Authored by: Joseph Ciollo
U.S. District Court – Property Loss – Subrogation Against Tenants
In AmGuard Insurance Company v. Ellis, the plaintiff insurer filed a subrogation action after making payments to its insureds in connection with a fire loss. The insurer alleged that the defendants left their minor children unsupervised in the subject property and in possession of a lighter, which the children used to ignite combustible materials in the subject property, causing the fire to spread throughout. The defendants moved to dismiss the complaint on two grounds. First, the defendants argued that the Court lacked subject matter jurisdiction due to a lack of diversity of citizenship. The Court disagreed with the defendants and held that the citizenship of the insurer as the party in interest, and not the citizenship of the insureds, was relevant to the diversity of citizenship analysis. Second, the defendants argued that the insurer’s subrogation claim violates Connecticut law providing that in the context between a landlord’s insurer against a tenant, the landlord has no right of subrogation in absence of a specific agreement in the contract. The Connecticut Supreme Court has previously concluded that an express agreement that the tenant will bear responsibility for his negligence and needs to obtain his own insurance to cover that responsibility is the kind of “specific agreement” that will overcome the general presumption against subrogation. In the present case, the only insurance obligation imposed upon the defendant tenants was to obtain insurance to protect only themselves in the event of a catastrophic loss of personal property and the contents of an apartment. The applicable lease did not put the tenants on notice of an insurer’s right of subrogation or for the securement of insurance coverage beyond a loss in the tenant’s apartment. Further, the lease contained no provision requiring the securing of insurance coverage for the mutual benefit of the landlord and tenants. The Court disagreed with the insurer’s reliance on a lease provision containing a general prohibition against damage in the apartment, holding that it did not rise to the level of a clearly delineated risk allocation. The lease also did not provide notice that the defendants would be responsible for a fire causing damage beyond their apartment. Based on the Court’s analysis of the anti-subrogation doctrine, the motion to dismiss was granted.
Superior Court – Standing Of Third-Party Claimant – Declaratory Judgment
In Lentek et al v. Integris Insurance Company et al, the plaintiffs filed a medical malpractice action against a medical group and physician who were insured by Integris Insurance Company (“Integris”). The plaintiffs filed an Offer of Compromise to settle the underlying action for $2 million, based on the plaintiffs’ understanding of the Integris policy that the insured defendants were insured separately for $1 million each under the policy. Counsel for the insured defendants in the underlying action, however, took the position that the defendants are not separately insured under the policy. The Offer of Compromise was not accepted by the insured. The plaintiffs sought a declaration concerning the rights and obligations under the Integris policy, specifically regarding the liability coverage available to the insured defendants for medical incidents as alleged in the underlying action. The defendants moved to dismiss the present action, contending that the Court lacked subject matter jurisdiction. The defendants argued that the plaintiffs were improperly circumventing the Connecticut direct action statute, which grants an injured person, upon recovery of a final judgment against a tortfeasor, a right of action against the tortfeasor’s insurer. The defendants asserted that, because judgment had not yet entered in the underlying action, the plaintiffs lacked standing. The defendants further asserted that the plaintiffs’ declaratory judgment action was not ripe for adjudication because it was uncertain whether the plaintiffs would prevail against the insured defendants in the underlying action. The plaintiffs denied that they were pursuing a direct action against the insurer, as they were not seeking a determination of the merits of the underlying action or an order that the defendants were obligated to defend, indemnify, or provide coverage in the underlying action. Rather, the plaintiffs contended that they were properly seeking a declaratory judgment regarding the amount of liability coverage. The plaintiffs argued that without a determination as to the applicable coverage, they would be in the dark as to whether to refile an Offer of Compromise based on the insured defendants’ interpretation of the contract regarding available coverage, or whether to keep their current Offer of Compromise on the underlying docket. The plaintiffs seeming sought guidance on whether they should file a new Offer of Compromise for $1 million, consistent with the insured defendants’ interpretation of the policy. The Court observed however, that Connecticut law only permitted the plaintiffs to refile an offer of $2 million, which was the amount of their first offer. The Court noted that the only possible effect of refiling an Offer of Compromise would be to set a later date for interest to begin running. According to the Court, if that was the injury the plaintiffs sought to avoid, then it was wholly within their own control to preserve their purported rights to prejudgment Offer of Compromise interest, by not refiling their Offer of Compromise; it did not depend on the amount of liability coverage available under the policy. The Court found that absent a colorable claim of direct injury, the plaintiffs did not establish their aggrievement, and, therefore, they lacked standing to maintain the declaratory judgment action. The motion to dismiss was granted.
Superior Court – Underinsured Motorist Coverage – Motion For Summary Judgment
In Bacon v. Amica Mutual Insurance Company, the plaintiff was injured in a motor vehicle accident and filed an action to recover Underinsured Motorist (“UIM”) benefits pursuant to his policy with Amica Mutual Insurance Company (“Amica”). The tortfeasor’s insurance policy had bodily injury liability limits of $25,000 per person/$50,000 per occurrence. The plaintiff was party to a settlement agreement with the tortfeasor’s insurance company, State Farm, in which the plaintiff settled with State Farm for the sum of $24,500. Amica moved for summary judgment on the grounds that the plaintiff did not exhaust the tortfeasor’s bodily injury policy since $500 remained unpaid. The plaintiff argued that the $500 was tendered to a third-party claimant, so it was unavailable to the plaintiff and is exhausted for purposes of the policy and the UIM statute. The Amica policy language and UIM statute shared similar requirements that a plaintiff exhaust the tortfeasor’s limits of liability and that this exhaustion occur by payment of judgments or settlements. Amica submitted an affidavit from State Farm stating that $500 had not been paid. The Count noted that the plaintiff’s argument that the State Farm policy was exhausted because $500 was being held for a potential third-party claimant was not supported by any legal analysis or citations. The plaintiff’s arguments and unsupported factual assertions could not controvert Amica’s evidence that the tortfeasor’s policy retains a balance of $500. Further, there was nothing in the UIM statute, the Amica policy language, or the relevant case law, nor did the plaintiff provided the Court with any authority, to suggest that “payment” means tendered, accounted for, or allocated, in lieu of actual payment. The motion for summary judgment was granted.
