Thomas Berardino et al. v. Hartford Underwriters Ins. Co. et al. (2012)

MEMORANDUM OF DECISION

In this case the plaintiffs, Thomas Berardino and his wife, Charlene Berardino, claim to have suffered serious injuries in a motor vehicle accident which occurred on August 2, 2008.   In their complaint the plaintiffs allege that at that time Thomas Berardino was operating a motor vehicle, in which Charlene was a passenger, eastbound on South Salem Road in Ridgefield.   At the same time, a motor vehicle operated by Carlos Cardona, which was proceeding westbound on South Salem Road, negligently crossed the center line of the highway and collided with the Berardinos' vehicle causing personal injuries.   The plaintiffs claim that Cardona was an uninsured motorist and that each of the defendants have issued uninsured/underinsured motorists coverage which applies to their vehicle.

In the first and fourth counts of their amended complaint dated September 29, 2010, the plaintiffs Thomas Berardino and Charlene Berardino, respectively, claim uninsured motorists coverage under a policy issued by defendant Hartford Underwriters Insurance Company.   In the second and fifth counts of the complaint the plaintiffs claim similar benefits under a policy issued by defendant AIU Insurance Company.   In the third and sixth counts of the complaint the plaintiffs claim similar benefits under a policy issued by defendant AIG Insurance Company.

Presently at issue before the court is a motion for summary judgment filed by defendants, AIU Insurance Company and AIG Casualty Company on November 4, 2011 seeking judgment on Second, Third, Fourth and Fifth Counts of the plaintiffs' amended complaint.   Defendant AIG asserts several grounds supporting its motion for summary judgment.   First, it claims that the plaintiffs were injured while in “an owned motor vehicle” and are excluded from coverage under the terms of the AIG policy and General Statutes § 38a–336(d).  Second, it claims that the policy limits under the policy it issued are less than those provided under the Hartford policy and consequently, it has no remaining responsibility for uninsured/underinsured coverage.

Defendant AIU claims that the plaintiffs were injured while in “an owned motor vehicle” and are excluded from coverage under the terms of the AIU policy and General Statutes § 38a–336(d).  AIU also claims that the “business pursuits” provision and the “professional services” provision of the AIU policy excludes the plaintiffs from recovery.

FACTS

It is not disputed that, at the time of the August 2, 2008 collision, Cardona was uninsured and was operating an uninsured motor vehicle.   It is also not disputed that the defendants issued automobile insurance policies providing for uninsured/underinsured motorist coverage.   In their motion for summary judgment, defendants AIG and AIU contend that there is no issue of material fact that, under the terms of their respective policies and the applicable statutory law, the plaintiffs are not entitled to benefits.   On February 16, 2012, the plaintiffs filed an opposition to the plaintiffs' motion for summary judgment.   The matter was heard at the short calendar on February 21, 2012.

DISCUSSION

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Brooks v. Sweeney, 299 Conn. 196, 210 (2010).

“[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ․ [A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ․ [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815 (2003).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)   Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11 (2008).

EXCLUSION FOR “OWNED MOTOR VEHICLES”

In the defendants' memorandum of law in support of the motion for summary judgment, AIG and AIU claim that Thomas Berardino was operating “an owned motor vehicle” and is thus excluded from coverage under General Statutes § 38a–336(d).  That statute provides, in relevant part:

“If a person insured for uninsured and underinsured motorist coverage is an occupant of a nonowned vehicle covered by a policy also providing uninsured and underinsured motorist coverage, the coverage of the occupied vehicle shall be primary and any coverage for which such person is a named insured shall be secondary.   All other applicable policies shall be excess.   The total amount of uninsured and underinsured motorist coverage recoverable is limited to the highest amount recoverable under the primary policy, the secondary policy or any one of the excess policies.   The amount paid under the excess policies shall be apportioned in accordance with the proportion that the limits of each excess policy bear to the total limits of the excess policies.   If any person insured for uninsured and underinsured motorist coverage is an occupant of an owned vehicle, the uninsured and underinsured motorist coverage afforded by the policy covering the vehicle occupied at the time of the accident shall be the only uninsured and underinsured motorist coverage available.”

General Statutes § 38a–363(d) defines “Owner of a private passenger motor vehicle” as “the person who owns the legal title thereto, except where the motor vehicle is the subject of a security agreement or lease with option to purchase with the debtor or lessee having the right to possession, in which event ‘owner’ means the debtor or lessee ․”

General Statutes § 38a–363 provides that the definitions set forth therein apply to General Statutes §§ 38a–17, 38a–19 and 38a–363 to 38a–388, inclusive.   While this does not expressly include the provisions under § 38a–336, the Appellate Court has held that “[s]ection 38a–371(a)(1) ․ links the definition of ‘owner’ to § 38a–336 by requiring that [t]he owner of a private passenger motor vehicle ․ shall provide ․ security in accordance with sections 38a–334 to 38a–343, inclusive.”  (Internal quotation marks omitted.)  Platcow v. Yasuda Fire & Marine Ins. Co. of America, 59 Conn.App. 47, 55–6 (2000).   The Appellate Court also stated that it is “guided by the principle that the legislature is always presumed to have created a harmonious and consistent body of law ․ Indeed, this tenet of statutory construction requiring us to read statutes together is particularly applicable when the statutes relate to the same subject matter.”  Id., 56.

General Statutes § 1–2z, the “plain meaning rule,” provides:  “The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes.   If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.”   Accordingly, this court concludes that in determining whether the motor vehicle in question was an owned motor vehicle or a non-owned motor vehicle for purposes of § 38a–336(d), the definition set forth in § 38a–363(d) controls.

In the present case, the plaintiffs were driving a 2007 Mercedes owned by Mercedes Benz Financial and leased to Saugatuck Associates IV, Inc., with Thomas Berardino as the guarantor on the lease.   Thomas Berardino put $15,000 down at the beginning of the lease and was reimbursed by Saugatuck Associates for the cost.   Subsequently, Saugatuck Associates made all monthly payments on the lease.   The defendant claims that because Thomas Berardino owned a significant number of the shares of the outstanding stock of Saugatuck Associates IV, Inc., he must be considered to be an “owner” of the motor vehicle leased to Saugatuck.   The defendants cite no authority for their theory of imputed ownership.   Because the motor vehicle at issue was apparently leased to Saugatuck subject to an option to purchase, the only “owner,” for the purposes of § 38a–336(d) is lessee—Saugatuck.

The court finds that the defendants have failed to meet their burden to show there is no issue of material fact as to their claim that the owner of the vehicle was Thomas Berardino.   In fact, the evidence would appear to demonstrate that neither plaintiff could be considered an owner under the law.   Accordingly, the court denies the motion for summary judgment on the first grounds advanced by the defendants.

GENERAL STATUTES § 38a–336(d)—POLICY LIMITS

AIG also argues that neither plaintiff is entitled to benefits because the Hartford's policy limits are in excess of the AIG policy limits.   As such, even assuming the plaintiffs were injured in a non-owned vehicle, they are not entitled to coverage under the AIG policy.   AIG relies on § 38a–336(d) which provides in relevant part:  “The total amount of uninsured and underinsured motorist coverage recoverable is limited to the highest amount recoverable under the primary policy, the secondary policy or any one of the excess policies.”   It is not disputed that the AIG policy's coverage is limited to $500,000 and the limit of coverage under the Hartford's policy is $1,000,000.   There is also no issue that the AIG policy contains a provision for uninsured conversion coverage.¹

Defendant AIG argues that the language of § 38a–336(d) excludes the plaintiffs from recovering under its policy because that policy's limits are less than the Hartford's policy limits.   In advancing this argument, defendant AIG apparently overlooks the fact that the policy it issued provided for conversion coverage which is governed by the provisions of § 38a–336a and not those of § 38a–336.

Section 38a–336a(c), provides in relevant part:  “Each insurer shall be obligated to pay to the insured, up to the limits of the policy's underinsured motorist conversion coverage, after the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements.”   Thus, conversion coverage allows an insured to “recover up to the limits of the applicable underinsured motorist coverage without regard to whether the tortfeasor's policy equaled or exceeded the underinsured motorist coverage.”   Savoie v. Prudential Prop. & Casualty Ins., Superior Court, judicial district of Fairfield, Docket No. CV 02 0394250 (June 27, 2003, Sheedy, J.) (35 Conn. L. Rptr. 5, aff'd 84 Conn.App. 594, 854 A.2d 786 (2004)).   Section 38a–336a(c) continues in relevant part:  “If the insured purchases such underinsured motorist conversion coverage, then in no event shall the underinsured motorist coverage be reduced on account of any payment by or on behalf of the tortfeasor or by any third party.”   Thus, conversion coverage also prevents any reduction in the insured's total conversion coverage by what the insured collects from either the tortfeasor or from a third party.   There is apparently no case which construes meaning of the term “third party as used in § 38a–336a(c).  However, there is nothing in the statute which would exclude another insurer which provides uninsured/underinsured coverage under the terms of its policy from being considered a third party.   Since defendant AIG accepted the extra premiums it was entitled to collect for issuing conversion coverage under § 38a–336a, it can not now claim the benefit of the non-stacking ² provisions of § 38a–336 (d) which, by its terms, only applies to non-conversion uninsured/underinsured coverage.   Accordingly, the court denies the motion for summary judgment on the second ground advanced by defendant AIG.

BUSINESS PURSUITS EXCLUSION

The next issue is whether the business pursuits exclusion in the AIU policy is applicable and precludes the plaintiffs from coverage under that policy.  “The seminal case [on the meaning of the term “business pursuits”] is Home Ins. Co. v. Aurigemma, 45 Misc.2d 875, 879, 257 N.Y.S.2d 980 (1965), in which a New York Supreme Court concluded that the term business pursuits encompassed two elements, continuity and profit motive.   As to the first, there must be a ‘customary engagement’ or a ‘stated occupation’;  as to the latter, there must be shown to be such activity as a ‘means of livelihood’;  ‘gainful employment’;  ‘means of earning a living’;  ‘procuring subsistence or profit’;  ‘commercial transactions or engagements.’  ․ In a subsequent New York Appellate Court decision, Shapiro v. Glens Falls Ins. Co., 47 App.Div.2d 856, 365 N.Y.S.2d 892 (1975), aff'd, 39 N.Y.2d 204, 347 N.E.2d 624, 383 N.Y.S.2d 263 (1976), the court clarified that for purposes of the ‘business pursuits' exclusion, the ‘business' engaged in by [the insured] need not necessarily be limited to his sole occupation or employment ․

“The majority of jurisdictions that have considered this issue have followed Aurigemma, holding that the term business pursuits means a continued or regular activity that is conducted for the purpose of profit, such as a trade, profession or occupation ․” (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Pacific Indemnity Ins. Co. v. Aetna Casualty & Surety Co., 240 Conn. 26, 30–31 (1997).   Ultimately, “[t]he determination of whether a particular activity constitutes a business pursuit is to be made by a flexible fact-specific inquiry.”  Id., 33.

In addition to stating the Aurigemma standard, the court held that “[i]n a business pursuit the profit motive, or purpose of profit, is important.   Whether there is or is not actual profit is immaterial.   Does a pursuit have to be successful from a profit standpoint before it is a business pursuit?   If a business suffers a loss, was it not a business?   The answers are obvious.   Profit motive, not actual profit, makes a pursuit a business pursuit.”   Pacific Indemnity Ins. Co. v. Aetna Casualty & Surety Co., supra, 240 Conn. 34.

In the present case, the AIU policy states that it does not provide coverage for liability “[a]rising out of an insured person's business property or business pursuits, investment activity or any activity intended to realize a profit for either an insured person or others.   However, this exclusion does not apply to:  (a) Volunteer work for an organized charitable, religious or community group;  (b) Incidental business activity;  (c) Limited residence Premises Business Liability coverage;  or (d) Residences held for rentals which are listed on the Declarations Page.” ³

The evidence offered by the defendants to support summary judgment on the issue of the business pursuits exception is the testimony of Thomas Berardino stating that (1) the percentage of time he drove the vehicle to and from work in comparison to personal use was either “50/50 or 60/40” and (2) Saugatuck paid for the gas on the Mercedes.   The defendants conclude that this indisputably demonstrates that the plaintiff was the owner of a work motor vehicle used at least 40% of the time for business purposes.

Thomas Berardino stated in his deposition that the car was used to drive to and from work around 40% to 50% of the time it was in use.   He also stated that the majority of the vehicle's use was personal.   The defendant offers no authority for the proposition that using a vehicle for commutation purposes constitutes a business use under Aurigemma.   Specifically, the plaintiff offers no evidence indicating a profit motive behind Thomas Berardino's use of the car to drive to and from work.   The plaintiffs do argue that Saugatuck paid for the vehicle's gas.   However, the defendants have not demonstrated that merely obtaining reimbursement of commutation expenses from an employer is sufficient evidence of either a profit motive or a business purpose.   Moreover, the use described by Thomas Berardino at the time of the accident, driving to shop for a new vehicle for his wife, clearly was not a business purpose.   The court denies summary judgment on the third ground advanced by the defendants.

PROFESSIONAL SERVICES EXCLUSION

Finally, defendant AIU claims that it is entitled to summary judgment on the basis of the professional services exclusion set forth in its policy.   Although the standard with respect to a policy's professional services exclusion is less explicitly stated under Connecticut law than the standard applicable to a business pursuits exclusion, the requirement of a fact-based inquiry is similar.

In Truck Ins. Exchange v. Buinauskas, Superior Court, judicial district of Litchfield, Docket No. CV 11 6004847S (January 6, 2012, Pickard, J.) [53 Conn. L. Rptr. 287], the plaintiff, Truck Insurance Exchange, sought a declaratory judgment that it had no duty to defend and indemnify the defendant, Brian Lambert, based on the professional services exclusion in his homeowner's insurance policy.   The suit in the aforementioned case arose out of another suit between the two defendants, Lambert and Keith Buinauskas, a state trooper.   Buinauskas responded to a call at Lambert's home.   When Lambert resisted arrest, Buinauskas and his partner tried to physically take Lambert into custody.   As a result, Buinauskas sustained an injury to his thumb and forearm.   The plaintiff argued that the professional services provision in the policy excludes Lambert from coverage because (1) the plain language of the exclusion makes it applicable to both the insured and the injured party and (2) the exclusion applies if the injury arises out of the rendering of or failure to render professional services by either the insured or the injured party.

With respect to the applicability of the professional services exclusion, the court held that “acceptance of the plaintiff's position would lead to absurd results which no one would expect.   For example, a homeowner would have no coverage for bodily injury sustained by plumbers, electricians, lawyers, doctors or any other professional called to the home to render services.   ‘[T]he determinative question [in interpreting an insurance policy] is the intent of the parties, that is, what coverage the insured expected to receive and what the insurer was to provide, as disclosed by the provisions of the policy.’  National Grange Mutual Ins. Co. v. Santaniello, 290 Conn. 81, 88 (2009).   It seems obvious to the court that neither the plaintiff nor Lambert or any other insured would have expected that an ordinary homeowners insurance policy would not provide coverage for injuries to professionals who come to the home to provide services.”  Id.

In the present case, the AIU policy states that it does not provide coverage for liability “[a]rising out of an insured person performing or failure to perform professional services, or for professional services for which any insured person is legally responsible or licensed.”   AIU argues that both the fact that Thomas Berardino drove the vehicle for work and that Saugatuck paid for the vehicle's gas is determinative of the performance of a professional service.   The defendant do not explain either what professional services Berardino was performing or who he was performing them for.

Accepting the defendants' argument would lead to an unreasonable result.   The AIU policy declaration page lists the plaintiffs' other two cars as covered automobiles.   Acceptance of AIU's position here would lead to exclusion of coverage for either of the plaintiffs' personal vehicles if used for any work-related purpose (i.e. to drive the plaintiff to and from work).   Such exclusions are clearly contrary to the reasonable expectations of consumers purchasing motor vehicle coverage and to the narrow language of the professional services exclusion.   The court denies summary judgment on the fourth ground advanced by the defendants.

CONCLUSION

For the foregoing reasons, the court denies the defendants' motion for summary judgment with respect to the Second, Third, Fourth and Fifth Counts of the plaintiffs' amended complaint.

David R. Tobin, J.

FOOTNOTES

FN1. The AIG policy's declarations page states that the uninsured/underinsured motorist coverage has conversion coverage.   Within the AIG policy, section III under “Part C—Uninsured Motorists Coverage” states that the policy's definition of “underinsured motor vehicle” changes when the “[d]eclarations indicate that Underinsured Motorists Conversion Coverage applies.”   In particular, the definition of “underinsured motor vehicle” is given a new definition:  “ ‘Underinsured motor vehicle’ means a land motor vehicle ․ for which the sum of all payments received by or on behalf of the ‘insured,’ from or on behalf of any persons or organizations who may be legally responsible, is less than the fair, just and reasonable damages of the ‘insured.’ “.  FN1. The AIG policy's declarations page states that the uninsured/underinsured motorist coverage has conversion coverage.   Within the AIG policy, section III under “Part C—Uninsured Motorists Coverage” states that the policy's definition of “underinsured motor vehicle” changes when the “[d]eclarations indicate that Underinsured Motorists Conversion Coverage applies.”   In particular, the definition of “underinsured motor vehicle” is given a new definition:  “ ‘Underinsured motor vehicle’ means a land motor vehicle ․ for which the sum of all payments received by or on behalf of the ‘insured,’ from or on behalf of any persons or organizations who may be legally responsible, is less than the fair, just and reasonable damages of the ‘insured.’ “

FN2. “ ‘Stacking’ refers to the ability of the insured, when covered by more than one insurance policy, to obtain benefits from a second policy on the same claim when recovery from the first policy alone would be inadequate.”  Nationwide Ins. Co. v. Gode, 187 Conn. 386, 388 n. 2 (1982)..  FN2. “ ‘Stacking’ refers to the ability of the insured, when covered by more than one insurance policy, to obtain benefits from a second policy on the same claim when recovery from the first policy alone would be inadequate.”  Nationwide Ins. Co. v. Gode, 187 Conn. 386, 388 n. 2 (1982).

FN3. The policy defines both “business” and “incidental business.”   “Business means a part-time or full-time trade, occupation or profession, including farming or ranching, other than incidental business.”   “Incidental Business means a business activity that does not produce gross revenues in excess of $10,000 in any year, has no employees subject to workers' compensation or other similar disability laws, and conforms to federal, state and local laws.   Incidental business includes the business of farming provide that it does not involve employment of others for more than 1,250 hours of farm work during the Policy Period, and does not produce more than $25,000 in gross annual revenues from the raising or care of animals or agriculture.   A qualifying organization is not considered an incidental business.”.  FN3. The policy defines both “business” and “incidental business.”   “Business means a part-time or full-time trade, occupation or profession, including farming or ranching, other than incidental business.”   “Incidental Business means a business activity that does not produce gross revenues in excess of $10,000 in any year, has no employees subject to workers' compensation or other similar disability laws, and conforms to federal, state and local laws.   Incidental business includes the business of farming provide that it does not involve employment of others for more than 1,250 hours of farm work during the Policy Period, and does not produce more than $25,000 in gross annual revenues from the raising or care of animals or agriculture.   A qualifying organization is not considered an incidental business.”

Tobin, David R., J.