William Ridgaway, Sr., Admin. et al. v. Mount Vernon Fire Insurance Company (2011)

MEMORANDUM OF DECISION ON MOTION FOR ORDER (# 146)

This memorandum of decision concerns five related cases.   The allegations include that, in April 2000, Silk, LLC (Silk) operated a bar located in Groton, Connecticut.   It is alleged that Mount Vernon Fire Insurance Company (Mount Vernon) provided excess and umbrella insurance to Silk. Separate personal injury/wrongful death actions (personal injury actions) were commenced in 2001 against Silk by the estates of decedents William P. Ridgaway, Jr. and Frank Sestito, Jr.,¹ alleging that, on April 15–16, 2000, Silk negligently and recklessly dispensed liquor to Anthony Sulls, resulting in fatal physical injuries to the decedents.   Silk brought a declaratory judgment action, Docket No. X04 HHD CV 02 4034598, seeking coverage and indemnity from Mount Vernon.   Ridgaway and Sestito filed bad faith actions against Mount Vernon:  Ridgaway v. Mount Vernon (Docket No. X04 HHD CV 02 4034738), and Sestito v. Mount Vernon (Docket No. X04 HHD CV 03 4034624) (bad faith actions).

At the January 31, 2011 scheduling conference, a briefing schedule was established concerning the question of the matters to be tried in July 2011.   Mount Vernon filed three motions for order, in the declaratory judgment action and in the bad faith actions, which were followed by Ridgaway's and Sestito's objections, to which Mount Vernon replied.   For the reasons stated below, those motions are granted in part and denied in part.

1. Trial Schedule

In its motions for order, Mount Vernon argues that the declaratory judgment action should proceed to trial first, as it may obviate the need for any trial in the bad faith actions.   Ridgaway and Sestito contend that these matters should be tried together.

The declaratory judgment action was previously scheduled to be tried in 2010.   The parties' presentations ignore the fact that, at the trial management conference which was held on August 20, 2010, it was agreed that the declaratory judgment action would be tried first and separately, since, if it was determined that there was no coverage, trial of the bad faith actions would be unnecessary.

The trial management order compliance which was filed in the declaratory judgment action, dated August 20, 2010 (# 183), addressed only that matter and not the two bad faith actions.   Therein, at page 2, the parties represented to the court, in their joint list of issues which are in dispute, that the sole issue to be tried was “[w]hether or not the policy issued by the defendant, Mt. Vernon Fire Insurance Company, CUP 2006608 covered liquor liability on April 15 and 16, 2000 for the claims arising out of the service of alcohol.”   Damages were not set forth as an issue to be tried.²

At Ridgaway's request, the trial of the declaratory judgment action, which was scheduled to commence on September 7, 2010, was continued, to December 6, 2010.   The parties requested the court to rule on several motions in limine in the interim.   Subsequently, on September 23, 2010, the court issued rulings (# 188);  including on Mount Vernon's motion to preclude any evidence of damages concerning the decedents (# 175).

Due to the illness and unavailability of Mount Vernon's then-counsel, the December 2010 trial did not go forward.   Thus, by agreement, the declaratory judgment action was twice scheduled to be tried in 2010, as to the coverage dispute only, separate from and before the bad faith actions, which were held in abeyance by agreement.

Subsequently, Mount Vernon retained new counsel.   At the January 31, 2011 scheduling conference, the court was informed that other, related cases had been resolved.   By stipulations, partial judgments have entered, in specified amounts, for Ridgaway and Sestito, and against Silk, in the underlying personal injury actions.

“[I]t has long been held that the decision to consolidate or sever the trial of different actions is within the sound discretion of the court ․ Rode v. Adley Express Co., Inc., 130 Conn. 274, 277, 33 A.2d 329 (1943).”  Alpha Crane Service, Inc. v. Capitol Crane Co., 6 Conn.App. 60, 68, 504 A.2d 1376, cert. denied, 199 Conn. 808, 508 A.2d 769 (1986).   See Connecticut National Bank v. Rytman, 241 Conn. 24, 56, 694 A.2d 1246 (1997) (trial court decision that severance was in the interests of judicial economy was within its discretion).

“[P]ursuant to General Statutes § 52–205 ³ and Practice Book § 15–1, the trial court may order that one or more issues that are joined be tried before the others.   The interests served by bifurcated trials are convenience, negation of prejudice and judicial efficiency ․ Bifurcation may be appropriate in cases in which litigation of one issue may obviate the need to litigate another issue.”  Powell v. Infinity Insurance Co., 282 Conn. 594, 610 n.5, 922 A.2d 1073 (2007).

In ruling on bifurcation, courts have considered several factors:  “(1) whether the issues are significantly different from one another;  (2) whether the issues are to be tried before a jury or to the court;  (3) whether the posture of discovery on the issues favors a single trial or bifurcation;  (4) whether the documentary and testimonial evidence on the issues overlap;  and (5) whether the party opposing bifurcation will be prejudiced if it is granted.”  (Internal quotation marks omitted.)   Mitchell v. Mitchell, Superior Court, judicial district of Waterbury at Waterbury, Docket No. FA 08 4017568 (May 22, 2009, Cutsumpas, J.T.R.) (47 Conn.L.Rptr. 865).

As to the first factor, in view of their agreement that the declaratory judgment action should be tried first and separately, the court is unpersuaded by Ridgaway's and Sestito's arguments that the issues in the declaratory judgment action and the bad faith actions are so intertwined that separation of them is impossible.   See Ridgaway's objection, p.5. Similarly, the fact that Silk and Ridgaway have entered into an assignment agreement, in which Silk has assigned its claims against Mount Vernon to Ridgaway, has not been shown to change the evidence which may be presented at trial.

Clearly, the issues raised in the complaints in the declaratory judgment action and the bad faith actions, while related, are markedly different.   In its one-count complaint in the declaratory judgment action, Silk seeks a declaratory judgment determining Mount Vernon's duty to “indemnify” Silk, based on Policy No. CUP2006608, an excess and umbrella liability protection claims made policy.   See complaint, ¶ 5, and prayer for relief, ¶ 1.

In contrast, in the bad faith actions, in three-count complaints, Ridgaway and Sestito allege that Mount Vernon is (1) liable to them as third-party beneficiaries for breach of the duties of good faith and responsible dealings;  (2) liable for breaches of the Connecticut Unfair Insurance Practices Act, General Statutes § 38a–815 et seq.  (CUIPA) and the Connecticut Unfair Trade Practices Act, General Statutes § 42–110b et seq.   (CUTPA);  and (3) liable for willful, wanton, fraudulent and reckless breaches of CUTPA, for which they seek punitive and exemplary damages.   See Ridgaway amended complaint (# 118);  Sestito complaint.

In contrast to the allegations in the declaratory judgment action, the bad faith actions contain allegations of conduct by Mount Vernon, such as misrepresenting the terms of coverage, failure to disclose the true policy limits, and attempted alteration of the policy, which are not alleged in the declaratory judgment action.   See Ridgaway amended complaint, first count, ¶ 20;  Sestito complaint, first count, ¶ 20.   Other post-notice of claim unfair settlement practices are also alleged.   See Ridgaway amended complaint;  second count, ¶ 22;  Sestito complaint, second count, ¶ 22.   These allegations also are not contained in the declaratory judgment complaint.   Thus, the issues in the declaratory judgment action and the two bad faith actions are significantly different from one another.

In addition, the claims for relief also differ significantly.   In the declaratory judgment action declaratory relief is sought.⁴  In the bad faith actions, the plaintiffs seek compensatory damages, and punitive and exemplary damages and attorneys fees under CUTPA.

Also, the parties are not identical.   Silk is not a party in the bad faith actions.   Thus, while related, the suits do not involve the determination of matters in controversy between the same parties.   See Veits v. Hartford, 134 Conn. 428, 436, 58 A.2d 389 (1948).

Factors (2) and (3) are not dispositive.   Each case has been claimed for a jury trial.   Discovery concluded long ago.

Likewise, as to the fourth factor, while there is some overlap, the court is unpersuaded that the evidence to be presented in the declaratory judgment action is the same that would be presented in the bad faith actions.   Ridgaway and Sestito have not shown that the declaratory judgment action and the bad faith actions require the same witnesses and documentary evidence.

As to the fifth factor, Ridgaway and Sestito have not shown that they would be prejudiced, in that they would have to try the same case twice.   Also, the court is unpersuaded that it is speculative to conclude that prejudice to Mount Vernon is likely to ensue if the declaratory judgment action is tried together with Ridgaway's bad faith action and/or together with the Sestito bad faith action, so that evidence of all of the allegations of post-notice of claim misconduct by Mount Vernon would be presented to the jury at the same time the declaratory judgment action is tried.   Rather “potential prejudice resulting from facts that are not related,” Powell v. Infinity Insurance Co., supra, 282 Conn. 610 n.5, may be resolved by not trying the actions together, as the parties agreed in August 2010.

Judicial economy would not be not served by trying the declaratory judgment action and either or both bad faith actions together.   A finding of no coverage in the declaratory judgment action would, as the parties agreed in 2010, result in both bad faith actions not being tried.

Accordingly, in the exercise of its discretion, the court concludes that, as was agreed in August 2010, the declaratory judgment action should be tried first and separately from the bad faith actions.

2. Bifurcation of Liability and Damages

In the motions for order, Mount Vernon also argues that the issue of damages, concerning the extent to which Mount Vernon would be required to indemnify Silk, should be determined separately from and subsequent to the determination as to whether there is coverage, as a second phase of the same trial in the declaratory judgment action.   Ridgaway and Sestito assert that this would waste judicial resources and that the same argument could be made in any case involving liability and damages.

Ridgaway's objection, page 11, acknowledges that a determination in favor of Mount Vernon as to the issue of coverage would obviate the need for testimony regarding the damages Silk allegedly suffered.   As noted above, bifurcation may be appropriate where “litigation of one issue may obviate the need to litigate another issue.”  Powell v. Infinity Insurance Co., supra, 282 Conn. 594, 610 n.5.

While Silk settled with the plaintiffs/estates in the underlying personal injury actions, those settlements do not bind Mount Vernon.  “[T]he right of the insurer to challenge the settlement entered into by its insured on grounds of fraud, collusion or unreasonableness provides it with ample opportunity to contest the propriety of such a settlement.”  Black v. Goodwin, Loomis & Britton, Inc., 239 Conn. 144, 155, 681 A.2d 293 (1996).

The court also has considered the five factors outlined above in order to decide whether the determination as to coverage should be separated from the presentation of evidence as to damages.   See Mitchell v. Mitchell, supra, Superior Court, Docket No. FA 08 4017568.

The first factor is whether the issues are significantly different.   As explained above, in the declaratory judgment action, the issue of coverage may be determinative.   The damages issues relate to the stipulated settlements entered into in the underlying personal injury actions, Ridgaway v. Silk, Docket No. X04 HHD 01 4034638, in which a settlement resulted in a judgment against Silk in the amount of 1.0 Million (see # 302);  and Sestito v. Silk, Docket No. X04 HHD 01 4034735, in which a settlement resulted in a judgment against Silk in the amount of $350,000.00 (see # 163).

The issues as to whether those amounts are reasonable, and not the result of collusion, relate to issues of liability and damages in the personal injury actions, which are distinct from the coverage question in the declaratory judgment action.   Some evidence of exposure would have to be presented in the liability phase, where the jury determines whether there is coverage.   However, unlike the usual liability and damages determination presented to a jury, such as in a typical personal injury action, where liability and damages stem from an incident, here the liability issue, i.e. whether there is coverage, involves facts which are largely unrelated to the claimed damages, which stem from issues of liability arising from the year 2000 incidents and issues concerning damages suffered by the decedents.

Again, the second and third factors are not determinative.   The issues are to be tried to the jury, and discovery concluded long ago.

As to the fourth factor, documentary and testimonial overlap, it is clear that there would be little overlap.   The evidence as to liability and damages in the underlying personal injury actions would be quite different from the evidence about whether there is coverage.

Concerning the fifth factor, prejudice to the party opposing bifurcation, as explained above, if there is no coverage, the jury would not have to make a determination as to damages.   Under that scenario, Ridgaway and Sestito (and Mount Vernon) would not have to incur the costs of trying the issues related to liability and damages in the underlying personal injury actions.   Similarly, judicial economy would be served, since that phase of the trial would not occur.

Since the coverage and damages issues and evidence are not closely related, since there has been no showing of prejudice to the parties opposing bifurcation, and since bifurcation may serve judicial economy, in the exercise of its discretion, the court concludes that bifurcation of the coverage and damages issues in the declaratory judgment matter is warranted.

3. Status of Bad Faith Actions

In its motions for orders, Mount Vernon asserts that it intends to revive and supplement its motions to dismiss the bad faith actions, since it asserts that the Ridgaway and Sestito estates lack standing to pursue third-party claims against Mount Vernon.   See Mount Vernon's motions to dismiss in the Ridgway bad faith action (# 145) and in the Sestito bad faith action (# 114).   Those motions are not before the court for adjudication.

Mount Vernon also argues that, if trial of the bad faith actions becomes necessary, they should be consolidated for trial.   As discussed above, the court has determined that those actions will not be tried together with the declaratory judgment action.   As discussed, depending on the outcome of the trial of the declaratory judgment action, there may be no need to consider trial of the bad faith actions.   At this time, the court declines to consider consolidation of the bad faith actions for trial.

CONCLUSION

For the reasons stated above, the motions for order are granted in part and denied in part.   The declaratory judgment action is scheduled to be tried first and separately from the bad faith actions, with the presentation of evidence to commence on July 11, 2011.   In addition, in the trial of the declaratory judgment action, the issues of coverage and damages are bifurcated.   It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO

JUDGE OF THE SUPERIOR COURT

FOOTNOTES

FN1. For ease of reference, the estates are referred to below, respectively, as “Ridgaway” and “Sestito.”.  FN1. For ease of reference, the estates are referred to below, respectively, as “Ridgaway” and “Sestito.”

FN2. In the prayer for relief, Silk also sought attorneys fees and costs for representation in the underlying personal injury actions brought by Ridgaway and Sestito..  FN2. In the prayer for relief, Silk also sought attorneys fees and costs for representation in the underlying personal injury actions brought by Ridgaway and Sestito.

FN3. Section 52–205 provides, “In all cases, whether entered upon the docket as jury cases or court cases, the court may order that one or more of the issues joined be tried before the others.”  Practice Book § 15–1 contains similar language..  FN3. Section 52–205 provides, “In all cases, whether entered upon the docket as jury cases or court cases, the court may order that one or more of the issues joined be tried before the others.”  Practice Book § 15–1 contains similar language.

FN4. As noted above, the prayer for relief also sought attorneys fees and costs for representation in the underlying personal injury actions..  FN4. As noted above, the prayer for relief also sought attorneys fees and costs for representation in the underlying personal injury actions.

Shapiro, Robert B., J.