author: CALLAHAN, C. J.

text:
    REICHHOLD CHEMICALS, INC. v. HARTFORD ACCIDENT AND INDEMNITY COMPANY ET AL.
    (SC 15698)
    Callahan, C. J., and Borden, Berdon, Norcott, Katz, Palmer and McDonald, Js.

      Argued October 28
    officially released December 23, 1997

      Francis J. Brady, with whom were Barry J. Fleishman, pro hac vice, and, on the brief, Elizabeth J. Stewart and Leon B. Kellner, pro hac vice, for the appellant (plaintiff).

      Stephen A. Fennell, pro hac vice, with whom were John B. Farley and, on the brief, Steven J. Barber, pro hac vice, John W. Lemega, John L. Altieri, Jr., Ralph P. DeSanto, pro hac vice, Michael T. Ryan, Kathleen F. Munroe, R. Cornelius Danaher, Frederick B. Bedford, Sheldon Karasik, pro hac vice, and John B. Harris, for the appellees (defendant Home Insurance Company et al.).
   Opinion

CALLAHAN, C. J.

The principal issue in this appeal is whether the trial court properly applied New York law to the facts of this insurance coverage dispute. We conclude that it did not.

The record reveals the following uncontroverted facts and procedural history. On October 6, 1988, the plaintiff, Reichhold Chemicals, Inc., brought an action against sixteen insurance companies from which it had purchased primary and excess comprehensive general liability insurance coverage, alleging that those policies obligated the insurers to defend and indemnify the plaintiff with respect to claims arising from chemical contamination at twenty-three sites across the United States.

As a result of settlements, successful motions for summary judgment and liquidation proceedings, there are only six remaining defendants, each of which is an excess liability carrier. The sites for which the plaintiff is seeking coverage are located in California, Delaware, Florida, Georgia, Louisiana, Massachusetts, Michigan, Mississippi, New Jersey and Washington.

At the time the relevant liability insurance policies were issued, the plaintiffs headquarters were located in New York. The plaintiff negotiated the policies, paid the policy premiums and, in some instances, received payments on claims filed pursuant to the policies through its New York office. The plaintiffs insurance broker was located in New York. The defendants negotiated, executed and administered the policies through their New York offices.

The trial court divided the action into separate jury trials on the basis of site location. The first trial, which is the subject of this appeal, involved coverage for claims arising from chemical contamination of groundwater at a site in Tacoma, Washington (site).

Although the site is located in Washington, the court applied New York law. Under New York law, timely compliance with a notice of occurrence provision contained in a liability policy is a condition precedent to attachment of the insurer’s duty to defend and indemnify. See Olin Corp. v. Ins. Co. of North America, 966 F.2d 718, 723 (2d Cir. 1992) (applying New York law). Hence, an insurer “need not show prejudice before it can assert the defense of noncompliance.” Security Mutual Ins. Co. of New York v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 440, 293 N.E.2d 76, 340 N.Y.S.2d 902 (1972) (primary coverage carrier); American Home Assurance Co. v. International Ins. Co., 90 N.Y.2d 433, 442-43, 684 N.E.2d 14, 661 N.Y.S.2d 584 (1997) (excess coverage carrier). By contrast, although a lack of timely notice defense also is recognized under Washington law, insurers must plead and prove prejudice in order to assert the defense. Public Utility District Number One v. International Ins. Co., 124 Wash. 2d 789, 803-804, 881 P.2d 1020 (1994).

The trial was bifurcated into two stages. The first stage of the proceedings was limited to the issue of whether the plaintiff had complied with the notice of occurrence provisions contained in the policies. At the close of the evidence on the issue of notice, the trial court instructed the jury that the issue was to be decided in accordance with New York law. The jury found that the plaintiff had not complied with those provisions and returned a verdict for the defendants American Home Assurance Company, Century Indemnity Company, Commercial Union Insurance Company, The Home Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, and against the defendant Granite State Insurance Company.

The plaintiff moved to set aside the verdict, for judgment notwithstanding the verdict and for a new trial. The trial court denied all three motions and rendered judgment for the defendant American Home Assurance Company et al. in accordance with the verdict. Pursuant to Practice Book § 4002C, the plaintiff appealed from that judgment to the Appellate Court. We transferred the appeal to this court pursuant to Practice Book § 4024 and General Statutes § 51-199 (c).

On appeal, the plaintiff maintains that the trial court improperly: (1) applied New York law rather than Washington law; (2) bifurcated the trial; and (3) limited the scope of the plaintiffs evidence during the notice phase and allowed the defendants to introduce impermissibly prejudicial evidence of contamination during that phase of the trial. We reverse the judgment of the trial court and remand for a new trial.

I

The plaintiff first urges this court to examine the propriety of continued adherence to the lex loci contractus doctrine set forth in the Restatement of Conflict of Laws (Restatement [First]). Restatement, Conflict of Laws § 332 et seq. (1934). The plaintiff maintains that we should abandon use of that doctrine and adopt in its stead the “most significant relationship” test set forth in the Restatement (Second) of Conflict of Laws (Restatement [Second]). 1 Restatement (Second), Conflict of Laws § 187 et seq. (1971 and Sup. 1988). According to the plaintiff, Washington, not New York, is the jurisdiction that has, with respect to the notice issue, the “most significant relationship” with the contract claims underlying this issue. The plaintiff maintains, therefore, that Washington notice law should have been applied. We agree.

A brief overview of the various choice of law approaches is necessary to our resolution of the plaintiffs choice of law claim. Courts generally have adopted one of three approaches to resolving choice of law issues in insurance coverage cases: (1) the “lex loci contractus” rule; (2) the “center of gravity” approach; 1 Restatement (Second), supra, § 188 (1971); or (3) the “location of the risk” approach. Id., § 193.

A

The traditional test for resolving choice of law issues in contract cases is the lex loci contractus rule set forth in the Restatement (First). Restatement, supra, § 332 et seq. (1934). Under that approach, which has been used by Connecticut courts, a contract is construed according to the law of the place where the contract was made. See Williams v. State Farm Mutual Automobile Ins. Co., 229 Conn. 359, 366, 641 A.2d 783 (1994); Breen v. Aetna Casualty & Surety Co., 153 Conn. 633, 637, 220 A.2d 254 (1966).

B

A second approach to resolving choice of law issues in contract cases is the “most significant relationship” test of the Restatement (Second). Sections 187 and 188 of the Restatement (Second) set forth relevant general principles applicable to all contracts, and §§ 189 through 197 address the application of those principles to specific types of contracts.

Section 187 pertains to cases in which a contract contains a choice of law clause; 1 Restatement (Second), supra, § 187, p. 134 (Sup. 1988); and § 188 pertains to cases in which a contract does not contain such a clause. 1 Restatement (Second), supra, § 188 (1) (1971). Section 188, which applies to cases that traditionally would have been decided under the lex loci contractus rule, provides that in the absence of an effective choice by the parties, “(1) [t]he rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.”

Section 6 (2) of the Restatement (Second), which is applicable to all substantive areas, sets forth seven overarching considerations in determining which state has the “most significant relationship”: “(a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied.”

Section 188 (2) lists five contacts to be considered in applying the principles set forth in § 6 to a contract dispute: “(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties.” Comment (e) to § 188 (2) states that “the forum, in applying the principles of § 6 to determine the state of most significant relationship, should give consideration to the relevant policies of all potentially interested states and the relative interests of those states in the decision of the particular issue. The states which are most likely to be interested are those which have one or more of the [enumerated] contacts with the transaction or the parties.” Id., § 188 (2), comment (e), p. 579.

The appropriate starting point under § 188, therefore, is identification of the policy underlying the relevant law of each state having one or more of the listed contacts. If application of a particular state’s law would further its underlying policy, that state is said to have an “interest.” See id., § 6 (2) (c). If two or more states have conflicting “interests,” the court must determine which gives rise to the “most significant relationship.” Id., § 188 (1).

The Restatement (Second) sets forth several rebuttable presumptions regarding which state is the jurisdiction that enjoys the “most significant relationship.” Id., §§ 188 through 197, pp. 575-632. Those presumptions are based on the assumption that, with respect to a particular type of contract, a state having certain of the enumerated contacts ordinarily will be the state that has the “most significant relationship.” See id., Title B, Introductory Note, p. 586 (“it is considered possible to state . . . that ... a particular contact plays an especially important role in the determination of the state of the applicable law”).

Section 188 (3) sets forth a general presumption for all contracts: “If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied . . . .” New York courts have interpreted § 188 (3) as establishing a “center of gravity” presumption in favor of applying the law of the state where the majority of the contracting transactions occurred. See Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 642 N.E.2d 1065, 618 N.Y.S.2d 609 (1994); see also Auten v. Auten, 308 N.Y. 155, 160, 124 N.E.2d 99 (1954). Under the center of gravity approach, the law of a different state is applied only if that state’s policy-based interest in having its own law applied is strong enough to override the presumption in favor of application of the law of the state at the “center of gravity.” See 1 Restatement (Second), supra, § 188 (1).

C

The Restatement (Second) analysis does not end with § 188. Section 193 of the Restatement (Second) sets forth a third possible approach for resolving choice of law questions in insurance coverage cases. Section 193 provides that “[t]he validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the transaction and the parties, in which event the local law of the other state will be applied.” Thus, § 193 establishes a special presumption in favor of application, in liability insurance coverage cases, of the law of the jurisdiction that is the principal location of the insured risk.

Most courts applying the § 193 presumption in environmental liability coverage cases have deemed the location of the waste site to be the location of the insured risk. See, e.g., A. Johnson & Co. v. Aetna Casualty & Surety Co., 741 F. Sup. 298, 300-302 (D. Mass. 1990), aff’d, 933 F.2d 66 (1st Cir. 1991); Leksi, Inc. v. Federal Ins. Co., 736 F. Sup. 1331, 1336 (D.N.J. 1990). In a case involving nationwide claims against a boiler manufacturer for exposure to asbestos, however, an Ohio federal court reasoned that the risk insured against was the risk that claims against the policyholder would deplete the insured’s assets and that, accordingly, the principal location of the insured risk was the primary location of those assets. Babcock & Wilcox Co. v. Arkwright-Boston Mfg. Mutual Ins. Co., 867 F. Sup. 573, 579-80 (N.D. Ohio 1992), aff’d, 53 F.3d 762 (6th Cir. 1995), cert. denied, 516 U.S. 1140, 116 S. Ct. 973, 133 L. Ed. 2d 893 (1996). Comment (a) to § 193 indicates, however, that in environmental liability coverage cases, the location of the waste site is the location of the insured risk. 1 Restatement (Second), supra, § 193, comments (a) and (b), pp. 610-11.

D

The modem trend has been to move away from the lex loci approach of the Restatement (First) to the more flexible approach of the Restatement (Second). This court previously has endorsed the use, in other contexts, of the Restatement (Second) approach to resolving choice of law questions. For example, although we traditionally had adhered to the lex loci delicti doctrine, which provides that the substantive rights and obligations arising out of a tort claim should be determined by the law of the place of injury; see, e.g., Gibson v. Fullin, 172 Conn. 407, 411, 374 A.2d 1061 (1977); Menczer v. Menczer, 160 Conn. 563, 564-65, 280 A.2d 875 (1971); Landers v. Landers, 153 Conn. 303, 304-305, 216 A.2d 183 (1966); Orr v. Ahern, 107 Conn. 174, 176, 139 A. 691 (1928); we expressly abandoned “categorical allegiance” to that doctrine in O’Connor v. O’Connor, 201 Conn. 632, 648, 519 A.2d 13 (1986), in favor of the Restatement (Second) approach. Id., 650.

Furthermore, our approval of the use of the Restatement (Second) approach has not been limited to cases involving tort claims. For example, in Elgar v. Elgar, 238 Conn. 839, 846-52, 679 A.2d 937 (1996), we followed § 187 of the Restatement (Second) in resolving a choice of law question presented in an antenuptial contract dispute. See also Cleveland v. U.S. Printing Ink, Inc., 218 Conn. 181, 188-91, 588 A.2d 194 (1991) (following Restatement [Second] approach in workers’ compensation case).

Moreover, many jurisdictions have abandoned completely the use of lex loci contractus to resolve choice of law questions in contract cases; see, e.g., State Farm Mutual Automobile Ins. Co. v. Estate of Simmons, 84 N.J. 28, 37, 417 A.2d 488 (1980); and Maryland and Michigan, states that, like Connecticut, traditionally followed the rule, recently partially abandoned its use. See, e.g., Commercial Union Ins. Co. v. Porter Hayden Co., 116 Md. App. 605, 681-82, 698 A.2d 1167 (1997); Chrysler Corp. v. Skyline Industrial Services, Inc., 448 Mich. 113, 125, 528 N.W.2d 698 (1995).

In O’Connor v. O’Connor, supra, 201 Conn. 642, we noted that “ ‘[t]he basic theme running through the attacks on the [lex loci] rule is that wooden application of a few overly simple rules, based on the outmoded “vested rights theory,” cannot solve the complex problems which arise in modem litigation and may often yield harsh, unnecessary and unjust results.’ . . . The lex loci approach fails to acknowledge that jurisdictions other than the place of injury may have a legitimate interest in applying their laws . . . .” (Citation omitted.) That rationale is equally applicable to choice of law questions in contract cases. We conclude, therefore, that the Restatement (Second) approach to resolving such questions should be followed in contract cases.

Accordingly, we adopt the § 188 general presumption, which provides that unless another state has an overriding policy-based interest in the application of its law, the law of the state in which the bulk of the contracting transactions took place should be applied. We also adopt the § 193 special presumption for liability insurance contracts, which provides that unless another state has an overriding policy-based interest in the application of its law, the law of the state in which the insured risk is located should be applied.

E

The plaintiff maintains that the Restatement (Second) approach dictates that, with respect to the notice issue, Washington law, rather than New York law, should have been applied at trial. We begin our choice of law analysis with respect to this particular factual situation by considering, in accordance with § 6 (2) (c), whether both New York and Washington have an “interest” in the application of their own notice law to the insurance policies at issue in this case. In order to make that determination, we: (1) identify the policies that underlie each state’s notice law; and (2) examine whether those policies would be advanced by the application of the state’s notice law in the present case. See 1 Restatement (Second), supra, § 6 (2) (c).

For the following two reasons, we conclude that New York has an “interest” in having New York notice law applied. First, New York has asserted a policy-based interest in limiting the availability of liability coverage. See Unigard Security Ins. Co. v. North River Ins. Co., 79 N.Y.2d 576, 581, 594 N.E.2d 571, 584 N.Y.S.2d 290 (1992) (insurer must have opportunity to protect itself); Security Mutual Ins. Co. of New York v. Acker-Fitzsimons Corp., supra, 31 N.Y.2d 440 (no prejudice required rule); see also Technicon Electronics Corp. v. American Home Assurance Co., 141 App. Div. 2d 124, 143, 533 N.Y.S.2d 91 (1988), aff’d, 74 N.Y.2d 66, 542 N.E.2d 1048, 544 N.Y.S.2d 531 (1989) (asserting interest in limiting coverage with respect to pollution exclusion clauses). New York courts have found the place of contracting to be more significant than the location of the risk, especially when combined with coinciding contract-related factors such as negotiation of the policies and the location of the insured. See, e.g., Borg-Warner Corp. v. Ins. Co. of North America, 174 App. Div. 2d 24, 29, 577 N.Y.S.2d 953 (1992), leave to appeal denied, 80 N.Y.2d 753, 600 N.E.2d 632, 587 N.Y.S.2d 905 (1992) (applying New York law in environmental liability coverage case in which contaminated sites were located in several states because formation and performance contacts were centered in New York); Olin Corp. v. Ins. Co. of North America, 743 F. Sup. 1044 (S.D.N.Y. 1990), aff’d, 929 F.2d 62 (2d Cir. 1991) (applying New York law in environmental liability coverage dispute in which contaminated site was located in Virginia because formation and performance contacts were centered in New York). Second, because three of the six defendants have their principal places of business in New York and because all six negotiated, executed and administered the policies through their New York offices, application of New York law would further the protective policy underlying New York’s notice law.

For the following two reasons, we also conclude that Washington has an “interest” in having Washington notice law applied. First, Washington’s actual prejudice requirement is intended to protect the justified expectations of the parties. See Public Utility District Number One v. International Ins. Co., supra, 124 Wash. 2d 803 (“[t]o release an insurer from its obligations without a showing of actual prejudice would be to authorize a possible windfall for the insurers”); see also Pederson’s Fryer Farms, Inc. v. Transamerica Ins. Co., 83 Wash. App. 432, 438-39, 922 P.2d 126 (1996); Canron, Inc. v. Federal Ins. Co., 82 Wash. App. 480, 485, 918 P.2d 937 (1996); Pulse v. Northwest Farm Bureau Ins. Co., 18 Wash. App. 59, 61, 566 P.2d 577 (1977). Washington courts also have recognized that the state in which the hazardous waste site is located has a compelling interest in the application of its own law. “Washington has a paramount interest in the health and safety of its people. Washington bears the responsibility under [the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)] for ensuring the site cleanup and will bear the burden if the site is not cleaned. The existence or absence of insurance proceeds can determine whether or not a hazardous waste site is remediated. Washington, therefore, has a significant interest in [the plaintiffs] insurance coverage.” Canron, Inc. v. Federal Ins. Co., supra, 494. Second, because the site at issue in this appeal is located in Washington, application of Washington law will advance both the policy underlying that state’s notice defense law and its public policy of protecting the environment and the health and safety of its citizens.

F

New York and Washington have conflicting “interests,” and, therefore, we must determine which of those interests gives rise to the “most significant relationship.” Because the liability insurance policies provide coverage for risks located in more than one state, the parties have attached great significance to the question of which provision of the Restatement (Second), § 193 or § 188, should guide our analysis of this question.

For the following three reasons, we conclude that the § 193 special presumption, rather than the § 188 general presumption, should apply in cases involving liability insurance policies that cover immovable risks located in more than one state. First, § 188 (3) indicates that § 193, rather than § 188, is the appropriate section. See 1 Restatement (Second), supra, § 188 (3) (if place of negotiation is place of performance, local law of that state will usually be applied “except as otherwise provided in §§ 189-199” [emphasis added]). Second, both § 193 and comment (a) to that section deal directly with application of the notice law of the state in which the insured risk is located. Id., § 193, comment (a), p. 610 (§ 193 rule applies to questions such as “whether the company is released from liability by reason of the insured’s failure to give it prompt notice”). Third, comment (f) to § 193 explicitly discusses liability insurance policies that provide coverage for risks located in more than one state. See id., § 193, comment (f), pp. 613-14 (indicating that courts should treat each risk insured under such policies as separate policy). Accordingly, the § 193 presumption that Washington enjoys the “most significant relationship” is applicable to the notice issue in the present case.

The importance that the parties have attached to the determination of whether § 188 or § 193 should guide our analysis, however, is overstated. Those sections merely provide a starting point; they do not control the result. Having determined that Washington is the state presumed to have the “most significant relationship” to the notice issue, we must determine, guided by the principles set forth in § 6 (2), whether New York’s interest in the application of its notice law is sufficiently compelling to override that presumption.

Our analysis of the relative significance of the interests of New York and Washington begins with an examination of the policies embodied in our own state law. See id., § 6 (2) (b). Connecticut, like Washington, affords protection to liability insurance policyholders from forfeiture of coverage due to failure to comply with contractual notice provisions. “The purpose of a policy provision requiring the insured to give the company prompt notice of an accident or claim is to give the insurer an opportunity to make a timely and adequate investigation of all the circumstances. . . . And further, if the insurer is thus given the opportunity for a timely investigation, reasonable compromises and settlements may be made, thereby avoiding prolonged and unnecessary litigation. ... If this legitimate purpose can be protected by something short of automatic enforcement of the notice provisions, then their strict enforcement is unwarranted.” (Citation omitted; internal quotation marks omitted.) Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 417, 538 A.2d 219 (1988). “[A] proper balance between the interests of the insurer and the insured requires a factual inquiry into whether, in the circumstances of a particular case, an insurer has been prejudiced by its insured’s delay in giving notice of an event triggering insurance coverage. If it can be shown that the insurer suffered no material prejudice from the delay, the nonoccurrence of the condition of timely notice may be excused because it is not ... a material part of the agreed exchange.” (Internal quotation marks omitted.) Id., 417-18. Hence, in liability insurance coverage cases, Connecticut has an interest, as the forum state, in applying its own notice law, rather than that of New York.

Connecticut law is not, however, identical to Washington law. “[Although we are persuaded that the existence or nonexistence of prejudice from delayed notice should be determined on a factual basis, the burden of establishing lack of prejudice must be borne by the insured. It is the insured who is seeking to be excused from the consequences of a contract provision with which he has concededly failed to comply. . . . The determination of what is fair, as a factual matter, must however depend upon a proper showing by the complainant who seeks this extraordinary relief.” Id., 419-20.

Connecticut notice law, in effect, splits the difference between Washington law and New York law. Like Washington; see Public Utility District Number One v. International Ins. Co., supra, 124 Wash. 2d 789; Connecticut requires a showing of prejudice before it will allow an insurer to avoid liability. Unlike Washington, however, Connecticut places the burden of proof on the policyholder rather than on the insurer. Although Connecticut law therefore provides policyholders with less protection than does Washington law, it does provide protection. Because New York law affords no protection from possible unjust forfeiture; see American Home Assurance Co. v. International Ins. Co., supra, 90 N.Y.2d 433; we conclude that Connecticut notice law is more consistent with Washington law than it is with New York law. Accordingly, Connecticut, as the forum state, has an interest in applying Washington notice law rather than New York notice law, and like § 193, that interest suggests that in the present case, Washington, the site of the risk, is the state with the “most significant relationship” to the notice issue.

Furthermore, respect for the relevant policies of our own state is not the only principle under § 6 (2) that supports application of Washington’s notice law. For the reasons that follow, we conclude that certainty, predictability and uniformity of results within our jurisdiction; see 1 Restatement (Second), supra, § 6 (2) (f); will be advanced by the application of Washington notice law and impeded by the application of New York notice law.

Like Washington, Connecticut has a significant public policy interest in ensuring that funds are available for the cleanup of hazardous waste sites. CERCLA authorizes the federal Environmental Protection Agency (EPA) to utilize “superfund” money to clean up hazardous waste sites and then sue responsible parties in order to replenish the “superfund.” See 42 U.S.C. §§ 9601 through 9675. In order for the EPA to undertake a long-term cleanup action, however, the state in which the hazardous waste site is located must first agree to pay or assure payment of at least 10 percent of the remediation cost. See 42 U.S.C § 9604 (c) (3) (C) (i); see also R. McKinstry, “The Role of State ‘Little Superfunds’ in Allocation and Indemnity Actions Under the Comprehensive Environmental Response, Compensation and Liability Act,” 5 Vill. Envtl. L.J. 83, 85-90 (1994). The Connecticut legislature has enacted a “little superfund law”; see General Statutes §§ 22a-133a to 22a-133j; that provides, inter alia, that when “the threat to the environment and public health ... is unacceptable” and “the responsible party is not in timely compliance with orders ... to provide remedial action,” the cost of remedial action may be paid with state funds. General Statutes § 22a-133f (a) (2).

There currently are fourteen Connecticut sites on the EPA Superfund National Priority List and eleven Connecticut sites on the state Superfund Priority List. Those sites represent a significant threat to the environment, to the health and safety of Connecticut citizens and to our state’s financial resources. Accordingly, Connecticut has a compelling interest in not applying New York notice law in environmental liability coverage cases involving Connecticut sites. See Gilbert Spruance Co. v. Pennsylvania Manufacturers’ Assn. Ins. Co., 134 N.J. 96, 629 A.2d 885 (1993) (New Jersey’s urgent concern for health and safety of its citizens and its interest in securing financial resources to remediate New Jersey’s toxic-waste sites and to compensate victims of New Jersey pollution gave rise to dominant relationship). Because Connecticut’s compelling interest in not applying New York notice law in cases involving Connecticut sites is consistent with its interest, as the forum state, in the application of Washington notice law in the present case, application of Washington law in this case will advance certainty, predictability and uniformity of results within our jurisdiction.

Moreover, application of Washington law is consistent with the protection of the justified expectations of the parties; see 1 Restatement (Second), supra, § 6 (d) and (e); which is a basic principle underlying the field of contracts. Id., § 188 (1), comment (b), p. 576. The policies at issue in this case do not contain choice of law clauses; accordingly, it is not possible to give effect to the parties’ subjective expectations with respect to choice of law. It is possible, however, to give effect to their justified expectations regarding performance of substantive contract obligations. While an insurer’s expectation regarding protection from liability in cases in which an insured’s failure to provide timely notice has prejudiced the insurer is justified, such expectation of protection from liability in cases in which the lack of notice has not prejudiced the insurer is not justified. Requiring a showing of prejudice protects the justified expectations of the parties and at the same time prevents one party from reaping an unjust windfall. Aetna Casualty & Surety Co. v. Murphy, supra, 206 Conn. 417-18; Public Utility District Number One v. International Ins. Co., supra, 124 Wash. 2d 803.

Finally, in this case the administrative difficulties; see 1 Restatement (Second), supra, § 6 (2) (g); that the trial court might encounter in applying the law of the several jurisdictions where the sites are located do not provide an adequate basis for the application of New York notice law instead of Washington notice law. The case has already been divided into site-specific trials, and, hence, on remand the trial court will need to consider only the law of Washington.

Moreover, even if the case had not been so divided, application of the notice law of the site jurisdictions likely would not have been unduly burdensome. This is not an area of the law in which a trial court might find itself grappling with numerous conflicting and subtly differing bodies of law. Seven of the ten states in which the sites at issue in this case are located require insurers to prove prejudice in order to take advantage of a lack of timely notice defense. See Clemmer v. Hartford Ins. Co., 22 Cal. 3d 865, 885-86, 587 P.2d 1098, 151 Cal. Rptr. 285 (1978); State Farm Mutual Automobile Ins. Co. v. Johnson, 320 A.2d 345, 347 (Del. 1974); Johnson Controls, Inc. v. Bowes, 381 Mass. 278, 282, 409 N.E.2d 185 (1980); Wendel v. Swanberg, 384 Mich. 468, 478, 185 N.W.2d 348 (1971); Rampy v. State Farm Mutual Automobile Ins. Co., 278 So. 2d 428, 433-34 (Miss. 1973); Cooper v. Government Employees Ins. Co., 51 N.J. 86, 94, 237 A.2d 870 (1968); Public Utility District Number One v. International Ins. Co., supra, 124 Wash. 2d 803. One state, Florida, requires insureds to prove lack of prejudice. See Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1217-18 (Fla. 1985). The two remaining states follow the New York rule that no showing of prejudice is required. See Jackson v. Transportation Leasing Co., 893 F.2d 794, 795-96 (5th Cir. 1990) (applying Louisiana law); Caldwell v. State Farm Fire & Casualty Ins. Co., 192 Ga. App. 419, 421, 385 S.E.2d 97 (1989).

Furthermore, if a trial court were to find application of the notice laws of more than one jurisdiction unduly burdensome, the court could divide the case into separate site-specific or rule of law-specific trials. A choice of law determination should not turn solely on the relative ease of application of the law of one particular jurisdiction.

We conclude that New York’s “interest” in the application of New York notice law is not sufficiently compelling to overcome the § 193 presumption in favor of application of Washington law. Because Washington is the state with the “most significant relationship” to the notice issue, Washington notice law, rather than New York notice law, should have been applied.

II

The plaintiff next maintains that the trial court improperly bifurcated the trial into separate notice and coverage phases. We disagree.

A trial court may order that one or more issues that are joined be tried before the others. General Statutes § 52-205; Practice Book § 283. Bifurcation of trial proceedings lies solely within the discretion of the trial court; see Day v. General Electric Credit Corp., 15 Conn. App. 677, 689, 546 A.2d 315, cert. denied, 209 Conn. 819, 551 A.2d 755 (1988); In re Jose C., 11 Conn. App. 507, 508, 527 A.2d 1239 (1987); and appellate review is limited to a determination of whether that discretion has been abused. See Swenson v. Sawoska, 18 Conn. App. 597, 601, 559 A.2d 1153 (1989), aff’d, 215 Conn. 148, 575 A.2d 206 (1990).

The interests served by bifurcated trials are convenience, negation of prejudice and judicial efficiency. Vichare v. Ambac, Inc., 106 F.3d 457, 466 (2d Cir. 1996). Bifurcation may be appropriate in cases in which litigation of one issue may obviate the need to litigate another issue. See Morse/Diesel, Inc. v. Fidelity & Deposit Co. of Maryland, 763 F. Sup. 28, 35 (S.D.N.Y.), modified in part on other grounds, 768 F. Sup. 115 (S.D.N.Y. 1991).

In the present case, litigation of the notice issue might have obviated the need to litigate complex coverage issues related to the Tacoma site. Accordingly, we conclude that the trial court did not abuse its discretion by bifurcating the notice and coverage aspects of the trial.

Ill

The plaintiffs final claim is that the trial court improperly: (1) limited its presentation of evidence during the notice phase of the trial; and (2) allowed the defendants to introduce, during the same phase, irrelevant and unduly prejudicial evidence. We disagree.

A

The plaintiff maintains that the trial court improperly refused to allow it to introduce evidence that the groundwater contamination for which it is seeking coverage is a “covered occurrence” under the policies. In particular, the plaintiff claims that exclusion, during the notice phase, of evidence offered for the purpose of demonstrating that the groundwater contamination at the site was both unexpected and unintentional, was unduly prejudicial.

Under New York law, an insured is required to give notice to its excess insurers “when the circumstances known to [the insured] would have suggested a reasonable possibility of a claim that would trigger that excess insurer’s coverage.” Olin Corp. v. Ins. Co. of North America, supra, 743 F. Sup. 1054. Two factors, therefore, are relevant to when the plaintiffs duty to notify the defendants attached: (1) when the circumstances known to the plaintiff suggested a reasonable possibility of a groundwater contamination claim; and (2) when the circumstances known to the plaintiff suggested a reasonable possibility that the claim would reach the layers of excess coverage.

Prior to trial, the court found, as a matter of law, that June 30, 1986, is the latest possible date on which circumstances suggesting a reasonable possibility of a groundwater claim became known to the plaintiff. On that date, the plaintiff entered into a consent order regarding the site with the EPA and the Washington Department of Ecology. The consent order, which acknowledged that the plaintiff had violated state and federal environmental laws and regulations, required the plaintiff to submit to the Department of Ecology a permit application, maintain financial responsibility for liability, submit to the EPA and the Department of Ecology various plans and schedules for groundwater sampling and take further actions necessary to comply with state and federal law.

Accordingly, determining whether the plaintiff complied with the notice provisions contained in the excess policies involved three subsidiary issues: first, on what date the circumstances known to the plaintiff suggested a reasonable possibility that remediation costs associated with groundwater contamination could pierce the various layers of excess insurance; second, whether, in light of that date, the notice given to the defendants on September 28,1988, was timely; and third, if such notice was not timely, whether the delay was excusable. See Security Mutual Ins. Co. of New York v. Acker-Fitzsimons Corp., supra, 31 N.Y.2d 440.

Evidence regarding whether the groundwater contamination was unexpected and unintentional, therefore, was not relevant to the issue of notice. Accordingly, the trial court did not abuse its discretion by excluding such evidence during the notice phase of the trial.

B

The plaintiff also maintains that the trial court improperly allowed the defendants to introduce evidence that characterized the plaintiff as a “polluter.” In particular, the plaintiff maintains that testimony regarding chemical storage, drum disposal, contaminated soil and the need for “capping” the soil was irrelevant and unduly prejudicial.

While the testimony at issue may have cast the plaintiff in an unfavorable light, it was neither irrelevant nor unduly prejudicial. The plaintiffs knowledge of the nature and possible extent of soil contamination is relevant to the determination of the date on which the plaintiff reasonably should have suspected that the cost of remediating seepage of soil contaminants into the groundwater could pierce the layers of excess insurance. Accordingly, the trial court did not abuse its discretion by admitting such testimony into evidence during the notice phase of the trial.

The judgment of the trial court is reversed and the case is remanded for a new trial.

In this opinion the other justices concurred.

       The plaintiffs primary coverage insurers, the named defendant, Hartford Accident and Indemnity Company, and the defendant Aetna Casualty and Surety Company, were insurance companies organized under the laws of Connecticut with their principal places of business in Connecticut.

       The six remaining defendants are American Home Assurance Company, Century Indemnity Company, Commercial Union Insurance Company, Granite State Insurance Company, The Home Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pennsylvania. Hereafter, we refer to the six remaining defendants as the defendants.

       The policies at issue provide “layers” of coverage. Some policies provide coverage that attaches immediately after the coverage limits of the plaintiff’s primary policies have been reached, and others provide coverage that attaches only after the coverage limits of the primary policies and the coverage limits of other excess policies have been reached.

       Three of the six defendants have their principal places of business in New York.

       None of the relevant liability insurance policies contained a choice of law clause.

       The policies require the plaintiff to provide the defendants with timely notice of any occurrence that is likely to involve a claim. The polices also contain “pollution exclusion” clauses that typically limit coverage to “an accident or happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in personal injury [or] property damage . . . .”

       The plaintiff and Granite State Insurance Company (Granite State) subsequently entered into a stipulation in which it was agreed that the action would be dismissed as to Granite State and that the continued viability of the plaintiffs claims against Granite State would depend on the outcome of this appeal. Thereafter, the court rendered a supplemental judgment in accordance with the stipulation.

       New York courts have used the term “center of gravity” to refer to the analytical approach set forth in § 188 (3). See, e.g., Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 642 N.E.2d 1065, 618 N.Y.S.2d 609 (1994).

       Section 188 of the Restatement (Second) provides: “(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
      “(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicilfe], residence, nationality, place of incorporation and place of business of the parties. These contacts are to be evaluated according to their relative importance with respect to the particular issue.
      “(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ 189-199 and 203.”

       Section 193 of the Restatement (Second) provides that “[t]he validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the transaction and the parties, in which event the local law of the other state will be applied.”

       Section 193 of the Restatement (Second), in particular, pertains to liability insurance contracts. See footnote 10 of this opinion.

       Section 187 of the Restatement (Second) provides: “(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
      “(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
      “(3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.”

       See 42 U.S.C. §§ 9601 through 9675.

       We do not find persuasive the argument that application of the notice law of more than one state to a particular contract will produce impermissibly inconsistent results. Nationwide uniformity of insurance contract interpretation is an illusory goal, not truly achievable or necessarily preferable; see Gilbert Spruance Co. v. Pennsylvania Manufacturers’ Assn. Ins. Co., 134 N.J. 96, 101, 629 A.2d 885 (1993); and does not have “ ‘sufficient value to overcome the significant governmental interest of the various jurisdictions where the insured risks are located, or where the insured entity predictably will incur legal liabilities.’ ” Id., 108.

       United States Department of Environmental Protection, Federal Superfund List (1997); Connecticut Department of Environmental Protection, State of Connecticut Superfund Priority List (1997).

       Although our conclusion on the choice of law issue requires a new trial, we consider the remaining claims on appeal because they are likely to arise again.

         Because the plaintiff did not notify its insurers of a possible occurrence at the site until September 28,1988, and did not proffer evidence explaining or excusing the delay of more than two years, the trial court rendered partial summary judgment in favor of a primary insurer.

       The plaintiff also maintains that it was unduly prejudiced by the defendants’ reference during opening statements to “highly toxic chemical[s]” whose “purpose was basically to kill organism[s].” For the following three reasons we disagree. First, the nature of the chemicals is relevant to the determination of when the plaintiffs duty to notify the defendants of a possible contamination claim attached. Second, the reference was factually accurate. Third, in light of the fact that the trial lasted ten weeks, the prejudicial effect, if any, of that reference was, as the trial court concluded, de minimis.


source: Caselaw Access Project

author: MCDONALD, J.

license: Public Domain

text:
    LIBA H. FURHMAN ET AL. v. FREEDOM OF INFORMATION COMMISSION ET AL.
    (SC 15694)
    Callahan, C. X, and Borden, Berdon, McDonald and Peters, Js.
    Argued September 26
    officially released December 23, 1997

      Victor R. Perpetua, appellate attorney, with whom, on the brief, was Mitchell W. Pearlman, general counsel, for the appellant (named defendant).

      Daniel E. Casagrande, for the appellees (plaintiffs).

      Marilyn J. Lipton, Cynthia C. Anger and Trida J. Johnson, law student intern, filed a brief for the Connecticut Association of Municipal Attorneys, Inc., as amicus curiae.

      Mary-Michelle U. Hirschoff filed a brief for fire Connecticut Conference of Municipalities as amicus curiae.
   Opinion

MCDONALD, J.

This appeal concerns a ruling of the freedom of information commission (commission) that portions of a meeting of the New Milford mayor and town council (collectively, town), to discuss the town’s response to a landfill permit application pending before the state department of environmental protection (department), should have been held in open session.

The town filed an administrative appeal in the Superior Court, and that court reversed in part the commission’s decision on the grounds that the commission had misinterpreted and misapplied General Statutes § l-18a (e) (2) and (h) (3). The commission appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c). We affirm the judgment of the trial court.

The underlying facts of this case are undisputed. On June 1, 1995, the New Milford town council convened in executive session, thereby excluding the public, in order to discuss a special waste disposal application filed by Waste Management of Connecticut, Inc. (Waste Management), with the department. Waste Management sought a permit to dump 150,000 tons of dredged waste sediments from the port authority of New York and New Jersey in the New Milford landfill.

During the executive session, town officials discussed with counsel various options by which the town might oppose the permit application. These discussions included the feasibility of a declaratory judgment action and whether a lawsuit could be filed immediately against the department. The town also discussed the contents of its environmental consultants’ reports, the hiring of a “lobbyist” who would help in any administrative proceedings before the department, the amount of money to be spent on attorneys and consultants, and the frequency of updates from attorneys and consultants.

Thereafter, Jay Lewin filed a complaint against the town before the commission claiming that the public should not have been excluded from the town’s discussion of certain matters. After a hearing, the commission held that the town properly discussed in executive session the feasibility of a declaratory judgment action and whether a lawsuit should be filed against the department. The commission found, however, that the town violated General Statutes § 1-21 (a) when it excluded the public from its discussion of: (1) the amount of money to be spent on consultants and attorneys; (2) the hiring of a lobbyist; (3) the contents of some prior consultants’ reports; and (4) the frequency of updates from attorneys and consultants. The town appealed to the Superior Court, which reversed the commission’s decision as to the first three matters of discussion. The commission appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).

General Statutes § 1-21i (d) provides that appeals from the decisions of the commission are taken pursuant to the Uniform Administrative Procedure Act (UAPA). General Statutes §§ 4-166 through 4-189. Under the UAPA, a trial court may reverse the decision of an administrative agency if that decision evinces an “error of law.” General Statutes § 4-183 (j) (4).

At issue before us is the meaning and application of § l-18a (e) (2) and (h) (3), which, when read with § 1-21 (a), exempt from public disclosure “strategy and negotiations with respect to . . . pending litigation.” General Statutes § l-18a (e) (2).

Pursuant to § 1-21 (a) of the Freedom of Information Act; General Statutes § 1-7 et seq.; meetings of public agencies shall be open to the public, except for executive sessions. “Executive session” is defined, in relevant part, as “a meeting of a public agency at which the public is excluded for one or more of the following purposes ... (2) strategy and negotiations with respect to pending claims or pending litigation to which the public agency or a member thereof, because of his conduct as a member of such agency, is a party until such litigation or claim has been finally adjudicated or otherwise settled . . . .” General Statutes § l-18a (e). “Pending litigation” is defined, in relevant part, as “the agency’s consideration of action to enforce or implement legal relief or a legal right.” General Statutes § 1-18a (h) (3).

The commission first argues that the interpretations of “strategy” and “pending litigation” are questions of fact, regarding which a reviewing court must defer to the administrative agency’s judgment unless it is arbitrary or irrational. We do not agree.

This court is required to defer to the subordinate facts found by the commission, if there is substantial evidence to support those findings. Dufraine v. Commission on Human Rights & Opportunities, 236 Conn. 250, 259, 673 A.2d 101 (1996); Newtown v. Keeney, 234 Conn. 312, 319-20, 661 A.2d 589 (1995). Here, however, the subordinate facts about the contents and circumstances of the town’s executive session are not in dispute. Rather, it is the meaning of the statute that is disputed. The determination of the meaning of a statute presents a question of law, which is within the province of the trial court and of this court. Board of Education v. Freedom of Information Commission, 217 Conn. 153, 158, 585 A.2d 82 (1991); New Haven v. Freedom of Information Commission, 205 Conn. 767, 773-74, 535 A.2d 1297 (1988). Such a review is plenary. See Davis v. Norwich, 232 Conn. 311, 317, 654 A.2d 1221 (1995).

We are therefore required to determine the meaning of the words “strategy” and “pending litigation” as used in the Freedom of Information Act. We then determine if the orders of the commission resulted from a correct application of the law to the topics discussed in executive session. See New Haven v. Freedom of Information Commission, supra, 205 Conn. 774.

In determining statutory meaning, we must ascertain and give effect to the intent of the legislature. State v. Spears, 234 Conn. 78, 86, 662 A.2d 80, cert. denied, 516 U.S. 1009, 116 S. Ct. 565, 133 L. Ed. 2d 490 (1995). In doing so, “we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter.” (Internal quotation marks omitted.) State v. Burns, 236 Conn. 18, 22-23, 670 A.2d 851 (1996).

We recognize that the basic policy of the Freedom of Information Act supports limiting the exceptions to open meetings. This court has said that it will construe the act to favor disclosure and that “exceptions to disclosure must be narrowly construed.” (Internal quotation marks omitted.) Glastonbury Education Assn. v. Freedom of Information Commission, 234 Conn. 704, 712, 663 A.2d 349 (1995). The burden of establishing the applicability of an exception rests upon the party claiming it. New Haven v. Freedom of Information Commission, supra, 205 Conn. 775. We have not, however, hesitated to apply an exception where the party seeking it has met the burden of establishing that it applies. Glastonbury Education Assn. v. Freedom of Information Commission, supra, 727.

We agree with the trial court that the the town’s discussion in executive session of the hiring of the lobbyist, the consultants’ reports and the costs related to possible legal action concerning the Waste Management permit application was within the statutory exception with respect to “pending litigation.” “Pending litigation” refers to an agency’s consideration of “action to enforce or implement legal relief or a legal right.” General Statutes § l-18a (h) (3). Here, the town considered in executive session appropriate courses of conduct to pursue enforcement of a legal right to oppose and defeat the Waste Management permit application. It is undisputed that the town considered legal relief and its legal rights. The commission did approve discussion during the executive session of a declaratory judgment action and a lawsuit against the department.

Other matters addressed in executive session were also related directly, often as alternatives, to the pursuit of that legal relief and legal right. The cost of additional consultants and attorneys was a factor to be considered with respect to any action to enforce a legal right. The hiring of attorneys and consultants was considered as a means to contest the permit application. The hiring of a lobbyist for the purpose of persuading the department to oppose the permit was an action to enforce or implement such legal relief or a legal right. The payment of attorneys and consultants regarding the application concerned “action” to enforce or implement legal relief or a legal right. Discussion of the relevant costs of those attorneys and consultants is therefore “consideration” of “action” within the statutory exemption. The consideration of the environmental consultants’ reports was also within the statutory exception to public disclosure. Those reports, concerning the sediment’s effect on the environment, would influence the town’s choice of an appropriate course of action.

The commission argues that “action” in the definition of “pending litigation” should mean “legal action.” We disagree. The definition of “pending litigation” in § 1-18a (h) has three subdivisions. Subdivisions (1) and (2) refer to litigation in terms of legal action. Subdivision (3), however, refers to “consideration of action to enforce or implement legal relief or a legal right.” Absent from that subdivision are the terms “legal action” and “an action.” Words of a statute “shall be construed according to the commonly approved usage of the language . . . .” General Statutes § 1-1 (a). Such a reading of the statute yields the interpretation that any action, not restricted to legal action, to implement legal relief or enforce a legal right concerns “pending litigation” under the exception.

We also agree with the trial court that the executive session was held for the purpose of discussing “strategy” with respect to pending litigation. This court has previously defined “strategy” as it is used elsewhere in the Freedom of Information Act to mean “the art of devising or employing plans or stratagems . . . .’’Webster’s Third New International Dictionary. Stamford v. Freedom of Information Commission, 241 Conn. 310, 318, 696 A.2d 321 (1997) (defined for purposes of General Statutes § 1-19). The commission argues that strategy should mean “legal strategy.” The term “legal strategy” does not appear in the statute. Nothing in the statute, our cases or the legislative history supports this restrictive definition.

We hold that the town properly met in executive session to discuss strategy concerning pending litigation. All of the contested matters under discussion related to the town’s plan and strategy by which it could defeat Waste Management’s permit application to dump sludge in New Milford.

The judgment is affirmed.

In this opinion the other justices concurred.

       General Statutes § 1-18a (e) provides in relevant part: “ ‘Executive sessions’ means a meeting of a public agency at wliich the public is excluded for one or more of the following purposes . . . (2) strategy and negotiations with respect to pending claims or pending litigation to which the public agency or a member thereof, because of his conduct as a member of such agency, is a party until such litigation or claim has been finally adjudicated or otherwise settled . . . .”
      General Statutes § l-18a (h) provides in relevant part: “ ‘Pending litigation’ means. . . (3) the agency’s consideration of action to enforce or implement legal relief or a legal right.”

       The commission complainant, Jay Lewin, also joined in the appeal.

       General Statutes § 1-21 (a) provides in relevant part: “The meetings of all public agencies, except executive sessions as defined in subsection (e) of section 1-18a, shall be open to the public. . . .”

       The trial court upheld the commission’s decision that the discussion of the frequency of updates from attorneys and consultants should have been in public because it was not related to the process of choosing a plan of action. This issue is not contested.

       The commission also argues that defining these terms is best left to the proper administrative agency and cites Cos Cob Volunteer Fire Co. No. 1, Inc. v. Freedom of Information Commission, 212 Conn. 100, 106, 561 A.2d 429 (1989). “When the legislature uses a broad term ... in an administrative context, without attempting to define that term, it evinces a legislative judgment that the agency should define the parameters of that term on a case-by-case basis.” Id. This court, however, in Board of Education v. Freedom of Information Commission, supra, 217 Conn. 161-62, did undertake to define the plain meaning of the terms “pending claims and litigation” while citing Cos Cob Volunteer Fire Co. No. 1, Inc., for the proposition that defining the precise elaboration of the terms’ further parameters would be a task “properly left with the administrative agency, on a case-by-case basis.” Our precedents are clear that this court, in the first instance, determines the meaning of statutes on the basis of legislative intent. The administrative agency then applies the statutes after that interpretation to the facts of each case. This court need not, we have held, defer to an incorrect decision of law by an agency. Board of Education v. Freedom of Information Commission, supra, 159.

       In Board of Education v. Freedom of Information Commission, supra, 217 Conn. 153, before § 1-18a (h) had been enacted, this court declined to construe “ ‘pending claims and litigation’ to encompass only those claims presently in litigation or pending before some other adjudicatory body.” Id., 160.


author: PER CURIAM.

text:
    ELINOR HALPERN v. BOARD OF EDUCATION OF THE CITY OF BRISTOL
    (SC 15661)
    Callahan, C. J., and Borden, Berdon, Palmer and McDonald, Js.
    Argued November 4
    officially released December 30, 1997

      Jon L. Schoenhom, with whom, on the brief, was Alice M. Sexton, for the appellant (plaintiff).

      Brian Clemow, with whom, on the brief, was Karen H. Simmonds, for the appellee (defendant).
   Opinion

PER CURIAM.

This case had its genesis more than twenty-three years ago. The facts and procedural history are recited in three previous opinions of this court as well as in the trial court’s present memorandum of decision. The plaintiff, Elinor Lee Halpern, was a tenured teacher employed by the defendant, the board of education of the city of Bristol (board). In 1974, the plaintiffs employment contract was terminated for cause by the board after a constitutionally sufficient hearing. The board did not, however, issue a written decision, nor did it set out in writing the reasons for its decision or provide a written summary of the evidence upon which it relied. This court, on an appeal from a judgment of the Court of Common Pleas dismissing the plaintiffs appeal from the board’s decision, concluded that the lack of a written decision containing the reason for the decision and a summary of the evidence relied upon constituted a due process violation. Lee v. Board of Education, 181 Conn. 69, 79, 434 A.2d 333 (1980). We, therefore, set aside the trial court’s judgment and remanded the case with direction that it be returned to the board for further proceedings. Id., 84. The board thereafter met and reviewed the record. It affirmed the decision to terminate the plaintiffs employment and issued a statement in compliance with this court’s mandate. On the plaintiffs subsequent appeal from the trial court’s judgment affirming the board’s decision, we concluded that the board’s failure to hold another hearing, allowing the plaintiff an opportunity to rebut the board’s findings and conclusions, was a violation of the plaintiffs right to due process. Halpern v. Board of Education, 231 Conn. 308, 649 A.2d 534 (1994). We issued an explicit order detailing the requirements the board was to follow on remand. Id., 314-15. The present appeal stems from the board’s hearing held in compliance with that remand.

Pursuant to our order, the board adopted proposed findings and conclusions and provided a copy to the plaintiff. After properly notifying the parties, the board held a hearing to allow the plaintiff an opportunity to present a rebuttal. The board did not provide for recording or transcription of the hearing and, after allowing two hours for the plaintiffs rebuttal, the board terminated her argument. Upon seeking additional comments on the matter and hearing none, the board voted unanimously to adopt its proposed findings and conclusions. The plaintiff appealed from the board’s decision to the trial court. In a lengthy memorandum of decision, the trial court affirmed the decision of the board. The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).

The four issues raised on this appeal are whether the trial court properly determined that: (1) the board was not required to provide for recording or transcription of the plaintiffs rebuttal argument pursuant to General Statutes (Rev. to 1995) § 10-151 (d) and (f); (2) the board’s decision to terminate the plaintiffs oral argument after two hours was not unreasonable or prejudicial; (3) there was a sufficient factual basis in the record to support the board’s findings; and (4) the plaintiffs claim of bias by the board is not supported by the evidence.

Our examination of the record, and our review of the briefs and arguments of the parties on appeal persuades us that the judgment of the trial court should be affirmed. The central issue of the constitutional adequacy of the plaintiffs opportunity to present a rebuttal to the proposed findings and conclusions at a hearing before the board was resolved properly in the trial court’s thoughtful and comprehensive memorandum of decision. Halpern v. Board of Education, 45 Conn. Sup. 171, 706 A.2d 1011 (1997). Because that memorandum of decision fully addresses the arguments raised in the present appeal, we adopt it as a proper statement of the facts and the applicable law on those issues. It would serve no useful purpose for us to repeat the discussion contained therein. See Molnar v. Administrator, Unemployment Compensation Act, 239 Conn. 233, 235, 685 A.2d 1107 (1996); Val-Pak of Central Connecticut North, Inc. v. Commissioner of Revenue Services, 235 Conn. 737, 740, 669 A.2d 1211 (1996).

The judgment is affirmed.

         Lee v. Board of Education, 181 Conn. 69, 434 A.2d 333 (1980); Halpern v. Board of Education, 196 Conn. 647, 495 A.2d 264 (1985) (see footnote 3 of this opinion); Halpern v. Board of Education, 231 Conn. 308, 649 A.2d 534 (1994); Halpern v. Board of Education, 45 Conn. Sup. 171, 706 A.2d 1011 (1997).

       In Halpern v. Board of Education, 231 Conn. 308, 312, 649 A.2d 534 (1994), we reiterated our conclusions that the hearing itself was constitutionally sufficient, and that only the lack of an adequate written statement of findings and conclusions raised the issue of due process violations.

       During the intervening period between our decisions in Lee v. Board of Education, supra, 181 Conn. 69, in 1980 and in Halpern v. Board of Education, supra, 231 Conn. 308, in 1994, there was another appeal from the trial court’s judgment dismissing, on the ground of a prior pending action, a separate action seeking a writ of mandamus and other relief. The trial court’s judgment of dismissal was affirmed by this court. Halpern v. Board of Education, 196 Conn. 647, 495 A.2d 264 (1985).


author: KATZ, J.

text:
    JEFFREY HUNNIHAN v. MATTATUCK MANUFACTURING COMPANY ET AL.
    (SC 15751)
    Callahan, C. J., and Borden, Berdon, Norcott and Katz, Js.

      Argued October 30
    officially released December 30, 1997

      Joseph C. Tanski, pro hac vice, with whom were Joseph C. Marrow, pro hac vice, Henry Snyder and, on the brief, Margaret A. Triolo, for the appellant (defendant Connecticut Insurance Guaranty Association).

      Timothy E. Welsh, for the appellee (defendant Fireman’s Fund Insurance Company).
   Opinion

KATZ, J.

The principal issue in this administrative appeal is whether the defendant Connecticut Insurance Guaranty Association (association), is obligated to pay a proportionate contribution toward a workers’ compensation award when a former insurer from whom reimbursement otherwise could be sought is insolvent. The association appeals from the decision of the compensation review board (board) affirming the decision by the workers’ compensation commissioner for the fifth district (commissioner) ordering the association to reimburse a codefendant, Fireman’s Fund Insurance Company (Fireman’s Fund), for a portion of the workers’ compensation award paid by Fireman’s Fund to the plaintiff, Jeffrey Hunnihan. The amount ordered to be reimbursed corresponds to the period of the plaintiffs employment during which the now insolvent insurer, the defendant American Mutual Insurance Company (American Mutual), was the workers’ compensation insurance carrier for the plaintiff’s employer. We reverse the decision of the board.

The facts relevant to this appeal are undisputed. While employed by the named defendant, Mattatuck Manufacturing Company (Mattatuck), between October 14, 1970, and August 18, 1987, the plaintiff sustained a repetitive trauma injury to his back caused by his employment. During that period, Mattatuck was insured for workers’ compensation liability by four different carriers. The defendant Liberty Mutual Insurance Company (Liberty) was Mattatuck’s insurer for a five year period commencing in 1970 and ending in 1975; the defendant Travelers Insurance Company (Travelers) was the insurer for a five year period commencing in 1976 and ending in 1980; American Mutual was the insurer for a six year period commencing in 1981 and ending in 1987; and Fireman’s Fund was the insurer for a one year period commencing in 1987 and ending in 1988. Fireman’s Fund, as the last insurer on the risk, became initially liable for the plaintiffs award pursuant to General Statutes § 31-299b and paid benefits to him for a period of 104 weeks totaling $54,457.39. Thereafter, liability was transferred to the defendant second injury fund pursuant to General Statutes § 31-349 (b).

Fireman’s Fund then sought reimbursement pursuant to § 31-299b from Mattatuck’s previous insurers for their proportionate shares of the benefits it had paid to the plaintiif. Both Liberty and Travelers agreed to reimburse Fireman’s Fund for their proportionate shares of the benefits paid. American Mutual, however, on March 9, 1989, had been adjudicated insolvent as defined by General Statutes § 38a-838 (7) of the Connecticut Insurance Guaranty Association Act (guaranty act). Thereafter, in accordance with General Statutes § 38a-841, the association became obligated to pay covered claims against American Mutual. Consequently, the commissioner ordered the association to reimburse Fireman’s Fund in the amount of $19,060. The association, however, appearing on behalf of American Mutual, refused to reimburse Fireman’s Fund, and pursuant to General Statutes § 31-301 appealed from the commissioner’s order to the board. The board, on October 30, 1996, affirmed the award ordered by the commissioner and this appeal followed.

The association bases its appeal primarily upon two arguments. First, the association contends that the Fireman’s Fund claim is not reimbursable because the association is authorized to pay only covered claims, and the Fireman’s Fund claim does not satisfy the requirements of a “covered claim” as that term is defined by the guaranty act. Second, the association claims that the workers’ compensation commission (commission) lacked subject matter jurisdiction to order reimbursement by the association. We agree with the association with regard to the first issue, but disagree with it as to its second argument.

I

We address the jurisdictional claim first because if the commission lacked subject matter jurisdiction over the dispute when it ordered reimbursement, we would not reach the association’s second claim that the order was improper under the guaranty act. The substance of this claim is that the limited subject matter jurisdiction of the commission does not authorize it to order reimbursement by the association because such an order requires a determination by the commission that the claim to be reimbursed is a covered claim within the meaning of § 38a-838 (6) of the guaranty act. That determination cannot be made by the commission, the association argues, because the Workers’ Compensation Act limits the commission’s jurisdiction to claims and questions arising only under that act. Although the association acknowledges that the commission may interpret other statutory provisions as incidentally necessary to its resolution of claims arising under the Workers’ Compensation Act, it argues that in this case the required interpretation of the guaranty act is not merely incidental to the issue, but, rather, constitutes the central issue in the case. Fireman’s Fund, on the other hand, contends that because the legislature inserted into the Workers’ Compensation Act, through General Statutes § 31-355 (e), the association’s obligations in relation to workers’ compensation claims, it clearly intended that the association’s obligations be determined by workers’ compensation commissioners. We agree with Fireman’s Fund.

The association is correct in its contention that the subject matter jurisdiction of the commission is circumscribed by the agency’s enabling legislation. “Administrative agencies [such as the commission] are tribunals of limited jurisdiction and their jurisdiction is dependent entirely upon the validity of the statutes vesting them with power and they cannot confer jurisdiction upon themselves.” Castro v. Viera, 207 Conn. 420, 428, 541 A.2d 1216 (1988). “ ‘It is a familiar principle that a court which exercises a limited and statutory jurisdiction is without jurisdiction to act unless it does so under the precise circumstances and in the manner particularly prescribed by the enabling legislation.’ ” Id., 427-28. Therefore, resolution of the jurisdictional issue here is a matter of statutory interpretation over which our review is plenary. State v. Burns, 236 Conn. 18, 22, 670 A.2d 851 (1996).

In interpreting statutes, we are guided by “well established tenets of statutory construction. [0]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. ... In seeking to discern that intent, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter. . . . Furthermore, [w]e presume that laws are enacted in view of existing relevant statutes . . . and that [statutes are to be interpreted with regard to other relevant statutes because the legislature is presumed to have created a consistent body of law.” (Citations omitted; internal quotation marks omitted.) Conway v. Wilton, 238 Conn. 653, 663-64, 680 A.2d 242 (1996).

Our analysis begins, therefore, with the language of the relevant provisions. General Statutes § 31-278 sets forth the powers and duties of commissioners. Pursuant to that section, commissioners “shall have all powers necessary to enable [them] to perform the duties imposed upon [them] by the provisions of [the Workers’ Compensation Act],” and each commissioner is directed to “hear all claims and questions arising under [the act] . . . .” General Statutes § 31-355 (e) of the Workers’ Compensation Act directly refers to the association, providing that “whenever the employer’s insurer has been determined to be insolvent . . . payments required under [this section] shall be the obligation of the Connecticut Insurance Guaranty Association pursuant to the provisions of sections 38a-836 to 38a-853, inclusive.”

Although the association contends that these provisions do not create subject matter jurisdiction in the commission to allow it to resolve issues central to the case that do not arise under the Workers’ Compensation Act, it does not dispute that this case originated as a workers’ compensation claim. Instead, its argument appears to be that at a certain stage in the present litigation, presumably after the commissioner apportioned liability among the prior insurers, resolution of the case ceased to turn upon provisions of the Workers’ Compensation Act, and became dependent upon an interpretation of the guaranty act.

While it may be true that in the final stages of this litigation resolution of the remaining claim required the commissioner to interpret a provision of the guaranty act, it is not necessarily true that that task removed the case from the operation of § 31-278. In fact, § 31-355 (e) suggests otherwise. The insertion in § 31-355 (e) delineating the association’s obligations under the Workers’ Compensation Act reflects the legislature’s intent for the commission to have jurisdiction to adjudicate claims against the association originating under that act. Otherwise, it would not have included instruction regarding the association’s responsibilities under the Workers’ Compensation Act at all.

Furthermore, it is important to recognize that when a claim originates under the Workers’ Compensation Act and at some point during the proceedings it becomes necessary for the commission to interpret provisions of other enactments in order to resolve the claim, the purposes and public policy concerns underlying the Workers’ Compensation Act nevertheless continue to be implicated until a conclusion is reached. If jurisdiction were found not to exist in such circumstances and the commission was precluded from seeing such claims through to their conclusion, the result would be to thwart the operation of the Workers’ Compensation Act and the public policies underlying it. A case that had arisen under the Workers’ Compensation Act and proceeded through many stages under the jurisdiction of the commission would suddenly be called to a halt and the parties would be left to pursue the final resolution of their claims in another tribunal with jurisdiction over the final element of the controversy. Such a result hardly serves the legislature’s goal in enacting this remedial legislation, as recently reiterated in Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 381, 698 A.2d 859 (1997): “The purpose of the Workers’ Compensation Act . . . is to provide compensation for injuries arising out of and in the course of employment, regardless of fault. . . . Under the statute, the employee surrenders his right to bring a common law action against the employer, thereby limiting the employer’s liability to the statutory amount. ... In return, the employee is compensated for his or her losses without having to prove liability. ... In a word, these statutes compromise an employee’s right to a common law tort action for work related injuries in return for relatively quick and certain compensation.” (Citations omitted; internal quotation marks omitted.)

Here, because the injured employee plaintiff is no longer directly involved in the dispute, it is not immediately obvious how a determination that jurisdiction exists to enable the commission to resolve this case will advance the remedial purposes of the Workers’ Compensation Act. It may not always be the case, however, that whenever the commission is called upon to interpret a provision of another act, the employee claimant will have already received compensation. If the commission is to function effectively in the manner contemplated by the legislature, it must be able to interpret other acts when necessary in order to resolve cases originating under the Workers’ Compensation Act. Any other result would be inconsistent with the remedial public policy underlying the Workers’ Compensation Act. Accordingly, we conclude that the commission did not lack subject matter jurisdiction to adjudicate the present case.

II

The association’s second claim is that it is not obligated to reimburse Fireman’s Fund for American Mutual’s proportionate share of the award made to the plaintiff because the Fireman’s Fund claim is not a covered claim as defined by § 38a-838 (6) of the guaranty act. Specifically, the association argues that the Fireman’s Fund claim falls within the exception to the covered claim definition contained in that section that excludes amounts due insurers “as subrogation recoveries or otherwise.” General Statutes § 38a-838 (6) (c). Fireman’s Fund, on the other hand, contends that the language relied upon by the association does not absolutely exclude all claims made by insurers and is not directed toward claims based upon the statutory right to reimbursement provided for by § 31-299b. We conclude that the commission improperly determined that the Fireman’s Fund claim is a covered claim reimbursable by the association.

We begin by setting forth the applicable standard of review. In an administrative appeal, “[o]ur resolution of [the] issue is guided by the limited scope of judicial review afforded by the Uniform Administrative Procedure Act; General Statutes § 4-166 et seq.; to the determinations made by an administrative agency. [W]e must decide, in view of all of the evidence, whether the agency, in issuing its order, acted unreasonably, arbitrarily or illegally, or abused its discretion.” (Internal quotation marks omitted.) Connecticut Alcohol & Drug Abuse Commission v. Freedom of Information Commission, 233 Conn. 28, 39, 657 A.2d 630 (1995). “Cases that present pure questions of law, however, invoke a broader standard of review than is ordinarily involved in deciding whether, in light of the evidence, the agency has acted unreasonably, arbitrarily, illegally or in abuse of its discretion.” (Internal quotation marks omitted.) State v. State Employees’ Review Board, 239 Conn. 638, 645, 687 A.2d 134 (1997). “Although the inteipretation of statutes is ultimately a question of law . . . it is the well established practice of this court to accord great deference to the construction given [a] statute by the agency charged with its enforcement.” (Internal quotation marks omitted.) Connecticut Alcohol & Drug Abuse Commission v. Freedom of Information Commission, supra, 39. An exception is that “when a state agency’s determination of a question of law has not previously been subject to judicial scrutiny . . . the agency is not entitled to special deference.” (Internal quotation marks omitted.) State v. State Employees’ Review Board, supra, 645.

In this case, the issue of whether an insurer’s claim against the association is properly reimbursable constitutes a question of law. Furthermore, although statutory interpretation by the commission — an administrative agency — is required, the statute to be interpreted is not part of the Workers’ Compensation Act assigned to the commission for enforcement, but, rather, is a provision of the guaranty act. Consequently, although, as we have previously stated, the commission had the authority to inteipret § 38a-838 (6), we afford no special deference to its interpretation. Our analysis is guided, however, by the same well established tenets of statutory construction that instructed our resolution of the association’s first claim in this appeal. Conway v. Wilton, supra, 238 Conn. 663.

Pursuant to General Statutes § 38a-841, the association is authorized to pay only covered claims, and must deny all other claims. In order to be reimbursable by the association, a claim against the association must be encompassed within the definition of a covered claim contained in § 38a-838 (6). The language relied upon by the association as excluding the Fireman’s Fund claim provides that “the term ‘covered claim’ shall not include any amount due any . . . insurer ... as subrogation recoveries or otherwise . . . .” (Emphasis added.) General Statutes § 38a-838 (6) (c). Specifically, because the amount allegedly due is not purported to be based upon a right of subrogation, it is the “or otherwise” language of the statute that the association argues excludes the claim. While the association reads the words “as subrogation recoveries or otherwise” as disjunctive and excluding all claims by insurers, Fireman’s Fund argues that the words “or otherwise” merely modify the words “subrogation recoveries,” so that only claims based on subrogation or akin to subrogation recoveries are excluded from the definition of a covered claim. Furthermore, Fireman’s Fund contends that if the legislature had intended to bar absolutely all claims by insurers, it could have done so explicitly rather than by employing a broad, catchall phrase of uncertain meaning. We agree with the association’s reading of § 38a-838 (6).

To begin with, we note that the term “otherwise” is defined by Black’s Law Dictionary (6th Ed. 1990) as meaning “[i]n a different manner; in another way, or in other ways.” Substituting this definition for the term “otherwise” in the statute demonstrates that not only are subrogation recoveries by an insurer excluded but so are recoveries obtained in a different manner or in other ways. This result comports with the everyday understanding of the phrase “or otherwise,” and with a plain reading of § 38a-838 (6). Read this way, the language is very broad, and encompasses all amounts claimed by insurers as reimbursement. Contrary to the assertion by Fireman’s Fund that the phrase “or otherwise” is of uncertain meaning, we conclude that the language provides a strong indication that under the guaranty act, all claims by insurers are excluded from the definition of a covered claim.

The legislative purpose underlying the guaranty act supports our interpretation of § 38a-838 (6). The association was established for the purpose of providing a limited form of protection for policyholders and claimants in the event of insurer insolvency. The protection it provides is limited based upon its status as a nonprofit entity and the method by which it is funded. Specifically, the association is a nonprofit legal entity created by statute to which all persons licensed to transact insurance in the state must belong. See General Statutes §§ 38a-838 (8) and 38a-839. When an insurer is determined to be insolvent under § 38a-838 (7), the association becomes obligated pursuant to § 38a-841, to the extent of covered claims within certain limits. The rates and premiums charged by member insurers are authorized by General Statutes § 38a-849 to include amounts sufficient to recoup the assessments levied upon insurers by the association. Because § 38a-849 provides that insurers may pass on the costs of the assessments made against them by the association, it is in reality policyholders who pay for the protections afforded by the association. Limitations on the association’s obligations, therefore, provide another form of protection against increased premiums for policyholders in addition to the primary protection afforded all claimants against losses resulting from insurer insolvency.

The legislative history confirms that the association was established for the benefit of consumers. At the public hearing held prior to passage of the bill proposing the creation of the association, Peter Kelly, a member of the state insurance department stated: “[T]his bill provides the means to avoid financial loss to Connecticut residents because of the insolvency of [insurance companies], ... In the late 1960s . . . [consumers were being hurt and on a personal scale, an insolvency can be ruinous. . . . [The bill] provides the means for all insurance companies assessed to recover from the entire insured residents of this state the cost of such assessments so that it is really not an assessment on a company but an assessment on the entire residents of the state who are insured after the fact. This is spreading the risk amongst all Connecticut residents. . . . I think you must remember that industry is not paying the cost. This bill provides that Connecticut residents will pay the cost. . . . This bill provides for protections of residents of this state and the residents if any assessments are ever made will pay for the cost of such assessments in their future insurance premiums.” Conn. Joint Standing Committee Hearings, Insurance and Real Estate, 1971 Sess., pp. 55-59.

An interpretation of the covered claim definition that excludes claims by insurers is in accord with this legislative purpose to provide protection for policyholders and claimants from insurer insolvency. The exclusion of claims by insurers leaves the risk of insurer insolvency on the insurance industry. The result is that policyholders, who in effect fund the association, pay only for protection for fellow policyholders and claimants in the event that an insurer becomes insolvent.

Other jurisdictions that have construed similar provisions in their guaranty association acts have also concluded that claims by insurers are excluded by their acts. In Maxwell Communications v. Webb Publishing Co., 518 N.W.2d 830, 833 (Minn. 1994), the Minnesota Supreme Court interpreted identical language contained in its guaranty association act as excluding claims by insurers. The language of the Minnesota act provided that “ ‘a covered claim does not include . . . claims due a reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise.’ ” Id., 832, quoting Minn. Stat. § 60c.09 (2) (2). The Minnesota guaranty association, like our association, was funded by assessments levied on member insurers that were by statute allowed to be passed directly on to policyholders. The court based its decision upon the breadth of the “or otherwise” language employed by the Minnesota act, and upon the public policy sought to be advanced by the act, namely, protection for policyholders as distinct from insurance companies. Maxwell Communications v. Webb Publishing Co., supra, 833. The court reasoned that “[b]y excluding claims of what may be described as insurance industry creditors, policyholders pay only for the protection lost by similarly-situated policyholders of insolvent insurers. The members of the insurance industry itself bear the risk of loss of their own direct claims against the insolvent carrier, which they still may assert against the insolvent carrier’s receiver. In other words, the Guaranty Act does not provide a solvent substitute for an insolvent insurer, but, rather, is a limited form of protection for the public.” Id.; see also Ursin v. Ins. Guaranty Assn., 412 So. 2d 1285, 1289 (La. 1981); Ferrari v. Toto, 383 Mass. 36, 37-38, 417 N.E.2d 427 (1981). We find this reasoning persuasive and equally applicable to an interpretation of § 38a-838 (6) of our own guaranty act.

Although we realize that § 31-299b, by placing initial liability on the last insurer in circumstances where a compensable injury is the responsibility of several insurers, may create a hardship for the last insurer in the event that a prior insurer has become insolvent, we believe that the conclusion we reach reflects the result intended by the legislature. We express no opinion, however, as to whether the last insurer may seek reapportionment among the remaining solvent insurers by the commission when a prior insurer has been adjudicated insolvent, because that decision is not necessary to the resolution of this appeal.

The decision of the board is reversed and the case is remanded to the board with direction to render a decision in favor of the association.

In this opinion the other justices concurred.

       The association is a nonprofit legal entity established by General Statutes § 38a-839 and governed by the Connecticut Insurance Guaranty Association Act, which is codified at General Statutes § 38a-836 et seq. The association was established in order to reimburse, to a limited extent, covered claims against insolvent insurers.

       A right of reimbursement is provided for by General Statutes § 31-299b, which also imposes initial liability upon the last employer or insurer for a workers’ compensation claim relating to a period of time during which there was more than one employer or insurer liable for the injury. Section 31-299b provides: “Initial liability of last employer. Reimbursement. If an employee suffers an injury or disease for which compensation is found by the commissioner to be payable according to the provisions of this chapter, the employer who last employed the claimant prior to the filing of the claim, or the employer’s insurer, shall be initially liable for the payment of such compensation. The commissioner shall, within a reasonable period of time after issuing an award, on the basis of the record of the hearing, determine whether prior employers, or their insurers, are liable for a portion of such compensation and the extent of their liability. If prior employers are found to be so liable, the commissioner shall order such employers or their insurers to reimburse the initially liable employer or insurer according to the proportion of their liability. Reimbursement shall be made within ten days of the commissioner’s order with interest, from the date of the initial payment, at twelve per cent per annum. If no appeal from the commissioner’s order is taken by any employer or insurer within ten days, the order shall be final and may be enforced in the same manner as a judgment of the Superior Court.”
      The association is a defendant in this action because by the time the last insurance carrier for the plaintiffs employer sought reimbursement pursuant to § 31-299b from the employer’s previous insurance carriers for the compensation award that it had paid to the plaintiff, one of those carriers, American Mutual Insurance Company, had been declared insolvent, and the association had become obligated to the extent of covered claims against the insolvent insurer.

       The association appealed from the decision of the board to the Appellate Court pursuant to General Statutes § 31-301b. Thereafter, we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).

       The Workers’ Compensation Act in its entirety is codified at General Statutes §§ 31-275 through 31-355a.

       The subject matter jurisdiction of the commission in previous cases has encompassed the interpretation of statutory provisions codified outside the Workers’ Compensation Act when such interpretations have been incidentally necessary to the resolution of a case arising under that act. See Wonacott v. Bartlett Nuclear, Inc., 15 Conn. Workers’ Comp. Rev. Op. 334 (1996) (board interpreted Internal Revenue Code in determining wages under General Statutes § 31-310); Pascarelli v. Moliterno Stone Sales, 14 Conn. Workers’ Comp. Rev. Op. 328 (1995) (board interpreted Bankruptcy Code in determining whether relief from stay required to allow proceedings against insurer); Versage v. Kurt Volk, Inc., 11 Conn. Workers’ Comp. Rev. Op. 253 (1993) (board interpreted provision of guaranty act in reviewing award of interest on disability payments pursuant to General Statutes § 31-300).

       General Statutes § 31-355 (e) provides: “Notwithstanding the provisions of subsections (a) to (d), inclusive, of this section, whenever the employer’s insurer has been determined to be insolvent, as defined in section 38a-838, payments required under this section shall be the obligation of the Connecticut Insurance Guaranty Association pursuant to the provisions of sections 38a-836 to 38a-853, inclusive.”

       General Statutes § 38a-838 (6) provides: “ ‘Covered claim’ means an unpaid claim, including, but not limited to, one for unearned premiums, which arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a-836 to 38a-853, inclusive, apply issued by an insurer, if such insurer becomes an insolvent insurer after October 1, 1971, and (a) the claimant is a resident of this state at the time of the insured event; or (b) the claimant is not a resident of this state, but only under all of the following conditions: (i) The insured is a resident of this state at the time of the insured event; (ii) the insolvent insurer is licensed to do business in this state at the time of the insured event; (iii) the state of the claimant’s residence has an association similar to the association created by said sections; and (iv) such claimant is refused coverage by such association because the insolvent insurer is not licensed to do business in the state of the claimant’s residence at the time of the insured event; or (c) the property from which the claim arises is permanently located in this state, provided the term ‘covered claim’ shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise; provided that a claim for any such amount, asserted against a person insured under a policy issued by an insurer which has become an insolvent insurer, which, if it were not a claim by or for the benefit of a reinsurer, insurer, insurance pool or underwriting association, would be a ‘covered claim’ may be filed directly with the receiver of the insolvent insurer but in no event shall any such claim be asserted against the insured of such insolvent insurer. A claim shall not be a ‘covered claim’ if it is filed by or on behalf of an individual who is neither a citizen of the United States nor an alien legally resident in the United States at the time of the insured event, or an entity other than an individual whose principal place of business is not in the United States at the time of the insured event, and it arises out of an accident, occurrence, offense, act, error or omission that takes place outside of the United States, or a loss to property normally located outside of the United States or, if a workers’ compensation claim, it arises out of employment outside of the United States . . . .”

       The association has other beneficiaries in addition to workers’ compensation claimants. The guaranty act, pursuant to General Statutes § 38a-837, applies to “all kinds of direct insurance, except life, title, surety, accident and health, credit, financial guaranty, mortgage guaranty, ocean marine, and flood insurance pursuant to the federal Flood Disaster Protection Act of 1973, as amended.” Pursuant to General Statutes § 38a-839, the association “[f]or the purposes of administration and assessment . . . [is] divided into three separate accounts: (a) The workers’ compensation insurance account; (b) the automobile insurance account; and (c) an account for all other insurance to which sections 38a-836 to 38a-853, inclusive, apply.”