Orkney v. Hanover Ins. Co.

• Decision Date: 30 March 1999
• Docket Number: (SC 15942)
• Citation: 248 Conn. 195,727 A.2d 700
• Court: Connecticut Supreme Court
• Parties: ETHEL ORKNEY v. HANOVER INSURANCE COMPANY

248 Conn. 195

727 A.2d 700

ETHEL ORKNEY v. HANOVER INSURANCE COMPANY

(SC 15942)

Supreme Court of Connecticut.

Argued December 4, 1998.

Officially released March 30, 1999.

Callahan, C. J., and Berdon, Norcott, Palmer and McDonald, JS. Paul M. Clyons, for the appellant (plaintiff).

Jon S. Berk, for the appellee (defendant).

Opinion

CALLAHAN, C. J.

The dispositive issue in this appeal is whether the contracts of insurance at issue relieved the defendant automobile liability insurer of the obligation to provide underinsured motorist benefits to the plaintiff.¹ We conclude that they did and affirm the judgment of the trial court.

The following facts and procedural history are undisputed. On August 19, 1994, the plaintiff, Ethel Orkney, was a passenger in a motor vehicle that was owned and operated by Norman Nicholson. The Nicholson vehicle was involved in an accident with an automobile driven by Sachito Sekiguchi. The plaintiff alleges that the accident was caused by Sekiguchi's negligence and that she was injured as a result of that negligence.

Alamo Rent-A-Car, Inc. (Alamo), was the owner of the vehicle operated by Sekiguchi (rental vehicle). The automobile rental agreement between Alamo and Sekiguchi provided that, "[u]nless contrary to state law ... if there is no other valid and collectible insurance ... available to the renter ... sufficient to meet minimum financial responsibility law requirements, then ... Alamo shall provide protection against liability for bodily injury, death or property damage to others up to the minimum financial responsibility limits required by applicable law. Such protection shall be provided through either an insurance policy or a certificate of self insurance .... [The renter agrees] that any amounts over this minimum will be covered by [the renter] or by [his] liability policy and that [he] will indemnify [Alamo] for any losses that exceed the minimum limits." Connecticut law requires that automobile insurance policies provide minimum liability coverage of $20,000 per person for bodily injury or death and $40,000 per accident.² Thus, with respect to the plaintiff s alleged injuries, Alamo provided Sekiguchi, in her capacity as the driver of the rental vehicle, with liability insurance coverage of $20,000. Sekiguchi had no other automobile liability insurance coverage.

On March 4, 1994, Alamo, as an owner of rental vehicles registered in Connecticut, had filed an application³ for self-insurer status with the Connecticut department of insurance. The application was approved effective March 15, 1994. Consequently, at the time of the accident, Alamo was a self-insurer under Connecticut law.

The plaintiff sought to recover damages from Sekiguchi and Alamo⁴ for injuries that she allegedly had sustained in the accident caused by Sekiguchi's negligence. She subsequently settled her claims against Sekiguchi and Alamo for a total of $20,000—the maximum liability coverage the rental agreement provided Sekiguchi in her capacity as the driver of the rental vehicle.⁵ Thereafter, the plaintiff commenced this action for underinsured motorist benefits against Nicholson's carrier, and, coincidentally, her own carrier, the defendant, Hanover Insurance Company, claiming underinsured motorist coverage under both Nicholson's automobile liability policy and her own automobile liability policy (Hanover policies).⁶ The defendant moved for summary judgment on the ground that its policies did not provide coverage for the plaintiff's claims because: (1) although the plaintiff had exhausted the liability insurance coverage available to Sekiguchi as the driver of the rental car, she had failed to exhaust the liability coverage available to Alamo as the owner of the rental car;⁷ and (2) the policies specifically excluded vehicles owned by self-insurers from the policy definition of underinsured motor vehicles, and Alamo, the owner of the rental car, was a self-insurer under Connecticut law. Concluding that the plaintiff had failed to exhaust the limits of Alamo's liability coverage, the trial court granted the defendant's motion for summary judgment.

The plaintiff appealed from the judgment of the trial court to the Appellate Court, and, pursuant to Practice Book § 63-4 (1) (A), the defendant subsequently filed a timely preliminary statement of issues as alternative grounds for affirmance of the trial court's judgment. We transferred the appeal to this court pursuant to Practice Book § 65-1 and General Statutes § 51-199 (c).

As an alternate ground for affirmance of the trial court's judgment,⁸ the defendant contends that, as a matter of law, the plaintiff was not entitled to receive underinsured motorist benefits from it because the Hanover policies explicitly excluded vehicles owned by self-insurers from the policy definition of underinsured motor vehicles. The plaintiff does not dispute that the Hanover policies exclude underinsured motorist coverage for vehicles owned by self-insurers and that Alamo was a self-insurer under Connecticut law. Rather, the plaintiff argues that: (1) although § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies⁹ permits vehicles owned by self-insurers to be excluded from uninsured motorist coverage, it does not permit vehicles owned by self-insurers to be excluded from underinsured motorist coverage; and (2) if § 38a-334-6 (c) (2) (B) does permit automobile liability insurance providers to exclude self-insured vehicles from the purview of underinsured motorist coverage, the regulation is invalid.¹⁰ We are unpersuaded by the plaintiff's arguments.

"The standard of review for summary judgment is well established. Summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Levine v. Advest, Inc., 244 Conn. 732, 743, 714 A.2d 649 (1998); Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554, 707 A.2d 15 (1998); see Practice Book § 17-49.

An insurer's responsibility to provide uninsured and underinsured motorist coverage is mandatory, not discretionary. General Statutes § 38a-336 (a) (1) provides in relevant part that "[e]ach automobile liability insurance policy shall provide insurance, herein called uninsured and underinsured motorist coverage, in accordance with the regulations adopted pursuant to section 38a-334...."¹¹ (Emphasis added.) We previously have concluded, moreover, that "an insurer may not, by contract, reduce its liability for ... uninsured or underinsured motorist coverage," except as authorized by § 38a-334-6 of the Regulations of Connecticut State Agencies. Vitti v. Allstate Ins. Co., 245 Conn. 169, 174, 713 A.2d 1269 (1998); Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 377-78, 593 A.2d 498 (1991); Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 483, 518 A.2d 373 (1986). Consequently, the provision of the Hanover policies that excludes motor vehicles owned by self-insurers from the policy definition of "underinsured motor vehicle" is enforceable only if properly authorized by § 38a-334-6.

Section 38a-334-6 (c) provides in relevant part that "[t]he insurer's obligations to pay may be made inapplicable... (2) if the uninsured vehicle is owned by (A) the named insured ... [or] (B) a self insurer under any motor vehicle law...." (Emphasis added.) In the plaintiffs view, the lack of a direct reference in the regulation to underinsured motor vehicles indicates that the regulation does not apply to such vehicles. We repeatedly have stated, however, that the statutes and regulations applicable to uninsured motorist coverage also apply to underinsured motorist coverage. See, e.g., Colonial Penn Ins. Co. v. Bryant, 245 Conn. 710, 712 n.2, 714 A.2d 1209 (1998); Lowrey v. Valley Forge Ins. Co., 224 Conn. 152, 153 n.1, 617 A.2d 454 (1992); McGlinchey v. Aetna Casualty & Surety Co., 224 Conn. 133, 134-35, 617 A.2d 445 (1992); Hotkowski v. Aetna Life & Casualty Co., 224 Conn. 145, 151, 617 A.2d 451 (1992); Covenant Ins. Co. v. Coon, 220 Conn. 30, 31 n.3, 594 A.2d 977 (1991). In fact, we previously have determined that the coverage exclusion authorized in § 38a-334-6 (c) (2) (A) for vehicles owned by a named insured applies to underinsured motorist coverage as well as to uninsured motorist coverage. Lowrey v. Valley Forge Ins. Co., supra, 152. We conclude, therefore, that § 38a-334-6 (c) (2) (B) authorizes the exclusion of vehicles owned by self-insurers from the scope of the underinsured motorist coverage provided by an automobile liability insurance policy.

The plaintiff argues, however, that if § 38a-334-6 (c) (2) (B) permits the exclusion of motor vehicles owned by self-insurers from underinsured motorist coverage, the regulation is invalid because, in the plaintiffs view, permitting such exclusions contravenes the purpose of the underinsured motorist statute. "The plaintiff [however] has a difficult task to demonstrate that [§ 38a-334-6 (c) (2) (B)] is beyond the scope of the insurance commissioner's authority. Mass v. United States Fidelity & Guaranty Co., 222 Conn. 631, 649, 610 A.2d 1185 (1992); Travelers Ins. Co. v. Kulla, 216 Conn. 390, 399, 579 A.2d 525 (1990). The commissioner is specifically authorized by statute to promulgate regulations regarding exclusions ... applicable to ... uninsured motorists coverages .... General Statutes § 38a-334 (a). Regulations issued by the insurance commissioner to implement the statutes governing uninsured [and underinsured] motorist coverage are presumed valid and have the force and effect of a statute. Dugas v. Lumbermens Mutual Casualty Co., 217 Conn. 631, 641, 587 A.2d 415 (1991); Lumbermens Mutual Casualty Co. v....