THERESA ANASTASIA v. GENERAL CASUALTY COMPANY OF WISCONSIN, SC 18766

Judicial District of New Haven

 Insurance; Whether Policy Language Relied on to Reduce Plaintiff's Underinsured Motorist Coverage was Invalid Because it was Ambiguous and Not Substantially Congruent with § 38a-334-6 of the Regulations of Connecticut State Agencies; Whether Reduction in Coverage Contravened Public Policy.  The plaintiff was involved in an automobile accident and sued the driver of the other vehicle (the tortfeasor) for compensatory, punitive and exemplary damages.  That lawsuit resulted in a settlement agreement in which the plaintiff received $100,000 designated compensatory damages and $315,000 designated punitive and exemplary damages.  The plaintiff then brought this action against her insurer to recover underinsured motorist benefits.  The defendant insurer moved for summary judgment, arguing that the policy and § 38a-334-6 of the Regulations of Connecticut State Agencies barred the plaintiff's claim because her coverage limit for underinsured motorist benefits was $250,000, and she had already received $415,000 from the tortfeasor.  The plaintiff's policy provides that the defendant may reduce her underinsured motorist coverage limit by deducting "all sums paid . . . because of bodily injury."  Based on this language, the defendant claimed that it could reduce the plaintiff's coverage by the settlement sums that she received for compensatory, punitive and exemplary damages.  The plaintiff, in turn, argued that this language is invalid because it is not substantially congruent with § 38a-334-6.  She claimed that § 38a-334-6 only authorizes a reduction in underinsured motorist coverage for damages that have been paid to compensate for bodily injuries and not for damages that have been paid to punish a wrongdoer for reckless misconduct, such as punitive or exemplary damages.  She thus claimed that the policy language is broader than that permitted by § 38a-334-6.  She also argued that the policy language is, at the very least, ambiguous and should be construed against the defendant and in favor of coverage.  The trial court rejected the plaintiff's arguments and rendered summary judgment for the defendant.  In so ruling, it found that the policy language is not ambiguous and that our Supreme Court has interpreted identical language to include sums paid for punitive and exemplary damages.  It next concluded that the policy language and § 38-334-6 permitted the defendant to reduce the plaintiff's underinsured motorist coverage by the entire settlement amount, regardless of the fact that a large portion of the settlement was for punitive and exemplary damages.  In this appeal, the plaintiff argues that the trial court improperly concluded that the relevant policy language was not ambiguous and was expressly permitted by § 38a-334-6.  She also argues that the trial court improperly allowed for a coverage reduction in violation of this state's public policy favoring the pursuit of punitive damages for reckless conduct as a means of deterring dangerous behavior.