Maluszewski v. Allstate Ins. Co.

• Decision Date: 09 June 1994
• Docket Number: No. 12024,12024
• Citation: 34 Conn.App. 27,640 A.2d 129
• Court: Connecticut Court of Appeals
• Parties: Katherine MALUSZEWSKI v. ALLSTATE INSURANCE COMPANY.

Page 129

640 A.2d 129

34 Conn.App. 27

Katherine MALUSZEWSKI v. ALLSTATE INSURANCE COMPANY.

No. 12024.

Appellate Court of Connecticut.

Argued Dec. 1, 1993.

Decided April 5, 1994.

Certification Denied June 9, 1994.

Raymond T. DeMeo, with whom was Stephen E. Goldman, Hartford, for the appellant-appellee (defendant).

William J. Sweeney, Jr., New Britain, for the appellee-appellant (plaintiff).

Before LANDAU, FREDERICK A. FREEDMAN and SCHALLER, JJ.

SCHALLER, Judge.

The defendant, Allstate Insurance Company, appeals from the judgment of the trial court confirming an arbitration award in the amount of $130,000 in favor of the plaintiff, Katherine Maluszewski. The defendant claims that the trial court improperly confirmed the award by failing to apply (1) a de novo standard of review to matters of law, (2) a consent to settle provision, and (3) an offset for uninsured-underinsured motorist coverage from another insurer. The plaintiff filed a cross appeal from the court's denial of her motion for supplemental judgment, claiming that the trial court improperly denied her request for interest from the date of the arbitration award. We affirm the judgment of the trial court.

The following facts are relevant to the appeal and cross appeal. On June 16, 1989, the plaintiff was a passenger on a motorcycle driven by Carmen Gianni. A collision occurred between Gianni's motorcycle and a motorcycle driven and owned by Julian Albrecht. The plaintiff was injured in the accident and sought to recover various insurance moneys.

At the time of the accident, the plaintiff's parents had an insurance policy issued by the defendant that had uninsured-underinsured limits of $50,000 for each of three vehicles; the total available coverage was $150,000. Although the plaintiff was not the policyholder she was an insured under the policy issued to her parents. Gianni's policy with Progressive Casualty Insurance Company (Progressive) provided him with liability and uninsured motorist coverage limited to a total of $250,000. Albrecht had no liability insurance coverage.

The plaintiff sought to recover under Gianni's policy with Progressive. Progressive, Gianni and the plaintiff settled the claim, whereby the plaintiff collected $20,000 from Gianni's liability coverage and $230,000 from Gianni's uninsured-underinsured motorist coverage. The plaintiff, however, neither requested nor received the defendant's written consent before entering into the settlement with Gianni and Progressive.

The plaintiff also sought to recoup uninsured-underinsured motorist coverage from the defendant. On the eve of trial, the plaintiff and the defendant entered into an "Arbitration Agreement" that provided the following: "Claimant Katherine Maluszewski and Respondent Allstate Insurance Company hereby agree to submit to arbitration the issues of uninsured/underinsured motorist coverage and claimant's right to receive any damages, or the amount of damages.

"The parties agree that the Allstate Insurance Policy AU106-1 and endorsement AU1697-2 are hereby modified by this Agreement to include this arbitration clause pursuant to and in accordance with Connecticut General Statutes § 38a-336.

"The parties, in agreeing to submit this matter to arbitration pursuant to Connecticut General Statutes § 38a-336 specifically reserve their rights to proceed under Connecticut General Statutes § 52-408 through § 52-424. The parties also reserve their right to court review of any award pursuant to American Universal Insurance Company v. DelGreco, 205 Conn. 178 (1987)."

A panel of three arbitrators heard the case, and, by a two-to-one decision, issued the following award: "The arbitrators award the Claimant the sum of $130,000.00 against Allstate in full and final resolution of all the claims submitted to them." The $130,000 represented the $150,000 available under the plaintiff's parents' policy minus the $20,000 from Gianni's liability coverage paid by Progressive. The arbitrators found that Albrecht was 100 percent responsible for the accident, and that the plaintiff's damages totaled $875,000 "net of all collateral source payments." (Emphasis added.) At the arbitration proceeding, the defendant attempted to raise the defense that the plaintiff, by failing to obtain the defendant's written consent to enter a settlement agreement with Gianni and Progressive, had breached a provision of the defendant's policy. The arbitrators concluded, however, that the defendant had waived this defense because it was not raised in a timely manner.

The plaintiff applied to the Superior Court to confirm the arbitrators' award pursuant to General Statutes § 52-417. ¹ The defendant filed an application seeking that the court vacate, modify, or correct the arbitrators' award pursuant to General Statutes § 52-418. ² The trial court determined that the parties had voluntarily submitted the issues of coverage and damage to the arbitrators, and, as a result, the court's review was limited to the question of whether the award conformed to the submission. The court held that the award did conform to the submission, and rendered judgment confirming the award. The defendant now claims that the trial court improperly confirmed the award because the arbitrators' determination that coverage was available under the defendant's policy was incorrect. ³

I

THE DEFENDANT'S APPEAL

A

We must first determine the standard of review that the trial court was required to apply in reviewing the decision of the arbitrators. This inquiry hinges on whether the arbitration was voluntary or compulsory, and, if voluntary, whether the submission was restricted or unrestricted.

If the parties engaged in voluntary arbitration, the trial court's standard of review, provided that the submission was unrestricted, would be limited to whether the award conformed to the submission. Bridgeport v. Connecticut Police Department Employees Local 1159, 32 Conn.App. 289, 292-94, 628 A.2d 1336, cert. denied, 227 Conn. 925, 632 A.2d 703 (1993). If the parties engaged in voluntary, but restricted, arbitration, the trial court's standard of review would be broader depending on the specific restriction. For example, a typical restriction is that the arbitrators' award must conform to the law. "Had the parties restricted the authority of the arbitrators by including in their arbitration agreement a proviso that the arbitrators' award must not be contrary to law, the court would have been bound to enforce the restriction. See Board of Trustees v. Federation of Technical College Teachers, [179 Conn. 184, 187, 425 A.2d 1247 (1979) ]; Chase Brass & Copper Co. v. Chase Brass & Copper Workers Union, [139 Conn. 591, 594-96, 96 A.2d 209 (1953) ]." Bodner v. United Services Automobile Assn., 222 Conn. 480, 490, 610 A.2d 1212 (1992).

If the parties engaged in compulsory arbitration, "[u]pon judicial review of compulsory arbitration proceedings pursuant to 38a-336 (c), ⁴ 'the reviewing court must conduct a de novo review of the interpretation and application of the law by the arbitrators.' American Universal Ins. Co. v. DelGreco, [supra, 205 Conn. at 191, 530 A.2d 171]." Stephan v. Pennsylvania General Ins. Co., 224 Conn. 758, 763, 621 A.2d 258 (1993).

The defendant presents two arguments. In its brief and at oral argument, the defendant contended that the arbitration agreement modified the insurance policy to provide for compulsory arbitration. At oral argument, however, the defendant conceded that the parties had voluntarily entered into the arbitration agreement, and suggested that the agreement contained restrictions mandating that the trial court treat the arbitration as compulsory and exercise de novo review of the arbitrators' conclusions of law. We disagree with both contentions and conclude that the parties submitted their claims to voluntary, unrestricted arbitration.

As set forth above, the arbitration agreement contains three paragraphs. The first paragraph contains the submission, whereby the plaintiff and defendant framed the issues for arbitration as those of coverage and damages, if any, without explicitly restricting the power of the arbitrator or expanding the review of the award by the court. As such, the first paragraph provides for voluntary, unrestricted arbitration. The defendant argues, however, that the second and third paragraphs either incorporate compulsory arbitration into the policy or restrict the voluntary submission by providing for de novo review of the arbitrators' conclusions of law. Paragraph two provides that the parties "modified" the insurance policy to incorporate "this arbitration clause pursuant to and in accordance with Connecticut General Statutes § 38a-336...." Paragraph three states that the parties "submit this matter to arbitration pursuant to ... § 38a-336...."

We first address the defendant's argument that the parties modified the insurance policy to provide for compulsory arbitration. We note at the outset that the plaintiff was not a party to the original policy, but rather an insured who benefited under the policy. "The relations of the parties to an insurance policy are contractual and when the proceeds of the policy are made payable to a third person, it is properly characterized as a third party beneficiary contract. 1 Williston, Contracts, §§ 357, 369." Shaw v. John Hancock Mutual Life Ins. Co., 120 Conn. 633, 638, 182 A. 472 (1936). The plaintiff's parents and the defendant, as parties to the contract, retained the rights to modify the contract. "For a valid modification, there must be mutual assent to the meaning and conditions of the modification and the parties 'must assent to the same thing in the same sense ... if they are to vary the contract in any way.' Lar-Rob Bus Corporation v. Fairfield, 170 Conn. 397, 402, 365 A.2d 1086 (1976)." (Emphasis added; internal quotation marks omitted.) Manzin v. United Bank & Trust Co., 6 Conn.App. 513, 516, 506 A.2d 169 (1986). Bec...