Terry Davis v. Ace American Ins. Co. (2013)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (# 130)

Preliminary Statement

This action to recover underinsured motorist benefits arises out of an on-the-job car accident in which the plaintiff was injured due to the negligence of a third party.   He settled his claims against the third-party tortfeasor for $20,000.00, the limit under the tortfeasor's policy.   Thereafter, the plaintiff commenced this action against his employer's underinsured motorist carrier, Ace American Insurance, Co. (“Ace”).  In a case consolidated with this action, the plaintiff has claims against his personal underinsured motorist carrier (“SafeCo”).   The defendant filed a motion for summary judgment asking the court to render judgment for the plaintiff in the amount of $568.98, the amount of the policy remaining after credits and offsets applicable under the policy are deducted from the policy limit of $40,000.00.   For the reasons set forth below, the motion is GRANTED.¹

Standard of Review

A party seeking summary judgment has the very heavy burden of demonstrating the absence of any genuine issue of material facts which, under applicable principles of law, entitle him to judgment as a matter of law.  PB § 17–44;  Appleton v. Board of Education, 254 Conn. 205 (2000).

Facts

On December 4, 2009, the plaintiff was involved in an automobile accident while making deliveries for his employer Advanced Auto Parts.   The accident was the fault of third-party tortfeasor Dawn Greatorex.   The plaintiff was injured and thereafter made a claim for workers' compensation benefits which he received.   The plaintiff settled his personal injury claim with Ms. Greatorex for the limit of her policy, $20,000.00.   From that settlement, he repaid the workers' compensation carrier $11,774.98.   Thereafter, he commenced this action against Ace, his employer's underinsured motorist coverage carrier.   He also commenced a companion action, consolidated with this case, against Safeco Insurance Company of Illinois, his personal underinsured motorist coverage carrier.²  The liability limit on the Safeco policy is $500,000.00.   Ace is the primary carrier.   SafeCo is the excess carrier.

As indicated, the Ace policy at issue has a coverage limit of $40,000.00.   It also provides that the “limit of insurance shall be reduced by:  (a) All sums paid or payable under any workers' compensation ․ law.”

To date, the plaintiff has been paid a total of $51,206.00 in workers' compensation benefits for either medical bills or indemnity payments.   When the plaintiff settled with the tortfeasor, he paid back a portion of the compensation payments received in the amount of $11,774.98.   Therefore, the total amount of the workers' compensation payments paid to the plaintiff totals $39,431.02.   A policy limit of $40,000.00 renders $568.98 available under the Ace policy.   Plaintiff does not dispute these facts.   Although Ace did not articulate, at first, the basis upon which the judgment should enter against it, at oral argument, Ace stipulated to the value of plaintiff's non-economic damages as being at least $568.98 ³ the amount remaining under the policy.   Plaintiff agreed with the stipulation.

Notwithstanding the above, the plaintiff objected to the entry of summary judgment because there remains a question as to whether SafeCo or Ace should have the benefit of the workers' compensation set offs and credits.   He points this court to an arguable split of authority on the issue.   If Ace is not to receive the full credit for the workers' compensation payments, the coverage limit on the Ace policy would not be reduced to $568.98.

Although SafeCo was present at oral argument and conceded that it has an interest in the outcome of this issue, and although SafeCo was given an opportunity to file a memorandum, no such filing occurred.⁴  Indeed, the SafeCo policy has not been produced to Ace or the plaintiff and has not been provided to the court.   Whether its provisions even include a claim for the workers' compensation credits is unknown.   However, insofar as the court finds that Safeco would not be entitled to any of the workers' compensation credits, even assuming it contained a provision similar to that contained in the Ace policy, the failure to provide the policy is not a basis upon which the court renders its decision.

Although not directly on point, in Aetna Casualty and Surety Co. v. CNA Insurance Co., 221 Conn. 779 (1992), the Supreme Court considered which of two underinsured carriers held the primary policy and which held the excess policy.   An arbitration between the parties had resulted in one carrier being deemed primary and therefore receiving the full benefit of the tortfeasor settlement credit.   The trial court vacated the arbitration award, determined that both policies were “primary” and gave the full amount of the set off to both, before ordering a pro-rata contribution to pay the plaintiff's damages.   Id. at 783, n.2. The Supreme Court reversed and remanded with instruction to confirm the arbitration award.   The Court did not decide the issue presented here but did confirm an arbitration award in which the primary carrier received the entire credit for the tortfeasor settlement.

Thereafter, in Loika v. Aetna Casualty and Surety Co., 44 Conn.Sup. 59 (1994) [12 Conn. L. Rptr. 8], the trial court held that the primary policy providing underinsured motorist coverage was entitled to limit coverage by the full amount of the payments received under other liability policy provisions.   Id. at 70.   The court further held that the excess or secondary insurer was not entitled to any credit for these payments.  Id. In Loika, the plaintiff's decedent was killed in a one-car accident.   The owner of the vehicle in which she was a passenger had a $20,000 limit for liability which was paid to the plaintiff.   The driver of the vehicle (a non-owner) had a $100,000 liability policy which was paid to the plaintiff.   Thereafter, the plaintiff brought claims against the driver's underinsured policy (held by Allstate) as well as the decedent's underinsured policy (held by Aetna).   Id. at 60–61.   The parties agreed that IF the Allstate policy applied, which was an issue in dispute, the Allstate policy was primary and the Aetna policy was excess or secondary.  Id. at 61.

The court first determined that the Allstate policy applied to the plaintiff's claim.  Id. at 66–67.   Having done so, it then turned to the question of which insurer would receive credit for the $120,000.00 paid to the plaintiff by the two liability policies.   The court first rejected Aetna's claim that both insurers should receive the credit.

The chief concern in reconciling disputes as to amount and priority of payments between insurers is the avoidance of compromising coverage for the insured ․ If policy provisions allowing deductions of uninsured motorist limits compromises the insured's coverage, then such provisions are not enforceable ․ It seems quite illogical in light of this underlying philosophy to allow to the underinsurance carriers a credit of $240,000 for bodily injury liability payments when only $120,000 was actually paid to the plaintiffs.

Id. at 69.   The court then took up the issue of allocation of credits between the two insurers.

It is generally recognized that when one policy is primary and the one is excess, as here, “[a] primary carrier has the first claim to certain available reductions, which could completely offset the primary uninsured motorist carrier's obligation to pay benefits.”   P. Morello & J. Donovan, Handbook of Connecticut Uninsured and Underinsured Motorist Law (1993) p. 40.   This is only fair since the secondary insurer is liable only for the amount the claimant is entitled to receive over the maximum coverage of the primary insurer.

Id. at 70.   The court thus determined that the Allstate policy, as the primary insurer, should receive the full amount of the $120,000 credit and that Aetna would receive no credit.  “By fashioning this result Aetna is treated as an excess carrier, which is exactly what it bargained for.   Its liability attaches only to the extent of the excess loss above the primary insurer's uninsured coverage.   Some other pro rata division of deductions would be inconsistent with its role.”  Id. The decision of the trial court in Loika, was affirmed per curiam and adopted as the decision of the Appellate Court.  Loika v. Aetna Casualty & Surety Co., 39 Conn.App. 714, cert. denied, 236 Conn. 902 (1996).

While the holding in Loika addressed the allocation of other liability payments rather than workers' compensation benefits, this court sees no basis, as a matter of policy, for this to be a distinction with a difference.   Given the appellate precedent cited above, it appears that when and if the issue presented here is put to our appellate courts, the outcome will mirror those reached in the Aetna and Loika decisions.   The court is also persuaded by the reasoning of Fuentes v. City of New Haven, judicial district of New Haven, Dkt. No. CV 030475791 (December 8, 2005, Zoarski, J.T.R.) [40 Conn. L. Rptr. 443], 2005 WL 3663280 (Conn.Super.), which, on very similar facts, reaches the same conclusion after a thorough analysis of existing case law on the issue.

As such, Ace is entitled to the full amount of the workers' compensation credits.   As indicated above, this leaves only $568.98 available for coverage, an amount which the plaintiff and defendant agree is inadequate to compensate the plaintiff for his noneconomic damages.   Judgment will enter in favor of the plaintiff in the amount of $568.98.

SO ORDERED

Kari A. Dooley, J.

FOOTNOTES

FN1. This is the second motion for summary judgment filed by Ace. The first motion was granted [54 Conn. L. Rptr. 561] but the court subsequently vacated the decision in its entirety following plaintiff's motion to reargue and for reconsideration.   The court had misapprehended the extent to which the offsets and credits available under the policy had been paid by Ace. At this juncture, any confusion or dispute as to which offsets and credits have been paid are resolved and agreed upon by plaintiff and Ace..  FN1. This is the second motion for summary judgment filed by Ace. The first motion was granted [54 Conn. L. Rptr. 561] but the court subsequently vacated the decision in its entirety following plaintiff's motion to reargue and for reconsideration.   The court had misapprehended the extent to which the offsets and credits available under the policy had been paid by Ace. At this juncture, any confusion or dispute as to which offsets and credits have been paid are resolved and agreed upon by plaintiff and Ace.

FN2. That case is captioned Terry Davis v. Safeco Ins. Co. of Illinois, and bears docket number CV 11–6010707..  FN2. That case is captioned Terry Davis v. Safeco Ins. Co. of Illinois, and bears docket number CV 11–6010707.

FN3. Ace also indicated that additional medical bills incurred as a result of the accident might be forthcoming..  FN3. Ace also indicated that additional medical bills incurred as a result of the accident might be forthcoming.

FN4. When Ace requested permission of the court (Taylor, J.) to file the motion for summary judgment and this court agreed to hear the motion, it was with the understanding that all parties to both actions who wished to be heard on this issue would be provided that opportunity.   Counsel for Ace confirmed that this understanding was communicated to all parties at a status conference held with the court (Taylor, J.)..  FN4. When Ace requested permission of the court (Taylor, J.) to file the motion for summary judgment and this court agreed to hear the motion, it was with the understanding that all parties to both actions who wished to be heard on this issue would be provided that opportunity.   Counsel for Ace confirmed that this understanding was communicated to all parties at a status conference held with the court (Taylor, J.).

Dooley, Kari A., J.