Reddy v. New Hampshire Ins. Co.

• Decision Date: 16 June 1992
• Docket Number: No. 9808,9808
• Citation: 612 A.2d 64,28 Conn.App. 145
• Court: Connecticut Court of Appeals
• Parties: M. Chandra Sekharra REDDY, Administrator (Estate of Vijaya S. REDDY) v. NEW HAMPSHIRE INSURANCE COMPANY.

Page 64

612 A.2d 64

28 Conn.App. 145

M. Chandra Sekharra REDDY, Administrator (Estate of Vijaya S. REDDY) v. NEW HAMPSHIRE INSURANCE COMPANY.

No. 9808.

Appellate Court of Connecticut.

Argued Dec. 9, 1991.

Decided June 16, 1992.

Philip F. Spillane, New Milford, for appellant (plaintiff).

Deborah L. Bradley, with whom, on the brief, were John W. Lemega and Daniel P. Scapellati, Hartford, for appellee (defendant).

Before FOTI, NORCOTT and MURRAY, JJ.

MURRAY, Judge.

The sole issue presented in this appeal is whether the "umbrella" or "excess" insurance policy issued by the New Hampshire Insurance Company (carrier) is required, under the mandatory provisions of General Statutes (Rev. to 1989) § 38-175c (now § 38a-336), ¹ to provide uninsured and underinsured motorist coverage to the plaintiff. ² The trial court, in granting summary judgment in favor of the carrier, concluded that the umbrella policy in this case was not within the scope of General Statutes § 38-175c, and was therefore not required to provide uninsured motorist coverage. We affirm that judgment.

I

The pertinent facts in this case are not disputed. M. Chandra Sekharra Reddy, the plaintiff, is the administrator of his deceased sixteen year old son's estate. The young man was killed in an automobile accident on June 29, 1986. William Simonelli was the second automobile operator in this two vehicle accident and, pursuant to a settlement agreement, the estate collected $300,000 from Simonelli's automobile liability insurance carrier, thereby exhausting coverage under the only applicable liability policy.

Reddy then made a claim for underinsured motorist benefits under his own automobile liability insurance policy (the underlying policy). Pursuant to an arbitration proceeding, he recovered $600,000, the full amount of coverage available under the underinsured motorist provision of that underlying policy.

Reddy thereafter made a claim for additional underinsured motorist benefits under his personal catastrophe liability policy (umbrella policy). The umbrella policy provided automobile liability coverage in the amount of $1,000,000 in excess of the retained limit provided by the underlying policy, which was issued by the same carrier. This umbrella policy provided: "The company agrees to pay on behalf of the insured ultimate net loss in excess of the retained limit, subject to the limit of liability which the insured shall become legally obligated to pay as damages because of personal injury or property damage." It also stated in its conditions section, with respect to payment of loss, that "[t]he insured may pay the amount of ultimate net loss to the claimant to effect settlement and upon submission of due proof thereof, the company shall indemnify the insured for that part of such payment which is in excess of the retained limit, or the company will, upon request of the insured, make such payment to the claimant on behalf of the insured." This policy, commonly known as an excess or umbrella policy, specifically excluded uninsured motorist coverage. ³ In addition, the umbrella policy also specified that any section of the policy in conflict with the Connecticut General Statutes at the time of the policy's effective date is automatically amended to conform to the mandates of such statutes. ⁴

When the carrier denied coverage under the umbrella policy, Reddy commenced this action to recover underinsured motorist benefits. Reddy alleged that the umbrella policy is an automobile liability insurance policy under General Statutes § 38-175c, and, therefore, the carrier, he complained, is required to provide underinsured motorist coverage to Reddy pursuant to § 38-175c, in conjunction with the conformity to state law provision of the umbrella policy. Reddy also alleged that such coverage is required despite the contrary exclusion provision in this policy. The carrier denied that the umbrella policy was an automobile liability insurance policy for purposes of General Statutes § 38-175c, and also responded by way of special defense that the policy itself expressly excludes uninsured motorist coverage. After Reddy denied the special defense, both parties moved for summary judgment. On December 7, 1990, the trial court granted summary judgment in favor of the carrier. It ruled that the umbrella policy was not within the scope of § 38-175c. This appeal followed.

II

General Statutes § 38-175c (Rev. to 1989) (now § 38a-336) contains this state's mandatory uninsured motorist coverage provisions. It requires every automobile liability insurance policy to provide uninsured motorist coverage in accordance with the regulations adopted pursuant to § 38-175a (now § 38a-334). General Statutes (Rev. to 1989) § 38-175c(a)(1). Originally, this section required uninsured motorist coverage in minimum limits, and there was no provision for underinsured, as opposed to uninsured, motorist coverage.

In 1979, however, the statute was amended by No. 235 of the 1979 Public Acts to require underinsured motorist coverage. General Statutes § 38-175c(a)(1). "The purpose of this amendment was to remedy the 'anomalous situation' which was noted in Roy v. Centennial Ins. Co., 171 Conn. 463, 475, 370 A.2d 1011 (1976), and Simonette v. Great American Ins. Co., 165 Conn. 466, 471, 338 A.2d 453 (1973), where an injured party could find himself in a better position if the tortfeasor had no liability insurance than if he had only the statutory minimum amount." Nationwide Ins. Co. v. Gode, 187 Conn. 386, 390-91, 446 A.2d 1059 (1982). The statute was further amended by No. 461 of the 1983 Public Acts to require every automobile liability insurance policy issued or renewed on and after July 1, 1984, to provide uninsured motorist coverage "with limits for bodily injury and death equal to those purchased to protect against loss resulting from the liability imposed by law unless the insured requests in writing a lesser amount." General Statutes § 38-175c(a)(2). The purpose of this amendment was to permit the injured party to recover the amount he would have received had the tortfeasor been insured to the same extent as the injured party unless and until the insured had requested in writing to have the insurance policy provide a lesser amount of uninsured motorist coverage. American Motorists Ins. Co. v. Gould, 213 Conn. 625, 631, 569 A.2d 1105 (1990).

Pursuant to § 38-175a, the insurance commissioner has adopted regulations with respect to minimum provisions to be included in automobile liability insurance policies issued after the effective date of such regulations and covering, inter alia, private passenger motor vehicles. ⁵ Specifically, the commissioner adopted § 38-175a-4 of the Regulations of Connecticut State Agencies. It provides: "These regulations do not apply to the insurance afforded under any policy: (1) to the extent that the insurance afforded exceeds the limits specified in subsection (a) of § 14-112 of the general statutes and, where applicable, § 38-320 of the general statutes or (2) if the policy contains an underlying insurance requirement or provides for a retained limit of self insurance equal to or greater than the limits specified in said subsection (a) of § 14-112, and, where applicable, § 38-320."

The term "automobile liability insurance policy" is not defined in our statutes or regulations. Our Supreme Court, in Cohn v. Pacific Employers Ins. Co., 213 Conn. 540, 569 A.2d 544 (1990), was presented with an issue similar to the one here, namely, whether an excess or umbrella insurance policy must provide uninsured motorist coverage. The Cohn court held that the umbrella policy there was not required to provide uninsured motorist coverage to the plaintiff. Id., at 547-48, 569 A.2d 544. The court reasoned that the defendant's umbrella policy was an indemnity policy, not a liability policy. The court distinguished the two as follows: " 'Whether an insurance contract is a liability policy or an indemnity policy depends upon the intention of the parties, as evidenced by the phraseology of their agreement.... The chief difference between a liability policy and an indemnity policy is that under the former a cause of action accrues when the liability attaches, while under the latter there is no cause of action until the liability has been discharged, as by payment of the judgment by the insured.' 6A J. Appleman, Insurance § 4261, and see cases cited therein." Cohn v. Pacific Employers Ins. Co., supra, at 546-47, 569 A.2d 544. The Cohn court then concluded that the term "automobile liability insurance policy" as referenced in § 38-175c of our statutes "includes only those policies that extend underlying coverage before the operation of any indemnity policy that might otherwise exist." Id., at 547-48, 569 A.2d 544.

III

Reddy argues that his umbrella policy is a liability, not an indemnity, policy. Thus, he contends, Cohn requires his umbrella policy to provide uninsured motorist coverage. We note, however, that the Cohn court's holding was limited to the fact that excess indemnity policies are not subject to the requirements of § 38-175c. Additionally, Cohn did not address the precise issue presented to us by Reddy, namely, whether the provisions of § 38-175c require his excess "liability" policy, which has an underlying insurance requirement, to provide uninsured motorist coverage.

The trial court, in its memorandum of decision, rejected Reddy's argument that Cohn necessarily holds all excess nonindemnity policies to the requirements of § 38-175c, and concluded, on the basis of Cohn and case law from other jurisdictions cited with approval in Cohn, that this umbrella policy was not within the scope of § 38-175c. ⁶ It further concluded that because the umbrella policy expressly excluded uninsured motorist coverage the carrier was not obligated to provide such coverage to Reddy. The trial court based its decision on the distinction between primary and excess...