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Veilleux v. Progressive Northwestern Insurance Co.

United States District Court, D. Connecticut

September 13, 2018

ERIC VEILLEUX Plaintiff,
v.
PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, et al. Defendants.

          RULING ON MOTION FOR SUMMARY JUDGMENT

          MICHAEL P. SHEA, U.S.D.J.

         I. Introduction

         This case involves an injured party's suit to collect a judgment obtained against two tortfeasors from their insurers. The plaintiff, Eric Veilleux, brought suit against the defendants, Progressive Insurance Company (“Progressive”) and Nautilus Insurance Company (“Nautilus”), to collect on a stipulated judgment entered against Central Auto & Transport, LLC (“Central Auto”) and Central Rigging & Transfer, LLC (“Central Rigging”). This Court previously approved a stipulation of dismissal with respect to the claims against Nautilus (see ECF No. 78; ECF No. 76); hence, Progressive is the lone remaining defendant. Veilleux's remaining claims against Progressive include the following: (i) a direct action under Conn. Gen. Stat. § 38a-321 against Progressive for the full amount of a $750, 000 insurance policy provided to Central Auto (count one); (ii) a common law claim for the same amount advanced under an assignment of rights from Central Auto to Veilleux (count two); (iii) a common law claim for the same amount as a judgment creditor of Central Auto and/or as a third party beneficiary of the policy between Central Auto and Progressive (count three); (iv) a claim for breach of the implied covenant of good faith and fair dealing on the basis of Progressive's failure to honor Central Auto's policy (count four); (v) a direct action under Conn. Gen. Stat. § 38a-321 against Progressive for the full amount of a $1, 000, 000 insurance policy provided to Central Rigging (count five); (vi) a common law claim for the same amount advanced under the assignment of rights from Central Rigging to Veilleux (count six); and (vii) a claim for breach of the implied covenant of good faith and fair dealing on the basis of Progressive's failure to honor Central Rigging's policy (count seven). Now before me is Progressive's motion for summary judgment. (ECF No. 81.) For the following reasons, this motion is denied.

         II. Background

         A. Factual Background[1]

         The following facts, which are taken from the parties' Local Rule 56(a) Statements and the exhibits, are undisputed unless otherwise indicated. Progressive issued a “Commercial Auto Policy . . . to Central Auto & Transport, LLC (“Central Auto”), with effective dates of June 2, 2006, to June 2, 2007” (“Policy 1”). (ECF No. 83, Defendant's Local Rule 56(a)1 Statement (“Def.'s L.R. 56(a)1 Stmt.”) at ¶ 1); ECF No. 87, Plaintiff's Local Rule 56(a)2 Statement (“Pl.'s L.R. 56(a)2 Stmt.”) at ¶ 1.) Progressive issued a “commercial Auto Policy . . . to Central Rigging & Transfer, LLC (“Central Rigging”), with effective dates of March 10, 2006 to March 10, 2007” (“Policy 2”). (Def.'s L.R. 56(a)1 Stmt. at ¶ 11; Pl.'s L.R. 56(a)2 Stmt. at ¶ 11.) At the time of Veilleux's accident, Central Rigging, Central Auto, and “Central Construction Services, LLC, each conducted business under the name of ‘Central Group' as well as under each of their separate corporate names.” (Def's L.R. 56(a)1 Stmt. at ¶ 21; Pl.'s L.R. 56(a)2 Stmt. at ¶ 21.) All three entities “acted in concert, in a joint venture and as a commingled, single entity in regards to the acts and omissions described in the plaintiff's operative complaint.” (Def's L.R. 56(a)1 Stmt. at ¶ 22; Pl.'s L.R. 56(a)2 Stmt. at ¶ 22.)

         Veilleux “alleges that on September 8, 2006, he was employed by GDS Contracting, LLC (‘GDS') in Berlin, Connecticut, and was working on GDS's premises.” (Def's L.R. 56(a)1 Stmt. at ¶ 24; Pl.'s L.R. 56(a)2 Stmt. at ¶ 24.) On that day, according to Veilleux's complaint, “Joseph Cunningham was acting as the agent, servant and/or employee of Central Rigging.” (Def's L.R. 56(a)1 Stmt. at ¶ 25; Pl.'s L.R. 56(a)2 Stmt. at ¶ 25.) Cunningham allegedly “drove onto GDS'[s] premises in a tractor labeled ‘Central Rigging,' pulling a trailer labeled ‘Central Auto and Transport' . . . .” (Def's L.R. 56(a)1 Stmt. at ¶ 26; Pl.'s L.R. 56(a)2 Stmt. at ¶ 26.) Cunningham, who had arrived on the premises “to deliver an aerial lift, ” either asked or directed that Veilleux “assist him in unloading the aerial lift from the trailer.” (Def's L.R. 56(a)1 Stmt. at ¶ 28 (“[Veilleux] alleges that on September 8, 2006, Joseph Cunningham asked [Veilleux] to assist [Cunningham] in unloading the aerial lift from the trailer.”); Pl.'s L.R. 56(a)2 Stmt. at ¶ 28 (“Denied, that Joseph Cunningham ‘asked' [Veilleux] to assist him in unloading the aerial lift from the trailer. Whether it was a ‘request' or a ‘directive' based upon the instruction to [Veilleux] by his boss to assist the driver is a question of fact.”).) This task required Veilleux “to get into the bucket of the aerial lift”; “when he was in the bucket, Joseph Cunningham raised the trailer portion of the flatbed trailer and, at that time, the chain securing the aerial lift broke and the lift rolled off the trailer and crashed into a building adjacent to the GDS premises.” (Def's L.R. 56(a)1 Stmt. at ¶¶ 29-30; Pl.'s L.R. 56(a)2 Stmt. at ¶¶ 29-30.) According to Veilleux's complaint, this resulted in him being “pinned between the bucket of the lift and the wall and sustain[ing] severe injuries.” (Def's L.R. 56(a)1 Stmt. at ¶ 31; Pl.'s L.R. 56(a)2 Stmt. at ¶ 31.)

         “On or about November 27, 2007, Louis N. George, Esq. of Hassett & George, P.C., sent a letter to Howland & Sargent” inquiring as to coverage for “Central Auto & Transport, LLC and its related entities.” (Def's L.R. 56(a)1 Stmt. at ¶ 35; Pl.'s L.R. 56(a)2 Stmt. at ¶ 35; ECF No. 83-5 at 77 (“George Letter”)) The “Howland & Sargent Group sent a Memo to [Progressive] (the ‘Howland Memo')” containing the letter on December 5, 2007. (Def's L.R. 56(a)1 Stmt. at ¶ 36; Pl.'s L.R. 56(a)2 Stmt. at ¶ 36.) “On December 10, 2007, Margaret Bertone of Progressive sent a letter to Central Rigging regarding a possible claim under [Policy 2] arising from the September 8, 2006 incident involving [Veilleux.].” (Def's L.R. 56(a)1 Stmt. at ¶ 37; Pl.'s L.R. 56(a)2 Stmt. at ¶ 37.)[2] On that same day, she also “sent a letter to Attorney Steve McEleney regarding a possible claim under [Policy 2] arising from the September 8, 2006 incident involving [Veilleux].” (Def's L.R. 56(a)1 Stmt. at ¶ 38; Pl.'s L.R. 56(a)2 Stmt. at ¶ 38.) “On February 26, 2008, Lawrence D. Leeders of Progressive sent a letter to Attorney Louis George regarding a possible claim under [Policy 2] arising from the September 8, 2006 incident involving [Veilleux].” (Def's L.R. 56(a)1 Stmt. at ¶ 39; Pl.'s L.R. 56(a)2 Stmt. at ¶ 39.) A day later, Leeders “sent a letter to Tony Crane of Central Rigging regarding a possible claim under [Policy 2] arising from the September 8, 2006 incident . . . .” (Def's L.R. 56(a)1 Stmt. at ¶ 40; Pl.'s L.R. 56(a)2 Stmt. at ¶ 40.)

         “On May 20, 2008, [Leeders] sent a letter to [Attorney George] regarding Progressive's coverage position with respect to any potential claims under [Policy 2]”; the letter denied coverage under Policy 2. (Def's L.R. 56(a)1 Stmt. at ¶ 41; Pl.'s L.R. 56(a)2 Stmt. at ¶ 41; ECF No. 83-5, Def.'s Ex. 21 (“Denial of Coverage Letter”) at 4.) “On or about October 30, 2008, Progressive received a letter from [Attorney George] regarding a lawsuit filed by [Veilleux] against Central Rigging.” (Def's L.R. 56(a)1 Stmt. at ¶ 42; Pl.'s L.R. 56(a)2 Stmt. at ¶ 42.) “On or about February 12, 2015, [Progressive] received a letter from John P. Clifford, Jr., Esq. regarding a claim against Central Auto under [Policy 1].” (Def's L.R. 56(a)1 Stmt. at ¶ 43; Pl.'s L.R. 56(a)2 Stmt. at ¶ 43.) On that same day, Progressive received another letter from Attorney Clifford “regarding a claim against Central Rigging under [Policy 2].” (Def's L.R. 56(a)1 Stmt. at ¶ 45; Pl.'s L.R. 56(a)2 Stmt. at ¶ 45.)

         B. Veilleux's Complaint

         Veilleux makes the following allegations in his complaint. (See ECF No. 17-1 (“Complaint”).) He alleges that he filed suit in Hartford Superior Court “[o]n or about September 3, 2008 . . . seeking recovery from [Central Auto and Central Rigging] for the severe, serious, and disabling injuries” he suffered. (Id. at Count 1, at ¶ 5[3].) On March 30, 2016, Veilleux entered into a stipulation with Central Auto and Central Rigging, “upon which judgment entered on said date, wherein [both companies] stipulated to liability for the injuries suffered by [Veilleux] as aforesaid, and to judgment in favor of [Veilleux] in the amount of Three Million Seven Hundred and Fifty Thousand Dollars ($3, 750, 000), plus costs.” (Id. at Count One, at ¶ 6; Id. at Count Five, at ¶ 7). Veilleux contends that Central Auto and Central Rigging were both insured for liability for such injuries by Progressive at the time of his accident, and that Progressive “neglected and/or refused to provide coverage” to Central Auto and Central Rigging despite its obligation to “insure and defend” them. (Id. at Count One, at ¶¶ 7-11; Id. at Count Five, ¶¶ 7-11.)

         Veilleux's claims against Progressive include the following: (i) a direct action under Conn. Gen. Stat. § 38a-321 against Progressive for the full amount of a $750, 000 insurance policy provided to Central Auto; (ii) a common law claim for the same amount advanced under the assignment of rights from Central Auto to Veilleux; (iii) a common law claim for the same amount as a judgment creditor of Central Auto and/or as a third party beneficiary of the policy between Central Auto and Progressive; (iv) a claim for breach of the implied covenant of good faith and fair dealing on the basis of Progressive's failure to honor Central Auto's policy; (v) a direct action under Conn. Gen. Stat. § 38a-321 against Progressive for the full amount of a $1, 000, 000 insurance policy provided to Central Rigging; (vi) a common law claim for the same amount advanced under the assignment of rights from Central Rigging to Veilleux; and (vii) a claim for breach of the implied covenant of good faith and fair dealing on the basis of Progressive's failure to honor Central Rigging's policy. (See generally id.)

         III. Standard of Review Summary judgment is appropriate only when the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “In making that determination, a court must view the evidence in the light most favorable to the opposing party.” Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (internal quotation marks omitted). “A fact is material if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007) (internal quotation marks omitted). The moving party bears the burden “of showing that no genuine factual dispute exists . . ., and in assessing the record to determine whether there is a genuine issue as to any material fact, the court is required to resolve all ambiguities and draw all factual inferences” in favor of the non-moving party. Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 203 (2d Cir. 1995).

         IV. Discussion

         A. Claims Concerning Coverage

         Conn. Gen. Stat. § 38a-321, otherwise known as the “direct action statute, ” see Tucker v. Am. Int'l Grp., Inc., 936 F.Supp.2d 1, 13 (D. Conn. 2013), provides in relevant part as follows:

Each insurance company which issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become absolutely liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty. . . . Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment.

         Conn. Gen. Stat. § 38a-321. A plaintiff must make three showings to set out a cause of action under this statute: “(1) that the plaintiff has recovered a final judgment; (2) that the judgment is against a person who was insured by the defendant against liability on it; and (3) that the judgment remains unsatisfied.” Tucker, 936 F.Supp.2d at 8, quoting Skut v. Hartford Accident & Indemnity Co., 142 Conn. 388, 393 (1955). If the judgment remains unsatisfied “for more than 30 days, the injured party is subrogated to the rights of the insured defendant and may proceed with the action to the same extent that the defendant could have enforced his claim against the insurer.” Id. In its motion for summary judgment, Progressive contends that neither Policy 1 nor Policy 2 provide coverage for Veilleux's judgment against Central Auto and Central Rigging. (See ECF No. 81 at 1-2.)

         An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract . . . .” Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1, 5 (2008) (internal quotation marks omitted). Thus, “[t]he determinative question is the intent of the parties, that is, what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . . If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning.” Id. (internal quotation marks omitted). “When interpreting [an insurance policy], [a court] must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result.” Johnson v. Connecticut Ins. Guar. Ass'n, 302 Conn. 639, 643 (2011) (internal quotation marks omitted). “In determining whether the terms of an insurance policy are clear and unambiguous, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.” Id. An insurance policy “is ambiguous when it is reasonably susceptible to more than one reading.” Id. In such circumstances, “any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy.” Id. at 643 (internal quotation marks omitted).

         Progressive makes several arguments in favor of its contention that neither of its Policies cover Veilleux's claim against Central Auto and Central Rigging. I address each of these arguments in turn.

         1. The Applicability of the Motor Carrier Act Endorsement

         The parties dispute whether the Motor Carrier Act Endorsement (“MCS-90 endorsement”) provides coverage for Veilleux's claim against Central Auto under Policy 1. In 1980, Congress enacted the Motor Carrier Act (“MCA”), which, among other things, directed the “Secretary of Transportation [to] prescribe regulations [requiring] minimum levels of financial responsibility” for motor carriers engaged in interstate commerce “sufficient to satisfy liability amounts established by the Secretary covering public liability, property damage, and environmental restoration . . . .” 49 U.S.C. § 31139(b). “Such financial responsibility could be established by evidence of insurance . . . reflected in an insurance policy endorsement on ‘Form MCS-90B' . . . .” Lyons v. Lancer Ins. Co., 681 F.3d 50, 53 (2d Cir. 2012) (citing 49 C.F.R. § 387.31(d)(1)). The parties are in agreement that Policy 1 contains an MCS-90 endorsement in satisfaction of Progressive's obligations under the MCA. (See Def's L.R. 56(a)1 Stmt. at ¶ 4; Pl.'s L.R. 56(a)2 Stmt. at ¶ 4; ECF No. 83-1 at 16 (the MCS-90 endorsement).) The parties' sole dispute is whether the MCS-90 could apply to the incident in this case, which both parties agree took place as a result of intrastate travel. (Compare ECF No. 82 at 15 (arguing that MCS-90 endorsement does not cover intrastate trips) with ECF No. 86 at 12-16 (conceding trip that resulted in Veilleux's injuries involved only intrastate travel but arguing that MCS-90 endorsement applied anyway).)

         As noted above, the MCA requires only those carriers engaged in interstate commerce to demonstrate the “financial responsibility” encapsulated in the MCS-90 endorsement. See 49 U.S.C. § 31139(b); Lyons v. Lancer Ins. Co., 681 F.3d 50, 58 (2d Cir. 2012) (discussing the “requisite interstate nexus” for the application of the MCS-90 endorsement). The majority of courts, including the Second Circuit and the Connecticut Supreme Court, apply a “trip-specific approach” to determine whether this “requisite interstate nexus” exists in a case-i.e., they look to see if the specific trip that resulted in the loss at issue was interstate in nature. See Lyons, 681 F.3d at 60 (rejecting coverage claim under MCS-90 on basis that trip that resulted in loss was entirely intrastate in nature); Martinez v. Empire Fire & Marine Ins. Co., 322 Conn. 47, 59, 62 (2016) (adopting the “trip-specific approach” used by the Second Circuit in Lyons and listing cases from other Circuits adopting the same approach). Here, as noted, the parties agree that the trip resulting in Veilleux's injuries was intrastate.

         This does not resolve the matter, however, as there remains the question of whether Connecticut law has expanded coverage under the MCS-90 endorsement. In Martinez, the Connecticut Supreme Court noted that “although the ‘trip-specific' interpretation limits the application of federally mandated insurance coverage to trips that are interstate in nature, the states nevertheless remain free to create their own regulations governing insurance requirements for motor carrier transportation within their state borders.” See Martinez, 322 Conn. at 63 (citing Thomas Hershewe, Hiding in Plain Sight, Trial, February 2015, at 46, 48). The Martinez court went on to note that “Connecticut has adopted regulations that generally mirror the federal regulations and that apply to motor carriers engaging in intrastate travel.” Id. (citing Con. Agencies Regs. § 14-163c-1 et seq.). The cited regulations adopt portions of the MCA, including the “financial responsibility” provision noted above, “as regulations of the Department of Motor Vehicles.” See Conn. Agencies Regs. 14-163c-1 (adopting “Part 387 [of the MCA], Minimum Levels of Financial Responsibility for Motor Carriers”); see also Chmura v. Connecticut Dep't of Motor Vehicles, No. CV084020932S, 2010 WL 6496184, at *3 (Conn. Super. Ct. Aug. 31, 2010) (“Pursuant to Regulation § 14-163c-1, parts of the Code of Federal Regulations, were incorporated by reference as regulations of the [Department of Motor Vehicles] . . . .”).

         Connecticut regulations in turn apply the federal regulations, including the MCS-90 endorsement, to “[a]]ny motor vehicle in intrastate commerce that has a gross vehicle weight rating, or gross combination rating, or gross vehicle or gross combination weight, of eighteen thousand one (18, 001) or more pounds . . . .” See Conn. Agencies Regs. 14-163c-2 (emphasis added) (noting that the “regulations adopted in accordance with [Conn. Agencies Regs. 14-163-1] shall apply to [various categories of vehicles]”); Conn. Gen. Stat. § 14-163c(a) (authorizing the Commissioner of Motor Vehicles to adopt regulations incorporating federal regulations, including the one specifying the MCS-90 endorsement, and to make them applicable to certain motor vehicles or carriers “in intrastate commerce”); Thomas Hershewe, Hiding in Plain Sight, Trial, February 2015, at 46, 48-49 (noting that some states, including Connecticut, have adopted the federal motor carrier regulations-including the MCS-90 endorsement-into state law and that “[b]y virtue of the state's incorporation, . . . intrastate vehicle[s] [are] subject to the financial responsibility requirements, and the MCS-90 should apply”). Thus, although the federal regulations permitting use of the MCS-90 apply only to interstate travel, the State of Connecticut has expanded liability under the MCS-90 to certain types of intrastate travel.

         Progressive argues that “it is irrelevant that the State of Connecticut, in promulgating state regulations regarding intrastate commerce, has adopted certain sections of the Code of Federal Regulations” and that this legislation “does not preempt or otherwise alter the federal minimum levels of financial responsibility, ” including the MCS-90 endorsement. (See ECF No. 88 at 2.) This argument misses the mark. While Progressive is correct that Connecticut's regulations do not alter the federal minimum level of coverage provided by the MCS-90 endorsement, the regulations do alter the level of protection afforded under state law. Thus, even if the MCS-90 endorsement does not apply to intrastate travel as a matter of federal law, it does apply to certain types of intrastate travel under Connecticut law. Progressive also argues that the Martinez court suggested otherwise, noting that the court stated, “we observe that, although the ‘trip-specific' interpretation limits the application of federally mandated insurance coverage to trips that are interstate in nature, the states nevertheless remain free to create their own regulation governing insurance requirements for motor carrier transportation within their state borders.” (See ECF No. 88 at 3 (emphasis in original) (citing Martinez, 322 Conn. at 63).) This argument, like Progressive's previous argument, misses the fact that Connecticut has adopted the federally mandated insurance coverage of the MCS-90 and expanded it to certain intrastate carriers. Thus, the MCS-90 endorsement applies to certain categories of intrastate travel as a matter of Connecticut state law.

         Veilleux asserts in his Local Rule 56(a) Statement that the tractor involved in this case weighed more than 18, 001 pounds. (See Pl.'s L.R. 56(a)2 Stmt. at ¶ 7 (“The 1988 Volvo Aero tractor . . . is a vehicle with an unladen weight of 18, 500 pounds . . . .”). If so, that would make the MCS-90 applicable to this case. Progressive is therefore not entitled to summary judgment on its claim that the MCS-90 does not apply.

         2. The Applicability of the Hired Auto Coverage Endorsement

         The parties disagree on whether the so-called “Hired Auto Coverage Endorsement” could provide coverage for Veilleux's claims under Policy 2. The Hired Auto Coverage Endorsement contained in Policy 2 provides, in relevant part, as follows:

Except as specifically modified in this endorsement, all provisions of the Commercial Auto Policy Apply. We agree with you that the insurance provided under your Commercial Auto Policy is modified as follows:
. . .
When used in this Endorsement, whether in the singular, plural, or possessive: 1. “Hired auto” means an auto you lease, hire, rent or borrow. This does not include any auto you lease, hire, rent or borrow from any of your employees, partners (if you are a partnership), members (if you are a limited liability company) or member of their households.
. . .
When used in Part I - Liability to Others, the definition of insured auto is amended ...

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