Gen. Accident Ins. Co. v. Mortara

• Decision Date: 04 November 2014
• Docket Number: No. 19146.,19146.
• Citation: 101 A.3d 942,314 Conn. 339
• Court: Connecticut Supreme Court
• Parties: GENERAL ACCIDENT INSURANCE COMPANY v. Jason MORTARA.

314 Conn. 339

101 A.3d 942

GENERAL ACCIDENT INSURANCE COMPANY

v.Jason MORTARA.

No. 19146.

Supreme Court of Connecticut.

Argued April 22, 2014.

Decided Nov. 4, 2014.

David A. Leff, New Haven, for the appellant (defendant).

Michael M. Wilson, for the appellee (plaintiff).

ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA and VERTEFEUILLE, Js.

Opinion

ESPINOSA, J.

This appeal presents a choice of law question: when a dispute between an insurance carrier and its insured regarding the insurance carrier's obligation to pay underinsured motorist benefits requires a determination of whether the relevant policy provisions provide coverage for the claim, is the issue properly resolved under the choice of law rules governing claims sounding in tort or claims sounding in insurance and contract? Our existing precedent already has conclusively answered this question. As we explain herein, it is well established that in such an instance, the choice of law determination is made by applying the insurance and contract choice of law rules set forth in §§ 6, 188, and 193 of 1 Restatement (Second), Conflict of Laws (1971). The defendant, Jason Mortara, appeals from the judgment of the Appellate Court, which affirmed the judgment of the trial court vacating the arbitration award rendered in his favor.¹ The defendant claims that the arbitration panel properly determined that this court's decision in Williams v. State Farm Mutual Automobile Ins. Co., 229 Conn. 359, 641 A.2d 783 (1994), applying choice of law rules for tort claims, dictates that New Jersey law rather than Connecticut law governs his claim for uninsured motorist benefits under the motor vehicle insurance policy issued by the plaintiff, General Accident Insurance Company. To the contrary, we conclude that pursuant to this court's decisions in Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 698 A.2d 859 (1997), and Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., 243 Conn. 401, 703 A.2d 1132 (1997), the Appellate Court, in its opinion adopting the decision of the trial court, properly applied §§ 6(2), 188 and 193 of the Restatement (Second), contract choice of law, to determine that Connecticut law governed the claim. See General Accident Ins. Co. v. Mortara, 141 Conn.App. 571, 573, 62 A.3d 553 (2013). Accordingly, the judgment of the Appellate Court is affirmed.

In its memorandum of decision, the trial court set forth the following relevant facts and procedural history.

“The defendant ... was a passenger in a vehicle that was driven by his mother [Jacqueline Mortara] 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 [the defendant] against Ednie.² The claim was settled for $95,000. At the time of the collision, [the defendant] lived in Connecticut with [Jacqueline Mortara], and [her] vehicle was insured by the Pennsylvania General Insurance Company, which is a subsidiary of the plaintiff.... The policy was issued in Connecticut and included underinsured motorist coverage with a limit of $300,000.

“[The defendant] 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 [Company] policy? ... 2. If New Jersey law applies, has [the defendant] complied with the Longworth [v. Van Houten, 223 N.J.Super. 174, 538 A.2d 414 (App.Div.1988) ] line of decisions of the New Jersey courts, so as to allow [the defendant] ... to recover under the [underinsured] motorist coverage of [Jacqueline Mortara's] vehicle policy? 3. If recovery is allowed, what is the amount of fair, just and reasonable compensation for [the defendant] ...? 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., [supra, 229 Conn. at 359, 641 A.2d 783 ], New Jersey law applied and that the defendant complied with the procedure set forth in Longworth v. Van Houten, [supra, 223 N.J.Super. at 174, 538 A.2d 414 ]. The panel awarded the defendant a gross sum of $275,000, which was adjusted to $160,125.54.

“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.” (Footnotes altered; internal quotation marks omitted.) General Accident Ins. Co. v. Mortara, 52 Conn.Supp. 522, 523–24, 72 A.3d 482 (2013). On the basis of its conclusion that Connecticut law governed the claim, the trial court granted the plaintiff's application to vacate the arbitration award and denied the defendant's application to confirm the award. Id. at 544, 72 A.3d 482. The defendant appealed from the judgment of the trial court to the Appellate Court, which affirmed the judgment of the trial court in a per curiam decision and adopted its memorandum of decision as a proper statement of the relevant facts, issues and applicable law. General Accident Ins. Co. v. Mortara, supra, 141 Conn.App. at 571, 62 A.3d 553. This certified appeal followed.

“[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 whe[n] judicial review of compulsory arbitration proceedings required by [General Statutes § 38a–336 (c) ]³ is undertaken ... the reviewing court must conduct a de novo review of the interpretation and application of the law by the arbitrators. 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.” (Footnote added; internal quotation marks omitted.) Kinsey v. Pacific Employers Ins. Co., 277 Conn. 398, 404 n. 5, 891 A.2d 959 (2006).

Because the substantive issue in the present case concerns a question of insurance coverage, which is subject to compulsory arbitration, our review is de novo. We explained in Quigley–Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 238, 772 A.2d 577 (2001), that a “question involving the interpretation of a policy term or governing law that affects how much [the insured] can recover from the insurer ... is a coverage question....” By contrast, if the question turns on “the measure of damages that can be recovered from the tortfeasor ... the question is a damages issue....” (Emphasis omitted.) Id. at 239, 772 A.2d 577. The first question submitted for arbitration—whether Connecticut law or New Jersey law applied to the application and interpretation of the defendant's insurance policy—made clear that the disputed issue between the parties concerned coverage under the policy rather than damages recoverable from the tortfeasor. Specifically, the plaintiff denied the defendant's claim for benefits under the underinsured motorist provision in the insurance policy issued to Jacqueline Mortara on the basis that pursuant to Connecticut law, the defendant's failure to exhaust the limits of the tortfeasor's policy released the plaintiff from any obligation to pay underinsured motorist benefits pursuant to the insurance policy. See General Statutes § 38a–336 (b).⁴

Our conclusion that the appeal presents a coverage issue also means that the choice of law rules governing claims sounding in insurance and contract govern the defendant's claim, rather than the rules governing claims sounding in tort. See Dodd v. Middlesex Mutual Assurance Co., supra, 242 Conn. at 384, 698 A.2d 859 (“An action to recover under an automobile insurance policy is not an action in tort but, rather, an action in contract. The obligation of [an] insurance carrier providing uninsured motorist coverage as a part of its liability insurance coverage on the automobile of the insured person is a contractual obligation arising under the policy of insurance.” [Emphasis omitted; internal quotation marks omitted.] ).

We therefore turn to the choice of law rules governing the present case. “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 place, we adopted the most significant relationship approach of the Restatement (Second) ... for analyzing choice of law issues involving contracts.... Thus, the choice of law determination in this case involves an interplay among §§ 193, 188 and 6 of the Restatement (Second).... Where there is no choice of law provision in the contract, the general rule to be applied is that of § 188. Section 188, in turn, directs us to other provisions for specific...