713 A.2d 281 | Conn. Super. Ct. | 1997
The Hunt Club is a corporation doing business on property located at 645 Long Cove Road in Gales Ferry. At all times pertinent to this action, the Hunt Club was a commercial stable and its sole business was the boarding and training of horses and the teaching of horseback riding to the public.
Stanley Grab (Grab), doing business as Investment Counseling Service was the insurance agent of the Hunt Club. For several years prior to March 21, 1991, Grab structured an insurance program for the Hunt Club. The program called for a farmowner's policy, a stable liability policy, a horse van policy and a workers' compensation policy. This program was in effect for the policy period from March 21, 1991 to March 21, 1992, and, for that policy period, Grab billed to the Hunt Club separate premiums for the farmowner's policy and the stable liability policy and those separate premiums were paid to him in full by the Hunt Club.
For the policy period from March 21, 1991 to March 21, 1992, Grab purchased for the Hunt Club, through the Milford Insurance Agency, a policy of insurance issued by the defendant. The policy was described as a "farmowner's policy" and included comprehensive personal liability coverage with limits of $300,000 per occurrence and a horse exclusion endorsement form ML-20A. The horse exclusion endorsement excluded from the comprehensive personal liability coverage of the policy "any Liability for personal injury or property damage arising out of the ownership, care, boarding or use of horses, donkeys, mules or any other similar animal." *300
The premium received by the defendant for the policy which it issued was payment for a farmowner's policy with a horse exclusion endorsement and the premium did not include any payment for a stable liability policy. Approximately three specialized insurance carriers issued stable liability policies and it was the usual practice in the case of a commercial stable for the defendant to issue a farmowner's policy with a horse exclusion endorsement to the commercial stable and for one of the specialized insurance carriers to issue a stable liability policy to the commercial stable. Grab attempted to secure a stable liability policy for the Hunt Club from one of the specialized insurance carriers for the period from March 21, 1991, to March 21, 1992, but failed to do so and no stable liability policy was in effect for such period.
On February 12, 1992, the plaintiff was lawfully on the property of the Hunt Club for the purpose of transporting and helping a horseback riding student engaged in riding lessons with the Hunt Club. While walking through the barn area on the premises of the Hunt Club and while in a passageway in the barn area, a bale of hay was thrown down from the loft by a Hunt Club employee. The bale of hay hit the plaintiff on the head and caused him personal injuries.
On or about October 23, 1992, the plaintiff brought an action against the Hunt Club, which sought monetary damages for the personal injuries he sustained in the accident of February 12, 1992. The lawsuit was filed with the Superior Court for the judicial district of New London at New London and was assigned docket number CV9205252615S.
Subsequent to the accident of February 12, 1992, the Hunt Club notified the defendant of the personal injuries sustained by the plaintiff and of the lawsuit instituted by him. The defendant disclaimed coverage on the *301 grounds of the horse exclusion endorsement and reserved its rights under the policy, but retained counsel to defend the lawsuit on behalf of the Hunt Club. The counsel retained by the defendant provided a defense to the Hunt Club in the lawsuit.
On September 29, 1995, the court, Hurley, J., entered a judgment by stipulation in the plaintiff's lawsuit for the plaintiff to recover from the Hunt Club the sum of $95,000 without costs or interest.
On December 7, 1995, the Hunt Club assigned to the plaintiff all its rights, title claims and interest, legal and equitable, in and to any and all contract rights, tort claims and causes of action which it had against the defendant.
By letter dated September 22, 1980, the defendant filed with the insurance department of the state of Connecticut thirteen exceptions to AAIS farmowner's filing number FO-80-17, including number 13 to add mandatory endorsement ML-20A to farmer's comprehensive personal liability insurance. The endorsement read: "It is agreed that the insurance does not apply to bodily injury or property damage arising out of the maintenance, ownership, or use of horses."
By letter dated December 19, 1980, Francis H. Gammon (Gammon), principal examiner in the ratings division of the insurance department of the state of Connecticut (insurance department), wrote the defendant the following: "We question the far reaching effect the Horse Exclusion Endorsement, #ML-20A, might have on your policyholders. We have accepted similar forms that exclude coverage for horses owned by others, but a farmer should expect liability coverage for horses owned by the insured. Otherwise your filing of September 22, 1980 is acceptable."
By letter dated December 22, 1980, the defendant responded to Gammon's letter and stated: "By way of *302 explanation, it is our feeling that horses are a liability item that deserves additional premium for coverage. . . . Secondly, we also find that a large percent of our insureds with horse operations have the horse liability coverage provided through a market such as Rhulan or other surplus lines broker."
By letter dated April 25, 1997, the defendant informed the insurance department that it could find no indication that the ML-20A (10/86) exclusion was ever filed with the insurance department. The defendant submitted the ML-20A (10/86) exclusion with its letter and requested approval effective at the earliest possible date and permission to leave the form attached to its existing policies.
By letter dated April 29, 1997, the insurance department informed the defendant as follows: "With reference to your letter dated 25 April, 1997, in accordance with the provisions of CGS §
On February 12, 1992, the date of the plaintiff's accident at the Hunt Club property, the horse exclusion policy was not filed with the insurance department.
With respect to the plaintiff's claims of breach of contract and direct action under §
General Statutes §
The majority of jurisdictions which have addressed this issue have concluded that the failure to file the policy or endorsement does not render it invalid. In a number of cases, the courts have considered significant the existence of a savings statute or other statute providing penalties for the failure to file. In other cases, the court found significant the lack of a specific statutory provision for voidance.
In Gary v. American Casualty Co. of Reading, Pa.,
The court also found significant the fact that the Arizona statute, from which the Oklahoma statute was derived, did not "expressly provide that endorsements delivered or issued in violation of that statute are void and that the Arizona Supreme Court has interpreted the predecessor of that statute as leaving a policy issued in violation of the filing requirement enforceable as issued but subjecting the issuer to a fine." Id., 1552, citing Southern Casualty Co. v. Hughes,
While the Oklahoma Supreme Court has not addressed the issue of the effect of unfiled insurance policies and endorsements, the Oklahoma Court of Appeals did in Hill v. Agri-Risk Services,
In addition, the court determined that the trial court properly construed and applied all terms of the policy. An Oklahoma statute provided that a policy or endorsement which was otherwise valid but which contained a provision not in compliance with the Oklahoma insurance code would not be rendered invalid but would be applied "`in accordance with such conditions and provisions as would have applied had such policy . . . or endorsement been in full compliance with the Code'" Id., quoting Okla. Stat. tit. 36, § 3620 (1981). See also Highlands Ins. Co. v.American Marine Corp. ,
Later, in Federal Deposit Ins. Corp. v. American Casualty Co. ofReading, Pa.,
The plaintiff in Federal Deposit Ins. Corp. argued that a "regulatory exclusion" in a director and officer's liability policy was void because the insurer did not seek approval of the exclusion until years after its use, although the Oklahoma insurance board later approved substantially similar exclusions filed by another insurer. In deciding that the exclusion was not void, the court noted that other sections of the Oklahoma insurance code contained voidance provisions and that the legislature's failure to provide such a provision in relation to the filing requirement indicated that it did not intend *308 such a severe sanction. Thus, the court held that failure to comply with the filing requirement did not void the exclusion. Id., 682-83.
In Great Lakes Container Corp. v. National Union Fire Ins. Co.,
In Resolution Trust Corp. v. Hedden,
In National Union Fire Ins. Co. of Pittsburgh v. Ambassador Group,Inc.,
In Elston v. Shell Oil Co.,
The persuasive value of those cases in which the court relied upon the existence of legislatively imposed penalties to conclude that a policy or endorsement was not void is limited. Connecticut does not provide for such penalties in either its General Statutes or in the applicable insurance regulations.4 It is noteworthy, however, that in its letter to the defendant regarding the noncompliance with §
The facts of the present case support a conclusion that the endorsement should not be held invalid. The Hunt Club contracted for insurance for its horse operations by purchasing through its insurance agent a farmowner's policy and a stable liability policy and paid separate premiums to the agent for each of these policies. Although the Hunt Club may have correctly believed that it procured liability coverage for claims *311
of personal injury, there are no facts to support a finding that such coverage was provided by the policy issued by the defendant. The premium paid for the farmowner's policy reflected the exclusionary horse endorsement. As noted in FDIC v. American Casualty Co. of Reading, Pa.,
supra,
The defendant argues that the insurance department's subsequent approval of the endorsement and its permission to leave the endorsement on existing policies suggests that the approval had retroactive effect. While the court does not agree that the insurance department's April 29, 1997 approval letter necessarily supports a finding of retroactive effect, it is noteworthy that the department approved a similar horse exclusion endorsement in 1980, the ML-20A (10/80). Under the holding ofResolution Trust Corp. v. Hedden, supra,
The cases cited by the plaintiff represent the minority position and are in many instances factually dissimilar from the present action. InMiller v. National Farmers Union Property Casualty Co.,
The Miller court concluded that the primary purpose of the statute requiring filing of policies and rating plans was "not the approval of policy forms but the approval of premium charges." Id., 703. In the present case, how ever, the premium charged to the Hunt Club for the farmowner's policy by the defendant was based on the terms of that policy, including the exclusionary endorsement.
Workman v. Great Plains Ins. Co., supra,
The defendant insurer argued that there was no state statute and therefore no public policy which prohibited the use of the altered endorsement. A Nebraska law did provide, however, that no insurance policy could be issued in the state unless it was filed with and approved by the department of insurance. The court found, based on testimony of a representative of the department, that the printed endorsement form was within the department's guidelines for approval, but the endorsement as altered was not. The court determined that the alterations were inconsistent with the language of the printed endorsement and with the omnibus clause in the principal policy form. Thus, the court upheld the trial court's finding that the altered endorsement was not in the form approved by the insurance department, was contrary to the public policy of the state of Nebraska and was void. Id., 28.
In the present action, there is no issue regarding the effect of an alteration on an approved policy endorsement. Furthermore, in EquityMutual Ins. Co. v. All state Ins. Co.,
The case of Linkens v. Furman,
In American Mutual Fire Ins. Co. v. Illingworth,
While Illingworth sets forth valid reasons for voidance of an unapproved endorsement, the court was acting under a clear directive on the legislature's purpose for the filing requirement. In addition, voidance of an unfiled endorsement is not the only method by which to address the concern that true effect cannot otherwise be given to the terms of a filing statute. In this court's opinion, the imposition of a monetary fine or a penalty other than voidance is sufficient to protect the efficacy of §
For the aforementioned reasons, the court finds that the horse exclusion to the insurance policy in issue was valid and the defendant is not liable to the plaintiff for breach of contract with respect to the insurance policy nor to the plaintiff under the direct suit brought by the plaintiff against it pursuant to §