PACIFIC INSURANCE COMPANY, LIMITED v. CHAMPION STEEL, LLC, ET AL.
SC 19402, SC 19403
Supreme Court of Connecticut
September 27, 2016
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Argued April 4—officially released September 27, 2016
Jonathan M. Freiman, with whom, on the brief, was Jenny R. Chou, for the appellant in Docket No. SC 19402 (named plaintiff).
Jenny R. Chou, with whom, on the brief, was Jonathan M. Freiman, for the appellant in Docket No. SC 19403 (proposed intervenor Connecticut Reliable Welding, LLC).
Sylvia Marisa Ho, with whom were Kelly B. Gaertner, and, on the brief, Kevin C. Hines, Bryan J. Hass and Paul Erickson, for the appellees in Docket Nos. SC 19402 and SC 19403 (defendants).
ZARELLA, J. The dispositive issue in the present appeals is whether a workers’ compensation insurer can maintain an equitable subrogation claim against third-party tortfeasors to recover benefits it has paid, on behalf of an insured employer, to an injured employee. We conclude that it can.
The facts and procedural history giving rise to this appeal can be succinctly stated. On May 17, 2011, James Doughty, an employee of Stanford Dulaire, doing business as Connecticut Reliable Welding, LLC (Reliable), was working at a construction site when the retractable lifeline he was wearing failed, causing him to fall and sustain physical injuries. Because Doughty‘s injuries occurred during the course of his employment, Reliable was required to pay benefits under the Workers’ Compensation Act (act),
In May, 2013, Pacific brought the present action against the defendants, Champion Steel, LLC, Shepard Steel Company, Inc., and Dimeo Construction Company (collectively, defendants), seeking to recover the benefits it had paid to Doughty.1 In its complaint, Pacific essentially alleged that the defendants were negligent in their failure to provide an adequate fall arrest system at the work site, which negligence, Pacific avers, caused Doughty‘s injuries. The defendants filed separate motions to dismiss the complaint, claiming that the trial court lacked subject matter jurisdiction because Pacific did not have standing to bring an action under either
Pacific makes four arguments in its appeal, Docket No. SC 19402. Specifically, Pacific claims that the trial
In its separate appeal, Docket No. SC 19403, Reliable claims that the trial court improperly: (1) concluded that Reliable did not have standing; (2) denied Pacific‘s motion to substitute Reliable as the plaintiff; and (3) concluded that Reliable‘s motion to intervene was rendered moot. At oral argument, counsel for both Reliable and the defendants agreed that if we concluded in SC 19402 that Pacific properly asserted an equitable subrogation claim, we would not need to reach the issues in SC 19403. Accordingly, we do not address Reliable‘s claims on appeal. Moreover, because we do not reach Reliable‘s claims, we need not consider the defendants’ argument that Reliable did not have standing to invoke this court‘s jurisdiction.
Our review of a trial court‘s ruling on a motion to dismiss is de novo and we indulge every presumption favoring jurisdiction. Cuozzo v. Orange, 315 Conn. 606, 614, 109 A.3d 903 (2015). In addition, because the issue of whether a workers’ compensation insurer may assert an equitable subrogation claim is a question of law, our review of that issue, accordingly, is also de novo.
I
We first address the jurisdictional issue. In their memoranda of law in support of their motions to dismiss, the defendants argued that Pacific did not have standing to bring this action because Pacific had not cited any authority recognizing a workers’ compensation insur-
In its appeal to this court, Pacific argues that the trial court improperly considered the legal sufficiency of its equitable subrogation claim, which is the standard applicable to reviewing a motion to strike, rather than Pacific‘s standing to assert such a claim. In essence, its claim is that whether a common-law claim exists is not jurisdictional and the proper procedural tool for testing whether such a claim exists is a motion to strike. We need not decide whether the trial court improperly considered the legal sufficiency of Pacific‘s claims in addressing the defendants’ motions to dismiss, or whether the proper procedural vehicle for testing whether a claim exists is a motion to dismiss or a motion to strike, because we conclude that Pacific can properly assert an equitable subrogation claim. Moreover, we agree with Pacific‘s argument that, due to its obligation to pay workers’ compensation benefits to Doughty as a result of the defendants’ negligence, it has a colorable claim of injury and a direct interest in the outcome of this action, and, therefore, standing. See, e.g., Handsome, Inc. v. Planning & Zoning Commission, 317 Conn. 515, 550, 119 A.3d 541 (2015) (Standing generally exists “when a complainant makes a colorable claim of direct injury [that] he has suffered or is likely to suffer, in an individual or representative capacity. Such a personal stake in the outcome of the controversy . . . provides the requisite assurance of concrete adverseness and diligent advocacy.” [Internal quotation marks omitted.]).
II
We next consider whether a workers’ compensation carrier can maintain a claim for equitable subrogation against a third-party tortfeasor whose negligence caused harm to an employee. Subrogation is a doctrine of equity that allows one party, such as an insurer (known as the subrogee), to assert the legal rights or claims of another person, such as an insured (known as the subrogor), against a third party, for example, a tortfeasor, when the subrogee has indemnified the subrogor for a loss caused by the third-party tortfeasor.
Pacific argues that this court has recognized an insurer‘s broad, common-law right to bring a subrogation action when it has paid an insured for a loss caused by a third-party tortfeasor and that the workers’ compensation statutory scheme has not abrogated that right. It further argues that public policy supports recognizing an equitable subrogation claim because an employer or an employee may not have an incentive to bring an action against the tortfeasor.
We agree. In our view, it is beyond dispute that equitable subrogation has long existed at common law, and that the doctrine has long been available to an insurer seeking reimbursement for a loss it indemnifies when a third party is liable for such loss. See, e.g., Regan v. New York & New England Railroad Co., 60 Conn. 124, 131, 22 A. 503 (1891) (“[i]t has hitherto been established by a line of decisions reaching backward more than a century and substantially unbroken by dissent . . . that where the insurer has indemnified the owner of the goods lost, he is entitled to be subrogated to all the means of indemnity which the owner held against the party causing the loss and primarily liable therefor“); Connecticut Mutual Life Ins. Co. v. New York & New Haven Railroad Co., 25 Conn. 265, 277 (1856) (“[b]y virtue of this doctrine, there is no doubt of the right of an insurer, who has paid a loss, to use the name of the insured, in order to obtain redress from the author of the wrong“);4 Orvis v. Newell, 17 Conn. 97, 101 (1845) (“[the] right of substitution or subrogation rests upon the basis of mere equity and benevolence” [internal quotation marks omitted]); see also Wasko v. Manella, supra, 269 Conn. 538 n.9 (citing Orvis v. Newell, supra, 97, for proposition that insurers had subrogation rights at common law). In fact, in Regan v. New York & New England Railroad Co., supra, 124, decided in March, 1891, this court noted that an insurer‘s right of subrogation had existed, at that time, for more than one century; id., 131; and that the decisions of the Supreme Court of the United States and the high courts of many of our sister states were in accord. Id., 131–33. It is fundamental that if the legislature wishes to abrogate the common law, it must do so expressly. See Caciopoli v. Lebowitz, 309 Conn. 62, 70, 68 A.3d 1150 (2013) (“[w]e recognize only those alterations of the common law that are clearly expressed in the language of the statute” [internal quotation marks omitted]); Chadha v. Charlotte Hungerford Hospital, 272 Conn. 776, 789, 865 A.2d 1163 (2005) (“[a]lthough the legislature may eliminate a [common-law] right by statute, the presumption that the legislature does not have such a purpose can be overcome only if the legislative intent is clearly and plainly expressed” [internal quotation marks omitted]). We have not found any provision in the act, and the defendants have not pointed to any, that abrogates this long-standing doctrine in the context of workers’ compensation. In other areas of workers’ compensation, however, the legislature has expressly abrogated the common law. For example, at common law an employee was permitted to bring an action against his employer for injuries he sustained due to the employer‘s negligence. See Swain v. O‘Loughlin, 80 Conn. 200, 204-205, 67 A. 480 (1907) (sustaining negligence action brought by injured employee against employer); see also Perille v. Raybestos-Manhattan-Europe, Inc., 196 Conn. 529, 536-40, 494 A.2d 555 (1985) (reviewing history of employer‘s common-law duties to employees). The act expressly abrogated this common-law cause of action against the employer. See
Our conclusion that a workers’ compensation insurer may maintain a common-law equitable subrogation action against a third-party tortfeasor who is liable for injuries sustained by an employee is also supported by public policy. First, allowing insurers to bring such actions serves the public policy of containing the cost of workers’ compensation insurance. See Quire v. Stamford, 231 Conn. 370, 375, 650 A.2d 535 (1994) (
The defendants argue that Pacific cannot assert equitable subrogation against them because, at common law, personal injury claims could not be assigned. Moreover, the defendants assert, the act created a right in the employer that had never before existed—namely, the right to bring a direct action against a tortfeasor to recoup workers’ compensation benefits it paid to an employee for injuries the tortfeasor is legally liable for—and, in so doing, deviated from the common law. As a result, the defendants conclude that the employer‘s right must be strictly construed. Because the act allows an employer to pursue a claim against the tortfeasor,
The defendants argue that the enactment of No. 97-58 of the 1997 Public Acts (P.A. 97-58), which abolished uninsured motorist insurance carriers’ subrogation rights, effectively abrogating our holding in Westchester Fire Ins. Co., is an affirmation by the legislature that personal injury actions cannot be assigned. Insofar as the defendants intend to assert, by making this argument, that P.A. 97-58 abrogated our conclusion in Westchester Fire Ins. Co. that assignments and equitable subrogation are distinct, we do not agree. We read the relevant part of the public act as merely abrogating the common-law subrogation rights of uninsured motorist insurance carriers.5 Additionally, even if the enactment of P.A. 97-58 is a legislative affirmation of the common-law prohibition against the assignment of personal injury claims generally, the legislature has specifically abrogated this rule in the context of workers’ compensation, as subsequently explained in this opinion. See
Second, an insurer‘s right of equitable subrogation is distinct from an employer‘s right to bring an action against a third-party tortfeasor who harmed an employee. The employer‘s right is statutory and was created by the act.7 See Dodd v. Middlesex Mutual Assurance Co., supra, 242 Conn. 381. Prior to the enactment of the act, however, and pursuant to the common-law prohibition against the assignment of personal injury claims, the employer had no such right. Id., 382. Thus, the statute had to expressly provide for the employer‘s right to bring such an action. See Caciopoli v. Lebowitz, supra, 309 Conn. 70 (legislature‘s abrogation of common law must be express). On the other hand, an insurer‘s right of equitable subrogation arises from the common law, and it existed at the time the act was enacted. See, e.g., Regan v. New York & New England Railroad Co., supra, 60 Conn. 131. Accordingly, the legislature did not need to expressly create the insurer‘s right. See Wasko v. Manella, supra, 269 Conn. 538-39 n.9 (“The common law did not permit the assignment of personal injury actions, and thus the legislature specifically, and explicitly, had to abrogate the common law in order to allow an employer to subrogate against a tortfeasor. . . . This was accomplished with the enactment of the [act], and specifically
Third, we agree with the defendants that the act, and specifically
The defendants also contend that allowing Pacific, and similarly situated workers’ compensation insurers, to bring equitable subrogation claims is contrary to the expectations of the parties. The defendants claim that the act, specifically
In Wasko, this court recognized a homeowners insurance carrier‘s right to be equitably subrogated to its insured and to bring an action against a social guest who negligently caused fire damage to the home. Wasko v. Manella, supra, 269 Conn. 532. In so doing, we concluded that allowing subrogation would not upset the expectations of the parties. Id., 547. We noted “that most social guests fully expect to be held liable for their negligent conduct in another‘s home . . . .” (Emphasis in original.) Id. The homeowners in Wasko, we reasoned, could have brought a negligence claim directly against the tortfeasor, and there was “no logical reason for the [tortfeasor] to be unjustly enriched merely because he burned down the home of a party that had the foresight to purchase fire insurance, and subsequently chose to submit a claim to that insurance company rather than to proceed directly against him.” Id., 549. Likewise, in the context of workers’ compensation, the employee or employer may bring an action against a third party responsible for an employee‘s injuries, and we see no reason why allowing the insurer to bring such an action, rather than the employee or the employer, would upset the parties’ expectations. See id.; see also Allstate Ins. Co. v. Palumbo, supra, 296 Conn. 270 (denying homeowner insurer subrogation in part because defendant, insured‘s fiancé, would not expect insured to bring action against him for his negligence).
In sum, we conclude that, under the common law, an insurer that has indemnified the loss of an insured under circumstances in which a third party is legally liable for such loss, has the right to be subrogated to the insured‘s rights against the liable third party. Moreover, we have uncovered nothing in the act that abrogates such rights. Accordingly, we conclude that Pacific can assert an equitable subrogation claim against the defendants, and, therefore, that the trial court improperly granted the defendants’ motions to dismiss. We have not decided, however, that subrogation should be ordered. Said differently, we express no opinion as to whether Pacific has established its right to recover from the defendants. “[O]rdering subrogation depends on the equities and attending facts and circumstances of each case. . . . The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court.” (Citation omitted; internal quotation marks omitted.) Allstate Ins. Co. v. Palumbo, supra, 296 Conn. 260. “[A]n insurer may not be allowed to recover from any party whose equities are equal or superior to [its own equities].” (Emphasis omitted; internal quotation marks omitted.) Id., 282 (Zarella, J., dissenting). Thus, the present case
Moreover, because Pacific has stepped into the shoes of its insured, Reliable, the defendants may assert any defense they would be able to assert against Reliable or Doughty. In addition, we note that Pacific, as subrogee of Reliable, is subject to the same statutory obligations as Reliable would have been if it had brought this action. For example, Pacific must comply with the notice and apportionment provisions of
The judgment in SC 19402 is reversed and the case is remanded for further proceedings in accordance with the preceding paragraphs; the appeal in SC 19403 is dismissed.
In this opinion the other justices concurred.
* This case originally was scheduled to be argued before a panel of this court consisting of Chief Justice Rogers and Justices Palmer, Zarella, Eveleigh, McDonald, Espinosa and Robinson. Although Justices Palmer, Eveleigh and Espinosa were not present when the case was argued before the court, they have read the briefs and appendices, and listened to a recording of the oral argument prior to participating in this decision.