Verdon v. Transamerica Ins. Co.

• Decision Date: 15 June 1982
• Citation: 187 Conn. 363,446 A.2d 3
• Court: Connecticut Supreme Court
• Parties: Thomas VERDON, Administrator v. TRANSAMERICA INSURANCE COMPANY.

Page 3

446 A.2d 3

187 Conn. 363

Thomas VERDON, Administrator v. TRANSAMERICA INSURANCE COMPANY.

Supreme Court of Connecticut.

Argued March 10, 1982.

Decided June 15, 1982.

Michael Perzin, New Haven, with whom, were John J. Resnik, New Haven, and, on the brief, Ivan M. Katz, New Haven, for appellant (plaintiff).

John W. Lemega, Hartford, with whom, on the brief, were Thomas J. Hagarty and Mark B. Seiger, Hartford, for appellee (defendant).

Before SPEZIALE, C. J., and PETERS, PARSKEY, ARMENTANO and SHEA, JJ.

SHEA, Associate Justice.

This appeal raises the issue of whether a decrease in the value of an estate caused by legal malpractice is "damage to the property of any person" for purposes of General Statutes § 38-175, ¹ the so-called "direct action" statute. The plaintiff recovered a judgment for the diminution of the estate of Alma Bouffard in a negligence action brought against the attorney for the estate. The judgment not having been satisfied, the plaintiff brought this action directly against the defendant Transamerica Insurance Company, the judgment debtor's malpractice insurer. Transamerica moved to strike the complaint on the ground that it failed to state a cause of action under General Statutes § 38-175. The court granted the motion to strike the entire complaint and, pursuant to Practice Book § 157, rendered judgment for the defendant upon motion after the plaintiff failed to replead. See Kilbride v. Dushkin Publishing Group, Inc., 186 Conn. 718, 443 A.2d 922 (1982); Breen v. Phelps, 186 Conn. 86, 439 A.2d 1066 (1982). The plaintiff has appealed from this judgment.

In reviewing a ruling on a motion to strike, we must construe the allegations of the complaint most favorably to the plaintiff. See Senior v. Hope, 156 Conn. 92, 97-98, 239 A.2d 486 (1968). In his amended complaint the plaintiff alleged that (1) he had recovered a judgment against the attorney for the estate for "damages to property" arising out of the attorney's carelessness; ² (2) the defendant Transamerica was the attorney's insurer at the time the losses were suffered; (3) the judgment had not been satisfied; and (4) the plaintiff is subrogated to the judgment debtor's rights against Transamerica under General Statutes § 38-175. Although a motion to strike admits facts well pleaded; State v. LeSelva, 163 Conn. 229, 231, 303 A.2d 721 (1972); it does not admit legal conclusions. Research Associates, Inc. v. New Haven Redevelopment Agency, 157 Conn. 587, 588, 248 A.2d 927 (1968). The plaintiff's allegation that the direct action statute's subrogation provision is applicable can, therefore, be disregarded for the purpose of a motion to strike.

The defendant argues, and the trial court agreed, that the financial loss suffered by the plaintiff, as administrator of the estate of Alma Bouffard, is not "damage to property" as contemplated by the direct action statute. The court based its construction of General Statutes § 38-175 primarily on the use of the word "casualty" in the statute. "Chapter 681 of the Connecticut General Statutes, within which is contained General Statutes Sec. 38-175, is entitled 'Casualty Insurance ....' Black's Law Dictionary p. 275 (4th ed. 1968), defines a 'casualty' as an 'accident;' event due to sudden, unexpected, or unusual cause ... A loss ... by fire, shipwreck, lightning, etc.' " The implication of this statement in the memorandum of decision is that the loss of value of an estate due to negligence is not such a casualty and § 38-175 does not encompass mere monetary loss as suffered in this case.

Our construction of the direct action statute, however, yields a different result. As is true in every case involving the construction of a statute, our starting point must be the language employed by the legislature. See Reiter v. Sonotone Corporation, 442 U.S. 330, 337, 99 S.Ct. 2326, 2330, 60 L.Ed.2d 931 (1979); Baston v. Ricci, 174 Conn. 522, 528, 391 A.2d 161 (1978). General Statutes § 38-175 provides in relevant part: "Each insurance company which issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become absolutely liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty." (Emphasis added.) "In its dictionary definitions and in common usage 'property' comprehends anything of material value owned or possessed. See, e.g., Webster's Third New International Dictionary 1818 (1961). Money, of course, is a form of property." Reiter v. Sonotone Corporation, supra, 442 U.S. at 338, 99 S.Ct. at 2330. ³ "A consumer whose money has been diminished by reason of an antitrust violation has been injured in his ... property ...." Reiter v. Sonotone Corporation, supra, 339, 99 S.Ct. at 2331. Although this is our first opportunity to construe the word "property" in General Statutes § 38-175, we have on several occasions discussed its meaning in other contexts. In Winslow v. Zoning Board, 143 Conn. 381, 386, 122 A.2d 789 (1956), we were called upon to decide whether the phrase "any Stamford property owner" in 26 Spec.Law 1236, No. 619, § 553.1 was restricted to owners of real property. We said: "The word 'property' is defined as '[t]hat to which a person has a legal title.' ... It may include everything which is the subject of ownership." Id., 386-87. And in the taxation context, we stated that "[t]he word 'property' ... refers to every species of valuable right or interest which is subject to ownership, or that which has an exchangeable value or which goes to make up one's wealth or estate ...." International Business Machines Corporation v. Brown, 167 Conn. 123, 131-32, 355 A.2d 236 (1974).

The defendant focuses on the phrase "such casualty" as narrowing the meaning of "damage to the property of any person" so as to exclude mere monetary damage. Of course, the use of "such" to modify "casualty" indicates an allusion to the preceding language "bodily injury or death by accident of any person, or damage to the property of any person ...." These occurrences are referred to indiscriminately by the term "such casualty." "Casualty," like property, must be construed according to its "commonly approved usage." General Statutes § 1-1(a). The standard definition appropriate to the context of this case is "an unfortunate occurrence" synonymous with "mischance." Webster, Third New International Dictionary. The trial court relied upon a more restrictive definition: an "[a]ccident; event due to sudden, unexpected, or unusual cause ...." Black's Law Dictionary (4th Ed. Rev.) Even under this narrower definition, the trial court's view that damage to the net worth of an estate resulting from an attorney's negligence is not such an occurrence is erroneous. We must assume that the loss was accidental since the former action sounded in negligence rather than fraud. Although "sudden" may also imply quickness, its primary meaning is unexpected, "happening without previous notice or very brief notice." Webster, Third New International Dictionary. The complaint may fairly be construed as alleging that the loss resulted from a sudden, unexpected or unusual cause, to wit, the attorney's negligence. Our interpretation of the word "casualty" is, of course, limited to its significance as used in § 38-175. We recognize that in other contexts it may have a more restricted connotation.

There is no recorded legislative history ⁴ which militates against the broad construction dictated by the common usage of the language of the act. This court, however, has previously postulated in other contexts that the legislature's purpose in enacting the "direct action" statute was to remedy "[t]he unfairness to the assured of contracts of insurance" with provisions that the insurer should be liable only in cases where the assured had actually paid a judgment obtained against him. Guerin v. Indemnity Ins. Co., 107 Conn. 649, 652, 142 A. 268 (1928). "The intention of the Act is to give the injured person the same rights under the policy as the assured ...." Id., 653, 142 A. 268. Although the statute has been invoked almost exclusively in the context of motor vehicle negligence situations involving personal injuries and damage to tangible property, nothing in the statement of purpose of the act or any of our decisions so limits its scope. See Connecticut Wholesale Drug Co. v. New England Fire Ins. Co., 121 Conn. 514, 516-17, 186 A. 551 (1936). We note that chapter 682a of the General Statutes, entitled "CASUALTY INSURANCE RATES," is made applicable to "all insurance on risks or on operations in this state" except for five categories of insurance specifically exempted from such rate regulation. General Statutes § 38-201b. ⁵ It cannot be questioned that malpractice insurance rates are included in the casualty insurance rates to which chapter 682a applies. It is reasonable to infer from this usage of the word "casualty" in the insurance context that the same broad import of the word was intended by the legislature in using the phrase "loss ... occasioned by such casualty" in § 38-175.

Nor can we ascertain any consideration of policy which would justify authorization of a direct action by a judgment creditor against his debtor's insurer in cases where the property damaged is tangible but not where the property involved is intangible. The insured loss is no less real to the injured party if it is a decrease in his assets than if it is an equivalent amount of damage to his car. The defendant would have us read into § 38-175 by construction a meaning not apparent from its language and not consistent with any reasonable public policy. " 'It clearly is incumbent upon any...