NATIONAL GRANGE MUTUAL INSURANCE COMPANY v.

FELIX C. SANTANIELLO et al., SC 17961

Judicial District of New Britain

     Insurance; Whether Cancellation Notice sent to Insurer Constituted an "Endorsement"; Whether Insurance Policy Provided Coverage for Three Dealer Plates or Four Dealer Plates; Whether Sale or Lease of a Used Vehicle Constitutes a "Garage Operation" as that Term is Defined in Policy.  National Grange Mutual Insurance Company (NGMIC) issued an insurance policy to Carbone's Auto Body, Inc., that provided coverage for three dealer plates, even though Carbone's had requested coverage for four dealer plates.  In February, 2003, NGMIC, with Carbone's consent, cancelled coverage for the three dealer plates.  On May 20, 2003, Carbone's agreed to sell a used Plymouth Voyager to Nikolas Topintzis.  Because Carbone's was unable to transfer title to the Voyager at the time, Carbone's loaned the Voyager to Topintzis with a dealer plate attached.  On May 26, 2003, while driving the Voyager, Topintzis was involved in an accident that resulted in the death of Elizabeth Santaniello and serious injuries to Felix C. Santaniello.  Subsequently, NGMIC brought this action seeking a declaratory judgment that it had no obligation to defend or indemnify Carbone's and Topintzis in a negligence action instituted by the Santaniellos.  The defendants, first, argued that because NGMIC mistakenly issued a policy that covered only three dealer plates, NGMIC should be equitably estopped from denying coverage as to the fourth dealer plate.  Noting that Carbone's continued to use all four dealer plates even though it had cancelled coverage for three of them, the trial court rejected the defendants' equitable estoppel claim, ruling that, under the circumstances, it was not inequitable for NGMIC to deny coverage for the fourth dealer plate.  Next, the defendants claimed that the Voyager was covered under the "covered autos" and "garage business" clauses of the policy.  The court observed that the defendants' claim was predicated on their belief that the sale or lease of a used car constituted a "garage operation" under the policy.  "Garage operations" are defined in the policy as including "all operations necessary or incidental to a garage business," and the declaration page, in turn, defines "garage business" as a "repair shop."  Noting that the sale or lease of a used car is not one of the activities that a motor vehicle "repairer" was authorized to perform under General Statutes § 14-51 (a) (3), the court rejected the defendants' claim, ruling that the selling of the Voyager by Carbone's was not a use "necessary or incidental to" a repair shop.  Accordingly, the court rendered judgment declaring that the Voyager was not covered by the policy.  On appeal, noting that the policy, by its terms, could only be amended by "endorsement," the defendants claim that the cancellation notice sent to Carbone's did not constitute an "endorsement" because it was not captioned: "THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY."  The defendants also challenge the trial court's conclusion that (1) the policy provided coverage for only three dealer plates, and (2) the Voyager was not covered by the "covered autos" clause and/or the "garage business" clause of the policy.