Connecticut Cases March 19, 2019: A & R Enterprises, LLC v. Sentinel Insurance Company, Ltd.

Case Description

UNPUBLISHED OPINION

OPINION

ROBERT B. SHAPIRO, JUDGE TRIAL REFEREE

On September 20, 2018, evidence was presented to the court at a bench trial in this insurance coverage matter. Thereafter, pursuant to an agreed briefing schedule, the parties submitted post-trial memoranda, including replies, which were filed on January 8, 2019. After consideration of the evidence and arguments, the court issues this memorandum of decision.

I

Background

The plaintiff, A & R Enterprises, LLC, commenced this action for breach of an insurance policy against the defendant, Sentinel Insurance Company, Ltd., in June 2016, seeking damages in the amount of $ 3, 278.58 for repairs made to a motor vehicle owned by Creative Electric, LLC (Creative Electric) in June 2015. The plaintiff is the assignee of Creative Electric.

The plaintiff alleges that, on May 7, 2015, Creative Electric’s vehicle was damaged in a one-vehicle accident and the vehicle was covered by a commercial automobile insurance policy issued by the defendant. Creative Electric entered into a contract with the plaintiff to complete all reasonable and necessary repairs. The plaintiff alleges that it completed all reasonable and necessary repairs for a total cost of $ 9, 681.84 of which only $ 6, 403.26 was paid by the defendant. The plaintiff claims that a balance of $ 3, 278.58 remains due and owing from the defendant. It also alleges that the defendant’s failure to pay for the repairs is an attempt at "steering" its insured to an auto body shop other than the plaintiff’s by placing financial pressure on the insured to choose another repair facility.

In response (# 167), the defendant admits that it issued an auto insurance policy to Creative Electric, and that the policy covered the damaged vehicle. The defendant generally denies all other allegations or leaves the plaintiff to its proof. In addition, the defendant set forth various special defenses, including, in its fourth special defense, that the plaintiff’s claim is barred by applicable policy language providing that no one may bring legal action against the defendant until there has been full compliance with the terms thereof, see Section IV.A.3.a., and there has not been full compliance with all such terms, in that consent was not obtained before the obligations and expenses claimed by the plaintiff were incurred.

The defendant relies on Section IV.A.2.b(1), which provides, under Business Auto Conditions, that the defendant "has no duty to provide coverage under this policy unless there has been full compliance with the following duties," including that an insured "must ... [a]ssume no obligation, make no payment or incur no expense without our consent, except at the ‘insured’s’ own cost." See insurance policy, plaintiff’s Exhibit 3 (policy), page 8 of 12.

In addition, the defendant alleges that the policy provides that the most it will pay is "the cost of repairing or replacing the damaged ... property with other property of like kind and quality," pursuant to Section III, C.1.a(2); and that it "will not pay for the amount of betterment, if a repair or replacement results in better than like kind or quality," pursuant to Section III.C.3. See # 167, first and second special defenses.

Other special defenses were stricken by the court (Elgo, J.). See memorandum of decision, dated June 13, 2017 (# 123). The plaintiff replied to the defendant’s special defenses (# 150), and the defendant answered the reply (# 155).

Additional references to the factual background are set forth below.

II

Discussion

In a case tried to the court, "[t]he ... judge, as the trier of facts, is the sole arbiter of the credibility of witnesses and the weight to be given to their testimony." (Internal quotation marks omitted.) Taylor v. Commissioner of Correction, 324 Conn. 631, 637, 153 A.3d 1264 (2017). "[I]t is well established that it is the exclusive province of the trier of fact to make determination of credibility, crediting some, all, or none of a given witness’ testimony." (Internal quotation marks omitted.) Gonzalez v. State Elections Enforcement Commission, 145 Conn.App. 458, 475 77 A.3d 790, cert. denied, 310 Conn. 954, 81 A.3d 1181 (2013).

"Under our law, the terms of an insurance policy are to be construed according to the general rules of contract construction ... The determinative question 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 ... If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning ... However, [w]hen the words of an insurance contract are, without violence, susceptible of two [equally reasonable] interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted ... [T]his rule of construction favorable to the insured extends to exclusion clauses ... Put differently, [a]lthough policy exclusions are strictly construed in favor of the insured ... the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous ... The interpretation of an insurance policy is based on the intent of the parties, that is, the coverage that the insured expected to receive coupled with the coverage that the insurer expected to provide, as expressed by the language of the entire policy ... The words of the policy are given their natural and ordinary meaning, and any ambiguity is resolved in favor of the insured ... The court must conclude that the language should be construed in favor of the insured unless it has a high degree of certainty that the policy language clearly and unambiguously excludes the claim." (Citations omitted; internal quotation marks omitted.) Liberty Mut. Ins. Co. v. Lone Star Indus., Inc., 290 Conn. 767, 795-96, 967 A.2d 1 (2009).

"Although the general rule is that a defendant who pleads a special defense bears the burden on that issue, [the Supreme Court has] recognized an exception in the context of a special defense based on a claim that an insured has failed to comply with the terms of the insurance policy ... When an insured brings an action against an insurer for breach of the insurance contract, the insured bears the burden of proving that it complied with the terms of the contract, including the conditions ... Ordinarily, however, unless a defendant insurer affirmatively places such compliance at issue, it is presumed ... When a defendant pleads failure to comply with the terms of an insurance policy as a special defense, the usual presumption of compliance is extinguished, and the insured carries the burden of proving compliance with the insurance contract, including the conditions precedent to coverage." (Citations omitted; internal quotation marks omitted.) Nat’l Pub. Co. v. Hartford Fire Ins. Co., 287 Conn. 664, 673-74, 949 A.2d 1203 (2008). Here, as stated above, the defendant has pleaded a special defense alleging failure to comply with the terms of the policy.

"Whether a party to a contract substantially performs its obligations thereunder is ordinarily a question of fact to be determined by the fact finder." Pack 2000, Inc. v. Cushman, 311 Conn. 662, 685, 89 A.3d 869 (2014). As the assignee of Creative Electric, the plaintiff stand in its shoes. "It is hornbook law ... that an assignee ‘stands in the shoes of the assignor.’ ... An assignee has no greater rights or immunities than the assignor would have had if there had been no assignment." (Citations omitted; internal quotation marks omitted.) Shoreline Communications, Inc. v. Norwich Taxi, LLC, 70 Conn.App. 60, 72, 797 A.2d 1165 (2002).

The defendant contends that the plaintiff has not demonstrated that Creative Electric, the insured, obtained the defendant’s consent before incurring expenses associated with repairing the vehicle in excess of the amounts to which its appraiser, Harry Bassilaskis, agreed.

The court finds the following facts and credits the following evidence, except as noted. The alleged loss occurred on May 7, 2015. Bassilaskis went to the plaintiff’s repair facility in Torrington, Connecticut on June 24, 2015, where he met with the insured and inspected the vehicle. He discussed the scope of repairs with the plaintiff’s representative, Randall Serkey. While they agreed on the scope of damage, no agreement was reached on the total cost of repairs Bassilaskis provided the defendant’s estimate, and explained to the insured and to Serkey that the defendant was in a non-agreed position with the insured’s body shop of choice and that it was solely the insured’s choice as to where to have the vehicle repaired. He advised that a letter would be issued.

By letter issued the next day, June 25, 2015 (see defendant’s Exhibit D), the defendant advised the insured that it had been unable to reach an agreed price with the plaintiff, the "repairer of your choice." The defendant offered the sum of $ 4, 981.42 plus the insured’s deductible of $ 500.00 as sufficient to repair the vehicle "at a repair shop located reasonably convenient to you." Its claim representative asked the insured to contact her to discuss how it wished to proceed. See defendant’s Exhibit D.

While the plaintiff argues that this letter was drafted and sent after the insured had signed a repair contract with the plaintiff (see plaintiff’s Exhibit 4), evidence of agreement between the plaintiff and the insured does not evidence consent by the defendant. The defendant’s position, that it did not agree with the plaintiff’s price, was clearly stated. The plaintiff’s arguments that the insured had a reasonable expectation that the defendant would cover the cost of the repairs which the insured incurred, and that is reasonable that an insured would believe that he was acting with the defendant’s knowledge and consent, are unfounded. The insured did not have the requisite consent from the defendant.

The plaintiff also argues that of Section IV.A.2.b(1) of the policy, which provides that an insured "must ... [a]ssume no obligation, make no payment or incur no expense without our consent, except at the ‘insured’s’ own cost," does not require that an insured obtain the defendant’s consent and is ambiguous.

In support, the plaintiff argues that this provision is designed only to allow the insured to be notified of a claim, not to limit the ability of the insured to rectify damage to the insured property. The plain language of the provision is contrary to the plaintiff’s argument. The two cases cited by the plaintiff also do not support this argument. See plaintiff’s post-trial brief (# 175), p. 13. In First Chicago Ins. Co. v. Molda, 2015 IL App. (1st) 140548, 36 N.E.3d 400 (Appellate Court of Illinois, June 26, 2015), the court discussed subsection "a" of a similar provision in an insurance policy, concerning the insured’s obligation to "give [the insurer] or our authorized representative prompt notice of the ‘accident’ or ‘loss, ’ not subsection "b," which set forth a separate requirement, as the policy here also provides, "Additionally, you and any other involved ‘insured’ must: (1) Assume no obligation, make no payment or incur no expense without our consent, except at the ‘insured’s’ own cost." Id., 404-05. (Emphasis added.) The court discussed "Whether Notice Was Timely," id., 418, not whether there was consent.

Similarly unavailing to the plaintiff’s argument is the other case cited, Direnzo Towing & Recovery, Inc. v. Owner-Operator Indep. Drivers Ass’n, Inc., No. 4:16-CV-10073-TSH, 2018 WL 1940310 (D. Mass. Mar. 9, 2018). There, on February 28, 2014, a tractor-trailer owned by Kings Trucking Corp. (Kings) crashed while travelling on Interstate 290 in Worcester, Massachusetts, and the police requested Direnzo to come to the scene and provide towing, recovery, storage and remediation services. See id. , *3. Direnzo invoiced Kings for its services and Kings sought recovery from its insurer.

The Direnzo court concluded that the insurance policy, including a similar incur no expense "without [the insurer’s] prior written consent" provision, did not bar recovery since there the police had summoned Direnzo to the accident scene and there was no agreement between Kings and Direnzo. See id. , *10. Thus, the Direnzo court found that Direnzo’s damages did not arise from a contract or agreement, not that the "consent" requirement provided in the insurance policy only pertained to notice. This decision provides no support for the plaintiff’s argument here.

In contrast, the same consent provision at issue here has been enforced in New York. See R. Ferraro Collision, Inc. v. Universal Underwriters Ins. Co., 47 A.D.3d 696, 850 N.Y.S.2d 491 (2008) (payment by an insured automobile body repair shop’s president of a debt claimed by the owner of a vehicle stolen from the repair shop’s garage, which payment was made without the insurer’s consent, breached a provision of the insurance policy concerning the insured’s "duties after loss," and thus, the insurer was not obligated to indemnify the insured for the value of the vehicle). See Connecticut Ins. Guar. Ass’n v. Drown, 314 Conn. 161, 193 n.15, 101 A.3d 200 (2014) (Connecticut court may look to sister’s state court’s interpretation of insurance policy with identical language).

The quoted language of Section IV.A.2.b(1) of the policy concerning the requirement of consent is clear and unambiguous. Viewed as a whole, the policy does not require the defendant to pay whatever the insured’s selected repair shop charges the insured for the cost of repair.

The plaintiff also argues that if this section is read to require consent, then Section IV.A.2.b(1) is violated by Section IV.A.2.c(2) of the policy. Section IV.A.2.c(2) provides that the insured is required to "[t]ake all reasonable steps to protect the covered ‘auto’ from further damage. Also keep a record of your expenses for consideration in the settlement of the claim." While the plaintiff asserts that this section makes the insured responsible to take steps which cost money without the insurer’s consent, nothing therein is inconsistent with the provision requiring consent.

Also unavailing here is the plaintiff’s reliance on Auto Glass Express, Inc. v. Hanover Ins. Co., 293 Conn. 218, 233, 975 A.2d 1266 (2009). There, the court did not interpret a consent clause; rather the case was remanded to the trial court to determine whether the defendant breached the terms of the insurance policies by failing to pay the full amount of the invoices. See id. Similarly, in Oxford Auto., LLC v. Allstate Fire & Cas. Ins. Co., Superior Court, judicial district of Ansonia-Milford, Docket No. CV14 6019323 (June 6, 2018, Moran, J.T.R.), also cited by the plaintiff, a consent provision was not at issue.

In addition, there is no evidence of violation of Connecticut law concerning anti-steering. General Statutes § 38a-354(a) provides that "No automobile physical damage appraiser shall require that appraisals or repairs should or should not be made in a specified facility or repair shop or shops." See General Statutes § 38a-354(b), which provides, in relevant part, "No insurance company doing business in this state, or agent or adjuster for such company shall (1) require any insured to use a specific person for the provision of automobile physical damage repairs ... or (2) state that choosing a facility other than a motor vehicle repair shop participating in a motor vehicle repair program established by such company will result in delays in repairing the motor vehicle or a lack of guarantee for repair work."

Bassilakis stated that it was the insured’s right to choose the repair shop where the damage would be repaired. See also plaintiff’s Exhibit 1, page 4 of 4 (appraisal), which clearly stated this.

Inexplicably, in support of its steering argument, in its post-trial brief (# 175), pages 11-12, the plaintiff miscited M.V.B. Collision, Inc. v. Allstate Insurance Company, No. 07 CV 0187 (JFB)(JO), 2007 WL 2288046 (E.D.N.Y. Aug. 8, 2007), with Sentinel Insurance Co. incorrectly being listed as the named defendant. Review of the decision shows that Allstate Insurance Company was the named defendant, not the defendant here.

As stated above, the defendant has pleaded a special defense alleging failure to comply with the terms of the policy. The insured failed to obtain the insurer’s consent to the amounts sought for repairs, which was a condition precedent to coverage. The court finds that the insured failed to comply with the terms of the policy and finds in favor of the defendant as to subparagraph (a) of its fourth special defense. See Nat’l Pub. Co. v. Hartford Fire Ins. Co., supra , 287 Conn. 673-74.

Under these circumstances, the court need not consider the parties’ other arguments, such as concerning labor rates and other special defenses.

CONCLUSION

For the reasons stated above, the court finds in favor of the defendant, Sentinel Insurance Company, Ltd. Judgment may enter in favor of the defendant.