Opinion
No. CV 08 5023551S
May 23, 2011
MEMORANDUM OF DECISION IN RE MOTION TO REARGUE
The court regrets taking so long to decide this motion to reargue and apologizes to the lawyers and clients involved on this case. It had to decide a very complicated case visited upon it in the early fall and frankly this case as a motion to reargue was not attended to as quickly as it should have been. In this case the court wrote a twenty-five-page decision [ 47 Conn. L. Rptr. 687] and reviewed cases that favored the defendant's position and cases opposed to it. There is no Connecticut authority directly on point and this case might be an opportunity to have a precise ruling on the difficult issue presented. The court has read E. Udolf, Inc. v. Aetna Casualty Surety Co., 214 Conn. 741 (1990). The court at no point dealt with a claim that the policy language set forth on pages 744-45 was ambiguous in the use of "immediately upon discovery language." As a cursory reading of even the head notes reveals the court addressed agency issues, the definition of dishonesty and the definition of collusion. In other words the plaintiffs there did not raise the arguments raised here. Also it appears that the dishonest acts occurred at a point not prior to the Aetna policy's inception but while it was in effect. It is also unimaginable to this court that it would be bound by inferring a binding interpretation of contract language by an appellate court where that court was not asked to address the premises of that interpretation. Or to approach the matter from another perspective, here the court did not mean to imply that a black and white interpretation of the contract language provided only one possible interpretation of its meaning. Reasonably people could differ as to how this clause should be read. Counsel's failure to raise the ambiguity argument in Udolf can be considered a waiver in that case of any such argument but cannot bind the results of future litigation in the trial courts or dictate how an appellate court would rule if the argument were to be raised.
Community Savings Bank v. Federal Insurance Company, 960 F.Sup. 16 (D.Conn., 1997), is cited by the defendant. The court reviewed cases agreeing with this case but differed as to what it considered to be the better result. Also the language, "immediately upon discovery," in the clause in this policy does not equate with saying discovery means being "aware of" used in paragraph 6A of the policy involved in the Community Savings case, 960 F.Sup. at page 21.
Also the comments on the Homes Savings Bank case does not affect what this court believed was the strong reasoning of that case set forth at the trial court and appellate court levels, see page 21 of court's memorandum of decision.
Interestingly in conjunction with its reference to the Home Savings Bank case the defendant refers to another exclusion which barred coverage for a loss caused by any employee as to whom similar prior insurance had been cancelled and not reinstated since the last cancellation. The defendant now wants to be permitted to conduct discovery to inquire of the Hartford, the prior insurer, as to whether that policy was reinstated? How can the court do that since it was not raised initially in opposition to the plaintiff's motion or in support of the defendant's motion?
Also if we read the clause in issue that has been central to these motions — "immediately upon discovery" and this additional exclusion clause now being discussed one or the other of them is redundant by the defendant's interpretation.
In any event the court concludes that as to this policy, the language used is confusing and ambiguous as regard the issue before it just as the North Carolina Supreme Court concluded in Home Savings Bank v. Colonial American, 598 S.E.2d 265 (NC, 2004). In this regard the court does not explicitly rely on the old chestnut that ambiguous language is read against the party who drew it up — this language is ambiguous apart from presumptions.
Are there policy reasons that support the result of the defendant's position — yes there are, some the court had not considered. But that does not solve the problem of ambiguity. The solution to that is to change the policy language on every policy coming up for renewal to accurately and clearly reflect the defendant's coverage obligations.