329 Conn. 665
Conn.2018Background
- Plaintiffs Sandra and Patrick Tannone were injured by a vehicle that was a rental car owned by Enterprise; the driver/lessee had only minimum liability limits and plaintiffs allege their damages exceed that recovery.
- Plaintiffs' insurer (Amica) policies included statutorily mandated underinsured motorist (UIM) coverage but also contained an exclusion for vehicles “owned by a self-insurer.” Enterprise had been designated a self-insurer by the Connecticut Insurance Commissioner.
- Plaintiffs sought UIM benefits from Amica after exhausting the lessee’s policy limits; Amica denied coverage relying on the self-insurer exclusion authorized by Conn. Agencies Regs. § 38a-334-6(c)(2)(B).
- The trial court granted summary judgment for Amica; plaintiffs appealed and the case was transferred to the Connecticut Supreme Court for plenary review of statutory and regulatory interpretation.
- Since Orkney v. Hanover Ins. Co., Congress enacted the Graves Amendment (49 U.S.C. § 30106), which bars vicarious liability of rental car companies for harm caused by their lessees, eliminating the practical remedy against a rental company that was central to Orkney’s reasoning.
- The Supreme Court considered whether the regulation-authorized self-insurer exclusion remains valid as applied to rental car companies post-Graves Amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a policy UIM exclusion for vehicles “owned by a self-insurer” is valid as applied to a rental car company designated a self-insurer but immune under the Graves Amendment | The exclusion is invalid as applied because Graves Amendment precludes recovery from the rental company, leaving insureds without a remedy contrary to the public policy requiring UIM coverage | The exclusion is authorized by state regulation § 38a-334-6(c)(2)(B) and upheld in Orkney; legislative/regulatory acquiescence supports continuing validity | The exclusion is invalid as applied to rental car companies immune under the Graves Amendment; Enterprise is not a self-insurer for vicarious-liability risk and plaintiffs’ UIM claim may proceed |
| Whether Orkney still controls after Graves Amendment | Orkney’s rationale no longer applies because the availability of recovery from the self-insurer (central to Orkney) has been eliminated by federal law | Orkney remains controlling and the regulation should be enforced | Orkney is not overruled generally but its rationale is limited; it does not control where federal law removes any remedy against the self-insurer |
| Whether a rental company can be considered a self-insurer as to lessee negligence after Graves Amendment | A rental company cannot be a self-insurer for risks from lessee negligence because federal immunity removes the underlying risk and obligation to pay judgments | Designation by the commissioner and statutory self-insurer rules mean the exclusion applies regardless of Graves Amendment | Court holds a rental company is not a self-insurer for vicarious-liability risks barred by Graves Amendment; treating it as such would be nonsensical and conflict with public policy |
| Effect of legislative inaction post-Graves Amendment on regulation’s validity | Legislative silence does not validate a regulation that now conflicts with statutory public policy requiring UIM coverage | Legislature and commissioner had opportunity to amend but did not; that supports continuing the exclusion | Legislative inaction is not dispositive; the court will not infer tacit approval where federal law and state public policy conflict |
Key Cases Cited
- Orkney v. Hanover Ins. Co., 248 Conn. 195 (upheld self-insurer exclusion in regulatory context prior to Graves Amendment)
- Martin v. Powers, 505 S.W.3d 512 (Tenn. 2016) (rental company not a self-insurer for lessee vicarious-liability risk after Graves Amendment)
- Giglio v. American Economy Ins. Co., 278 Conn. 794 (regulations presumed valid but invalid if inconsistent with authorizing statute)
- Gormbard v. Zurich Ins. Co., 279 Conn. 808 (public policy strongly favors uninsured/underinsured motorist coverage)
- Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371 (historical Connecticut policy favoring uninsured motorist coverage)
- Rodriguez v. Testa, 296 Conn. 1 (recognizing Graves Amendment preemption of state vicarious-liability statute)