Hoffman v. United Services Auto. Ass'n

• Decision Date: 15 October 1987
• Docket Number: Civ. No. N-82-337 (PCD).
• Citation: 671 F. Supp. 922
• Court: U.S. District Court — District of Connecticut
• Parties: Kenneth HOFFMAN v. UNITED SERVICES AUTOMOBILE ASSOCIATION.

671 F. Supp. 922

Kenneth HOFFMAN v. UNITED SERVICES AUTOMOBILE ASSOCIATION.

Civ. No. N-82-337 (PCD).

United States District Court, D. Connecticut.

October 15, 1987.

Mark B. Seiger, George D. Royster, Jr., Halloran, Sage, Phelon & Hagarty, Hartford, Conn., for plaintiff.

Edmund T. Curran, Regnier, Taylor, Curran & Lagenbach, Hartford, Conn., for defendant.

RULING ON MOTION FOR SUMMARY JUDGMENT

DORSEY, District Judge.

On July 19, 1980, plaintiff and his wife, now deceased and for whose estate he is the executor, were passengers in an automobile owned by Richard Whelan, a Connecticut resident, when it was in a collision in Connecticut with an automobile owned by Richard Nowakowski. The accident resulted in numerous personal injuries and the death of Mrs. Hoffman.¹

Nowakowski had liability insurance of $20,000 per person and $40,000 per accident with Travelers Insurance Company ("Travelers"). Whelan had underinsured motorist insurance coverage of $50,000 per person and $100,000 per accident with Hanover Insurance Company ("Hanover") on two vehicles. Thus, under Connecticut law, that coverage was stacked so as to provide coverage of $100,000 per person and $200,000 per accident. Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 518 A.2d 373 (1986); Nationwide Ins. Co. v. Gode, 187 Conn. 386, 446 A.2d 1059 (1982). The claims of plaintiff, the estate, and Whelan were settled out of the two policies.² The Hanover policy does not appear to have been stacked for purposes of the settlement. Plaintiff received $5393.28 from Traveler's and $8300.79 from Hanover.

Plaintiff, a Maryland resident, for himself and his wife's estate instituted this action seeking the benefit of the "Excess Coverage" provision of the insurance policy on their two automobiles. Defendant's policy provided underinsured motorist coverage of $300,000 per person and $500,000 per accident.³

Defendant moves for summary judgment on the following issues: Should defendant's obligation under plaintiff's policy be reduced by (1) the amounts paid to him by the liability insurer (Travelers) and the primary underinsured motorist insurer (Hanover); (2) the additional $50,000 underinsured motorist coverage limits, as stacked, in the Hanover policy; and (3) the difference between the unstacked Hanover uninsured policy limits and the amount plaintiff recovered from Hanover?

1. Reduction By Amounts Paid the Liability and Primary Insurers

Plaintiff agrees that defendant's policy limits should be reduced by the $5393.28 he received from Travelers and the $8300.79 from Hanover, a total $13,694.07. Plaintiff's Memorandum in Opposition to Defendant's Motion for Summary Judgment at 7. Accordingly, summary judgment will enter on this issue. Local Rule 9(a).

2. Reduction By Policy Limits in the Stacked Primary Insurer's Policy

Defendant claims that its policy limit⁴ should be reduced not only by the $13,694.07, but also by the $50,000 additional per person coverage available under the stacked Hanover policy. Defendant's liability to plaintiff is governed by its policy which provides:

with respect to bodily injury to an insured while occupying a highway vehicle not owned by the named insured, this insurance shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such vehicle as primary insurance, and this insurance shall then apply only in the amounts by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Contract at § VI, ¶ 6 (emphasis added).

Choice of Law

A federal court sitting in diversity must apply the applicable choice-of-law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under Connecticut choice-of-law rules, the validity and construction of an insurance contract are usually determined by the law of the place where the contract was made. Whitfield v. Empire Mut. Ins. Co., 167 Conn. 499, 505-06, 356 A.2d 139 (1975); Breen v. Aetna Cas. & Sur. Co., 153 Conn. 633, 637, 220 A.2d 254 (1966).⁵ Here, it has already been determined that defendant's insurance contract must be construed under the law of Maryland. Ruling on Pending Motions at 5 (Nov. 13, 1984). The interpretation of the "excess insurance" provision poses a threshold question: What does the term "available" mean under the law of Maryland? Does it mean amounts actually received from an insurer or amounts that could, potentially, have been obtained from an insurer? If it is the latter, then the amount of available insurance must be determined. To determine what insurance was available under the Hanover policy requires reference to the law of Connecticut, which governs the Hanover policy, the "other similar insurance" as to which defendant claims its policy is excess.⁶

Definition of "Available"⁷

"Insurance policies, like other forms of contracts, are interpreted as a reasonable man would understand them. The terms of policies are construed in their plain, ordinary, and popular sense. This policy has been referred to as the `principle of reasonable expectations.'" Appleman, 6B Insurance Law and Practice, § 4254 at 25 (1979 & Supp.1987) (citations omitted). The word "available" is ambiguous and, therefore, must be construed against the insurer. Id. ("Ambiguous provisions in insurance policies must be construed against the insurer."). The word "available" could mean anything from "in hand" or "actually received" to "within reach" or "conceivably obtainable." Webster's Third World New International Dictionary at 150 (1981) defines available as what is accessible or obtainable. What is available, or accessible or obtainable, can range widely depending on what conduct or events are necessary to bring the tangible object into possession or the intangible objective to fruition. As the extent of those events or conduct is not defined, the word is ambiguous. A number of courts have found that, because of this ambiguity, the word should be construed strictly against the insurer. See Benzer v. Iowa Mut. Tornado Ins. Ass'n., 216 N.W.2d 385 (Iowa 1974); Safeco v. Ins. Co. of America v. Robey, 399 F.2d 330 (8th Cir.1968) (applying Arizona law); Kraft v. Allstate Ins. Co., 6 Ariz.App. 276, 431 P.2d 917, 920 (1967) (Arizona); Gordon v. Maupin, 469 S.W.2d 848, 850 (St.L.Mo. App.1971) (Missouri) (all construing similar provisions to mean what was actually available).⁸ The seemingly better and more reasoned approach would be to construe "available" to mean that which is reasonably available, viz, available with a reasonable effort, passage of time, or occurrence of events. Had the parties intended a construction⁹ which followed Benzer and its progeny, the words "recovered" or "received in hand" would have been used. The word "available," however, permits, and dictates, that the reference was to funds which were obtainable or within the legal reach of the insured. Construing the term in this manner allows the interest of both the insured and the insurer to be protected. The purpose of excess coverage is to provide additional coverage when the coverage provided by the primary policies does not fully compensate an insured for his loss. Obviously, this purpose is emasculated if the insured can bypass the coverage provided by the primary carrier and seek relief from the excess carrier or if the primary carrier is allowed to circumvent its obligations by settling with the victim for less than his full damages, without exhausting its coverage, only to pass the burden of the remainder of the full damages to the excess carrier. The word "excess" loses its meaning under either scenario. Appleman, 8A Insurance Law and Practice, § 4909 at 390-94 (1979 & Supp.1987). Thus, by construing the word "available" to mean that which is reasonably available ensures that the excess insurer's expectations are protected, i.e., that its coverage will truly be excess. On the other hand, the insured expected excess coverage and that expectation is protected by requiring him only to do that which is reasonable. The insured's protection is preserved in the excess carrier's recited coverage which is available after other available coverage is exhausted. His protection is lost only to the extent he waives or fails unreasonably to effectuate a claim to the primary coverage. An insured is thus required to do only what is reasonable to obtain the available, primary coverage. If, after reasonable efforts, there is no other coverage available, then the excess coverage can be tapped as was clearly what both parties could and should have contemplated.

It is beyond dispute that under Connecticut law, the Hanover policy could have been stacked and that plaintiff could have sought all or a portion of the extended policy limits. Ferrante, 201 Conn. 478, 518 A.2d 373. This rule was not decided until 1986 and thus at the time of plaintiff's accident and the resolution of his claim against Hanover it can be said to have been in doubt. Plaintiff's Memorandum in Opposition to Defendant's Motion for Summary Judgment at 3, citing Shea v. AIU Ins. Co., Conn. Law Trib. at 16 (Nov. 19, 1979); Pompeo Carta v. Transamerica Ins. Co., Arbitrator's Decision No. 12 20 0079 83 (June 19, 1985). Nevertheless, in Ferrante the court had little trouble in allowing stacking in favor of a passenger against all of the insurer's arguments. Hoffman cannot argue that his failure to seek an adjudication of his claim to coverage under the stacked Hanover policy was reasonable. The Hanover coverage was available by the simple expediency of bringing a lawsuit. If that suit was brought and failed, then plaintiff would have established that such coverage was not available and could have resorted to defendant's coverage without being subject to the defense that other insurance was available.

Absent such a showing of reasonableness and given the decision in Ferrante, defendant's coverage must be reduced...