Hansen v. Ohio Cas. Ins. Co.

• Decision Date: 31 December 1996
• Docket Number: No. 15535,15535
• Citation: 687 A.2d 1262,239 Conn. 537
• Court: Connecticut Supreme Court
• Parties: Colleen HANSEN, Executrix (ESTATE of Richard P. HANSEN), et al. v. OHIO CASUALTY INSURANCE COMPANY.

Page 1262

687 A.2d 1262

239 Conn. 537

Colleen HANSEN, Executrix (ESTATE of Richard P. HANSEN), et al. v. OHIO CASUALTY INSURANCE COMPANY.

No. 15535.

Supreme Court of Connecticut.

Argued Nov. 5, 1996.

Decided Dec. 31, 1996.

Daniel P. Scapellati, with whom, on the brief, was John W. Lemega, Hartford, for appellant (defendant).

Susan M. Cormier, Hartford, with whom were Louise R. Zito, New Haven, Kenneth J. Bartschi and, on the brief, Wesley W. Horton, Hartford, for appellee (plaintiff).

Before BORDEN, BERDON, NORCOTT, PALMER and McDONALD, JJ.

BERDON, Associate Justice.

The sole issue in this appeal is whether, under the facts of this case, the estate of the decedent, Richard P. Hansen, ¹ is entitled to underinsured motorist benefits, as a covered insured, pursuant to a garage insurance policy (policy) issued by the defendant insurer to a closely held corporation owned and operated by the decedent and his wife. ² The plaintiff, Colleen Hansen, as executrix of the estate of her deceased husband, and in her individual capacity, ³ sought to recover underinsured motorist benefits as a result of the death of her husband under the policy issued by the defendant, Ohio Casualty Insurance Company, to West Wharf Garage, Inc., the corporation owned by the plaintiff and the decedent. In accordance with the terms of the policy, the parties submitted to arbitration. They agreed to have the arbitrators first determine the threshold issue of coverage. A majority of the panel of three arbitrators determined that the plaintiff's decedent was not covered under the underinsured motorist endorsement to the policy.

Upon application of the plaintiff, ⁴ the trial court concluded that there was coverage and vacated ⁵ the arbitration panel's decision. The trial court relied heavily on the reasoning of our previous decision in Ceci v. National Indemnity Co., 225 Conn. 165, 622 A.2d 545 (1993). In short, the trial court concluded that "any reference to family members in a business policy issued to a corporation is ambiguous in light of the Ceci decision...." The defendant appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We now affirm the judgment of the trial court.

The undisputed facts are as follows. The plaintiff and the decedent were the sole shareholders of West Wharf Garage, Inc., a closely held corporation (corporation). The corporation was an automobile repair business operated by the plaintiff and the decedent. The decedent was the president and sole paid employee of the corporation, working as a mechanic and the manager of the garage. The plaintiff was the secretary and treasurer of the corporation, and she also worked, without salary, as the corporation's bookkeeper. The plaintiff also participated in the management of the daily affairs of the corporation. The defendant issued to the corporation a business automobile insurance policy, otherwise known as a garage policy, to cover its automobile repair business. The policy covered two wreckers owned by the corporation and three vehicle registration repair plates. The policy also contained an uninsured/underinsured motorist endorsement (uninsured motorist endorsement). On February 27, 1993, the decedent, while vacationing in Vermont with the plaintiff, was killed while riding a snowmobile that collided with an underinsured motor vehicle. The decedent and the plaintiff had traveled on their vacation to Vermont in a vehicle utilizing one of the repair plates. Following the accident, the estate of the decedent recovered the policy limits of the tortfeasor's motor vehicle insurance, thereby satisfying the exhaustion of liability coverage requirements. See General Accident Ins. Co. v. Wheeler, 221 Conn. 206, 603 A.2d 385 (1992). Subsequently, through the arbitration proceeding, the plaintiff, individually and in her capacity as executrix of the decedent's estate, sought underinsured motorist benefits from the defendant.

The policy issued to the corporation by the defendant provided in pertinent part:

"GARAGE COVERAGE FORM....

"Throughout this policy the words 'you' and 'your' refer to the Named Insured shown in the Declarations....

"SECTION VI--DEFINITIONS....

"C. 'Bodily injury' means bodily injury, sickness or disease sustained by a person including death resulting from any of these...."

The uninsured motorists endorsement of the policy provided in pertinent part:

"CONNECTICUT UNINSURED MOTORISTS COVERAGE....

"For a covered 'auto' licensed or principally garaged, or 'garage operations' conducted in, Connecticut, this endorsement modifies insurance provided under the following....

"GARAGE COVERAGE FORM....

"A. COVERAGE

"1. We will pay all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of an 'uninsured motor vehicle.' The damages must result from 'bodily injury' sustained by the 'insured' caused by an 'accident.' ...

"B. WHO IS AN INSURED

"1. You.

"2. If you are an individual, any 'family member.'

"3. Anyone else 'occupying' a covered 'auto' or a temporary substitute for a covered 'auto.' The covered 'auto' must be out of service because of its breakdown, repair, servicing, loss or destruction.

"4. Anyone for damages he or she is entitled to recover because of 'bodily injury' sustained by another 'insured.'

"C. EXCLUSIONS

"This insurance does not apply to any of the following ...

"3. 'Bodily injury' sustained by you or any 'family member' while 'occupying' or struck as a pedestrian by an 'uninsured motor vehicle' that you own....

"F. ADDITIONAL DEFINITIONS....

"1. 'Family member' means a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child.

"2. 'Occupying' means in, upon, getting in, on, out or off...." (Emphasis added.)

In this case, the named insured in the declarations of the basic policy was the corporation. Therefore, the plaintiff's decedent technically did not fall within § B.1 of the uninsured motorist endorsement referring to "You," if read solely in relation to who is the named insured in the basic policy. See Testone v. Allstate Ins. Co., 165 Conn. 126, 129-30, 328 A.2d 686 (1973). It is undisputed that the plaintiff's decedent did not fall within the provisions of § B.3 of the uninsured motorist endorsement as a designated insured because he was not "occupying," as that term is defined in § F.2 of the policy, a covered auto at the time of his fatal accident. The plaintiff essentially argues that the individual oriented and family oriented language throughout the uninsured motorist endorsement, and elsewhere in the policy, renders the policy ambiguous and creates uncertainty about who constitutes the "You" covered as an insured under the uninsured motorist endorsement. Therefore, the plaintiff argues that because the policy is ambiguous, it should be construed against the insurer and in favor of coverage for the plaintiff's decedent. We agree.

"An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract and enforced in accordance with the real intent of the parties as expressed in the language employed in the policy. Schultz v. Hartford Fire Ins. Co., 213 Conn. 696, 702, 569 A.2d 1131 (1990). The policy words must be accorded their natural and ordinary meaning. Kelly v. Figueiredo, 223 Conn. 31, 35, 610 A.2d 1296 (1992). Under well established rules of construction, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy. Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 375, 593 A.2d 498 (1991). This rule of construction may not be applied however, unless the policy terms are indeed ambiguous. Kelly v. Figueiredo, supra, [at] 37. Moreover, the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous. Id." (Internal quotation marks omitted.) Stephan v. Pennsylvania General Ins. Co., 224 Conn. 758, 763-64, 621 A.2d 258 (1993). "[C]onstruction of a contract of insurance presents a question of law for the court which this court reviews de novo." Aetna Life & Casualty Co. v. Bulaong, 218 Conn. 51, 58, 588 A.2d 138 (1991).

We view this case as a sequel to Ceci v. National Indemnity Co., supra, 225 Conn. at 173, 622 A.2d 545, in which we considered the effect of a "family member" clause in an uninsured motorist endorsement issued to a corporation on the coverage for the plaintiff, where the plaintiff could not be a family member of the corporation. Although the issue in this case does not solely revolve around family member language, we believe that the starting point here is that "[b]ecause corporations do not have families, uninsured motorist endorsements containing family member language should not be appended to business automobile liability insurance policies. If they are, then, in keeping with the consumer oriented spirit of the rules of insurance policy construction, the claimed ambiguity should be construed from the standpoint of the reasonable layperson in the position of the insured and not according to the interpretation of trained underwriters." Id., at 174-75, 622 A.2d 545. We believe that the same approach is warranted for language oriented toward individuals.

As we indicated in Ceci, "[i]t is a basic principle of insurance law that policy language will be construed as laymen would understand it and not according to the interpretation of sophisticated underwriters, and that ambiguities in contract documents are resolved against the party responsible for its drafting; the policyholder's expectations should be protected as long as they are objectively reasonable from the layman's point of view.... The premise behind the...