GENERAL ACCIDENT INSURANCE COMPANY v. JASON MORTARA
(SC 19146)
Supreme Court of Connecticut
Argued April 22—officially released November 4, 2014
Rogers, C. J., and Palmer, Zarella, Eveleigh, McDonald, Espinosa and Vertefeuille, Js.
David A. Leff, for the appellant (defendant).
Michael M. Wilson, for the appellee (plaintiff).
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Opinion
ESPINOSA, J. This appeal presents a choice of law question: when a dispute between an insurance carrier and its insured regarding the insurance carrier’s obligation to pay underinsured motorist benefits requires a determination of whether the relevant policy provisions provide coverage for the claim, is the issue properly resolved under the choice of law rules governing claims sounding in tort or claims sounding in insurance and contract? Our existing precedent already has conclusively answered this question. As we explain herein, it is well established that in such an instance, the choice of law determination is made by applying the insurance and contract choice of law rules set forth in §§ 6, 188, and 193 of 1 Restatement (Second), Conflict of Laws (1971). The defendant, Jason Mortara, appeals from the judgment of the Appellate Court, which affirmed the judgment of the trial court vacating the arbitration award rendered in his favor.1 The defendant claims that the arbitration panel properly determined that this court’s decision in Williams v. State Farm Mutual Automobile Ins. Co., 229 Conn. 359, 641 A.2d 783 (1994), applying choice of law rules for tort claims, dictates that New Jersey law rather than Connecticut law governs his claim for uninsured motorist benefits under the motor vehicle insurance policy issued by the plaintiff, General Accident Insurance Company. To thе contrary, we conclude that pursuant to this court’s decisions in Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 698 A.2d 859 (1997), and Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., 243 Conn. 401, 703 A.2d 1132 (1997), the Appellate Court, in its opinion adopting the decision of the trial court, properly applied §§ 6 (2), 188 and 193 of the Restatement (Second), contract choice of law, to determine that Connecticut law governed the claim. See General Accident Ins. Co. v. Mortara, 141 Conn. App. 571, 573, 62 A.3d 553 (2013). Accordingly, the judgment of the Appellate Court is affirmed.
In its memorandum of decision, the trial court set forth the following relevant facts and procedural history. ‘‘The defendant . . . was a passenger in a vehicle that was driven by his mother [Jacquelinе Mortara] when it was negligently struck by Richard Ednie. At the time of the collision, Ednie, who was a resident of Pennsylvania, had a State Farm Insurance policy with liability limits of $100,000 per person and $300,000 per accident. Following the collision, a lawsuit was filed in New Jersey on behalf of [the defendant] against Ednie.2 The claim was settled for $95,000. At the time of the collision, [the defendant] lived in Connecticut with [Jacqueline Mortara], and [her] vehicle was insured by the Pennsylvania General Insurance Company, which is a subsidiary of the plaintiff . . . . The policy was issued in Connecticut and included underinsured motоrist cov-erage with a limit of $300,000.
‘‘[The defendant] asserted an underinsured motorist claim against the plaintiff and subsequently requested that the claim be submitted to arbitration. The following three questions were submitted to the arbitration panel: 1. Does Connecticut law or New Jersey law apply to the application and interpretation of the . . . Pennsylvania General Insurance [Company] policy? . . . 2. If New Jersey law applies, has [the defendant] complied with the Longworth [v. Van Houten, 223 N.J. Super. 174, 538 A.2d 414 (App. Div. 1988)] line of decisions of the New Jersey courts, so as to allow [the defendant] . . . to recover undеr the [underinsured] motorist coverage of [Jacqueline Mortara’s] vehicle policy? 3. If recovery is allowed, what is the amount of fair, just and reasonable compensation for [the defendant] . . . ? The parties stipulated that if Connecticut law applies, then the defendant’s failure to exhaust Ednie’s State Farm Insurance policy would preclude recovery of underinsured motorist benefits pursuant to Connecticut law.
‘‘On April 5, 2011, the majority of the panel decided, in a two page decision, that pursuant to Williams v. State Farm Mutual Automobile Ins. Co., [supra, 229 Conn. 359], New Jersey law applied and that the dеfendant complied with the procedure set forth in Longworth v. Van Houten, [supra, 223 N.J. Super. 174]. The panel awarded the defendant a gross sum of $275,000, which was adjusted to $160,125.54.
‘‘On May 6, 2011, the plaintiff filed an application to vacate the arbitration award on the ground that pursuant to
‘‘[T]he standard of review for arbitration awards is determined by whether the arbitration was compulsory or voluntary. This court recognized the fundamental differences between voluntary and compulsory arbitration in American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 190–91, 530 A.2d 171 (1987). The court concluded therein that whe[n] judicial review of compulsory arbitration proceedings required by [
Because the substantive issue in the present case concerns a question of insurance coverage, which is subject to compulsory arbitration, our review is de novо. We explained in Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 238, 772 A.2d 577 (2001), that a ‘‘question involving the interpretation of a policy term or governing law that affects how much [the insured] can recover from the insurer . . . is a coverage question . . . .’’ By contrast, if the question turns on ‘‘the measure of damages that can be recovered from the tortfeasor . . . the question is a damages issue . . . .’’ (Emphasis omitted.) Id., 239. The first question submitted for arbitration—whether Connecticut law or New Jersey law applied to the application and interpretation of the defendant’s insurance policy—made clear that the disputеd issue between the parties concerned coverage under the policy rather than damages recoverable from the tortfeasor. Specifically, the plaintiff denied the defendant’s claim for benefits under the underinsured motorist provision in the insurance policy issued to Jacqueline Mortara on the basis that pursuant to Connecticut law, the defendant’s failure to exhaust the limits of the tortfeasor’s policy released the plaintiff from any obligation to pay underinsured motorist benefits pursuant to the insurance policy. See
We therefore turn to the choice of law rules governing the present case. ‘‘In Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., [supra, 243 Conn. 413], we abandoned the ancient lex loci contractus approach to choice of law, which looked primarily to the law of the state in which the contract was made. In its place, we adopted the most significant relationship approach of the Restatement (Second) . . . for analyzing choice of law issues involving contraсts. . . . Thus, the choice of law determination in this case involves an interplay among §§ 193, 188 and 6 of the Restatement (Second) . . . . Where there is no choice of law provision in the contract, the general rule to be applied is that of § 188. Section 188, in turn, directs us to other provisions for specific types of contracts. With respect to liability insurance contracts, the starting point is § 193 of the Restatement (Second) . . . .
‘‘Section 193 of the Restatement (Second) provides that [t]he validity of a contract of fire, surety or casualty insurance and the rights crеated thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the transaction and the parties, in which event the local law of the other state will be applied. Thus, § 193 establishes a special presumption in favor of application, in liability insurance coverage cases, of the law оf the jurisdiction that is the principal location of the insured risk. . . .
‘‘The commentary to § 193 notes that [a]n insured risk, namely the object or activity which is the subject matter of the insurance, has its principal location, in the sense here used, in the state where it will be during at least the major portion of the insurance period. In the great majority of instances, the term of a contract of fire, surety or casualty insurance will be relatively brief, and it will usually be possible to predict with fair accuracy where the risk will be located, or at least principally loсated, during the life of the policy. . . . So, in the case of an automobile liability policy, the parties will usually know beforehand where the automobile will be garaged at least during most of the period in question. . . . 1 Restatement (Second), supra, § 193, comment (b), p. 611. The Restatement (Second) considers the principal location of the insured risk to be a matter of intense concern to the parties to the insurance contract because [it] has an intimate bearing upon the risk’s nature and extent and is a factor upon which the terms and conditions of the policy will frequently depend. So the cost of automobile
‘‘In order to overcome this presumption, another state’s interest must outweigh those of the state where the insured risk is located and must be sufficiently compelling to trump the § 193 presumption. Sеction 6 (2) of the Restatement (Second) . . . provides the criteria by which that overriding interest should be evaluated. It must be remembered that even if another state has a substantial interest under § 6 (2), that interest will not defeat the § 193 presumption unless it is sufficiently compelling. As we indicated in Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., supra, 243 Conn. 417, the analysis begins but does not end with § 193. . . .
‘‘[Section] 6 (2) of the Restatement (Second) . . . which is applicable to all substantive areas, sets forth seven overarching considerations in determining which state has the most significant relationship: (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied. . . .
‘‘Furthermore, [§] 188 (2) [of the Restatement (Second)] lists five contacts to be considered in applying the principles set forth in § 6 to a contract dispute: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties. Comment (e) to § 188 (2) states that the forum, in applying the principles of § 6 to determine the state of most significant relationship, should give consideration to the relevant policies of all potentially interested states and the relative interests of those states in the decision of the particular issue. The states which are most likely to be interested are those which have one or more of the [enumerated] contacts with the transaction or the parties. Id., § 188 (2), comment (e), p. 579.
‘‘The appropriate starting point under § 188, therefore, is identification of the policy underlying the relevant law of each state having one or more of the listed contacts. If application of a particular state’s law would further its underlying policy, that state is said to hаve an interest. See id., § 6 (2) (c). If two or more states have conflicting interests, the court must determine which gives rise to the most significant relationship. Id., § 188 (1). . . . Moreover, application of the § 6 and § 188 factors is neither mathematical nor mechanical.’’ (Citations omitted; internal quotation marks omitted.) American States Ins. Co. v. Allstate Ins. Co., supra, 282 Conn. 467–68.
In a well reasoned opinion, the trial court properly applied these principles to the defendant’s claim. As to § 193 of the Restatement (Second), the court stated: ‘‘The record before this court indicates that the principal location оf the insured
The court next turned to §§ 188 and 6 (2) of the Restatement (Second), and properly concluded that the interests of New Jersey are not sufficiently compelling to overcome the presumption established under § 193 that Connecticut law apрlies. General Accident Ins. Co. v. Mortara, supra, 52 Conn. Supp. 544. The court began by considering the five contacts enumerated in § 188, and noted that because the contract was formed in Ridgefield, Connecticut, ‘‘the place of contracting and negotiation of the contract was Connecticut.’’ Id., 537. That fact, taken together with the failure of the defendant to offer any evidence to suggest that New Jersey, rather than Connecticut, was the place of performance of the contract establishes that Connecticut was the place of performance. Id. The subject matter of thе contract, the insured vehicle, was principally located in Connecticut. Finally, Jacqueline Mortara, the named insured, was domiciled in Connecticut, and although the plaintiff has a Philadelphia, Pennsylvania address listed on the policy, the plaintiff was doing business in Connecticut. Id., 538.
Finally, the court turned to the policy considerations set forth in § 6 (2) of the Restatement (Second), and correctly concluded that those considerations support rather than overcome the presumption that Connecticut law governs the defendant’s claim. General AccidentIns. Co. v. Mortara, supra, 52 Conn. Supp. 544. The court properly concluded that where, as in the present case, the insurer has multiple places of business in various states, the first consideration, the needs of interstate and international systems, is not a factor accorded significant weight. Id., 539; see Bellavita v. Allstate Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV-95-0327000-S (August 13, 1999) (25 Conn. L. Rptr. 229, 232).
The fourth, fifth and sixth factors—the protection of justified expectations, the basic policies underlying the particular field of law, and certainty, predictability and uniformity of result—all support the conclusion that Connecticut law governs. 1 Restatement (Second), supra, § 6 (2) (d), (e) and (f). With respect to the fifth and sixth factors, this court has noted that ‘‘[t]he commentary to § 188 of the Restatement (Second), indicates that [p]rotection of the justified expectations of the parties is the basic policy underlying the field of contracts, for the purpose of § 6 (2) (e) of the Restatement (Second). . . . Additionally, protection of justified expectations is also relevant to the factor of certainty, predictability, and uniformity of result under § 6 (2) (f) of the Restatement (Second). The need for protecting the еxpectations of the parties gives importance in turn to the values of certainty, predictability and uniformity of result. For unless these values are attained, the
Turning to the second and third factors of § 6 (2), the trial court correctly observed that they direct the court to consider the ‘‘relevant policies of the forum’’ and the ‘‘relevant policies of other interested states and the relative interests of those states in the determination of the particular issue . . . .’’ Id.; see 1 Restatement (Second), supra, § 6 (2) (b) and (c). Applied to the present case, these two factors require the court to consider the relevant policies and interests of Connecticut and New Jersey on this issue. As the trial court explained, the policies of both Connecticut and New Jersey with respect to the exhaustion requirement applied to underinsured motorist coverage in motor vehicle insurance policies are to ‘‘provide insurance рrotection when the liability coverage of the tortfeasor is inadequate, but neither state aims to make the insured whole. Additionally, both states have an exhaustion requirement to prevent the insured from receiving a windfall. Under Connecticut law, the requirement that the insured must fully exhaust the tortfeasor’s liability coverage before recovering underinsured motorist benefits is absolute. See Ciarelli v. Commercial Union Ins. Cos., 234 Conn. 807, 811, 663 A.2d 377 (1995); Continental Ins. Co. v. Cebe-Habersky, 214 Conn. 209, 212–13, 571 A.2d 104 (1990). New Jersey applies the exhaustion requirement of its underinsured motorist statute differently.’’5 General Accident Ins. Co. v. Mortara, supra, 52 Conn. Supp. 542–43. The court additionally observed, however, that ‘‘the defendant has not provided, and thе court’s independent research has not revealed, any differences in policy so fundamental as to override the special presumption favoring the application of the law of Connecticut, the principal location of the insured risk, to the present case. American States Ins. Co. v. Allstate Ins. Co., supra, 282 Conn. 475.’’ (Emphasis in original; internal quotation marks omitted.) General Accident Ins. Co. v. Mortara, supra, 543.
Finally, the trial court noted that the seventh and final factor of § 6 (2) of the Restatement (Second), the ‘‘ease in the determination and application of the law to be applied, favors the application of Connecticut’s straightforward exhaustion requirement in the present matter.’’ (Internal quotation marks omitted.) Id., 543–44; see 1 Restatement (Second), supra, § 6 (2) (g). The court properly concluded that considering all of the factors together provides further support for the conclusion that Connecticut law governs in the present case. General Accident Ins. Co. v. Mortara, supra, 52 Conn. Supp. 544.
The defendant’s argument that the arbitration panel correctly concluded that this court’s decision in Williams v. State Farm Mutual Automobile Ins. Co., supra, 229 Conn. 359, controls the present case and dictates the application of New Jersey law to his claim is unpersuasive. In Williams, which invоlved a claim for uninsured motorist benefits, the disputed issue did not pertain to insurance coverage, but to damages that would have been recoverable from the tortfeasor. Specifically, in that case, the defendant insurer denied benefits to the plaintiff on the basis that ‘‘the plaintiff could not maintain an action against the tortfeasor because he had not sustained either ‘serious injury’ or basic economic loss in excess of $50,000,’’ as required under New York law. Id., 363. Thus, the disputed issue in Williams implicated tort law principles rather than contract law prinсiples.6 It is true that the court in Williams concluded that because the choice of law test under either a tort or a contract analysis yielded the same result, i.e., the application of New York law to the claim, it was not necessary to determine whether the claim implicated tort or contract principles. Id., 364. Williams was decided, however, before Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., supra, 243 Conn. 413, in which we adopted the contract choice of law test applying §§ 6 (2), 188 and 193 of the Restatement (Second). Because
The judgment of the Appellate Court is affirmed.
In this opinion the other justices concurred.