Wilson v. Security Ins. Group

• Citation: 199 Conn. 618,509 A.2d 467
• Court: Supreme Court of Connecticut
• Decision Date: 13 May 1986
• Parties: James WILSON v. SECURITY INSURANCE GROUP.

Page 467

509 A.2d 467

199 Conn. 618

James WILSON v. SECURITY INSURANCE GROUP.

Supreme Court of Connecticut.

Argued Feb. 5, 1986.

Decided May 13, 1986.

Wesley W. Horton, with whom were Susan M. Cormier and Michael V. Hebert, Hartford, for appellant (defendant).

David M. Reilly, New Haven, for appellee (plaintiff).

Before HEALEY, SHEA, DANNEHY, SANTANIELLO and CALLAHAN, JJ.

SHEA, Associate Justice.

The plaintiff, James Wilson, brought this action to compel arbitration of his claim against the defendant, Security Insurance Group, based upon a policy of automobile insurance issued to the town of Woodbridge. His complaint alleges that this policy provides uninsured motorist coverage for his benefit with respect to injuries he received while on duty as a police officer of the town when he was struck by an unidentified automobile that fled the scene of the accident.

The defendant insurer filed a counterclaim seeking a declaratory judgment to determine two issues relating to the coverage provided by the policy and also an injunction restraining the plaintiff from proceeding with arbitration. The trial court, Reynolds, J. dismissed the counterclaim on the ground that the coverage questions raised must be decided by the arbitrators because the arbitration clause in the policy is required by General Statutes § 38-175c to include coverage disputes. After the trial of the case the court, S. Freedman, J., rendered judgment for the plaintiff directing the defendant to proceed with arbitration. In appealing from the judgment the defendant has raised four issues challenging the dismissal of the counterclaim: (1) whether the language of the arbitration clause in the insurance policy requires that certain issues relating to coverage be submitted to arbitration; (2) whether arbitration of these coverage issues is mandated by General Statutes § 38-175c; (3) whether, if § 38-175c does compel arbitration of such issues, it unconstitutionally deprives the defendant of due process of law or infringes upon the authority of the judiciary; and (4) whether, even if the preceding issues involving the merits of the defendant's counterclaim were properly decided, the trial court should have dismissed the counterclaim suo motu instead of striking it in accordance with the plaintiff's motion. We find no reversible error in the dismissal of the counterclaim.

I

In its counterclaim the defendant sought a determination of two questions involving interpretation of the provisions of the insurance policy: (1) whether the plaintiff is permitted to stack uninsured motorist coverage in a case involving one vehicle in a fleet of thirty-one vehicles owned by the named insured, the town of Woodbridge; and (2) whether the defendant insurer, which also carries the workers' compensation insurance for the town, the plaintiff's employer, is permitted to reduce the amount of uninsured motorist coverage by the amount of workers' compensation benefits paid or payable to the plaintiff. The defendant contends that these issues are not subject to arbitration under the clause of the policy that provides as follows: "If we and an insured disagree whether the insured is legally entitled to recover damages from the owner or driver of an uninsured motor vehicle, or do not agree as to the amount of damages, the insured may make a written demand for arbitration." The plaintiff maintains that this provision makes a disagreement concerning either the liability of the uninsured motorist or the damages sustained by the insured a condition precedent to arbitration but does not restrict the scope of arbitration to those issues. He argues that once there is a predicate dispute concerning liability of the uninsured motorist or the damages recoverable, the clause may be construed to call for arbitration of all disputes between the parties, including those concerning uninsured motorist coverage.

This court has previously construed a similar arbitration clause ¹ contained in the uninsured motorist section of an automobile policy not to apply to a coverage question even where that issue was also related to the determination of the liability of the uninsured motorist. Frager v. Pennsylvania General Ins. Co., 155 Conn. 270, 231 A.2d 531 (1967). "Under this provision, the only issues to be arbitrated are: (1) the insured's right to recover damages from the owner or operator of an uninsured automobile, and (2) the amount of such damages." Id., 275, 231 A.2d 531. In the absence of a contrary statute, "[a] party who has contracted to arbitrate certain matters has no obligation to arbitrate any matters other than those he has agreed to arbitrate." Id., 274, 231 A.2d 531; Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 5, 110 A.2d 464 (1954). In framing this policy provision the defendant was entitled to rely on our construction of the similar clause in Frager ² as not mandating arbitration of coverage issues. We agree with the defendant, therefore, that it did not by virtue of the terms of the policy agree to submit to arbitration the questions set forth in its counterclaim.

II

The trial court appears to have relied, not on the language of the policy, in deciding that the counterclaim issues must be arbitrated, but upon General Statutes § 38-175c(a)(1). ³ This statute requires that every automobile liability policy provide uninsured motorist coverage and that, after October 1, 1971, such a policy, if it contains a provision for binding arbitration, "shall include a provision for final determination of insurance coverage in such arbitration proceeding." In Oliva v. Aetna Casualty & Surety Co., 181 Conn. 37, 41, 434 A.2d 304 (1980) we recognized that this provision of § 38-175c(a)(1) had legislatively overruled our holding in Frager that an insurer could contractually limit the uninsured motorist issues to be decided by the arbitrators and thus exclude questions of coverage. "The expressed intent and effect of the aforesaid amendment to § 38-175c is to remove from the court and to transfer to the arbitration panel the function of determining, in the first instance, all issues as to coverage under automobile liability insurance policies containing uninsured motorist clauses providing for arbitration." Id., 42, 434 A.2d 304.

The defendant does not dispute that we must read into the policy before us, in accordance with § 38-175c(a)(1), a provision for "final determination of insurance coverage" by arbitrators. Oliva v. Aetna Casualty & Surety Co., supra, 41, 434 A.2d 304; see General Statutes § 38-175d. It contends, however, that the term "insurance coverage" as used in the statute does not include the issues of fleet stacking and workers' compensation setoff, which may require an interpretation of the statutes and regulations governing uninsured motorist benefits. We construe § 38-175c(a)(1) to make no distinction between coverage issues governed wholly by the policy language and those which may also require the application of statutes or regulations in order to resolve them. The legislative purpose in providing arbitration as an expeditious method of dispute resolution for uninsured motorist claims would be thwarted by requiring arbitrators to interpret the policy language in one proceeding and the courts to determine in another the effect of statutes or regulations upon the issues involved. Such a bifurcated procedure would be inconsistent with our view that § 38-175c(a)(1) transfers to the arbitration panel "the function of determining, in the first instance, all issues as to coverage" where the policy contains a provision for arbitration of any uninsured motorist claim. (Emphasis added.) Oliva v. Aetna Casualty & Surety Co., supra, 42, 434 A.2d 304. Where the insurer had complied with § 38-175c(a)(1) by including in the uninsured motorist arbitration clause of the policy a provision for arbitration of disputes "as to the amount of payment which may be owing under this coverage," we decided that an unrestricted submission of coverage issues was intended. Carroll v. Aetna Casualty & Surety Co., 189 Conn. 16, 19-21, 453 A.2d 1158 (1983). This defendant, whose policy does not conform to § 38-175c(a)(1), does not deserve a different result by virtue of its failure to follow the statutory mandate. We note that the Appellate Court has concluded that an arbitration clause making disputes as to "coverage of insurance" arbitrable applies to the issue of stacking of uninsured motorist coverages for each of three vehicles owned by the claimant and her husband. American Motorists Ins. Co. v. Brookman, 1 Conn.App. 219, 470 A.2d 253, cert. denied, 193 Conn. 801, 473 A.2d 1226 (1984). We see no reasonable basis for viewing § 38-175c(a)(1) as mandating arbitration of only those coverage issues governed wholly by the terms of the policy, as the defendant insurer contends.

III

The defendant insurer next raises two constitutional claims that are predicated upon our construction of § 38-175c(a)(1) as mandating arbitration of the legal questions raised in the counterclaim: (1) that to authorize arbitrators to make a final determination of these legal issues, precluding review by the courts, effectively allows them to exercise an essential judicial function allocated exclusively to judges by article second ⁴ and article fifth, § 1 ⁵ of our state constitution; and (2) that such a delegation of power deprives a person of his "remedies by due course of law" in violation of article first, § 10 ⁶ of our state constitution. The defendant also relies upon federal constitutional provisions protecting against a deprivation of property without due process of law.

The defendant maintains that to find that § 38-175c(a)(1) requires arbitration of disputes not encompassed by the terms of the policy transforms the character of the arbitration from voluntary to compulsory. The plaintiff points out, however, that the statute directs only that, if the policy contains a provision for binding...