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Continental Ins. Co. v. Cebe-Habersky

Supreme Court of Connecticut

March 20, 1990

The CONTINENTAL INSURANCE COMPANY
v.
Edward CEBE-HABERSKY.

Argued Dec. 8, 1989.

Page 105

[214 Conn. 210] Jack D. Garamella, with whom, on the brief, was Eva M. DeFranco, Danbury, for appellant (defendant).

Frederick J. Trotta, with whom were Joseph F. Trotta, New Haven, and, on the brief, Eileen M. Condon, for appellee (plaintiff).

Before ARTHUR H. HEALEY, SHEA, CALLAHAN, COVELLO and FRANCIS X. HENNESSY, JJ.

COVELLO, Associate Justice.

This is an appeal from a judgment of the trial court vacating a $40,000 underinsured motorist arbitration award. The sole issue is whether a claimant's access to underinsured motorist insurance first requires the payment of the limits of the liability policy insuring the person responsible for the accident. We conclude that such payments are required.

On November 30, 1985, the plaintiff, The Continental Insurance Company (Continental), had in force an automobile liability policy insuring the defendant, Edward Cebe-Habersky. The policy contained an endorsement providing uninsured and underinsured motorist coverage in the amount of $300,000.

On November 30, 1985, Cebe-Habersky was injured while riding as a passenger in an automobile owned and [214 Conn. 211] operated by Troy Knapp. The accident occurred when Knapp fell asleep at the wheel and the auto swerved off the road. The defendant, a thirty year old married electrician, fractured his nose and severely lacerated his face. He incurred medical expenses of $12,357.70, lost wages of $2260, and was left with four residual scars, two on his forehead, one on his cheek and one on his chin.

On June 4, 1987, Progressive Insurance Company (Progressive), the insurer of the Knapp vehicle, paid the defendant $17,000. The $17,000 payment was $3000 less than the $20,000 limits of the Progressive policy.

On September 15, 1987, the defendant made a demand for arbitration against Continental claiming that he had been injured by the negligent acts of an underinsured motorist. [1] The matters submitted to the arbitrators were: (1) whether full payment on the tortfeasor's (Progressive's) policy was a condition precedent to Continental's obligation to pay; and (2) the value of the defendant's damages.

On December 14, 1988, the arbitration panel found that the defendant's damages were $60,000. It then ordered Continental to pay the defendant $40,000, stating that this sum was "the value of the damages sustained by the claimant in excess of the $20,000 coverage on the vehicle of the underinsured tortfeasor."

The plaintiff filed an application in Superior Court to set aside the arbitration award. [2] The trial court, [214 Conn. 212] W. Sullivan, J., vacated the award, concluding that the "limits of the primary policy had not been 'exhausted' [as required by] General Statutes § 38-175c(b)(1)." [3] The defendant appealed to the Appellate Court. We thereafter transferred the matter to ourselves pursuant to Practice Book § 4023.

Page 106

General Statutes § 38-175c(b)(1) obligates insurance companies to pay on a policy's uninsured motorist coverage only after "the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements...." (Emphasis added.) Despite the straightforward language of the statute requiring "exhaust[ion] by payment," the defendant argues that by crediting Continental with the full policy limits of the tortfeasor's policy through subtraction of $20,000 from the $60,000 damages, the limits of liability of the bodily injury liability policy applicable at the time of the accident have been exhausted.

"Exhaust" means "to draw off or let out completely: to use up; [or] wholly expend." Webster, Seventh New Collegiate Dictionary. (Emphasis added.) There is nothing in the common meaning of "exhaust" to suggest that partial use of what is available amounts to its exhaustion.

The defendant points to a definition of "exhaust" in Webster, Third New International Dictionary, that [214 Conn. 213] reads: "to make use of or try out or otherwise account for the whole number of." (Emphasis added.) This definition constitutes less than two lines of a thirty-one line definition of "exhaust" found in the Third New International Dictionary. In analyzing a statute, it is required that "words and phrases shall be construed according to the commonly approved usage of the language." General Statutes § 1-1(a). (Emphasis added.) We conclude that the definition posited by the defendant does not constitute a commonly approved usage of the word "exhaustion." Our definition, moreover, accords with the intent of § 38-175c(b)(1), which seems to equate "exhaustion" with the "limits of liability," i.e., $20,000.

Even were this definitional obstacle somehow overcome, the defendant simply does not address the further requirement of ยง 38-175c(b)(1) that the other policies must be "exhausted by payment of judgments or settlements." (Emphasis added.) Here there was no "payment" to the ...


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