Reliance Ins. Co. v. Reider
Decision Date | 29 June 1999 |
Docket Number | (AC 18058) |
Citation | 730 A.2d 1229,54 Conn. App. 77 |
Court | Connecticut Court of Appeals |
Parties | RELIANCE INSURANCE COMPANY v. GEORGE M. REIDER, JR., INSURANCE COMMISSIONER |
Lavery, Hennessy and Stoughton, JS. William J. Prensky, assistant attorney general, with whom, on the brief, was Richard Blumenthal, attorney general, for the appellant (defendant).
Ralph G. Elliot, for the appellee (plaintiff).
The defendant, George M. Reider, Jr., insurance commissioner of the state of Connecticut (commissioner), appeals from the trial court's judgment reversing his decision ordering the plaintiff, Reliance Insurance Company (Reliance), to pay a loss under a manufacturer's output insurance policy issued by Reliance to Mariano Brothers, Inc. (Mariano). The commissioner claims that the trial court improperly concluded that (1) the coverages under the policy were severable and (2) Reliance's failure to file timely notice of cancellation with the Interstate Commerce Commission and the state department of transportation did not extend the cancellation date of the entire policy. We agree and reverse the judgment of the trial court.
The facts as set out in the memorandum of findings and recommendation issued by the insurance department hearing officer, on which the commissioner relied, are not in dispute and may be summarized as follows. In August, 1994, Reliance renewed and issued to Mariano, an interstate motor carrier, three insurance policies effective July 27, 1994, to July 27, 1995.1 One of these policies, the manufacturer's output policy, contained various coverage provisions.2 Mariano financed that policy and the other two policies through a premium financing agreement with A.I. Credit Corporation (finance company). Pursuant to that agreement, the finance company was appointed as Mariano's attorney-in-fact, with authority to cancel the policies for nonpayment of premiums. In the event of nonpayment, the agreement required the finance company to mail notice of its intent to cancel a policy to Mariano, after which Mariano would have ten days to cure the overdue premiums to prevent cancellation of a policy.
On November 2, 1994, the finance company mailed Mariano notice of its intent to cancel all three insurance policies because of Mariano's failure to pay premiums. A notice of cancellation was subsequently mailed to Mariano and Reliance on November 16, 1994, with an effective date of November 17, 1994, unless the unpaid premiums were paid in full on or before that date. Mariano did not pay the overdue premiums, and the policies were canceled on November 17, 1994.
On January 3, 1995, the finance company directed Reliance to reinstate all three of the policies previously canceled because Mariano had then paid the overdue premiums. Reliance refused to reinstate the manufacturer's output policy. Reliance notified Mariano's insurance broker on January 12, 1995, that that policy remained canceled as of November 17, 1994, and that coverage would not be reinstated until Reliance received deductible reimbursements from Mariano.3 Reliance indicated that once the reimbursements were received, a thirty day binder would be issued to allow the broker time to obtain other insurance for Mariano. After Mariano paid the outstanding deductible amounts to Reliance, Reliance issued the thirty day binder, which provided coverage under the manufacturer's output policy through February 26, 1995. That coverage was then extended to March 12, 1995. On March 31, 1995, the finance company issued to Mariano and Reliance another notice of cancellation for all three policies for nonpayment of premiums.
On April 4, 1995, Mariano's warehouse sustained damage from a windstorm. On April 11, 1995, the finance company requested that Reliance reinstate the policies because the finance company had received the delinquent premiums from Mariano. On that same date, Reliance notified the Interstate Commerce Commission and the state department of transportation of its cancellation of the motor carrier portion of Mariano's manufacturer's output policy. On April 21, 1995, the Interstate Commerce Commission notified Mariano that effective May 13, 1995, Mariano's certificate of insurance for cargo coverage would be canceled. Reliance informed the finance company in a letter dated May 9, 1995, that the manufacturer's output policy had not been reinstated.
Reliance ultimately denied coverage for Mariano's claim regarding the windstorm damage to his warehouse. On May 17, 1995, Mariano filed a letter of complaint with the state department of insurance. Following an investigation, the commissioner issued a cease and desist order against Reliance on November 7, 1996.4 Reliance then requested a hearing pursuant to General Statutes § 38a-19, which was held on January 22, 1997. The department hearing officer issued a decision on February 20, 1997, concluding that the finance company's November 16, 1994 notice of cancellation failed to effect cancellation because timely notice had not been sent to the Interstate Commerce Commission, as required by 49 C.F.R. 1043.7 (d)5 and General Statutes § 38a-170 (a) and (d).6 It is undisputed that Reliance did not notify either the state department of transportation or the Interstate Commerce Commission of the cancellation until April 11, 1995.
In an order issued February 21, 1997, the commissioner adopted the hearing officer's findings and recommendations, modified his November 7, 1996 order and directed Reliance to "honor all of its contractual obligations under [the manufacturer's output policy] through May 13, 1995, due to Reliance's failure to strictly comply with [General Statutes] § 38a-170 (d)." Reliance appealed from the commissioner's decision to the trial court, and the trial court reversed the commissioner's decision. This appeal followed.
As a threshold matter, it is well established that (Citations omitted; internal quotation marks omitted.) State Board of Labor Relations v. Freedom of Information Commission, 244 Conn. 487, 493-94, 709 A.2d 1129 (1998). With this standard in mind, we now address the commissioner's claims.
The commissioner first claims that the trial court improperly concluded that the warehouse liability portion of the manufacturer's output policy was severable from the truck cargo provisions of that policy with the result that the insurer's failure to give notice to the Interstate Commerce Commission, as required under federal law with regard to the cancellation of truck cargo liability coverage, saved only the truck cargo provisions of that policy from cancellation. The commissioner contends that the trial court improperly reversed the decision of the commissioner by concluding that the manufacturer's output policy coverages were severable when, in fact, the manufacturer's output policy was not severable as a matter of law. We agree.
When interpreting a statute, courts (Citations omitted.) State v. Jimenez, 228 Conn. 335, 341, 636...
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