Gen. Accident Ins. Co. v. Mortara

• Citation: 72 A.3d 482,52 Conn.Supp. 522
• Decision Date: 26 March 2013
• Docket Number: No. CV–11–6020225–S.,CV–11–6020225–S.
• Court: Superior Court of Connecticut
• Parties: GENERAL ACCIDENT INSURANCE COMPANY v. Jason MORTARA.

52 Conn.Supp. 522

72 A.3d 482

GENERAL ACCIDENT INSURANCE COMPANY

v.Jason MORTARA.^*

No. CV–11–6020225–S.

Superior Court of Connecticut,

Judicial District of New Haven.

March 26, 2013.

David A. Leff, New Haven, for plaintiff.

Michael L. Wilson, for the defendant.

A. ROBINSON, J.

This action arises out of a July 31, 1988 Motor Vehicle Collision that occurred in Ocean City, New Jersey. The relevant underlying facts are not in dispute, and the parties stipulated to them. The defendant, Jason Mortara, was a passenger in a vehicle that was driven by his mother when it was negligently struck by Richard Ednie. At the time of the collision, Ednie, who was a resident of Pennsylvania, had a State Farm Insurance policy with liability limits of $100,000 per person and $300,000 per accident. Following the collision, a lawsuit was filed in New Jersey on behalf of Mortara against Ednie. The claim was settled for $95,000. At the time of the collision, Mortara lived in Connecticut with his mother, and his mother's vehicle was insured by the Pennsylvania General Insurance Company, which is a subsidiary of the plaintiff, General Accident Insurance Company. The policy was issued in Connecticut and included underinsured motorist coverage with a limit of $300,000.

Mortara asserted an underinsured motorist claim against the plaintiff and subsequently requested that the claim be submitted to arbitration. The following three questions were submitted to the arbitration panel: “1. Does Connecticut law or New Jersey law apply to the application and interpretation of the ... Pennsylvania General Insurance Policy? ... 2. If New Jersey law applies, has [the defendant] complied with the Longworth line of decisions of the New Jersey courts, so as to allow [the defendant] Jason Mortara to recover under the under-insured motorist coverage of the Mortara vehicle policy? 3. If recovery is allowed, what is the amount of fair, just and reasonable compensation for [the defendant] Jason Mortara?” The parties stipulated that if Connecticut law applies, then the defendant's failure to exhaust Ednie's State Farm Insurance policy would preclude recovery of underinsured motorist benefits pursuant to Connecticut law.

On April 5, 2011, the majority of the panel decided, in a two page decision, that pursuant to Williams v. State Farm Mutual Automobile Ins. Co., 229 Conn. 359, 641 A.2d 783 (1994), New Jersey law applied and that the defendant complied with the procedure set forth in Longworth v. Van Houten, 223 N.J.Super. 174, 538 A.2d 414 (App.Div.1988). The panel awarded the defendant a gross sum of $275,000, which was adjusted to $160,125.54.¹

On May 6, 2011, the plaintiff filed an application to vacate the arbitration award on the ground that pursuant to General Statutes § 52–418(a)(4), “the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter was not made.” In response, the defendant filed an application to confirm the arbitration award and memorandum of law in support on August 8, 2011. On September 16, 2011, the plaintiff filed a reply brief. The matter was heard before the court on September 28, 2011. For reasons more fully articulated herein, this court grants the application to vacate the arbitration award, and denies the application to confirm it.

ISTANDARD OF REVIEW

“[T]he standard of review for arbitration awards is determined by whether the arbitration was compulsory or voluntary. This court recognized the fundamental differences between voluntary and compulsory arbitration in American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 190–91, 530 A.2d 171 (1987). The court concluded therein that [when] judicial review of compulsory arbitration proceedings required by [General Statutes § 38a–336 (c) ] is undertaken ... the reviewing court must conduct a de novo review of the interpretation and application of the law by the arbitrators.² The court is not bound by the limitations contractually placed on the extent of its review as in voluntary arbitration proceedings. Id., at 191, 530 A.2d 171. A reviewing court therefore must conduct a de novo review of the arbitrators' decision on coverage issues because such issues are subject to compulsory arbitration.” (Internal quotation marks omitted.) Kinsey v. Pacific Employers Ins. Co., 277 Conn. 398, 404 n. 5, 891 A.2d 959 (2006).

The parties do not agree on the appropriate standard of review. On the one hand, the defendant argues that the arbitration was voluntary and unrestricted. Therefore, the defendant contends that the proper standard of review is for the court to simply determine whether the award conforms to the submission. On the other hand, the plaintiff claims that under Quigley–Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 772 A.2d 577 (2001), this court must apply the de novo standard of review because the choice of law question is an insurance coverage issue subject to mandatory arbitration.

In Quigley–Dodd v. General Accident Ins. Co. of America, supra, 256 Conn. at 225, 772 A.2d 577, the Connecticut Supreme Court provided a framework for determining whether a choice of law issue involves a coverage issue and is therefore subject to compulsory arbitration under § 38a–336 (c) and de novo review. The plaintiff in Quigley–Dodd sought to vacate an arbitration award on the ground that the panel improperly applied Colorado rather than Connecticut law when a Colorado statute placed a cap on damages recoverable from a tortfeasor. Id., at 230, 772 A.2d 577. The plaintiff argued on appeal that the trial court improperly decided that the choice of law issue was not a coverage issue and that the arbitration decision was therefore not subject to de novo review. Id., at 231, 772 A.2d 577. In determining that the choice of law issue was a damages, not a coverage, issue, the court reasoned: “[I]n cases in which the issue before the arbitrators is a choice of law issue, when the substantive laws of the respective states deal with the claimant's right to recover damages from the uninsuredmotorist, or the measure of such damages, rather than the recovery of damages from an insurer, the choice of law issue is a damages issue and not a coverage issue, even though the choice of law may affect the amount of damages awarded to the claimant, and, ultimately, the amount recovered from the insurer. The essential point is that when the focus is on tort law governing the right to recover damages from the uninsured motorist or the measure of such damages, the issue is a damages issue, and when the focus is on law governing recovery against an insurer as such, the issue is a coverage issue.” Id., at 242, 772 A.2d 577.

The court in Quigley–Dodd provided the following hypothetical to further illustrate the distinction between a damages and a coverage issue: “State A has a law providing that punitive damages against a tortfeasor are limited to attorney's fees and nontaxable costs. State B has no such limitation. These laws do not deal with the rights of the various parties under an insurance contract, as such, but govern the measure of damages. Accordingly, a choice of law question involving them would affect the amount that the claimant could recover from the tortfeasor and would be a damages issue. Under the law of state B, however, a claimant may not recover punitive damages from a tortfeasor's insurer, while state A permits such recovery. These laws govern the recovery against an insurer, and a choice of law question involving them would be a coverage question subject to de novo review.” Id. The court concluded: “Accordingly, whether the choice of law question in this case is a coverage issue turns on whether the substantive laws of the respective states govern, on the one hand, the claimant's right to recover damages from the uninsured motorist or the measure of such damages, or, on the other hand, the recovery of damages from the insurer.” Id., at 243, 772 A.2d 577.³

The choice of law issue in the present case concerns the defendant's recovery from the plaintiff-insurer, not the tortfeasor. The stipulated facts do not raise an issue as to whether the defendant was entitled to recover from the tortfeasor. Rather, the issue is whether New Jersey law or Connecticut law applies to the determination of whether the plaintiff is legally obligated to pay the defendant pursuant to an underinsured provision in the insurance policy. As the parties have stipulated, if Connecticut law applies, “the failure to exhaust the tortfeasor's ... [p]olicy precludes [the defendant's] underinsuredmotorist claim under Connecticut law.” Thus, because “the focus is on law governing recovery against an insurer as such”; Quigley–Dodd v. General Accident Ins. Co. of America, supra, 256 Conn. at 242, 772 A.2d 577; the choice of law issue is a coverage issue, which is subject to compulsory arbitration and de novo review.

IICHOICE OF LAW ANALYSIS

Having determined that the appropriate standard of review is de novo, the threshold issue is whether New Jersey or Connecticut law applies to the present case. “In determining the governing law, a forum applies its own conflict-of-law rules....” Gibson v. Fullin, 172 Conn. 407, 411–12, 374 A.2d 1061 (1977). Without explanation, or articulation, the arbitration panel relied upon Williams v. State Farm Mutual Automobile Ins. Co., supra, 229 Conn. at 359, 641 A.2d 783, in determining that New Jersey law controls the present case. The plaintiff seeks to vacate the award on the ground that the panel improperly applied Williams to the present case. The defendant counters that the facts of Williams are “identical” to the facts of the present case and that the panel's reliance upon Williams was appropriate.

AApplicability of Williams v. State Farm Mutual Automobile Ins. Co.

In Williams v. State Farm Mutual Automobile Ins. Co., supra, 229 Conn. at 359, 641 A.2d 783, the plaintiff, who was a Connecticut...