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Rametta v. Stella

Supreme Court of Connecticut

April 10, 1990

Josephine RAMETTA
Conrad A. STELLA et al.

Argued Jan. 31, 1990.

Page 979

Robert M. Shields, Jr., with whom were Jeffrey A. Hoberman and, on the brief, Wesley W. Horton, Hartford, for appellants (defendants).

Michael P. Barry, Wethersfield, for appellee (plaintiff).


[214 Conn. 485] COVELLO, Associate Justice.

This is an appeal from the decision of the Appellate Court affirming a judgment of the trial court, Maloney, J., that the defendants Conrad A. Stella (Stella) and Stella Insurance Agency, Inc. (agency), were negligent in failing to obtain fire insurance on the plaintiff's property, and that the agency breached its contract with the plaintiff

Page 980

to provide that insurance. The trial court awarded the plaintiff $60,300 damages. The issues certified on appeal are: (1) in a tort action, does the collateral source rule apply to proceeds received by the plaintiff which are not payments of compensation for the plaintiff's injury or loss; and (2) in a contract action, must the calculation of the plaintiff's damages consider the effect of the third party sales agreement entered into subsequent to the breach, which would diminish the plaintiff's actual loss. We answer both questions in the negative, and we affirm the decision of the Appellate Court.

The trial court found the following: The plaintiff owned certain real property on Rocky Hill Avenue in New Britain that consisted of ten lots and a 235 year [214 Conn. 486] old house which had been divided into three apartments. The defendant Stella was a licensed insurance agent and broker, and was the president and principal stockholder of the defendant agency. The plaintiff had used Stella as her insurance agent for many years. In the past Stella had obtained insurance on several properties owned by the plaintiff, including the Rocky Hill Avenue property. The plaintiff customarily would consult Stella about the amount of coverage to obtain, and then follow his recommendation. Typically, Stella selected the insurance company for the plaintiff from among several that he represented. The plaintiff left the choice of insurer entirely within Stella's discretion. The plaintiff customarily paid all insurance premiums to the agency, after the defendants had already advanced the amount due to the insurance company and had obtained the policy for the plaintiff. Stella then would either bill the plaintiff or visit her at her home in Old Lyme to collect the amount due.

In March or April, 1986, the plaintiff met with Stella at the agency office and told him that she was considering selling the Rocky Hill Avenue property. At that time the property was insured for $60,000 against loss by fire under a policy issued by the Terra Nova Insurance Company, Ltd. On March 29, 1986, the defendants received a copy of a notice from the Terra Nova Insurance Company, addressed to the plaintiff, that stated that the policy would not be renewed after its expiration on May 6, 1986. On May 2, 1986, the plaintiff went to the agency and met with the office manager, Maria Stella. The plaintiff told Ms. Stella that she had a buyer, Frank Pascale, for the property, and that she wanted insurance coverage to protect her interest until the closing date. [1] The plaintiff paid $300 as a [214 Conn. 487] deposit for the insurance and stated that she would pay the balance when the exact amount due was determined. Ms. Stella gave the plaintiff a receipt that stated "Dep. for pol. to be ordered for 319 Rocky Hill Ave. Fire Ins."

After the May 2, 1986 meeting with the plaintiff, Stella unsuccessfully attempted to obtain $60,000 coverage on the property from one of the various insurance companies that the agency represented. The defendants then, as a last resort, applied for coverage to the Connecticut Insurance Placement Facility (Fair Plan), a pool of insurers that provides coverage for risks that are uninsurable on a direct basis. On June 11, 1986, the Fair Plan sent an approval notice to the defendants, which the defendants received on June 12. The plaintiff's notice of approval was sent to the 319 Rocky Hill Avenue address, which was the address the agency had indicated on the application as the location of the property. The defendants knew that the plaintiff did not reside at 319 Rocky Hill Avenue, yet they had not included any other mailing address for her and thus, she never received this notice.

Page 981

The approval notice stated that the Fair Plan would provide fire insurance coverage in the amount of $60,000 for a premium of $650. [2] The agency never paid the Fair Plan premium. [3] Stella never told the plaintiff that the agency was departing, in this instance, from its customary practice of advancing the required premiums[214 Conn. 488] to the insurer. Because the premium was never paid, no insurance was issued by the Fair Plan, and the property remained uninsured without the plaintiff's knowledge. [4] On July 4, 1986, the house at 319 Rocky Hill Avenue was destroyed by fire. Damage to the building exceeded $60,000.

After the fire, the plaintiff refused to sell the property to Pascale, and Pascale brought suit against her, seeking specific performance of their contract. On October 3, 1986, the plaintiff reached a new agreement with Pascale, whereby he agreed to withdraw his suit, and she agreed to sell the property for the original sales price of $190,000. The plaintiff also agreed to institute an action against the defendants for their failure to obtain insurance on the property and to divide the proceeds of any recovery with Pascale.

The plaintiff then brought the present action against the defendants in two counts, claiming: (1) that both defendants were negligent in failing to obtain insurance on the property; and (2) that the defendant agency breached its contract to obtain insurance on the property. On July 21, 1988, the trial court found the defendants jointly and severally liable on the negligence count and found the agency liable on the breach of contract count. The trial court then awarded $60,000 damages on the negligence count and, in the alternative, $60,300 damages on the contract count. [5]

[214 Conn. 489] The defendants appealed to the Appellate Court, claiming that the trial court had erred in concluding that the plaintiff had suffered actual loss, inasmuch as she had obtained the same price for her property after it had been damaged by fire as she would have obtained Before the fire occurred. In Rametta v. Stella, 19 Conn.App. 223, 562 A.2d 67 (1989), the Appellate Court affirmed the trial court's judgment. The Appellate Court concluded that the defendants' negligence resulted in an immediate loss to the plaintiff of the value of the fire insurance policy that should have been in effect at the time of the fire. The Appellate Court further concluded that the plaintiff's subsequent renegotiation of the agreement to sell the property was completely independent of and collateral to the defendants' acts of negligence and their resulting liability. The defendants filed a petition for certification to appeal to this court, which we granted, limited to the certified issues previously stated.

An action against an insurance agent for failure to obtain insurance may be brought under a theory of either negligence or breach of contract. Ursini v. Goldman, 118 Conn. 554, 559-60, 173 A. 789 (1934). The measure of the plaintiff's damages is the amount that should have been recovered under the policy. Id., 563. In the present case, the trial court determined that the defendants' negligence resulted in an immediate loss to ...

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