Tannone v. Amica Mut. Ins. Co.

• Citation: 189 A.3d 99,329 Conn. 665
• Decision Date: 07 August 2018
• Docket Number: SC 20020, (SC 20021)
• Parties: Patrick TANNONE v. AMICA MUTUAL INSURANCE COMPANY Sandra Tannone v. Amica Mutual Insurance Company
• Court: Supreme Court of Connecticut

329 Conn. 665

189 A.3d 99

Patrick TANNONE

v.AMICA MUTUAL INSURANCE COMPANY

Sandra Tannone

v.Amica Mutual Insurance Company

SC 20020, (SC 20021)

Supreme Court of Connecticut.

Argued February 27, 2018

Officially released August 7, 2018

James Wu, with whom were Cynthia C. Bott and, on the brief, James D. Horwitz, Bridgeport, for the appellants (plaintiffs).

Sean R. Caruthers, Branford, for the appellee (defendant).

Palmer, D'Auria, Mullins, Kahn and Vertefeuille, Js.

D'AURIA, J.

In these appeals, we again consider whether an automobile insurance policy containing underinsured motorist coverage, as required by state law, can validly exclude benefits to the insured when the owner of the underinsured vehicle is a rental car company designated as a "self-insurer" by the Insurance Commissioner (commissioner) pursuant to General Statutes § 38a-371 (c). We first addressed this issue in Orkney v. Hanover Ins. Co. , 248 Conn. 195, 202–206, 727 A.2d 700 (1999), and upheld the validity of § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, which authorizes an exclusion from the underinsured motorist coverage requirement for "uninsured or underinsured vehicle[s] ... owned by ... a self-insurer under any motor vehicle law ...."¹ We came to this conclusion because self-insurers are statutorily required to prove their ability to pay judgments when liable, rendering underinsurance coverage unnecessary in those situations. Orkney v. Hanover Ins. Co. , supra, at 204–206, 727 A.2d 700 ; see General Statutes §§ 14-129 (b) and 38a-371 (c). Therefore, we decided in Orkney that there was "nothing inconsistent between the public policy underlying underinsured motorist coverage and a regulation that permits a coverage exclusion" for vehicles owned by self-insurers. Orkney v. Hanover Ins. Co. , supra, at 206, 727 A.2d 700.

The factual setting in the present case is similar to that in Orkney , but the legislative landscape has changed. In both the present case and in Orkney , the plaintiff insureds were injured by an underinsured lessee driving a rental car owned by a self-insured rental car company. See id., at 197–99, 727 A.2d 700. The insureds were denied underinsured motorist benefits under their policies because those policies contained a self-insurer exclusion. Id., at 199–200, 727 A.2d 700.

Since our decision in Orkney , however, Congress passed legislation prohibiting rental car companies from being held vicariously liable for the negligence of their lessees. Specifically, Title 49 of the 2012 edition of the United States Code, § 30106 (a), commonly known as the Graves Amendment; see Rodriguez v. Testa , 296 Conn. 1, 4 n.2, 993 A.2d 955 (2010) ; makes rental car companies immune from vicarious liability for injuries caused by their underinsured lessees—even if a state has designated that company as a self-insurer capable of providing a remedy. Thus, under current law, when the plaintiffs in the present case were denied underinsured motorist benefits pursuant to their policies because of the self-insurer exclusion, they were effectively left without a remedy because they are precluded under the Graves Amendment from recovering from the self-insured rental car company.

We are therefore asked in these appeals to reassess, in light of this development in federal law, whether § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, which authorizes the self-insurer exclusions in these insurance policies, remains valid as applied to rental car companies. We conclude that, in this scenario, the state regulation conflicts with the public policy manifested in General Statutes § 38a-336 (a) (1) that requires insurance policies to provide underinsured motorist coverage, and, thus, § 38a-334-6 (c) (2) (B) of the regulations is invalid as applied.

I

The following undisputed facts and procedural history are relevant to this appeal.

The plaintiffs, Sandra and Patrick Tannone, were lawfully crossing the street when they were struck and seriously injured by an automobile. That automobile was a rental car owned by EAN Holdings, LLC, more commonly known as Enterprise Rent-A-Car (Enterprise). Enterprise had leased the vehicle to Barbara Wasilesky, but she was not driving at the time of the collision. The vehicle was instead operated by a permitted user named Arthur Huffman.

Wasilesky, the lessee, was the named insured on an automobile insurance liability policy that provided bodily injury coverage in the amounts of $20,000 per person and $40,000 per occurrence—the minimum allowable in Connecticut at the time. General Statutes §§ 38a-336 (a) (1) and 14-112 (a).² The plaintiffs made a claim against Wasilesky, as the lessee, and Huffman, as the vehicle operator, and the parties settled for the full amount of coverage from Wasilesky's policy, namely, $20,000 each.³ Wasilesky and Huffman have no other insurance coverage, and the plaintiffs claim that their damages exceed what they recovered under Wasilesky's insurance policy.

At the time of the collision, the defendant, Amica Mutual Insurance Company (Amica), insured the plaintiffs through separate policies. Each of their policies carried $500,000 of coverage for personal injuries sustained due to the negligence of an underinsured driver.⁴ This underinsured motorist coverage, however, excluded from the term " ‘underinsured motor vehicle’ " any vehicle "[o]wned ... by a self-insurer under any applicable motor vehicle law." (Emphasis added.) Enterprise was designated a self-insurer by the commissioner, making it eligible for the exclusion.

After settling with Wasilesky and Huffman, the plaintiffs commenced this consolidated action to recover underinsured motorist benefits from their own insurance policies issued by the defendant. In response, the defendant asserted special defenses, including that the policies do not afford underinsured motorist benefits when the tortfeasor's vehicle is owned by a self-insurer. The defendant moved for summary judgment, arguing that it was entitled to judgment as a matter of law because the vehicle driven by Huffman was owned by a self-insurer, Enterprise, and because the plaintiffs did not demonstrate that they had exhausted their remedy from Enterprise. In support of the validity of the exclusion, the defendant pointed to § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, which expressly authorizes such exclusions, and to Orkney v. Hanover Inc. Co. , supra, 248 Conn. at 195, 202–206, 727 A.2d 700, in which this court confirmed the validity of that regulation and a similar coverage exclusion. The plaintiffs asserted in response that the defendant's reliance on Orkney is misplaced because it predated the Graves Amendment, which eliminated the possibility that the plaintiffs could recover from Enterprise. The trial court nevertheless agreed with the defendant and granted its motions for summary judgment. The plaintiffs moved for reargument, and the trial court denied their motions.

The plaintiffs then appealed from the judgments of the trial court to the Appellate Court, and this court transferred the appeals to itself. See General Statutes § 51-199 (c) ; Practice Book § 65-1. Because a trial court's decision granting a motion for summary judgment and issues of statutory construction present questions of law, our review on appeal is plenary. See, e.g., Rodriguez v. Testa , supra, 296 Conn. at 6–7, 993 A.2d 955 (setting forth standard for granting motion for summary judgment); see also General Statutes § 1-2z (setting forth plain meaning rule governing statutory interpretation).

The plaintiffs claim that the self-insured exclusion in their underinsured motorist coverage does not apply to Enterprise due to the fact that the regulation authorizing that exclusion, § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, is invalid as applied to Enterprise because Enterprise cannot be held liable following the Graves Amendment. See Giglio v. American Economy Ins. Co. , 278 Conn. 794, 804 and n.9, 900 A.2d 27 (2006) (determining validity of coverage exclusion based on validity of insurance regulation authorizing exclusion). "[I]t is well established that an administrative agency's regulations are presumed valid and, unless they are shown to be inconsistent with the authorizing statute, they have the force and effect of a statute .... Moreover, [a] person claiming the invalidity of a regulation has the burden of proving that it is inconsistent with or beyond the legislative grant." (Citation omitted; internal quotation marks omitted.) Id., at 806–807, 900 A.2d 27 ; see Orkney v. Hanover Ins. Co. , supra, 248 Conn. at 203, 727 A.2d 700. We agree with the plaintiffs that, under these circumstances, the regulation giving rise to the self-insurance exclusion in the plaintiffs' policies is inconsistent with the authorizing statutes and, therefore, is invalid as applied to Enterprise. Accordingly, we reverse the judgments of the trial court and remand the cases to that court for further proceedings.

II

We first consider the interconnected legislative, regulatory, and public policy backdrop confronting us in this appeal, including how that backdrop has changed. Our state law requires all motor vehicle owners to maintain a minimum amount of automobile liability insurance coverage. General Statutes § 38a-335 (a). The legislature understood that some motorists will not comply with this law, however. Thus, to protect properly insured motorists from the negligence of financially irresponsible motorists, our state law expressly provides that every automobile insurance policy must provide its insured with a minimum amount of uninsured and underinsured motorist coverage as provided for in § 14-112 (a). General Statutes § 38a-336 (a) (1) (A) ("[e]ach automobile liability insurance policy shall provide insurance, herein called uninsured and underinsured motorist coverage ... for the protection of persons insured thereunder who are legally...