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Fiallo v. Allstate Insurance
Citations: 138 Conn. App. 325; 51 A.3d 1193; 2012 WL 4372954; 2012 Conn. App. LEXIS 436Docket: AC 32766
Court: Connecticut Appellate Court; October 2, 2012; Connecticut; State Appellate Court
Mario Fiailo appeals the trial court's judgment that denied his request to amend his complaint to include bad faith claims against Allstate Insurance Company after a jury ruled in his favor. The court also granted Allstate's motion to reduce the jury's verdict from $95,000 to $24,596.29, based on the terms of the plaintiff's insurance policy, which allowed for offsets due to amounts received from the at-fault party and workers' compensation benefits. The incident in question occurred on July 24, 2006, when Fiailo, while working at Eagle Hill School, was injured by a vehicle driven by Michelle Igesias, who had a $20,000 insurance policy. Fiailo received the full amount from Igesias and subsequently pursued a claim against Allstate under the underinsured motorists provision of his policy. During the jury trial from May 25-27, 2010, the jury was tasked with determining the extent of Fiailo's injuries; they awarded him $30,287.14 in economic damages and $64,712.86 in noneconomic damages. The court noted that issues related to reducing the underinsured motorist coverage were reserved for post-verdict determination. Allstate moved to reduce the verdict to zero based on the insurance policy, and Fiailo requested to amend his complaint on June 11, 2010, to include claims for breach of good faith, breach of contract, and violations of state insurance practices. The court denied this request, along with subsequent motions to reargue and reconsider. Ultimately, the judgment was rendered at $24,596.29, prompting Fiailo's appeal. He contends that the court erred by not allowing the amendment after the jury's verdict and incorrectly predicted that his bad faith claims could be pursued separately after the conclusion of the trial. The appellate court affirmed in part and reversed in part the trial court's judgment. On June 11, 2010, the plaintiff sought to amend his complaint against Allstate to include new claims of breach of the covenant of good faith, breach of contract, and violations of CUIPA and CUTPA, based on evidence revealed during the trial. The proposed five-count amended complaint kept the first count identical to the original and asserted that Allstate failed to properly investigate the claim, make good faith settlement efforts, disclose reasons for refusal to negotiate, and improperly refused to settle within policy limits. During a June 22, 2010 hearing, the court indicated that the amendment introduced new facts not presented at trial, which the plaintiff acknowledged. The plaintiff argued that he needed to raise these new claims to avoid being barred from pursuing them in future actions, citing the Supreme Court's stance on judgment-related estoppel. The court expressed skepticism about the merits of the amendment, questioning the basis for claiming bad faith when Allstate had defended itself, albeit unsuccessfully. The court required the plaintiff to provide stronger legal authority to support the proposed amendment and scheduled a subsequent hearing for mid-July. At the July 22, 2010 hearing, the plaintiff referenced Powell v. Infinity Ins. Co. to argue that he needed to amend his complaint to avoid res judicata. However, the court noted that Powell might not apply if the facts for the new claims were unknown at the time of the original trial. The court sought appellate authority to justify amending the complaint post-verdict, differentiating this case from Landry v. Spitz, where bad faith was litigated at trial, while in the current case, it was not. The plaintiff expressed suspicions of bad faith prior to the trial, but these did not solidify until afterward. When asked by the court for Connecticut case law supporting his request to bifurcate issues, the plaintiff failed to provide any authority, although he referenced cases where bifurcation was utilized for similar issues. The court noted that the cited cases already involved bad faith claims. The court denied the plaintiff's request to amend his complaint, explaining that motions to amend are subject to a standard of "abuse of discretion." The burden is on the plaintiff to demonstrate such abuse, and factors considered include the delay in amendment, fairness to opposing parties, and potential trial delays. The plaintiff contended the court erred by not allowing an amendment after the jury verdict, but both parties acknowledged the abuse of discretion standard. The court found no abuse in its denial, as the plaintiff repeatedly failed to provide persuasive legal authority. The court also referenced the case of Powell, which established that res judicata barred a subsequent bad faith claim related to a previous action against an insurer, emphasizing that both actions arose from the same underlying contractual breach. The court concluded that, similar to Powell, the plaintiff should have been aware of the bad faith issue prior to the first trial, making the amendment untimely. The insurer's motion to reduce the judgment prompted the plaintiff to seek an amendment to his complaint to include allegations of bad faith. Key allegations included the insurer's lack of discovery efforts, inadequate investigation, failure to make settlement offers until just before trial, a pattern of unethical practices, and a low pre-trial settlement offer, despite the plaintiff's willingness to settle within policy limits. The court had to determine whether to allow the amendment after a jury verdict but before judgment, with delay being a significant concern. The central issue was whether disallowing the amendment would cause substantial injustice to either party. The court considered whether the merits of the bad faith claims could be addressed in a potential second trial, referencing the precedent set in Powell, where bad faith claims were deemed timely if the relevant facts were known before trial. The trial court implied that claims should have been raised in the first action to avoid being barred by res judicata in a second. If the claims could not have been timely raised, they wouldn't be barred by denying the amendment. The trial court's discretion in this matter was upheld. Additionally, the plaintiff contended that the court failed to recognize ambiguity in the insurance policy's language, a point with which the court agreed, remanding the case for further proceedings. The plaintiff's automobile insurance policy, presented during a post-verdict hearing, indicated coverage of $50,000 per person and $100,000 per accident for uninsured/underinsured motorists on the declaration pages for each of the insured vehicles. Part V of the insurance policy, titled 'Uninsured Motorist Insurance Underinsured Motorist Insurance Coverage SS,' states that if a premium for Coverage SS is indicated on the declarations page, the insurer will pay damages for bodily injury sustained by an insured person due to an uninsured or underinsured motorist. Coverage limits will be reduced by amounts paid by the uninsured or underinsured motorist's owner/operator and any workers' compensation payments. Part VI, titled 'Uninsured Motorist Insurance Underinsured Motorist Conversion Insurance Coverage SC,' contains similar provisions, but applies to legally liable underinsured motorists. Here, damages payable will also be reduced by amounts recovered from the underinsured motorist's insurer and any workers' compensation payments. In the current case, if Part V applies, coverage limits would reduce to $30,000 after subtracting $20,000 recovered from the tortfeasor’s insurer from a $50,000 limit. If Part VI applies, payable damages would be $75,000 after deducting the same $20,000 from a full damage award of $95,000, but still subject to the $50,000 policy limit. The court dismissed the plaintiff's claim of ambiguity due to the absence of specific codes 'SS' or 'SC' on the declarations page, affirming that there was no indication of conversion coverage in the policy. The court concluded that the plaintiff is entitled to coverage under Part V only, following the principle that insurance policy terms are interpreted based on their plain meaning as understood by laypersons, and that ambiguity must be reasonably susceptible to multiple interpretations. The declarations page clearly specifies coverage for 'Uninsured/Underinsured Motorists.' Part V and Part VI of the legal document address 'Uninsured Motorist Insurance' and 'Underinsured Motorist Insurance,' respectively. The declarations page presents the term 'Uninsured/Underinsured Motorists,' which is ambiguous and can refer to either type of coverage. The ambiguity arises because the terminology does not clarify which specific insurance is being referenced. According to established legal principles, if ambiguity persists after examining the parties' intentions, it should be construed in favor of the insured's reasonable expectations, often through the contra proferentem rule, which interprets ambiguous terms against the insurer. However, in this case, the ambiguity relates to a question of historical fact regarding which specific coverage the plaintiff purchased, rather than merely a contractual interpretation. The court emphasizes that the intent of the parties should be ascertained through extrinsic evidence related to the purchase circumstances. The introduction of extrinsic evidence is permissible to resolve ambiguity, even if it typically might be excluded by the parol evidence rule. The court did not determine the parties' intentions but acknowledged that ambiguity exists, necessitating fact-finding to uncover the true intent behind the policy selection. Consequently, the judgment is partially reversed, specifically regarding the reduction of the jury verdict, and the case is remanded for further consideration of the parties’ intended coverage, while affirming the judgment in all other respects. ALVORD, J. concurred. The plaintiff claims the trial was bifurcated, but the court recognized it was not, and the case was tried before a jury with certain issues reserved for postverdict motions. The court's judgment is presumed correct unless the appellant proves harmful error. Previous cases illustrate that denying an amendment on the eve of trial or after a verdict is not an abuse of discretion. In Leone v. Knighton, the Supreme Court upheld the denial of a post-verdict amendment aimed at transforming the cause of action, emphasizing trial courts' discretion in such matters. Similarly, in Burton v. Stamford, amendments post-verdict are allowed but depend on case circumstances. In the present case, the circumstances did not demonstrate an abuse of discretion in denying the plaintiff's request to amend the complaint following the jury verdict. The declarations page of the insurance policy is part of the contract and specifies coverage limits for bodily injury. To recover uninsured/underinsured benefits, the tort-feasor's liability policy must be exhausted. The defendant cited Herrick v. Bordonaro and Carron v. Allstate Ins. Co., where the courts found the Allstate policy unambiguous, clarifying that "Uninsured/Underinsured Motorists" did not refer to conversion coverage, as "conversion" was not mentioned on the declarations page. The court asserts that previous decisions are not binding and expresses disagreement with them. The principle of "contra proferentem" dictates that ambiguities in a document are interpreted against its drafter. In the case of Metropolitan Life Ins. Co. v. Aetna Casualty & Surety Co., the Connecticut Supreme Court examined the "per occurrence" liability limit in excess insurance policies and determined that the policies were not ambiguous. Even if ambiguity existed, the contra proferentem rule does not apply in disputes between insurers. The trial court in the current case found no ambiguity after considering extrinsic evidence, including testimony from a defendant employee regarding policy language, which suggested a lack of conversion coverage for the plaintiff. However, no additional evidence, such as an application copy, was provided. The concurrence proposes shifting the burden of proof to the defendant on remand, which the court disagrees with. It concludes that if only the policy and declarations page are introduced upon remand, the plaintiff would likely prevail based on contra proferentem, not due to a shift in the burden of proof but because the burden has been met.