Hanover Ins. Co. v. Fireman's Fund Ins. Co.

• Court: Connecticut Supreme Court
• Writing for the Court: Before PETERS; PETERS; SHEA
• Citation: Hanover Ins. Co. v. Fireman's Fund Ins. Co., 586 A.2d 567, 217 Conn. 340 (Conn. 1991)
• Decision Date: 05 February 1991
• Docket Number: No. 14083,14083
• Parties: HANOVER INSURANCE COMPANY v. FIREMAN'S FUND INSURANCE COMPANY, et al.

Page 567

586 A.2d 567

217 Conn. 340

HANOVER INSURANCE COMPANY v. FIREMAN'S FUND INSURANCE COMPANY, et al.

No. 14083.

Supreme Court of Connecticut.

Argued Oct. 31, 1990.

Decided Feb. 5, 1991.

Theodore J. Tucci, Hartford, for appellant (plaintiff).

John B. Farley, Hartford, for appellee (named defendant).

Before PETERS, C.J., and SHEA, CALLAHAN, COVELLO and BORDEN, JJ.

PETERS, Chief Justice.

This appeal concerns the right of an insurer who has paid a fire loss to its insured to recover one half of its payment from a second insurer on a theory either of subrogation or of contribution. The plaintiff, Hanover Insurance Company (Hanover), filed suit against the named defendant, Fireman's Fund Insurance Company (Fireman's), and the Thomas Minogue Agency (Minogue), ¹ seeking reimbursement for moneys it had paid on a fire loss suffered by its insured, Anthony's Auto Body, Inc. (Anthony's). The complaint alleged that Fireman's had bound insurance coverage on Anthony's prior to the date of the fire loss, and that this insurance coverage obligated Fireman's to reimburse Hanover for part of the loss. Fireman's denied coverage and raised a special defense that Hanover's suit was time barred under General Statutes §§ 38-97 and 38-98. ² The trial court rendered judgment, after trial, in favor of Fireman's. Pursuant to Practice Book § 4023, we transferred Hanover's appeal to this court and now affirm the judgment of the trial court.

The trial court's memorandum of decision reveals the following facts. Hanover had issued a fire insurance policy covering Anthony's for the period from March 28, 1982, to March 28, 1983. On January 7, 1983, Hanover notified Anthony's of the cancellation of this policy effective February 7, 1983. Later that month, Anthony's contacted a licensed insurance agent affiliated with Minogue in an effort to obtain replacement insurance. Through Minogue, Anthony's was able to obtain an oral binder from Fireman's, which Minogue confirmed with a written memorandum dated January 31, 1983. On February 2, 1983, however, the agent who had given the oral binder for Fireman's discovered that a binder on coverage for auto body shops required an inspection. Unsuccessful in reaching the Minogue agent by telephone, the Fireman's agent mailed him a written memo with this information on the same day.

A fire occurred at Anthony's on February 3, 1983, that caused damage in the amount of $232,122, which Hanover paid in full. Although Hanover was aware of Fireman's oral binder by August 3, 1983, it made no formal demand for payment until July 3, 1984, more than one year after the fire loss.

The trial court ruled against Hanover's claim for subrogation on the ground that the oral binder between Fireman's and Anthony's included a one year suit provision pursuant to General Statutes §§ 38-98 and 38-100. ³ Because Hanover had not brought suit within twelve months following Anthony's loss, the court held that Hanover's suit was barred. The court further held that Fireman's had neither waived, nor was estopped from asserting, the one-year suit provision as a defense to Hanover's suit. ⁴

The trial court also ruled against Hanover on its alternate claim for contribution. The court concluded that Hanover had not been legally obligated to pay the entire fire loss at Anthony's and was barred from seeking contribution for its actions as a "volunteer." It also concluded that Hanover had failed to establish an equitable basis for its claim for contribution.

Hanover's appeal does not challenge the underlying facts found by the trial court but asserts its right to recovery, as a matter of law, without regard to the one year suit provision in § 38-98 under a theory either of subrogation or of contribution. We are unpersuaded that Hanover's claims are sustained by the record.

I

As Anthony's subrogee, Hanover had no greater rights against Fireman's than Anthony's possessed and was equally subject to any defenses that Fireman's might have asserted against Anthony's. See Brown v. Employer's Reinsurance Corporation, 206 Conn. 668, 673, 539 A.2d 138 (1988); Arton v. Liberty Mutual Ins. Co., 163 Conn. 127, 139-40, 302 A.2d 284 (1972). Hanover does not dispute these basic subrogation principles but contends, nonetheless, that its subrogation claim is not time barred.

The trial court concluded that the oral binder that Fireman's had issued to Anthony's included the one year suit provision that is part of the standard form of fire insurance policy in this state. Section 38-98 requires such a standard policy to provide that "[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity ... unless commenced within twelve months next after inception of the loss." Further, § 38-100 includes the terms of the standard fire insurance policy in "[b]inders or other contracts of temporary insurance." It is undisputed that Hanover did not bring suit within one year of the fire at Anthony's.

Despite the clarity of this statutory language, Hanover maintains that the trial court should not have held it bound by the statutory one year suit provision. It claims that the controlling statutes do not govern this case because Fireman's (1) failed, in pleading its statutory defense, explicitly to refer to § 38-100; (2) failed, in the circumstances of this case, to prove the applicability of the statutory provision; or (3) was estopped from invoking the statutory provision. We are unpersuaded.

A

Fireman's special defense alleged that Hanover could not recover because it had "failed to file suit within twelve months after inception of the loss in violation of Connecticut General Statute Section 38-97 and Section 38-98." Hanover correctly observes that the special defense should also have mentioned § 38-100 in order to be in full compliance with Practice Book § 109A. ⁵

In accordance with the general objectives of our rules of pleading; see Board of Education v. Commission on Human Rights & Opportunities, 177 Conn. 75, 77, 411 A.2d 40 (1979); the practice book section is designed to assure sufficient notice to the plaintiff of the statutory defense upon which a defendant intends to rely. Its provisions are therefore directory rather than mandatory. Rowe v. Godou, 209 Conn. 273, 275, 550 A.2d 1073 (1988). In the absence of any showing that either Hanover or the trial court was misled by the failure to cite § 38-100 in addition to §§ 38-97 and 38-98, we conclude that the issue raised by Fireman's special defense was properly before the court.

B

Hanover claims that Fireman's denial of the existence of any insurance policy or a valid binder disabled Fireman's from proving and prevailing on its statutory defense. This claim comes to us in a number of versions: (1) that Fireman's could not pursue such inconsistent pleadings; (2) that Fireman's was improperly relieved of its burden of proof by the trial court's mischaracterization of the statutory limitation of suit clause as a statute of limitation; (3) that Fireman's did not meet its burden of proof for inclusion of the statutory limitation in its oral binder; and (4) that Fireman's denial was a repudiation of its contractual obligation that excused Hanover from further compliance with conditions incorporated into the binder. We conclude to the contrary.

Hanover's claim with regard to inconsistency in Fireman's pleadings does not warrant extended discussion. Unlike the facts presented by Montanaro Bros. Builders, Inc. v. Snow, 190 Conn. 481, 489, 460 A.2d 1297 (1983), the record in this case discloses nothing to suggest that Hanover was in any way injured by Fireman's inconsistent defenses. Absent such a showing of prejudice, there is no general prohibition of inconsistent pleadings. See Practice Book §§ 94, 137; Dreier v. Upjohn Co., 196 Conn. 242, 245, 492 A.2d 164 (1985). The case of DeVita v. Esposito, 13 Conn.App. 101, 107, 535 A.2d 364 (1987), cert. denied, 207 Conn. 807, 540 A.2d 375 (1988), on which Hanover relies, does not compel a contrary result because, in this case, it was entirely consistent for the trial court to render a judgment declaring the oral binder issued to Anthony's to be effective while at the same time construing the binder to include the terms mandated by statutory requirements for a standard fire insurance binder.

The record equally fails to establish that Hanover was prejudiced by the trial court's inadvertent mischaracterization of the statutory one year suit provision as a statute of limitation. Hanover is correct that Monteiro v. American Home Assurance Co., 177 Conn. 281, 283, 416 A.2d 1189 (1979), holds that the provision is not a statute of limitation. The trial court's memorandum of decision as a whole makes it plain that the court's linguistic lapse was immaterial. The court expressly determined that the one year suit provision was included as a statutorily mandated term in the oral binder. This determination would have been unnecessary if the court had understood the provision to operate as a statute of limitation, rather than a contractual condition of the oral binder.

In making its determination about the effect of the governing statutes, the court correctly held that Fireman's had proven its defense. Although Fireman's was required to prove the terms and conditions of its oral binder, we are unpersuaded, in light of § 38-100, which expressly regulates the content of oral binders, that Fireman's was obligated to introduce evidence of the terms of a written policy of insurance that it never issued.

Finally, Hanover contends that Fireman's denial of the existence of a binder was a breach of contract that excused its subsequent noncompliance with the one year suit provision. The single authority upon which Hanover relies; Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 110 A.2d 464 (1954); however, supports the contrary proposition.

In Batter Building Materials Co., the issue was whether a...