Security Ins. Co. of Hartford v. DeLaurentis

• Citation: 202 Conn. 178,520 A.2d 202
• Court: Supreme Court of Connecticut
• Decision Date: 27 January 1987
• Parties: SECURITY INSURANCE COMPANY OF HARTFORD v. John DeLAURENTIS.

Page 202

520 A.2d 202

202 Conn. 178

SECURITY INSURANCE COMPANY OF HARTFORD v. John DeLAURENTIS.

Supreme Court of Connecticut.

Argued Nov. 7, 1986.

Decided Jan. 27, 1987.

Peter J. Ottomano, Weston, for appellant (defendant).

Susan M. Cormier, with whom were Wesley W. Horton, Hartford, and, on brief, Michael V. Hebert, Farmington, for appellee (plaintiff).

Before ARTHUR H. HEALEY, SHEA, DANNEHY, CALLAHAN and PICKETT, JJ.

ARTHUR H. HEALEY, Associate Justice.

The principal question on this appeal is whether an insurer must arbitrate an under -insured motorist claim pursuant to an arbitration provision of an un insured motorist clause included in an insurance policy issued by the insurer.

The underlying facts are undisputed. The plaintiff, Security Insurance Company of Hartford, issued an automobile insurance policy to the defendant, John DeLaurentis. The effective dates of the policy were from March 1, 1978, to March 1, 1979. The policy contained uninsured motorist coverage which provided, inter alia, for the arbitration of all coverage issues arising thereunder. ¹ The policy provided coverage for four separate vehicles owned by the defendant.

On September 18, 1978, the defendant was involved in an accident with a vehicle owned and operated by Eva Pikoulidis. Pikoulidis was insured by Metropolitan Property and Liability Insurance Company under a single limit policy of $50,000, a sum in excess of the statutory limits then in effect. On March 24, 1980, the defendant filed suit against Pikoulidis. This suit was settled on January 19, 1984; the defendant was paid the $50,000 policy limit. The defendant alleges that the reasonable value of his claim exceeds $50,000.

Upon settlement, the defendant filed for arbitration of his claim under his own policy, seeking to stack his uninsured motorist coverage, $20,000 on each of his four vehicles, to increase the coverage limit to $80,000. Because the amount payable under the policy would be reduced by "all sums paid on account of the insured's bodily injury by or on behalf of the owner or operator of the uninsured automobile," the potential recovery in the arbitration proceeding would be $30,000, the $80,000 policy limit reduced by the $50,000 paid on behalf of Pikoulidis.

The plaintiff responded by filing a declaratory judgment action which sought (1) a temporary and permanent injunction restraining the defendant from proceeding with arbitration, and (2) a determination whether (A) "[t]he 1979 amendment to Section 38-175c of the Connecticut General Statutes should apply retroactively; [ (B) i]f not, is an underinsured motor vehicle on September 18, 1978, an uninsured motor vehicle under Section 38-175c; [and (C) does the] plaintiff have any obligation to proceed to arbitration."

In its memorandum of decision dated April 18, 1978, the trial court, Spada, J., granted the plaintiff's request for summary judgment, and permanently enjoined the defendant from proceeding to arbitration. The court also answered "no" to each question presented for determination by declaratory judgment. On May 20, 1985, the defendant filed a request for further articulation. On July 28, 1985, the court filed a memorandum of decision in response to the defendant's request.

The defendant has appealed from the trial court rulings. The defendant claims that the court erred in ruling: (1) that the plaintiff has no obligation to proceed to arbitration; (2) that the insurance policy should not be construed to include underinsured motorists within its uninsured motorist protection; (3) that the defendant is permanently restrained from proceeding to arbitration without a finding of irreparable harm or lack of an adequate remedy at law; and (4) that the jurisdictional requirements for a declaratory judgment action were met in this case.

The defendant's first claim of error is that the trial court erred in ruling that the plaintiff has no obligation to proceed to arbitration. The defendant argues that the issue of whether the plaintiff must arbitrate the defendant's underinsurance claim is a question of coverage which must be determined by arbitration. In support of this argument, the defendant points to the language of the insurance policy issued by the plaintiff, as well as the mandatory language of General Statutes § 38-175c. The plaintiff, on the other hand, argues that the defendant's characterization of the issue as one of coverage is erroneous. The plaintiff contends that the issue of whether the plaintiff must arbitrate the defendant's claim is one of arbitrability which is a question for the court. Frager v. Pennsylvania General Ins. Co., 155 Conn. 270, 274, 231 A.2d 531 (1967), citing Connecticut Union of Telephone Workers, Inc. v. Southern New England Telephone Co., 148 Conn. 192, 198, 169 A.2d 646 (1961). The plaintiff also argues that the policy it issued to the defendant does not extend insurance benefits to accidents with underinsured motorists and General Statutes § 38-175c does not mandate arbitration because the statute does not apply retroactively. We agree with the defendant that the issue is one of coverage and, as such, the plaintiff is obligated to proceed with arbitration.

The duty to arbitrate may be created by contract or by statute. Wilson v. Security Ins. Group, 199 Conn. 618, 622, 509 A.2d 467 (1986); Frager v. Pennsylvania General Ins. Co., supra; Ginsberg v. Coating Products, Inc., 152 Conn. 592, 596, 210 A.2d 667 (1965), and cases cited therein. In the absence of a contrary statute, "[t]he obligations and rights of the parties are described and limited by their written agreement. The answer to the question whether or not the court shall direct a party to proceed with arbitration is embodied in the insurance contract." Visselli v. American Fidelity Co., 155 Conn. 622, 624, 237 A.2d 561 (1967); John A. Errichetti Associates v. Boutin, 183 Conn. 481, 488, 439 A.2d 416 (1981); W.J. Megin, Inc. v. State, 181 Conn. 47, 51, 434 A.2d 306 (1980). Parties who have contracted to arbitrate certain matters have no obligation to arbitrate any matters other than those which they have agreed to arbitrate. Wilson v. Security Ins. Group, supra; Frager v. Pennsylvania General Ins. Co., supra. Except when mandated by statute, a court may not compel parties "to arbitrate matters other than those which they have agreed to arbitrate under the provisions of their insurance policy." Visselli v. American Fidelity Co., supra; John A. Errichetti Associates v. Boutin, supra; Frager v. Pennsylvania General Ins. Co., supra; see Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 4, 110 A.2d 464 (1954). "Whether a particular dispute is arbitrable is a question for the court, unless, by appropriate language, the parties have agreed to arbitrate that question, also. Connecticut Union of Telephone Workers, Inc. v. Southern New England Telephone Co., [148 Conn. 192, 169 A.2d 646 (1961) ] [supra]; College Plaza, Inc. v. Harlaco, Inc., 152 Conn. 707, 206 A.2d 832 [1965]." Frager v. Pennsylvania General Ins. Co., supra.

The arbitration clause contained in the policy issued by the plaintiff, which constitutes the agreement to arbitrate and which, necessarily, determines the issues to be arbitrated, provides the following: "Arbitration: If any person making claim [under Part IV, Protection Against Uninsured Motorists,] and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured highway vehicle or an uninsured motor vehicle because of bodily injury to the insured, or do not agree as to the amount of payment which may be owing hereunder, or do not agree as to the coverage of insurance hereunder, then, upon written demand of either, the matter or matters upon which such person and the company do not agree shall be settled by arbitration.... Such person and the company each agree to consider itself bound by any award made by the arbitrators pursuant to this provision." (Emphasis added.)

This agreement to arbitrate is not a broad, all encompassing provision for arbitration. Cf. John A. Errichetti Associates v. Boutin, supra, 183 Conn. at 489, 439 A.2d 416. The provision applies only to claims filed pursuant to part IV of the insurance policy; unless the claim is filed pursuant to this clause, the arbitration provision is inapplicable. See Frager v. Pennsylvania General Ins. Co., supra, 155 Conn. at 275, 231 A.2d 531. Under the agreement, the plaintiff and the defendant agreed to arbitrate the following issues: (1) the insured's right to recover damages from the owner or operator of an uninsured automobile; (2) the amount of damages; and (3) any dispute as to the coverage of insurance to the claim filed by the insured.

While the defendant and the plaintiff, for the purpose of this appeal, do not disagree that the defendant is "legally entitled to recover damages" from Pikoulidis, or as to "the amount of payment which may be owing," there is disagreement as to whether the policy extends insurance benefits to this underinsurance claim. Whether an underinsured motor vehicle is an "uninsured automobile" within the terms of the policy is a question of the coverage under part IV of the policy. See Frager v. Pennsylvania General Ins. Co., supra, 276, 231 A.2d 531 (whether a "hit-and-run" automobile is an "uninsured automobile" under the terms of the policy is a question of coverage). ² The defendant's ability to obtain insurance benefits hinges upon a resolution of the dispute over whether the policy extends coverage to the claim filed. The arbitration clause contained in the policy mandates that the parties arbitrate this coverage dispute.

Further support for our conclusion that the defendant's claim is one of coverage which must be decided by arbitration can be found in the language of General Statutes § 38-175c. ³ Section 38-175c(a)(1) provides that all motor vehicle insurance policies issued on or after October 1, 1971,...