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Tannone v. Amica Mutual Insurance Co.

Supreme Court of Connecticut

August 7, 2018

PATRICK TANNONE
v.
AMICA MUTUAL INSURANCE COMPANY SANDRA TANNONE
v.
AMICA MUTUAL INSURANCE COMPANY

          Argued February 27, 2018

         Procedural History

         Action, in each case, to recover underinsured motorist benefits allegedly due under automobile insurance policies issued by the defendant, brought to the Superior Court in the judicial district of Danbury, where the cases were consolidated; thereafter, the court, Truglia, J., granted the defendant's motions for summary judgment in each case and rendered judgments thereon, from which the plaintiff in each case filed separate appeals. Reversed; further proceedings.

          James Wu, with whom were Cynthia C. Bott and, on the brief, James D. Horwitz, for the appellants (plaintiffs).

          Sean R. Caruthers for the appellee (defendant).

          Palmer, D'Auria, Mullins, Kahn and Vertefeuille, Js.

          OPINION

          D'AURIA, J.

         In these appeals, we again consider whether an automobile insurance policy containing underinsured motorist coverage, as required by state law, can validly exclude benefits to the insured when the owner of the underinsured vehicle is a rental car company designated as a ‘‘self-insurer'' by the Insurance Commissioner (commissioner) pursuant to General Statutes § 38a-371 (c). We first addressed this issue in Orkney v. Hanover Ins. Co., 248 Conn. 195, 202-206, 727 A.2d 700 (1999), and upheld the validity of § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, which authorizes an exclusion from the underinsured motorist coverage requirement for ‘‘uninsured or underinsured vehicle[s] . . . owned by . . . a self-insurer under any motor vehicle law . . . .''[1] We came to this conclusion because self-insurers are statutorily required to prove their ability to pay judgments when liable, rendering underinsurance coverage unnecessary in those situations. Orkney v. Hanover Ins. Co., supra, 204-206; see General Statutes §§ 14-129 (b) and 38a-371 (c). Therefore, we decided in Orkney that there was ‘‘nothing inconsistent between the public policy underlying underinsured motorist coverage and a regulation that permits a coverage exclusion'' for vehicles owned by self-insurers. Orkney v. Hanover Ins. Co., supra, 206.

         The factual setting in the present case is similar to that in Orkney, but the legislative landscape has changed. In both the present case and in Orkney, the plaintiff insureds were injured by an underinsured lessee driving a rental car owned by a self-insured rental car company. See id., 197-99. The insureds were denied underinsured motorist benefits under their policies because those policies contained a self-insurer exclusion. Id., 199-200.

         Since our decision in Orkney, however, Congress passed legislation prohibiting rental car companies from being held vicariously liable for the negligence of their lessees. Specifically, Title 49 of the 2012 edition of the United States Code, § 30106 (a), commonly known as the Graves Amendment; see Rodriguez v. Testa, 296 Conn. 1, 4 n.2, 993 A.2d 955 (2010); makes rental car companies immune from vicarious liability for injuries caused by their underinsured lessees-even if a state has designated that company as a self-insurer capable of providing a remedy. Thus, under current law, when the plaintiffs in the present case were denied underinsured motorist benefits pursuant to their policies because of the self-insurer exclusion, they were effectively left without a remedy because they are precluded under the Graves Amendment from recovering from the self-insured rental car company.

         We are therefore asked in these appeals to reassess, in light of this development in federal law, whether § 38a-334-6 (c) (2) (B) of the Regulations of Connecticut State Agencies, which authorizes the self-insurer exclusions in these insurance policies, remains valid as applied to rental car companies. We conclude that, in this scenario, the state regulation conflicts with the public policy manifested in General Statutes § 38a-336 (a) (1) that requires insurance policies to provide underinsured motorist coverage, and, thus, § 38a-334-6 (c) (2) (B) of the regulations is invalid as applied.

         I

         The following undisputed facts and procedural history are relevant to this appeal. The plaintiffs, Sandra and Patrick Tannone, were lawfully crossing the street when they were struck and seriously injured by an automobile. That automobile was a rental car owned by EAN Holdings, LLC, more commonly known as Enterprise Rent-A-Car (Enterprise). Enterprise had leased the vehicle to Barbara Wasilesky, but she was not driving at the time of the collision. The vehicle was instead operated by a permitted user named Arthur Huffman.

         Wasilesky, the lessee, was the named insured on an automobile insurance liability policy that provided bodily injury coverage in the amounts of $20, 000 per person and $40, 000 per occurrence-the minimum allowable in Connecticut at the time. General Statutes §§ 38a-336 (a) (1) and 14-112 (a).[2] The plaintiffs made a claim against Wasilesky, as the lessee, and Huffman, as the vehicle operator, and the parties settled for the full amount of coverage from Wasilesky's policy, namely, $20, 000 each.[3] Wasilesky and Huffman have no other insurance coverage, and the plaintiffs claim that their damages exceed what they recovered under Wasilesky's insurance policy.

         At the time of the collision, the defendant, Amica Mutual Insurance Company (Amica), insured the plaintiffs through separate policies. Each of their policies carried $500, 000 of coverage for personal injuries sustained due to the negligence of an underinsured driver.[4]This underinsured motorist coverage, however, excluded from the term ‘‘ ‘underinsured motor vehicle' '' any vehicle ‘‘[o]wned . . . by a self-insurer under any applicable motor ...


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