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Connecticut General Life Insurance Co. v. A.A.A. Waterproofing Inc.9/14/1995
In this garnishment proceeding to determine coverage under a liability insurance policy, plaintiff-garnishor, Connecticut General Life Insurance Company (CGLIC) appeals the judgment entered on the pleadings in favor of defendant-garnishee, American Motorists Insurance Company (American). We reverse and remand.
Before the commencement of this garnishment proceeding, CGLIC sued Property Company of America, Inc., and PCA Contractors, Inc., (PCA) for damages PCA allegedly caused to an apartment complex owned by CGLIC. PCA had insurance coverage through American. American initially provided a defense under the insurance contract to PCA for CGLIC's claims and the attorney retained to defend PCA filed an answer on behalf of PCA.
After tendering a defense to the CGLIC claims, American filed a separate declaratory judgment action against its insured, PCA, contending that it had no duty to defend nor to indemnify PCA for claims asserted by CGLIC. American did not join CGLIC as a party in the declaratory judgment action.
PCA failed to respond to the declaratory judgment action commenced by American. Consequently, a default judgment was entered in favor of American, determining that there was no duty to defend or indemnify against the claims asserted by CGLIC in the separate action.
After the time for appeal of that judgment had passed, American withdrew the defense it had provided to PCA and the attorney it had hired to represent PCA sought to withdraw. At that time CGLIC first became aware of the declaratory judgment action that American had filed against PCA.
After the attorney hired by American was allowed to withdraw, CGLIC obtained a default judgment against PCA in the underlying tort action. Thereafter, CGLIC commenced this garnishment proceeding to collect on its judgment against PCA. It contended that American's policy provided coverage to PCA; hence, the proceeds of that policy were available to satisfy its judgment. It further asserted that the declaratory judgment obtained by American was not binding upon it because it had not received notice of the proceeding and had not been joined therein.
American defended the garnishment proceeding on the basis that it had no obligation to join CGLIC in the declaratory judgment proceeding, that the declaratory judgment in its favor had conclusively determined that there was no coverage for PCA for CGLIC's claims, and that, thus, there was no debt that could be garnished by CGLIC.
The trial court agreed with American. Based upon the allegations of the garnishment, the answer to the writ, and the traverse of the answer, all of which set forth the essential facts noted above, the court granted American's motion for judgment on the pleadings.
CGLIC contends that the trial court erred in granting judgment on the pleadings in favor of American because the declaratory judgment American obtained against PCA was not binding on CGLIC. Specifically, CGLIC argues that American's failure to notify CGLIC or name CGLIC as an interested party in the declaratory judgment action or its premature litigation of the declaratory judgment action with PCA prevents the declaratory judgment from being binding upon it. While we disagree with the first premise, we agree with the second and, consequently, reverse and remand.
I.
Initially, the parties dispute the applicable standard of review. CGLIC argues that the standard of review is de novo, asserting that the trial court treated the motion for judgment on the pleadings as a motion to dismiss under C.R.C.P. 12(b)(5). Consequently, it asserts, we are to determine, assuming facts most favorable to
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