Summary
holding that where policy did not require insurance company to defend or indemnify the insured, "the failure to do so could not constitute a breach of the covenant of good faith and fair dealing"
Summary of this case from Country Club of Fairfield, Inc. v. New Hampshire Ins. Co.Opinion
No. CV-08-5021329S
October 13, 2009
MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT
The defendant, Hermitage Insurance Company ("Hermitage"), has moved for summary judgment on all counts of the complaint on the grounds that the insurance policy it issued to DS Entertainment d/b/a The Bar with No Name ("DS") does not provide coverage for the November 27, 2004 incident in which the plaintiff, Mervin Harris, was injured.
Facts
The plaintiff, Mervin Harris, has brought this action under Connecticut General Statutes § 38a-321, the "direct action" statute. This action arises out of an incident which occurred on November 27, 2004 when Harris was a patron at the Bar With No Name in Hartford, Connecticut. At some point during the evening Harris was assaulted by two employees of that establishment and sustained injuries.
On September 27, 2005 Harris instituted an action against DS seeking compensation for the injuries he sustained as a result of the assault by the employees of DS. In that action(the underlying complaint) Harris alleged that he was a business invitee at The Bar With No Name and he was "physically attacked and assaulted by John Doe 1 and John Doe 2 resulting in the injuries and losses to the plaintiff." He also alleged that his injuries and losses were the result of the negligence and carelessness of the defendants in that they, inter alia, failed to adequately supervise and train their employees, failed to implement policies and procedures and failed to exercise reasonable care to protect their customers from the violent propensities of their employees. The second count of the underlying complaint alleged that the plaintiff was injured as a result of the reckless or wanton misconduct of the defendants for failing to adequately supervise and train their employees, failure to implement policies and procedures and failure to exercise reasonable care to protect their customers from the violent propensities of their employees. In the underlying complaint the plaintiff sought compensatory damages and punitive damages, including attorneys fees.
On October 18, 2007, DS assigned to the plaintiff its rights, claims and interests to the cause of action against Hermitage arising out of the November 27, 2004 incident. On that same date DS executed a Stipulation of Judgment with the plaintiff in which DS admitted liability for the November 27, 2004 incident and agreed that the court would determine fair, just and reasonable damages. On December 14, 2007, the court entered judgment against DS in the amount of $164,087.40. The plaintiff then instituted this suit.
The First Count of the complaint alleges breach of contract based on the facts set forth above.
The Second Count incorporates the allegations of the First Count and adds allegations that Hermitage was negligent in its dealings with DS. In the Third Count the plaintiff alleges that Hermitage breached the covenant of good faith and fair dealing and the Fourth Count alleges that "The manner in which the defendant handled the initial claim and lawsuit violated one or more of [the] prohibitions of the Connecticut Unfair Insurance Practices Act."
In connection with the present motion, Hermitage has presented evidence that it issued a Commercial General Liability Insurance policy ("the Policy") to DS, with effective dates from April 11, 2004 through April 11, 2005. The Policy contains the following pertinent provisions and exclusions:
SECTION I — COVERAGES 1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" of "property damage" to which this insurance dos not apply . . .
b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is cause by an "occurrence" that takes place in the "coverage territory"; and
(2) The "bodily injury" or "property damage" occurs during the policy period.
The Policy further provides that an "occurrence is an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
The Policy also contains the following exclusions:
EXCLUSION — ASSAULT AND/OR BATTERY
This Endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE FORM
Assault and/or battery shall not be deemed an accident under this insurance. The Company shall not be obligated to pay on behalf of or defend the insured for any claim alleging an assault and/or battery no matter how the assault and/or battery is alleged to have occurred.
It is understood and agreed that this insurance does not apply to "bodily injury" or "property damage" arising or alleged to arise out of:
A) An assault and/or battery caused by or at the instigation or direction of:
1. The insured, his agent, or employee
2. Any patron or the insured; or
3. Any other person; or
B) Any act or omission of the insured, his agent or employee in connection with the prevention or suppression of an assault and/or battery or criminal acts by third parties.
EXCLUSION — INTENTIONAL ACTS
This Endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE FORM
This insurance does not apply to:
Exclusion 2.A., Expected or Intended Injury of Section I — Coverages, Coverage A. Bodily injury and Property Damage Liability, is deleted and replaced by the following:
"Bodily Injury" or "Property Damage" expected or intended from the standpoint of the insured or from the standpoint of any customer or patron of the insured.
EXCLUSION — PUNITIVE AND/OR EXEMPLARY DAMAGES
This Endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE FORM
This insurance does not apply to damages assessed for Punitive and/or Exemplary Damages. If a suit shall have been brought against the Insured for a claim falling within the coverage by this policy, seeking both compensatory and punitive or exemplary damages, the Company will afford a defense to such action but the Company shall not have an obligation to pay any cost, interest, or damages attributed to punitive or exemplary damages.
On October 25, 2005 Hermitage was notified of the underlying lawsuit. It took the position that the Policy did not provide coverage for the losses alleged in the complaint and did not defend that action.
Discussion of the Law and Ruling
Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fojtik v. Hunter, 265 Conn. 385, 389, 828 A.2d 596 (2003); Mytych v. May Dept. Stores Co., 260 Conn. 152, 158-59, 793 A.2d 1068 (2002); Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 202, 663 A.2d 1001 (1995). Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact; D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980); a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact, together with the evidence disclosing the existence of such an issue. Practice Book §§ 17-45, 17-46; Burns v. Hartford Hospital, 192 Conn. 451, 455, 472 A.2d 1257 (1984). In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. Town Bank Trust Co. v. Benson, 176 Conn. 304, 309, 407 A.2d 971 (1978); Strada v. Connecticut Newspapers, Inc., 193 Conn. 313, 317, 477 A.2d 1005 (1984). The test is whether a party would be entitled to a directed verdict on the same facts. Batick v. Seymour, 186 Conn. 632, 647, 443 A.2d 471 (1982); New Milford Savings Bank v. Roina, 38 Conn.App. 240, 243-44, 659 A.2d 1226 (1995).
Summary judgment should only be granted if the pleadings, affidavits and other proof submitted demonstrate that there is no genuine issue as to any material fact. Scinto v. Stam, 224 Conn. 524, 530, cert. denied, 114 S.Ct. 176, 126 L.Ed.2d 136 (1993); Connell v. Colwell, 214 Conn. 242, 246, 571 A.2d 116 (1991). Summary judgment is "designed to eliminate the delay and expense of litigating an issue where there is no real issue to be tried." Wilson v. City of New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).
Under Connecticut law, the terms of an insurance policy are to be construed according to the general rules of contract construction. The determinative question is the intent of the parties as disclosed by the provisions of the policy. Heyman Assocs. No. 1 v. Insurance Co. of the State of Pa., 231 Conn. 756, 770, 653 A.2d 122 (1995). If a policy's provisions are clear and unambiguous, then the language must be accorded its natural and ordinary meaning. Id. at 770-71. "There is no presumption that language in insurance contracts is inherently ambiguous." Buell Industries v. Greater New York Mutual Ins., 259 Conn. 527, 545, 791 A.2d 489 (2002).
Hermitage argues that the allegations of the underlying complaint do not fall within the Policy's coverage because the Policy covers only bodily injury caused by an "occurrence." An occurrence is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
The term "accident" is not specifically defined in the Policy. Under Connecticut law "an accident is an unintended occurrence." Hammer v. Lumbermen's Mut. Cas. Co., 214 Conn. 573, 590, 573 A.2d 699 (1990). See also Commercial Contractors Corp. v. American Ins. Co., 152 Conn. 31, 42, 202 A.2d 498 (1964) ("the term `accident' is to be construed in its ordinary meaning of an `unexpected happening' . . . the `accident' was the event causing injury, not the cause of that event"); Buell Industries v. Greater New York Mutual Ins., supra, at 541 (defining "accidental" to mean unexpected or unintended).
The Connecticut Supreme Court has held that the last event in the causal chain is what should be examined in order to determine whether an "occurrence" has been alleged. Metropolitan Life Ins. Co. v. Aetna Cas. Sur. Co., 255 Conn. 295, 312, 765 A.2d 891 (2001). In Metropolitan the insured, attempting to trigger coverage under excess insurance policies, argued that the alleged failure to warn claimants about the dangers of asbestos constituted an "occurrence" under the policies at issue. The Court disagreed and held that the event causing injury, not some point further back in the causal chain, is what determines whether there is an occurrence. It was the exposure to asbestos, rather than the failure to warn about the asbestos, which constituted the occurrence. The Court explained that the insured's failure to warn, "while possibly a cause of the claimants' injuries, occurred earlier in the `causal chain,' creating merely a `potential for future injury' . . . if the claimants had never been exposed to the asbestos, there would have been no occurrence at all for which [the insured] could have been liable." Id. at 322.
Similarly, in this case the injuries to the plaintiff were caused when he was "physically attacked and assaulted by John Doe 1 and John Doe 2" on November 27, 2004. Clearly, that assault was not accidental or unintended and, therefore, could not be an "occurrence" under the Policy.
The plaintiff argues that Hermitage is estopped from asserting that there was no occurrence alleged in the underlying complaint because it has waived its right to do so. This argument is based on the fact that in its letter denying coverage, Hermitage did not refer to the lack of an "occurrence" as defined by the Policy.
Under Connecticut law, waiver requires that a party has "both knowledge of the existence of the right and intention to relinquish it." Breen v. Aetna Casualty Surety Co., 153 Conn. 633, 645, 220 A.2d 254 (1966). Estoppel has two elements: "the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other. In the absence of prejudice, estoppel does not exist." Id. at 642.
The law of this state prevents the extensions of coverage by waiver or estoppel. Heyman Assoc. No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 777, 653 A.2d 122 (1995). Generally, waiver and estoppel cannot be used to extend the coverage of an insurance policy or create a primary liability but may only affect rights reserved therein; for example, an insurer may be estopped by its conduct or its knowledge or by statute from insisting on a forfeiture, but under no conditions can the coverage or restrictions on coverage be extended by waiver and estoppel. 16B Appleman, Insurance Law Practice, § 9090, pp. 579-82.
Not only was there no actual waiver by Hermitage here, but, to the contrary, in its denial letter to DS of October 28, 2005 and a follow-up letter to DS dated February 10, 2006, Hermitage expressly "reserve[d] the right to rely in the future on any policy provision or upon applicable law, regardless of whether or not that policy provision or law [was] addressed in [the denial] letter."
Even if the November 27, 2004 altercation is an "occurrence" under the meaning of the Policy, there is still no coverage because the assault and/or battery exclusion applies. The Policy provides that: "It is understood and agreed that this insurance does not apply to `bodily injury' or `property damage' arising or alleged to arise out of: A) An assault and/or battery caused by or at the instigation or direction of: 1. The insured, his agent, or employee; 2. Any patron or the insured; or 3. Any other person; or B) Any act or omission of the insured, his agent or employee in connection with the prevention or suppression of an assault and/or battery or criminal acts by third parties."
In Kelly v. Figueiredo, 223 Conn. 31, 610 A.2d 1296 (1992), the Connecticut Supreme Court interpreted an assault and battery exclusion similar to the one at issue here. In Kelly, the plaintiff alleged that he was struck and stabbed by a patron at the defendant's cafe. The cafe's liquor liability policy included the following language: "It is agreed that the insurance does not apply to bodily injury or property damage arising out of assault and battery or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of the insured, his employees, patrons or any other person."
The Court in Kelly stated:
The exclusion clause is not ambiguous. The words at issue do not have multiple definitions . . . We can say with a high degree of certainty that the exclusion clause was intended to exclude all assaults and batteries from coverage. See Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 514, 442 A.2d 920 (1982) (finding ambiguity where "we cannot say with any degree of certainty [what the clause] was intended to exclude"). The exclusion clause therefore unambiguously relieves Calvert of any obligation to defend or indemnify the insured in this case.
Kelly, supra at 37.
Relying on Kelly, the Appellate Court recently rejected a claim that an insurance policy's assault and battery exclusion was ambiguous in Clinch v. Generali-U.S. Branch, 110 Conn.App. 29, 954 A.2d 223 (2008), aff'd, SC 18256 (October 20, 2009 with advance release date of October 13, 2009). In Clinch the plaintiff alleged that he was injured at a restaurant during an altercation with three men, who were under the influence of alcohol. The plaintiff's lawsuit against the restaurant resulted in the entry of a judgment in excess of $300,000. The defendant was the restaurant's insurer and had declined to provide a defense in the underlying action because both the general liability policy and the liquor liability policy contained exclusions for assault and battery. As in the present case, the plaintiff in Clinch commenced the action against the defendant insurer under Connecticut General Statutes § 38a-321. Both parties moved for summary judgment. The trial court granted the summary judgment in favor of the defendant insurer.
On appeal the plaintiff argued that the defendant had a duty to defend because the allegations in the underlying complaint "possibly could have fallen within the coverage of the policy and that the defendant's failure to defend was a breach of this duty." Clinch v. Generali-U.S. Branch, supra at 33. The Appellate Court rejected this argument, noting that both the general liability and the liquor liability policies "clearly [set] forth exclusions for injuries arising from an assault or battery or from any acts or omissions connected to suppressing or preventing such acts of assault or battery."
The Court stated the following concerning the underlying complaint:
In the first count of his complaint, the plaintiff alleged that the insured was negligent, and, as a result of this negligence, the plaintiff was injured. The plaintiff specifically alleged that "as a direct result of the [insured's] failure to maintain its restaurant in a reasonably safe condition, the plaintiff, Steven Clinch, and two of his companions, were confronted inside the restaurant by a group of three males who were under the influence of alcohol, and the plaintiff was struck and hit inside the [insured's] restaurant by one of these males." The plaintiff also alleged that "[a]s a result of the negligence and carelessness of the [insured], their agents, servants or employees, as aforesaid, the plaintiff was caused to be punched and stuck inside the [insured's] restaurant and in the parking lot area of the restaurant and he was caused to suffer injuries . . ." The plaintiff pleaded thirteen allegations of negligence, which proximately caused the plaintiff's injuries and losses, none of which mentions assault and battery.
Reading the complaint in its entirety, as we must, the only cause of action alleged in the first count is for injury arising from assault and battery that stemmed from the insured's negligence. The plaintiff argues that on the basis of the language of the complaint, one could entertain a variety of causes for some of his injuries unrelated to assault and battery. The negligent acts that he describes, however, are tied inextricably by the language of the complaint to assault and battery. He describes no other manner in which he sustained his injuries. Thus, we conclude that the only causes reasonably construed from the plaintiff's complaint, that is to say, that do not unreasonably contort the meaning of the language of the complaint, are for injury arising out of assault and battery.
Clinch v. Generali-US. Branch, supra at 37-39.
As in Clinch, the Policy excludes assault and battery and negligent conduct which allegedly could have prevented the assault and battery, and the underlying complaint describes no manner in which the plaintiff was injured other than by the assault and battery.
The plaintiff in Clinch also argued that the assault and battery exclusion in the policy was ambiguous. The Court rejected that argument, noting that the terms should be given their ordinary meaning and that the Supreme Court had held a nearly identical assault and battery exclusion was not ambiguous in Kelly v. Figueiredo, 223 Conn. 31, 37, 610 A.2d 1296 (1992). Id. at 40.
The Second Circuit Court of Appeals and the District of Connecticut courts have also held that assault and battery exclusions like the one in the Policy preclude coverage notwithstanding the plaintiffs' attempts to couch the language of underlying complaints in terms of negligence. United National Insurance Co. v. Waterfront New York Realty Corp., 994 F.2d 105 (2d Cir. 1993); Hermitage Insurance Co. v. Sportsmen's Athletic Club, 2008 U.S. Dist. LEXIS 65138 (D.Conn. 2008).
Many judges of this court have also held that assault and battery exclusions like the one in the Policy preclude coverage. Campbell v. Conlon, 2003 Conn.Super. LEXIS 1592 (May 30, 2003, Wolven, J.); Salza v. Cellar, 2002 Conn.Super. LEXIS 1762 (May 20, 2002, Rush, J.); Axa Global Risks U.S. Ins. Co. v. S.G.S., Inc., 2000 Conn.Super. LEXIS 3182 (Nov. 15, 2000, Moraghan, J.); Penn-America Ins. Co. v. LTJ Corp., 1996 Conn.Super. LEXIS 2014 (July 23, 1996, Arena, J.).
Hermitage further argues that there is no coverage for the plaintiff's claims because they arose out of intentional acts by the insured's employees. As stated above, the underlying complaint alleged that the plaintiff was a business invitee at The Bar With No Name and he was "physically attacked and assaulted by John Doe 1 and John Doe 2," who were employees of the bar. The Policy provides that coverage does not apply to "`Bodily Injury' or `Property Damage' expected or intended from the standpoint of the insured."
The appellate courts of this state have held that applying the plain meaning of the word "intent," assaults are intentional acts within the meaning of policy exclusions similar to the one at issue here. Moore v. Continental Casualty Co., 252 Conn. 405, 408, 746 A.2d 1252 (2000); United Services Automobile Association v. Marburg, 46 Conn.App. 99, 104, 698 A.2d 914 (1997).
Other judges of this court have also held that the insurer was not obligated to defend and indemnify the insured for claims made which stemmed from acts of assault by the insured. Colonial Penn. Ins. Co. v. Dimitriadis, 2003 Conn.Super LEXIS 3268 (November 14, 2003, Doherty, J.); Allstate Ins. Co. v. Linarte, 2007 Conn.Super LEXIS 1359 (May 24, 2007, Shapiro, J.); Middlesex Mutual Ins. Co. v. Rand, 1996 Conn.Super LEXIS 912 (April 4, 1996, Stanley, J.).
There can be facts which show that the insured's mental state negated the intentional conduct in an assault. See., e.g. Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 663 A.2d 1001 (1995); St. Paul and Marine Ins Co. v. Shernow, 222 Conn. 823, 610 A.2d 1281 (1992). However, the plaintiff does not argue that the assault by the insured's employees was anything other than intentional.
For the foregoing reasons, summary judgment enters in favor of the defendant on the First Count. The Second Count incorporates the allegations of the First Count and then couches them in terms of negligence, in effect, alleging a negligent breach of contract, the Policy. Since Hermitage had no duty to defend or indemnify DS under the Policy, and, but for the existence of the Policy, had no duty to defend or indemnify DS, summary judgment enters on the Second Count for the same reasons that it entered on the First Count.
The underlying complaint also sought punitive damages. The Policy does not cover such damages. Furthermore, such damages are not insurable. Bodner v. United Services Automobile Ass'n., 222 Conn. 480, 497, 610 A.2d 1212 (1992); Tedesco v. Maryland Casualty Co., 127 Conn. 533, 537, 18 A.2d 357 (1941). The plaintiff has not contested this basis for summary judgment.
The defendant also seeks summary judgment on the Third and Fourth Counts of the complaint which allege a violation of the covenant of good faith and fair dealing and a violation of CUTPA, respectively. The court has found that the defendant had a reasonable basis for refusing to defend and indemnify the insured in this case. That basis was that the Policy, or contract of insurance, did not provide coverage to the insured, and/or excluded coverage. The covenant of good faith and fair dealing is contained in every contract, but cannot be used to vary the terms of the contract. Beckenstein Enterprises-Prestige v. Keller, 115 Conn.App. 680, 693, 974 A.2d 764 (2009). The court has found that the contract, in this case the Policy, did not require Hermitage to defend or indemnify DS. Thus, the failure to do so could not constitute a breach of the covenant of good faith and fair dealing and judgment should enter as a matter of law in favor of Hermitage on the Third Count of the complaint.
Similarly, since Hermitage correctly interpreted its Policy, its failure to defend or indemnify DS could not have constituted an unfair, oppressive, unethical or unscrupulous practice. Zulick v. Patron's Mutual Ins Co., 287 Conn. 367, 378, 949 A.2d 1084 (2008). Therefore, judgment should also enter in favor of Hermitage on the Fourth Count of the complaint.