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21st Century North American Insurance Co. v. Perez

Court of Appeals of Connecticut

November 7, 2017

21ST CENTURY NORTH AMERICAN INSURANCE COMPANY
v.
GLENDA PEREZ ET AL.

          Argued May 23, 2017

          Yelena Akim, for the appellant (plaintiff).

          Adam F. Acquarulo, for the appellee (defendant PV Holding Corp.).

          John-Henry M. Steele, for the appellee (defendant Gregory C. Norsiegian, Administrator [Estate of Leoner Negron]).

          Prescott, Beach and Mihalakos, Js.

         Syllabus

         The plaintiff automobile insurer commenced this action for a declaratory judgment determining whether it had validly cancelled an automobile insurance policy that it had issued to the insured defendants, P and S, and, thus, that it had no duty to defend or indemnify them following S's subsequent involvement in an automobile accident that resulted in a fatality. The defendant N, as the administrator of the estate of L, raised several special defenses and filed a counterclaim alleging that the cancellation notice sent by the plaintiff to P and S was fatally defective. The trial court found that P and S had failed to send the installment payment required for the month of June and had received a notice of cancellation, which indicated that they could cure the default by making both the June payment and the July payment within fifteen days, or else their coverage would expire. The court, which found that P and S had failed to make the full payment required by the notice prior to the expiration of coverage, but that they had made a partial payment in an amount slightly less than the amount of the June payment, concluded that the amount stated in the notice as the amount due, which was the equivalent of two monthly installments, was inaccurate, as the amount actually due was the amount of the June payment only, and that P and S had substantially complied with their obligations under the policy by sending the partial payment. The trial court rendered judgment in favor of the defendants on the complaint and counterclaim, and the plaintiff appealed to this court.

         Held:

1. The trial court's finding that the amount that was actually due when the plaintiff sent its notice of cancellation was the amount of the June payment, and not the amount listed on the cancellation notice, was clearly erroneous; the testimony and documentary evidence adduced at trial indicated that the cancellation notice provided P and S with the opportunity to cure their default for failing to timely make the June payment by making a payment equivalent to two installments before the cancellation date in order to remain current on their regular installment billing schedule, and there was no evidentiary support for a contrary finding nor any authority for the proposition that the amount specified as necessary to resume regular installment payments cannot exceed the initial amount of the default.
2. The trial court improperly applied the doctrine of substantial compliance to excuse the default by P and S in light of the partial payment that they had made following their receipt of the notice of cancellation; the defendants provided no authority for the proposition that the doctrine of substantial compliance or performance applies in the context of the payment of automobile insurance premiums due on a monthly installment basis, and although the substantial compliance doctrine was an equitable rule that excused technical contractual breaches in certain contexts, it had no application in the context of automobile insurance payments due on a monthly installment basis and could not excuse the failure of P and S to make full payment of the monthly installment due under the policy under the circumstances here, where the timely payment of the automobile insurance premiums due on a monthly installment basis was an essential and material condition to coverage under the policy and the contractual breach was material in nature, as there could be no substantial performance where the performance owed was the payment of money and time was of the essence.
3. This court declined to review N's unpreserved claims that the cancellation notice violated the Connecticut Unfair Insurance Practices Act (§ 38a-815 et seq.), the Connecticut Unfair Trade Practices Act (§ 42-110a et seq.), and the Creditors' Collection Practices Act (§ 36a-645 et seq.), as N failed to allege any such violations in his counterclaim and those claims were not raised before, or decided by, the trial court.
4. The trial court improperly rendered judgment in favor of the defendants, as the plaintiff demonstrated that it had validly cancelled the automobile insurance policy it had issued to P and S: an insurer is authorized by statute (§ 38a-342) to cancel an insurance policy due to nonpayment of premium provided that, pursuant to statute (§ 38a-343), the insurer sends notice of cancellation in a certified manner, provides notice within a proscribed period of time with respect to nonpayment of the premium due, provides a statement of the reason for cancellation, and advises the insured of possible ramifications involving the Commissioner of Motor vehicles, and the record in the present case indicated that the plaintiff complied with those requirements; moreover, the plaintiff offered P and S an opportunity to avert cancellation and thereby resume regular installment payments by making a payment equivalent to two installment payments by the date of cancellation, which they failed to do.

         Procedural History

         Action for a declaratory judgment that, inter alia, an insurance policy issued to the named defendant et al. had been cancelled for nonpayment of premiums, brought to the Superior Court in the judicial district of Hartford, where the defendant Gregory C. Norsiegian, the administrator of the state of Leoner Negron, filed a counterclaim; thereafter, the matter was tried to the court, Hon. Constance L. Epstein, judge trial referee; judgment for the defendants on the complaint and for the defendant Gregory C. Norsiegian, the administrator of the estate of Leoner Negron, on the counterclaim, from which the plaintiff appealed to this court; thereafter, the court, Hon. Constance L. Epstein, judge trial referee, denied the plaintiff's motion for an articulation. Reversed; judgment directed.

          OPINION

          BEACH, J.

         This appeal concerns the cancellation of an automobile insurance policy. The plaintiff, 21st Century North America Insurance Company, appeals from the judgment of the trial court in favor of the defendants, Glenda Perez, Ariel Seda, [1] Gregory C. Norsiegian, the administrator of the estate of Leoner Negron (administrator), Orlando Soto, Carmello Pacheco, Edgardo Contreras, Eric Valentin, John Skouloudis, and PV Holding Corporation (corporation). Becauseit allegedly complied with all applicable cancellation requirements contained in both the insurance policy and the General Statutes, the plaintiff claims that the court improperly failed to conclude that it validly had cancelled that policy. The plaintiff further claims that the court improperly applied the doctrine of substantial compliance to excuse nonpayment of the amount due to avert cancellation. We agree and, accordingly, reverse the judgment of the trial court.

         The relevant facts are not in dispute. The insured defendants purchased an automobile liability insurance policy from the plaintiff for a term of six months (policy). They made payments on an installment basis; the payments included a monthly ‘‘installment fee'' of $5. The insured defendants renewed the policy in May, 2012, and paid their first installment on May 10, 2012.

         The second installment of $62.24 was due before June 11, 2012.[2] When the insured defendants failed to make any payment on that installment, the plaintiff on June 19, 2012, sent them a certified notice of cancellation (cancellation notice).[3] That notice conveyed two important messages. First, it advised the insured defendants ‘‘that your insurance will cease at and from [12:01 a.m. on July 4, 2012] due to nonpayment of premium.'' Second, the cancellation notice provided the insured defendants with the opportunity to avert cancellation by making payment of $124.48 prior to the cessation of coverage on July 4, 2012.[4] The plaintiff at that time also sent the insured defendants a billing invoice stating that $124.48 was due before July 4, 2012.

         On June 26, 2012, the insured defendants made a partial payment of $62. In response, the plaintiff sent the insured defendants another billing invoice. That invoice acknowledged receipt of their partial payment and indicated that the remaining balance of $62.48 was ‘‘due before'' July 4, 2012. The invoice advised the insured defendants in relevant part that ‘‘if we do not receive the [remaining balance] by the date shown, your policy will be terminated. . . . [T]he payment must be received by 12:01 a.m. (one minute after midnight) Standard Time on [July 4, 2012] to avoid cancellation.'' It is undisputed that the insured defendants made no further payment to the plaintiff prior to that date.

         The ‘‘Statement of Account'' admitted into evidence, which documents activity on the policy, states that the policy was cancelled on July 4, 2012, due to ‘‘[n]on [p]ayment [e]ffective 07/04/12.'' On July 11, 2012, the plaintiff issued a refund of $5.01 to the insured defendants with respect to coverage that had been provided under the policy until July 4, 2012.

         On July 18, 2012, the insured defendants sent an additional payment of $62 to the plaintiff. On July 25, 2012, the plaintiff returned that payment to the insured defendants because the policy already had been cancelled.

         In the early morning hours of July 28, 2012, Seda was operating a 1996 Honda Accord previously covered under the policy. At approximately 2:26 a.m., Seda's vehicle collided with a 2013 Lincoln MKT near the intersection of Broad Street and Allen Place in Hartford. As a result of that collision, a passenger in the 2013 Lincoln was killed.

         On May 15, 2014, the plaintiff filed the present declaratory judgment action, in which it requested a declaration that (1) the policy ‘‘had been cancelled by virtue of the non-payment of premiums as of July 4, 2012''[5]and (2) the plaintiff had no duty to indemnify or to defend the insured defendants. On August 25, 2015, the administrator filed a counterclaim alleging that the cancellation notice was ‘‘fatally defective, '' in that it specified an ‘‘amount due'' in excess of the $62.24 installment amount that triggered that notice. The administrator also alleged, as a special defense, that the insured defendants ‘‘substantially performed all of their obligations under the policy.'' In answering the administrator's counterclaim, the plaintiff denied all allegations. The plaintiff, the administrator, and the corporation thereafter filed motions for summary judgment, which the court denied.

         A trial was held on October 7, 2015. The plaintiff submitted a dozen documents that were admitted into evidence. Among them was a copy of the policy, which provides in relevant part that the plaintiff may cancel the policy due to nonpayment of premiums. The plaintiff also offered the testimony of Diana Yeager, the plaintiff's underwriting staff consultant, who was familiar with the plaintiff's business records and general billing practices. During her testimony, Yeager detailed how the plaintiff arrived at the $124.48 figure as the amount necessary to cure the default and avoid cancellation of the policy, noting the distinction in the plaintiff's billing practices between ...


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