Sonson v. United Services Automobile Assn.

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CHARLES V. SONSON v. UNITED SERVICES
AUTOMOBILE ASSOCIATION
(AC 35890)
Alvord, Keller and Peters, Js.
Argued May 20—officially released September 16, 2014
(Appeal from Superior Court, judicial district of
Stamford-Norwalk, Hon. David R. Tobin, judge trial
referee.)
Stephen R. Sugrue, for the appellant (plaintiff).
James J. Noonan, with whom, on the brief, was John
W. Cannavino, Jr., for the appellee (defendant).
Opinion
PETERS, J. ‘‘Standardized contracts of insurance
continue to be prime examples of contracts of adhesion,
whose most salient feature is that they are not subject to
the normal bargaining processes of ordinary contracts.’’
(Internal quotation marks omitted.) Rumbin v. Utica
Mutual Ins. Co., 254 Conn. 259, 264 n.6, 757 A.2d 526(2000). In light of this industry practice, courts some-
times have allowed policyholders to obtain coverage
despite their failure to comply strictly with the terms
of their policy. See Arrowood Indemnity Co. v. King,
304 Conn. 179, 39 A.3d 712 (2012). The dispositive issue
in this appeal is whether the trial court properly refused
to extend this principle of lenity to the plaintiff, the
owner of a race car, and require his automobile insurer
to pay for damages to the car that occurred while he
was preparing for an organized racing contest even
though his insurance contract expressly excluded cov-
erage for losses so incurred. The plaintiff has appealed
from the judgment of the trial court enforcing the racing
exclusion and thus denying his claim for reimbursement
for the cost of repairs to his car. We affirm the judgment
of the trial court.
On August 31, 2007, the plaintiff, Charles V. Sonson,
filed a one count complaint claiming that the defendant,
United Services Automobile Association, breached its
insurance contract to pay for damages to the plaintiff’s
Ferrari. After a trial, the court found in favor of the
defendant on two grounds. First, the Ferrari was dam-
aged in a racing accident, and a clause in the plaintiff’s
automobile insurance policy expressly excluded cover-
age for losses incurred competing in or preparing for
an automobile race. Second, the plaintiff had materially
misrepresented where the car would be garaged and
registered at the time the policy was issued, allowing
for rescission under Virginia law. The plaintiff has
appealed.
The plaintiff does not challenge the propriety of the
court’s findings of the relevant facts. In the spring of
2006, the plaintiff decided to acquire a Ferrari model
F430 Challenge race car, an automobile designed for
operation on race tracks and not ‘‘street legal,’’ i.e., it
cannot be driven on town and city streets because it
does not have the safety equipment required for regis-
tration of automobiles in this country. The plaintiff
already had several vehicles insured by the defendant,
an insurance company that primarily provides insur-
ance for present or former members of the armed forces
of the United States and their dependents. Despite
recently having been informed by a representative of
the defendant that the defendant categorically does not
issue policies on race cars, on March 20, 2006, the plain-
tiff telephoned the defendant’s headquarters to add the
Ferrari to his existing automobile insurance policy.
Over the course of two telephone calls, the defendant’s
representatives asked the plaintiff for information
about the automobile he was seeking to have covered,
including where it would be garaged and registered.
Although the plaintiff claims he did not provide this
information, the representatives noted in the defen-
dant’s computer system that the car would be garaged
at the plaintiff’s home in Williamsburg, Virginia, and
would be registered in the state of Delaware.
On March 21, 2006, the defendant added the Ferrari
to the plaintiff’s existing policy. The policy contained
a provision that excluded losses incurred while racing,
or practicing or preparing for a race, in a facility
designed for racing.
On January 24, 2007, the Ferrari was severely dam-
aged, when, at Infineon Race Track in Sonoma, Califor-
nia, the plaintiff lost control of the car and crashed into
a guardrail. The plaintiff promptly notified the defen-
dant of the accident.
In response to this notification, on February 22, 2007,
the defendant acknowledged that it had issued the auto-
mobile policy in question, but expressly reserved its
right to enforce the terms of the insurance contract
that, in its view, defeated the plaintiff’s claim for com-
pensation. During its investigation, the defendant dis-
covered that the car had not been garaged in the
location indicated in its computer system, nor had it
been registered in Delaware or any other state. There-
after, on May 30, 2007, the defendant sent the plaintiff
a letter stating that the plaintiff’s policy was rescinded
because of the plaintiff’s material misrepresentations
that the car would be garaged at his home in Wil-
liamsburg and that the car would be registered in
Delaware.
The plaintiff initiated the present action to enforce his
policy with the defendant. In response, the defendant
asserted the following special defenses: (1) the plaintiff
intentionally, recklessly or negligently misrepresented
or concealed material facts at the time when he applied
for the policy; (2) coverage for damage to the Ferrari
was barred by the racing exclusion of the policy; (3)
the plaintiff’s claim was barred by provisions of the
policy regarding fraudulent statements or actions made
in connection with an accident or loss; (4) the plaintiff
did not have an insurable interest in the Ferrari; and
(5) the plaintiff’s claims were barred to the extent that
the plaintiff had received compensation for his losses
from others. After a trial to the court, the court con-
cluded that the defendant properly had rescinded the
policy for material misrepresentations under Virginia
law, finding not credible the plaintiff’s claims that the
defendant’s computer system had inaccurately
recorded the information he had provided when secur-
ing the policy. Addressing the racing exclusion, the
court concluded that coverage would have been prop-
erly denied on that basis had the policy not been
rescinded. On appeal, the plaintiff challenges both of
these conclusions. We agree with the court that the
racing exclusion was a proper basis for denial of cover-
age. Accordingly, we need not address the issue of
rescission.
The plaintiff maintains that the court improperly con-
sidered the racing exclusion in the plaintiff’s insurance
policy because (1) that issue was not raised in the
defendant’s initial specification of the reasons for its
denial of the plaintiff’s insurance claim, and (2) the loss
suffered by the plaintiff did not fall within the racing
exclusion. We are not persuaded.
At the outset, we note that both parties agree with
the court’s determination that Virginia substantive law
governs the issues presented by this case. See American
States Ins. Co. v. Allstate Ins. Co., 282 Conn. 454, 466,
922 A.2d 1043 (2007) (Florida law applied to automobile
insurance dispute when parties contemplated Florida
as principal location of automobile).
Our standard of review is well settled. ‘‘With regard
to the trial court’s factual findings, the clearly erroneous
standard of review is appropriate. . . . A factual find-
ing is clearly erroneous when it is not supported by
any evidence in the record or when there is evidence
to support it, but the reviewing court is left with the
definite and firm conviction that a mistake has been
made. . . . Simply put, we give great deference to the
findings of the trial court because of its function to
weigh and interpret the evidence before it and to pass
upon the credibility of witnesses. . . . The trial court’s
legal conclusions [however] are subject to plenary
review. [W]here the legal conclusions of the court are
challenged, we must determine whether they are legally
and logically correct and whether they find support in
the facts set out in the memorandum of decision . . . .’’
(Internal quotation marks omitted.) Miller v. Guimar-
aes, 78 Conn. App. 760, 766–67, 829 A.2d 422 (2003).
The plaintiff’s claim that the court acted improperly
in considering the racing exclusion1 is not persuasive
in light of the record as a whole. Although the plaintiff
correctly notes that the racing exclusion was not men-
tioned by the defendant as a basis for denial of coverage
in its May 30, 2007 letter informing the plaintiff that his
policy had been rescinded, the plaintiff fails to account
for the February 22, 2007 reservation of rights letter
issued by the defendant that expressly informed the
plaintiff of the possibility of denial of coverage on the
basis of the racing exclusion.2 The plaintiff has failed
to provide any authority, and we know of none, in
support of his contention that an insurer that denies
coverage on one basis is precluded from asserting
another basis of denial in later legal proceedings, when
proper notice has been issued to the policy holder.
Accordingly, the court acted properly in considering
the racing exclusion.
Next, we consider the plaintiff’s claim that the loss
suffered in the accident did not fall within the terms
of the racing exclusion. Specifically, the plaintiff argues
that at the time of the accident he was not competing
in, or preparing or practicing for, a race.
‘‘The interpretation of a contract presents a question
of law subject to de novo review. . . . [O]n appeal [this
court is not] bound by the trial court’s interpretation
of the contract provision at issue; rather, [this court
has] an equal opportunity to consider the words of the
contract within the four corners of the instrument itself.
. . . Each phrase and clause of an insurance contract
should be considered and construed together and seem-
ingly conflicting provisions harmonized when that can
be reasonably done, so as to effectuate the intention
of the parties as expressed therein. . . . Additionally,
[i]nsurance policies are contracts whose language is
ordinarily selected by insurers rather than by policy-
holders. The courts, accordingly, have been consistent
in construing the language of such policies, where there
is doubt as to their meaning, in favor of that interpreta-
tion which grants coverage, rather than that which with-
holds it. Where two constructions are equally possible,
that most favorable to the insured will be adopted.
Language in a policy purporting to exclude certain
events from coverage will be construed mostly strongly
against the insurer. . . . When an insurer drafts policy
language setting forth exclusions that limit coverage
under a policy, the insurer is required to use language
that clearly and unambiguously defines the scope of
the exclusions. . . . Exclusionary language in an insur-
ance policy will be construed most strongly against the
insurer and the burden is upon the insurer to prove
that an exception applies.’’ (Citations omitted; internal
quotation marks omitted.) PBM Nutritionals, LLC v.
Lexington Ins. Co., 283 Va. 624, 633–34, 724 S.E.2d
707 (2012).
In the present case, the relevant provision of the
policy stated: ‘‘We will not pay for . . . [l]oss to your
covered auto or any non-owned auto, located inside
a facility designed for racing, for the purpose of: a.
Competing in; or b. Practicing or preparing for; any
prearranged or organized racing or speed contest.’’ It
is undisputed that the loss occurred at Infineon Race
Track, a facility designed for racing. Therefore, the
question before us is whether the circumstances of the
plaintiff’s activities, as found by the court, constitute
competing in or practicing or preparing for any prear-
ranged or organized racing or speed contest under the
terms of the policy.
The court found that the plaintiff was accompanied
by a mechanic and driving coach, was travelling at
speeds of approximately seventy miles per hour on
curves and ninety miles per hour on straightaways, and
was wearing a fire suit, helmet, boots, and possibly
gloves.3 Further, the court specifically found the plain-
tiff’s claim that he had given up racing the Ferrari not
to be credible. Even keeping in mind that any ambiguity
in the language of the policy must be resolved in favor
of the insured, it is apparent that the plaintiff’s activities
fell within the terms of the racing exclusion, as these
findings clearly demonstrate that the plaintiff was prac-
ticing or preparing for a prearranged or organized racing
or speed contest. Accordingly, the court properly deter-
mined that the racing exclusion was applicable.4
The judgment is affirmed.
In this opinion the other judges concurred.
1
The plaintiff initially raised this issue, among others, in his January 13,
2011 motion for summary judgment. The court rejected the argument and
denied the motion.
2
The reservation of rights letter stated: ‘‘With respect to the loss that
occurred on January 24, 2007 at Napa Valley, California, we believe that
the policy may not provide coverage for the following reasons.’’ It then
reproduced the text of the racing exclusion provision of the policy. The letter
also stated: ‘‘We’re willing to continue with the investigation or settlement of
any claim or lawsuit resulting from the incident. We will continue, however,
only on the condition that our actions will not [h]arm any rights or defenses
we currently have under the policy, including the rights and defenses that
aren’t specifically referred to in this letter. Please also note the following:
We reserve the right to deny coverage at a later date. We reserve the right
to bring legal action to have the rights of the parties decided. Our actions
should not be interpreted as waiving or as preventing us from exercising
our rights. Our actions should not be interpreted as an acknowledgment of
liability or coverage. You may wish to consult your attorney about this
incident.’’
3
To the extent that the plaintiff challenges the court’s factual findings
regarding the circumstances of the accident, we conclude that they are not
clearly erroneous, as they find support in the record, and we are not left
with a firm and definite conviction that a mistake has been made. See 19
Perry Street, LLC v. Unionville Water Co., 294 Conn. 611, 624, 987 A.2d
1009 (2010).
4
Nothing in the record suggests that the court improperly placed the
burden on the plaintiff to prove that the exclusion did not apply. Rather,
the court expressly acknowledged that the burden was on the defendant to
prove the applicability of the racing exclusion, a burden it met in demonstra-
ting that the plaintiff was engaged in racing activities.