. Quigley-Dodd v. General Accident Ins. Co. of America, supra, 256 Conn. 239; Aetna Casualty & Surety Co. v. CNA Ins. Co., 221 Conn. 779, 783-85, 606 A.2d 990 (1992) (determination of which insurer's policy was primary, in light of conflicting "other insurance" provisions in each insurers policy, afforded de novo review); Wilson v. Security Ins. Co., 213 Conn. 532, 536-39, 569 A.2d 40, cert. denied, 498 U.S. 814, 111 S.Ct 52, 112 L.Ed.2d 28 (1990), cert. denied, 502 U.S. 1005, 112 S.Ct. 640, 116 L.Ed.2d 658 (1991) (whether, under the governing insurance regulations, the insurer was entitled to a setoff for workers' compensation payments to the claimant, afforded de novo review); American Universal Ins. Co. v. DelGreco, supra, 205 Conn. 191 (whether insurer could reduce claimant's recovery by amount paid to claimant by a particular type of third party, afforded de novo review).

The "other insurance" clause in Liberty Mutual's policy provides: "If there is other applicable similar insurance, we will not pay for any damages which would duplicate any payment made for damages under such similar insurance. However, any insurance we provide with respect to a vehicle you do not own, to which other similar insurance is applicable, shall be excess over such other applicable insurance."

The "other insurance" clause in Allstate's policy provides: "If there is other insurance[:] If the injured person was in, on, getting into or out of a vehicle which is insured for this coverage under another policy, this coverage will be excess. This means that when the injured person is legally entitled to recover damages in excess of the other policy limit, we will pay up to your policy limit, but only after all other collectible insurance has been exhausted." (Emphasis in original.)

After noting the rules of construction governing the interpretation of insurance policy provisions, the court, in its initial memorandum of decision, observed with respect to the Allstate "other insurance" provision that, "the plaintiff was not injured in, on, getting into or out of a vehicle which was insured for uninsured/underinsured motorist coverage under another policy. Allstate and only Allstate insured the car that the plaintiff was operating when she was injured. Therefore, under the very terms of its other insurance clause, Allstate's coverage was not excess." That is, Allstate and only Allstate insured the car that the plaintiff was operating when she was injured. Allstate takes no exception to this determination.

The court also held: "Under the second sentence of Liberty Mutual's other insurance clause, its coverage is clearly excess, since its insurance is being provided to a vehicle which the plaintiff did not own. The policies themselves, therefore, dictate, that Allstate's policy be primary and that Liberty Mutual's policy be excess." Allstate argues that the court misconstrued the second sentence of the other insurance provision in the Liberty Mutual policy.⁴

As quoted supra, the second sentence of Liberty Mutual's "other insurance" provision stated: "However, any insurance we provide with respect to a vehicle you do not own, to which other similar insurance is applicable, shall be excess over such other applicable insurance." In its brief, Allstate argues: "The Liberty Mutual insurance was provided `with...