Opinion
WWMCV116003795
02-24-2017
Enfield Lodging, LLC et al. v. Zurich American Insurance Co.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
John D. Boland, Senior Judge.
On July 31, 2008, Brian Millett died in a 37-foot fall into an elevator shaft in a motel under construction in the town of Enfield. His estate brought suit against a number of entities, all of whom participated in a court-assisted settlement in August of 2014. This case poses the question of whether either of the insurance carriers for the defendants in that action should be reimbursed by the other for the amounts paid in settlement of the estate's claims.
Although I conducted a trial and must make findings from the evidence presented on the disputed issues in this case, the parties greatly simplified that process by submitting a twenty-four-page joint stipulation of facts outlining the history of both this case and the underlying death case, and by agreeing to the unopposed admission of twenty relevant exhibits. I have relied upon that material to come to an understanding of many of the undisputed details of this fact-rich dispute. I commend the courtesy and professionalism of counsel exhibited in their production of these extensive submissions.
Enfield Lodging, LLC, was at all times the owner of the motel under construction. Joining it as plaintiffs in this case are Benderson Development Company, LLC, a contractor managing the construction of the motel, and Great Divide Insurance Company, which had issued a policy of commercial liability insurance to Benderson and on which Enfield Lodging was an additional insured. That policy provided coverage to both Benderson and Enfield Lodging for bodily injury at the construction site.
Schindler Elevator Corporation, which was a party to the wrongful death action but has not been made a party in this case, was engaged as the subcontractor providing and installing the elevator systems at the motel. Pursuant to its contract with the plaintiffs here, it purchased an Owners and Contractors Protective Liability Policy (#OCP 6634753) from defendant Zurich American Insurance Company. That policy named Benderson as the insured entity and Enfield Lodging as an additional insured.
In this venue of the superior court, Lisa Millett filed an action for damages individually and in her capacity as administratrix of the estate of her late husband. The suit was captioned " Lisa Millett v. Benderson Development Company, LLC., " and after transfer to the complex litigation docket was assigned docket number X06-UWY-CV10-6018973-S. Her six-count complaint included a list totaling fifty allegations of negligence on the part of Enfield Lodging, Benderson, and Schindler.
In due course, the Millett suit was submitted to mediation with the assistance of the Honorable William Bright. That process yielded an agreement that 1) $1,500,000 was a reasonable total payment to satisfy the demands of the Millett estate; 2) Schindler, insured by its own liability carrier, would pay one-third or $500,000 of that sum; and (3) Benderson and Enfield would pay two-thirds, or $1,000,000 of the total, with equal contributions by Great Divide and Zurich American. Those contributions were offered as an accommodation to the mediation process, but the two companies remained divided as to whether either insurer was contractually liable for any portion of that amount. Prior to the mediation, Great Divide had already filed this suit seeking a judicial resolution of that coverage dispute. Accordingly, each having paid its $500,000 while reserving the right by means of this action to seek reimbursement of that sum from the other, they appear here both pursuing declaratory judgments as to which had the duty to indemnify the insured parties as to the payment of damages in the Millett suit.
It is not my prerogative here to second-guess the decision of the parties before me to settle for the sum of $1.5 million. In the mediation, all parties had highly skilled and prepared counsel, several of whom are before me again in this suit. The amount they collectively determined to be the overall value of the case for settlement purposes is a given and is not the subject of my scrutiny.
While it is clear that Schindler's share of the settlement of the underlying case was $500,000, the parties make ambivalent statements as to who was the actual payor of that amount. Their stipulation of facts recites that " Schindler" paid it. Plaintiffs' brief claims that " $500,000 . . . was paid on behalf of Schindler, " implicitly by an unidentified third party, presumably Schindler's liability carrier. At page 9 of its November 9 Reply to Plaintiffs' Post-Trial Brief, Zurich claims that " on behalf of Schindler, [it] has already paid 1/3 of the settlement, " which from the discussion clearly refers to the $500,000 credited to Schindler. These observations are set forth in the interest of accuracy, but whether Schindler or Zurich American or another carrier made out the check has no impact upon the primary issues in this suit.
II. Pleadings in Present Suit
The operative complaint is the February 27, 2015, " Second Amended and Consolidated Complaint for Declaratory and Other Relief." After laying out the names and roles of the various entities involved in this dispute, and the particulars of the Millett suit, the plaintiffs focus upon the indemnification language of the Zurich American policy, which reads as follows:
I. 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" or " property damage" to which this insurance does not apply. We may, at our discretion, investigate any " occurrence" and settle any claim or " suit" that may result. But
(1) The amount we will pay for damages is limited as described in Section III--Limits of Insurance; and
(2) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments.
(b) This insurance applies to " bodily injury" or " property damage" only if:
(1) The " bodily injury" or " property damage" is caused by an " occurrence" and arises out of:
(a) Operations performed for you by the " contractor" at the location specified in the Declarations or
(b) Your acts or omissions in connection with the general supervision of such operations; and
(2) The " bodily injury" or " property damage" occurs during the policy period.
(c) Damages because of " bodily injury" or " property damage" include damages claimed by any person or organization for care, loss of services or death resulting at any time from the " bodily injury."
This language, plaintiffs contend, creates a duty on the part of Zurich American both to defend this suit's plaintiffs in the wrongful death case, and, more importantly, to serve as their primary indemnifier as to all damages owed to the estate. Zurich American did not deny the duty to defend, but proceeded to do so after having informed plaintiffs that it rejected their conclusion as to indemnification and was reserving its rights to deny coverage. Thus plaintiffs pray that this court declare:
1) That Zurich American owed Enfield and Benderson a duty to indemnify with respect to the Millett suit;
2) That the duty on defendant's part is primary to any such obligation on the part of Great Divide; and
3) That this court should order reimbursement of the $500,000 that Great Divide paid toward the settlement, plus interest on that amount, and, finally, grant such other relief as in law or equity may appertain.
Zurich American's answer largely admits the accuracy of plaintiffs' quotations from the policy and from the Millett complaint, as well as plaintiffs' description of the underlying action and how that case came to its conclusion. The answer denies all aspects of plaintiffs' conclusions that the policy language in question raises any duty on its part to indemnify them in light of the specifics of the Millett action.
Zurich American also pleads five special defenses. The first of these maintains that the " occurrence" causing the decedent's bodily injury did not arise out of " operations performed for Benderson . . . by Schindler, " nor out of " acts or omissions of Benderson . . . in connection with its general supervision of the operations of Schindler, " and thus the Millett claims lie outside of the terms of the policy. Secondly, Zurich American points to an exclusion in in the policy at Section I, part 2(d), expressly providing that " this insurance does not apply to 'bodily injury' arising out of your [Benderson's], or your 'employees, ' acts or omissions other than general supervision of 'work' performed for you by the 'contractor' [Schindler]." The third special defense seeks to shift to Great Divide all duty to indemnify the estate, and to disavow any responsibility on the part of Zurich American to contribute to the settlement, in reliance upon this defendant's denial of coverage under the policy. The fourth special defense makes a similar claim on the basis of the cited exclusionary language of Section 1, part 2(d). The fifth special defense raises the policy's " other insurance" provisions as an additional shield against plaintiffs' assertions, although it does so without specificity as to how those provisions are implicated here.
Additionally, Zurich American counterclaims and seeks a declaratory judgment
1) establishing that the policy it had issued did not obligate it to indemnify either Enfield or Benderson;
2) obligating plaintiffs to reimburse it for the $500,000 it paid towards the settlement, with interest; and
3) awarding such further or different relief as the court deems necessary to achieve justice.
It bases these demands upon three factual premises: first, that the decedent's injuries did not arise out of operations performed by Schindler for Benderson; second, that no acts or omissions of Benderson in connection with its general supervision of Schindler's work were a factor; and thirdly, that acts or omissions of Benderson or its employees other than in its supervision of the work performed by Schindler were the cause of Millett's injuries.
Plaintiffs' reply to Zurich American's allegations is similar to this defendant's answer. Plaintiffs generally admit the defendant's quotations of policy language and outline of the context of the dispute, and then take issue with Zurich American's conclusions as to the meaning and applicability of its policy to the particulars of this case.
III. Availability of Declaratory Relief
" The purpose of a declaratory judgment action, as authorized by General Statutes § 52-29 and Practice Book § 17-55, is to secure an adjudication of rights where there is a substantial question in dispute"; Bysiewicz v. Dinardo, 298 Conn. 748, 756, 6 A.3d 726 (2010). " One type of controversy to which our declaratory judgment statute often has been applied is a dispute over rights and liabilities under an insurance policy"; Travelers Cas. & Sur. Co. v. Netherlands Insurance Co., 312 Conn. 714, 727, 95 A.3d 1031 (2014); and " it is properly within the competent authority of a court to hear [an action for] declaratory judgment . . . relating to the rights and obligations of two insurance companies as to the coverage of their respective policies, where the pleadings embrace and present this ultimate and controlling issue"; id., at 730.
" An action for declaratory judgment . . . is a statutory action as broad as it well could be made"; New London County Mutual Ins. Co. v. Nantes, 303 Conn. 737, 748, 36 A.3d 224 (2012). The relief afforded in a declaratory judgment action " is highly remedial and the statute and rules should be accorded a liberal construction to carry out the purpose underlying such judgments"; and in such an action, the court is " not limited by the issues joined or by the claims of counsel"; Pequot Square Water Co. v. Brunelle, 46 Conn.App. 187, 197, 698 A.2d 920 (1997). Subsection (2) of Practice Book § 17-54 expressly authorizes the court to declare " the existence or nonexistence . . . (2) of any fact upon which the existence or nonexistence of such right, power, privilege or immunity does or may depend "; ACMAT Corp. v. Greater New York Mutual Life Insurance Co., 88 Conn.App. 471, 477, 869 A.2d 1254, cert denied, 274 Conn. 903, 876 A.2d 11 (2005) (emphasis in original).
This case involves disputes as to matters of both law and fact, and I find that both parties have met the threshold criteria for invoking the declaratory judgment process as just summarized. Each appears here having paid one-half of a million dollar settlement, and each seeks reimbursement of its payment from the other in reliance upon its reading of the provisions of an insurance policy. Each has a burden of proof: plaintiffs, to prove by a preponderance of the evidence its claim that the policy in question requires allocation of liability for the total payment (or such portion as is equitable) to shift from its shoulders to that of Zurich American, Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 562, 791 A.2d 489 (2002); and defendant to prove that any exclusionary provision excuses it from indemnification; Capstone Bldg. Corp. v. American Motorists Ins. Co., 308 Conn. 760, fn. 24, 67 A.3d 961 (2013) (although the exclusion is triggered only when there is an initial grant of coverage in the insuring agreement).
IV. The Issue to be Decided Here
Despite the ubiquitous reference in the material submitted to me of terms such as duty, breach, and cause, this is not a negligence case, although it is a derivative thereof. My task in this multi-party matter in which there are multiple and conflicting claims of behavior that might or might not have been found to have occurred, elements of which might have been covered by and other elements of which might have been determined to lie outside the provisions of OCP, is to evaluate the data that went into the mediation conference and to assess the risk each participant faced of an adverse verdict. I conclude, and will more fully explain momentarily, that the OCP covered some but not all of the allegations leveled at Benderson. Having done so, resolving the dispute requires that I now channel a hypothetical impartial claims adjuster, or a team of them, who would have decided how the risks of a loss at trial should have been apportioned among those who paid the settlement funds, taking into account their rights and obligations under the OCP as I find them to be. Even though " the duty to indemnify depends upon the facts established at trial and the theory under which judgment is actually entered in the case"; Board of Educ. of City of Bridgeport v. St. Paul Fire and Marine Ins. Co., 261 Conn. 37, 49, 801 A.2d 752 (2002); here there were no facts established in the underlying case, and the factual premises advanced by each party were highly disputed by the other parties. Prior to the mediation, a motion for summary judgment and a number of motions in limine that had been filed had been left undecided, leaving even " the theory under which judgment" might have entered (and for whom) at least a debatable topic at this time. A jury might have reached any one of a number of conclusions, some favoring both parties here and some neither, after a more complex process than I have been exposed to. I assume that interrogatories would have been submitted aimed at discerning exactly how the jury reached its conclusions. Given the manner in which the underlying case terminated, determining how a jury would have decided this case is unanswerable and therefore something other than a verdict must be the touchstone of a fair decision in this case.
" Except in unusual cases, the court should normally also refuse to consider a declaratory judgment action prior to the filing of damage suit against the insured, where the issue under the former necessitates a determination of the causation of the accident. The reason for such a conclusion is found in the fact that the basis of the insurer's liability will be determined by the proofs adduced in the damage action, and it cannot be ascertained in advance of the trial which grounds of liability, if any, will be adjudicated against the insured"; Ohio Casualty Ins. Co. v. Flanagin, 44 N.J. 504, 512, 210 A.2d 221 (1965). The restraint it counsels would be a luxury today, particularly in a case such as this wherein a settlement occurred without determination of which party caused the injuries which generated the insurers' payments.
In Capstone Bldg. Corp., supra, the Court responded to a series of questions certified to it by the United States District Court for the District of Alabama. The case pending in that forum had been brought by two related Capstone entities that each paid one million dollars to the University of Connecticut in settlement of claims for damages following alleged construction errors. They sought a declaratory judgment requiring indemnification of the settlement amounts against the insurer which had issued them a general liability policy. The Court agreed with the plaintiffs that the insurance policy in question did provide coverage as to some of the claims UCONN had made, but not all. The Court ruled that when an injured party's claims embraced both covered and noncovered allegations of tort accountability on a defendant's part, and when an insured participated in a global settlement disposing of multiple claims, its insurer could be held liable for the payment of such portions of a settlement as related to the covered events.
As distinct from this case, the insurer had refused to defend its insureds in the underlying case. That fact led the Court to consider whether the insurer ought to pay the entire settlement amount, as opposed to whatever fraction was allocable to covered events. It held that even when the insurer fails to defend, that insurer ought not to be required to underwrite the entire settlement amount. Instead, a court might have to decide the appropriate allocation of the settlement amount between the two species of claims. If so, it must be guided by the rule of reason:
I note that approximately a third of the cases cited in the parties' briefs turned upon an insurer's duty to defend, which is not contested here as Zurich American provided a defense and there is no complaint that the defense provided was inadequate. Some of those cited cases nevertheless contain useful guidance as to principles involved here, and will be followed to the appropriate degree.
In order to recover the amount of the settlement from the insurer, the insured need not establish actual liability to the party with whom it has settled so long as . . . a potential liability on the facts known to [the insured] is shown to exist, culminating in a settlement in an amount reasonable in view of the size of possible recovery and degree of probability of [a] claimant's success against the [insured].308 Conn. 760, 812, 67 A.3d 961.
As decisional techniques available to whomever must calculate such an allocation, the Court pointed out, in footnote 59, that " [i]n determining whether a settlement is reasonable, the jury is entitled to consider not only the damage sustained by the injured party, but also the likelihood that the injured party would have succeeded in establishing the insured's liability . . . This flexible reasonableness determination is consistent with allocating settlement costs in proportion to those claims for which an insurer breached its duty to defend"; and, in footnote 60, that " [t]he reasonableness determination may rely on a variety of factors, including, but not limited to 'whether there is a significant prospect of an adverse judgment, whether settlement is generally advisable, [whether] the action is taken in good faith, and [whether it is] not excessive in amount . . ."
The parties have not supplied, and I have not found, any Connecticut decision revealing a template as to how this process is to be conducted. Suggesting that a checklist of guidelines may be all that any court could articulate is the case of Perdue Farms, Inc. v. Travelers Casualty and Surety Co. of America, 448 F.3d 252 (4th Cir. 2006). Before that court was an appeal from a trial decision that an insurer who had failed to defend had to therefore fully indemnify plaintiff as to a settlement of $10,000,000 it had paid in response to a suit alleging both covered and uncovered claims. Though the circuit court agreed with the lower court's determination that coverage existed under one set of the charges in the underlying case, but not the other, it declined to punish Travelers by requiring it to pay for the noncovered events as well. Remanding for a new hearing on damages, the court explained, at 263:
The Capstone decision, since it was issued in response to certified questions of law propounded by a district court, did not comment upon the precise contours of the path to judgment. In a complicated case involving more than 35 insurance companies (including Zurich American) the court in an interlocutory ruling in R.T. Vanderbilt Company, Inc. v. Continental Casualty Co., Superior Court, Complex Litigation Docket at Waterbury, Docket No. X02UWYCV07-5016321 (March 28, 2014; Shaban, J.), indicated that in a later phase it would consider apportionment of liability for a class of asbestos-affected plaintiffs' claims. However, an appeal has been filed from that decision, and so the expected apportionment hearing appears to have not yet taken place. In the case of General State Ins. Co. v. Travellers Indem. Co., Superior Court, judicial district of Fairfield, Docket No. CV084-0233383 (April 9, 2013; Bellis, J.), plaintiff sought such an apportionment, but the court's determination that the policy issued by the defendant insurer did not provide coverage for the events on account of which plaintiff had indemnified their mutual insured rendered that process unnecessary.
the situation before us is as follows: Perdue has entered a settlement of both covered and non-covered claims, the settlement agreement does not fully indicate how liability was allocated between them, and Travelers is not liable for non-covered claims. This scenario evidently arises with some frequency, but the apportionment of settlement amounts between covered and non-covered claims is typically resolved through negotiation and private agreement, as litigation costs can be astronomical.
When a party pursues a judgment after negotiation fails and private agreement remains elusive, " the only proper solution is a rough apportionment of settlement amounts among covered and non-covered claims"; id., at 264. To arrive at that end, the court directed the trial court facing that task to consider a broad range of factors:
We do note that most courts and commentators to have considered the allocation of settlement amounts have recommended consideration of a variety of factors short of a full trial of the original suit . . . These factors include the underlying complaint and settlement agreement, the intent of the parties entering the settlement, and the relative merits of the underlying claims. The relevance of these factors and others may be a proper subject on remand. And while we have broached some considerations in our preceding discussion, they are not intended to be exhaustive, and the district court must consider them with the benefit of briefing and argument from the parties.
Here, the two insurers have not by negotiation reached any private agreement as to coverage, but have as a practical matter merely " loaned" $500,000 to each other to settle the claims they each dispute. To resolve their dispute, I am guided by the rule of reason as directed by the authorities cited.
V. Circumstances Surrounding the Death of Brian Millett
A. The Setting
On July 31, 2008, the motel project involved here was nearing completion. The exterior shell of the building had been erected, and interior finishing work was in progress. The plans included two side-by-side hydraulic elevators set in parallel shafts running from the building's basement to the ceiling above the fifth floor, in a sixteen-by-eight foot cavity known as a hoistway. Each shaft was approximately eight feet wide and eight feet in depth, and the two were distinguished by the labels " east" and " west." The designs included a horizontal separation beam at the top of each floor level running down the middle of the hoistway from front to back between the two shafts. That feature divided the east from the west shaft, and provided a mounting surface upon which the vertical interior elevator railings would be attached. Responsibility for the installation of the separation beams was delegated to the steel contractor, an entity not involved in either this or the prior lawsuit. Around 2:00 p.m. on July 31, the separation beam on the fifth floor had not been welded into place, and Schindler determined that it had reached the limit of its ability to go forward at that spot until that task was performed. Accordingly, Schindler's employees left the worksite for the night.
Sometime prior to their exit, they had erected at the fifth-floor level in each elevator shaft a scaffolding in the form of a supported sheet of particle board measuring four by eight feet and thus constituting a floor as to one-half of that shaft. These platforms served as a work site for those engaged in the installation of the elevators and other tasks. The other half of each shaft, also measuring about four by eight feet, was deliberately left open so as to allow transport up and down the shaft of tools, materials, and workers. In both shafts, Schindler had installed what is known in the industry as a car sling and which is basically the actual floor of what ultimately becomes the elevator car. It can be moved up and down the rails to the highest point to which those rails had been installed so as to permit the transport mentioned above, and also, if left in the raised position, to provide a temporary cover over the hole in the hoistway and thereby reduce or eliminate the safety hazard the hole otherwise poses to all persons working in the vicinity. As the Schindler workday ended, and for reasons not disclosed, the car sling on the east shaft was left at the level of the fifth floor, while that in the west shaft had been lowered to the basement level. No one other than a Schindler employee had at that time the means by which toraise or lower either car sling, and no one had requested that Schindler leave the west-side sling in the up position. Prior to the fall, Benderson had erected barriers separating workers from the hole. The barriers consisted of parallel two-by-fours nailed in place to create a railing, running parallel to the front of the hoistway and preventing easy access to the hole from outside the elevator shafts. Such a barrier is one of the recommended means by which the hazard of a fall into such an opening can be mitigated. That benefit was lost in this case, as it was expected that Millett would cross over the barriers and enter into the hoistway in order to perform the work assigned to him, and he did so. For a barrier to protect him, it would have had to run perpendicular to the one Benderson created, along the exposed edge of the particle board platform. While that might have been effective, none of the entities involved in the construction had erected such a barrier.
Exhibit I, titled Elevator Industry Field Employees' Safety Handbook, includes at page 41 a visual depiction of what such a barrier might have looked like.
B. Millett's Engagement at the Site
On the afternoon of July 31, Benderson employee Al Dishon was the project superintendent. At around 10:00 p.m. that evening, he expected Brian Millett to arrive at the work site to inspect the installed steel work in the building because, fortuitously, the decedent also worked as an inspector for a subcontractor known as JGI/Terracon. Millett was generally familiar with the motel construction project, as he had performed that type of inspection on prior occasions. Dishon knew that Millett was also a trained welder, and operated his own sole proprietorship known as " Welding for U/Liberty Welding." The two arranged that he would perform another task beyond steel inspection that evening. He would show up at 6:00 instead of at 10:00, and then, wearing his " Liberty Welding" hat, he would undertake the welding needed on the separation beam so that Schindler's work could proceed on the following morning. The contract they reached was entirely oral, but the parties to this case have stipulated that Millett was engaged as an independent contractor and was working alone at all pertinent times.
Notwithstanding the insurers' stipulation, the estate did not concede Millett's status as an independent contractor in the underlying case. In the mediation, one of its experts, Daniel Paine, prepared a report which both labelled Millett as an independent contractor and then repeatedly assigned to Benderson duties typically expected of employers, including supervision, training, work oversight, and provision of a harness. Stipulation number 75, quoting Paine at length, makes clear that he blurred any bright line between employee and independent contractor when he opined that " the definition of employer does not necessarily mean the employee's actual employer, but included Benderson as Construction Manager." Further, Paine was prepared to testify that Millett had not submitted a site-specific safety plan in writing as required by Benderson of all subcontractors, and hence should not have been allowed onsite by Dishon. His report goes on to assert that Dishon's direction that Millett work on the unprotected platform gave rise to a duty to go beyond an assumption that a harness would be used, and required Dishon to affirmatively assure that Millett hooked himself up for his safety.
Al Dishon would testify that he met Millett upon arrival and showed him to the spot where the welding was needed. He apparently helped him carry some of the appropriate tools to that spot. He watched as Millett entered the hoistway and took up position on the particle-board platform. Because the separation beams are located at the upper reach of the space dividing the floors, a ladder is required to reach the precise site of the weld. Dishon observed that a stepladder left by Benderson employees was already in place on the platform, and had to infer that Millett would use it in order to reach the weld location. In a statement he gave to the Enfield Police, he asserted that he knew Millett had access to a personal safety harness and should have been wearing it throughout his work at this height. He asked Millett if he needed anything, but there is no indication that either man made mention of the presence or absence of that device at the time in question. Dishon quickly left the area of the hoistway and returned to work in another part of the building. Thereafter, Millette worked alone in the hoistway for about another hour without incident.
C. How the Fall Occurred
At around 7:00 p.m., Dishon made a return trip to the site where Millett was working to see how things were going. From a distance, he observed Millett kneeling, then standing momentarily before plunging over the edge. Though he was nominally an eyewitness, the previous sentence sets forth the entirety of Dishon's description of the moment of the fall, and sheds little light upon the exact choreography or causes of the event.
The victim did not expire instantaneously. Dishon reached his side within seconds, and emergency personnel were rendering first aid within minutes. Witnesses report that Millett was still conscious upon their arrival and was able to state his name and the fact that he had fallen, but that he did not report any additional details as to how he fell. His injuries included a severe and visible head injury. He was pronounced dead at the hospital around three hours later, with no report of any further statements on his part.
Despite, or perhaps, because of this dearth of direct evidence as to what exactly happened to cause this catastrophe, the positions taken in the underlying action as to whose negligence was the cause of this tragedy were quite varied and contradictory. The fifty separate violations of either regulatory or common-law standards governing Benderson's duties to its employees or agents are not solely the basis of the first count of the estate's complaint--the estate proceeds in subsequent counts to level the same charges against Schindler and Enfield Lodging. On her own claim for loss of consortium, Lisa Millett repeats the same allegations as to each defendant.
Enfield and Benderson's expert witness, Stuart Burkhammer, analyzed the fifty violations claimed by those plaintiffs, and assigned them to three categories:
1) Negligence claims directed at Schindler Elevator Corporation;
2) Negligence claims directed at the construction manager, Benderson Development, related to its purported duty to oversee/supervise Schindler's work;
3) Negligence claims directed at the construction manager, Benderson Development, related to its duty to oversee, supervise, and/or train Brian Millett.
The parties in this case commonly utilized these categories in the trial and briefing, and they provide a handy framework for discussion of the merits of the parties' claims.
Whatever pleadings the defendants filed in the wrongful death action have not been made exhibits in this case. Their mediation position statements, however, are a part of the record here, and these make clear that Schindler denied any breach of duty to the Millett plaintiffs, and that Schindler, Benderson, and Enfield Lodging all pointed to Millett's own negligence as the cause of his demise. Specifically, they cited his failure to employ personal fall protection, specifically a harness, though such a device is required by OSHA regulations and industry practice for the protection of persons working at height and was available to him on site. The danger confronting him here was open and obvious. He was fifty-four years old and so had, presumably, more than thirty years' experience in the trade. Even if he had come to it in later life and so was lacking in experience, it was undisputed that he had had recent, specific training on the need for and employment of such equipment. Additionally, the mediation defendants had evidence that the decedent had a residue of marijuana in his system, and they claimed to have evidence that he was a regular user, even likely having smoked it some hours before coming to Enfield on that date. They contended that his own acts and omissions had to be viewed as factors substantially or perhaps even predominantly contributing to the incident. Each of the parties came to the mediation prepared with at least one expert and a wealth of additional material supporting its position, and predictably, the conclusions the experts reached were divergent if not contradictory. As is the nature of mediation, the process concluded without agreement or declaration as to which side of this divide was most possessed of the truth.
VI. Discussion
A. Parties' Stance as to Coverage Afforded by the Zurich American OCP
The parties differ as to how the behavior attributed to each triggers the terms of the OCP. Plaintiff maintains that since the " bodily injury" prompting the estate's claims is an " occurrence" which " arises out of " operations performed" by Schindler, the settlement of those claims (what Burkhammer classifies as category one claims) devolves upon defendant regardless of any actual negligence on the part of the elevator installer. To the extent that any of the claims implicate Benderson's negligence, plaintiffs seek to bring them under the ambit of the " supervision" of Schindler's work which comprise Burkhammer's second category, and which is also covered by the OCP. Plaintiffs imply that the third category, Benderson negligence vis-à-vis Millett independent of the Schindler connection, is in fact nothing more than an empty shell. Zurich American argues that the content of the estate's complaint falls entirely within category three, and that it is category two which is empty.
B). The Coverage Determination
Neither party makes a convincing argument that the coverage question is as one-sided and clear as that party contends. If this case had gone to a jury, at least seven different outcomes are imaginable: 1) a verdict for defendants, in which case neither insurer would have paid anything; 2) a verdict for plaintiff, finding negligence solely on the part of Schindler, such that this case would not be necessary; 3) a verdict for plaintiff finding negligence solely on the part of Benderson, but potentially due to a) its negligence in supervising the work of Schindler; or b) exclusively its own negligence; or 4) a judgment for plaintiff against both Schindler and Benderson, but as to the latter, with additional findings similar to scenario 3 that either prong " a" or " b, " was proven, or both. In the event of outcome 3(a), Zurich American would bear the burden of indemnification; in the event of outcome 3(b), Great Divide alone would have to pay the judgment. The outcome in any of the number 4 scenarios would trigger payments from either one or both insurers in proportion to the jurors' determination of the degree of negligence was to be attributed to each of the parties sued. Since neither party has conceded that all of the imagined outcomes were possible, I will outline why I believe that none could have been excluded at the time of the settlement.
1) Potential for a Defendants' Verdict
I will begin by discussing something well-known to the parties but which, if not made clear in this decision, might lead to confusion on the part of anyone else reading it. This case includes an important cluster of evidence not usually found in cases of this nature, in which plaintiffs in the underlying suits had been shot while shopping, electrocuted by hidden wires, hit on the head or crushed by objects dropped from several stories above, buried under collapsing walls or in collapsing trenches, and so on--all cases in which no reasonable person would assign any measure of negligence to the victim.
Had the Millett case gone to trial, however, the jury would have heard about details suggesting his negligence to a degree which necessitates considering that there was a substantial chance of a defendants' verdict. In that event, neither of today's contestants would have had to pay anything other than the cost of defense. At the time of his fall, Brian Millett was a veteran welder who had had specific training on the need for using personal fall prevention equipment when working at height. He stationed himself upon a four-by-eight foot platform next to an open and obvious hole beneath which was thirty-seven feet of air. His fall into that cavity did not occur because he was propelled by any external force, or because a piece of equipment failed or broke, or for any apparent reason other than his own loss of balance or inattention to his setting. He regularly used marijuana and had smoked the substance recently enough before his death that traces of it remained in his blood. Notwithstanding any impairment that might have caused him, and notwithstanding the obvious danger of the setting, he elected to work on that platform without a harness, although such safety devices were available at the jobsite. Probably the best case that the estate could have made at trial is that the defendants they targeted had failed to take steps to protect Millett from his own negligence, as opposed to proving that some affirmative act on their part had caused this tragedy.
General Statutes § 52-572h provides that a plaintiff's contributory negligence for an injury bars his recovery from others if his negligence exceeds theirs. I will examine the claims against the various defendants in the underlying case presently, but it is fair to say that there was voluminous material in the underlying case upon which defendants there might reasonably have expected a favorable outcome. That observation will not surprise the litigants in this case, because it is precisely the conclusion that they and their experts had reached and upon which they staked out their positions in the mediation. They have stipulated that " the experts retained by Schindler and Benderson in the Underlying Action were in agreement that Brian Millett's unfortunate death was due principally to his own negligence in that he failed to wear a personal fall arrest system." Plaintiff's mediation statement announces " Benderson and Enfield deny liability in this case . . . liability strongly favors the defendants . . ." Schindler's statement concluded that " the accident at issue was caused solely by the decedent's own negligence."
Footnote 2 of defendant's post-trial brief points out that the $1,500,000 settlement figure was a response to the estate's demand for $3,500,000. The substantial discount the estate agreed to ostensibly reflects its comprehension that it had problems in the case. On the other hand, the same footnote reports the defendants' awareness that wrongful death cases have inherent risks for defendants, particularly when brought by counsel who are known for their talent and persuasiveness, and that this perception forced them to move from offering zero to offering a sum which clearly exceeded nuisance value.
2) Potential for a Verdict Solely Against Schindler
While Schindler is not a party to this case, it paid a third of the settlement in the first case. A jury could have held it uniquely liable to Millett, although I think that possibility is not the most likely outcome that might have been expected here. If the jurors found for the plaintiff in spite of the problems the estate faced, my expectation is that they would have gone on to assign blame to all of the defendants in some measure, as envisioned in scenario 4. But the material tendered by the estate and Benderson in the mediation process make it impossible to exclude this outcome, and this material also provides a basis for the potential outcomes under scenario 4 which I will come to momentarily. Hence it could not prudently have been ignored by any adjuster calculating the risks of this outcome or those outlined in the remaining scenarios.
Schindler's negligence, or lack thereof, is declared by Zurich American in its brief to be off-limits (at page 9, " Category 1 claims are not at issue here, as these were direct negligence claims against Schindler paid as part of the settlement of the underlying litigation"), and by Great Divide to be irrelevant (at page 2, " coverage is not dependent upon any finding of negligence on the part of Schindler"). I am not ignoring these contentions, but merely setting forth the case against Schindler as it was made in the mediation for the purpose of illustrating what the jury might have had to weigh if the estate's case had gone to trial.
It is undisputed that Schindler had erected the platform from which Millett fell, and that it left the car sling at its lowered position at the end of its work on July 31 although the hole five floors above would not have existed if the sling had been raised. The estate's expert, Paine, was prepared to testify that these facts proved Schindler's negligence. Patrick McPartland, another expert working for the estate, was expected to give testimony undercutting some of the facts which Schindler cited in its defense such as its claim that it retained sole control over the use of the plywood platform and had not given permission to use it on July 31 either to Benderson or to anyone else. The estate's counsel, in other words, had ammunition with which to wage its battle against this subcontractor alone if it had to do so.
In the trial before me, Benderson's expert Burkhammer claimed that when it comes to hazards in a construction project a rule of the industry is that, in his exact words, " whoever created the hazard, however the hazard was created, could also be repaired by whoever created or caused the hazard." In this context, that rule would put the onus upon Schindler not to have left the car sling in the lowered position, as doing so ignored one of the three means of reducing risks to people working at height, i.e., to provide them with a net or floor beneath the hole if it cannot be eliminated entirely. In addition, Schindler's contract with Benderson provided in subparagraph 10.2.1 that " Contractor shall take all necessary precautions for the safety of, and shall provide all necessary protection to prevent damage, injury or loss to: 10.2.1.1 all employees on the Work and all other persons who may be affected thereby." This broad assumption of responsibility for safety could easily have tilted jurors against a conclusion completely exculpating Schindler for Millett's demise.
This witness described the other two means as designing the project so as to eliminate the hole (which here would have been impractical since it existed in order to allow vertical transport of workers and equipment), and usage by affected employees of personal safety harnesses, a subject which might have gone to the jury but not likely as an aspect of any negligence on Schindler's part.
Almost as an aside, Zurich American refers in its brief to a notable detail of the contract between Benderson and Schindler regarding the elevator contractor's indemnification burden. Amidst 55 pages of single-spaced, typed provisions appearing to be a somewhat standard form agreement, there is a single handwritten addendum, and it follows subparagraph 4.18.8 in the section captioned " Indemnification." The typed language of the agreement reads as follows:
4.18.8 Notwithstanding the foregoing, any indemnification obligations imposed upon us anywhere in the contract documents will not exceed proportionate extent of our negligence, and we will in no event accept the duty to defend another party unless and until a final determination is made by a court of competent jurisdiction that our direct and sole negligence was the cause of any bodily injury (including death resulting therefrom) or property damage.
The immediately following handwritten provision adds:
However, contractor understands that if it is found that its direct and sole negligence was the cause, its indemnification obligation under the contract documents includes the obligation to reimburse Benderson DevelopmentCompany, LLC or Owner for all costs they incur in defending themselves or any other entity they are obligated to defend.
In citing this language in its brief, Zurich American hints that it need pay nothing unless and until a factfinder has determined liability; if true, that might defeat Benderson's claims here. Plaintiffs' brief is completely silent on the subject. The " full and final determination" clause applies to the costs of defense, and since the handwritten portion merely shifts those costs in the event Schindler is found to be the sole party found liable the clause is not pertinent to the issues now before me. For settlement purposes, on the other hand, it ought to have been calculated by Schindler's adjuster as potentially adding to the cost of an adverse verdict.
3) Potential for a Verdict Solely Against Benderson
As I indicated with respect to Schindler, I am likewise skeptical that a jury would find fault exclusively as to Benderson; that prospect, however, is more likely with respect to this defendant than as to Schindler due to the temporal and spatial proximity of its agent, Dishon, to the scene of the accident. A jury finding against Benderson would likely have evaluated evidence that Dishon as its agent had by his own negligence played a part in the welder's death, which would be a noncovered event, and also evidence that he perpetrated any failure to act responsibly while in the course of his general supervision of Schindler's work, a covered event. It could have found that both circumstances existed, or only one or the other, but its conclusions would be a key factor in apportioning liability and the anticipation of those conclusions would be a key factor in adjusting the claims before any judgment was pronounced.
a) Benderson Negligence in General Supervision of Schindler's Work
Benderson parses the OCP as applying to " bodily injury" caused by an " occurrence" that " arises out of" operations performed by Schindler, or by its own employees while engaged in " general supervision" of Schindler's work.
i) Initial Grant of Coverage
Although involving an automobile insurance policy, the Court in New London County Mut. Ins. Co. v. Nantes, supra, expressly approved an expansive reading of the phrase " arise out of" as a trigger to insurance coverage. at 303 Conn. 737, 759, that decision held that " it is sufficient to show only that the . . . injury 'was connected with, ' 'had its origins in, ' 'grew out of, ' flowed from, ' or 'was incident to' the use of the automobile, in order to meet the requirement that there be a causal relationship between the . . . injury and the use of the automobile . . . it need not be shown that the incident in question was proximately caused by the vehicle . . ." See, also, QSP v. Aetna, 256 Conn. 343, 352, 773 A.2d 906 (2001), and Royal Indem. Co. v. Terra Firma, Inc., 287 Conn. 183, 947 A.2d 913 (2008).
Plaintiffs also cite a case applying New York law, Liberty Mutual Ins. Co. v. Zurich American Ins. Co., (March 28, 2014; DC, SDNY), which is interesting because the injury prompting the coverage dispute occurred in an elevator shaft and the Zurich American insurance contract before that court contained the precise terminology involved here. In language practically identical to that used by this state's supreme court, the district court opined at page 3 that " 'arising out of' has an expansive meaning and focuses 'not on the precise cause of the accident but on the general nature of the operation in the course of which the injury was sustained.'"
The parties' dependence upon foreign law warrants comment. The contract between Schindler and Benderson specifically recites that it shall be governed by New York law. (It contains a choice of forum clause also, again specifying New York.) The OCP is silent as to choice of law or forum. Both sides to this suit have freely cited cases from other states and from various federal district courts, without commenting on any differences between their holdings and what might be directed by the law of this state (except for one quibble by Zurich American on page 20 of its brief that an adverse case from New Jersey is " an out-of-state decision by a trial court with no binding effect"). I have accepted the parties' arguments based upon the rulings in these cases at face value, although I should note that I have not discerned that any principle upon which they depend is in stark conflict with the law of this state.
Reading the coverage language expansively, the allegations that Schindler's work zone contained hazards which were at least contributory to Millett's injury suffice to allow extension of coverage to Benderson as it claims.
ii) The " General Supervision" Provision
The phrase " general supervision" as the policy employs it has drawn the attention of both parties and warrants separate discussion. The phrase appears in the OCP's first section, denoting that coverage extends to Benderson's " acts or omissions in connection with the general supervision of [Schindler's] operations, " and again in the exclusionary provision of section 2(d) which distinguishes " general supervision of 'work' performed for [Benderson] by [Schindler]" from the acts or omissions of this plaintiff or its own employees.
Benderson urges that this term likewise be read expansively, citing cases such as Union Electric Co. v. Pacific Indemnity Co., 422 S.W.2d 87, (Mo. Ct. of App., 1967), Chesapeake & Potomac Tel. Co. v. Allegheny Constr. Co., 340 F.Supp. 734 (DCMD, 1972), Liberty Mutual Ins. Co. v. Zurich American Ins. Co., supra, and others. Union Electric was a coverage suit which followed a negligence suit brought by a tree trimmer who was severely injured after coming in contact with electrical wires in an area in which Pacific Electric's agents had directed him to work. The court noted the absence within the policy of a definition of " general supervision" and thus supplied this definition: ' ''general supervision' . . . as used in the policy . . . is susceptible of more than one meaning and its use in connection with the operations of an independent contractor presents an uncertainty and ambiguity as to its meaning which must be construed in favor of insured. It becomes a necessity to apply the general rules of construction . . . the words . . . surely include the supervisory duties of insured's employees in designating the area along the . . . lines where [a worker] would cut and trim trees and the providing of area plats in regard thereto and the subsequent inspection by insured's employees"; 422 S.W.2d 87, 93. Five years later, in another outdoor case where the work zone was uncontained, the court in Chesapeake & Potomac adopted Union Electric 's reasoning and held that general supervision included a project owner's directions to the employee of a subcontractor installing telephone poles. The Liberty Mutual case, in turn, is close to being on all fours with this one. The named plaintiff was the liability carrier for a property owner sued in an underlying suit by an injured worker. The worker (coincidentally, an employee of Schindler Elevator Corp.), was injured while descending a ladder within an elevator shaft; though his injuries were only vaguely described, they occurred when the ladder attached to the shaft's interior broke loose from its moorings. That defect likely was not the fault of Schindler. Zurich American had issued to the owner an OCP in pertinent part identical to that in issue here, and it defended on the basis that the employee was not injured while under the owner's supervision. In denying Zurich's motion for summary judgment, and granting Liberty Mutual's, the court noted that " general supervision" is an ambiguous term, since it " is susceptible to (at least) two reasonable interpretations: (1) hands-off or (2) more involved, possibly even to the point of micro-management"; page 4; and that the ambiguity would be interpreted against Zurich American as the issuer of the policy.
Although that case is fifty years old, the OCP involved here, apparently drafted in 1997 and issued in 2008, likewise omits a definition of this core term.
I need focus upon just one detail of the instant case to show how a jury might have found liability so as to require Zurich American to indemnify Benderson under the policy language in question. It is undisputed that Schindler's men left the worksite on July 31 leaving the car sling on the first floor and thus unavailable for blocking the hole. In the mediation statements, every party other than Schindler sought to prove that the company's agents either knew or should have known that Millett or someone of his talents would be working at height that evening. Their arguments are hardly irresistible, and a jury might have found Schindler underserving of blame. What is known, however, beyond any doubt, is that Dishon knew that Millett was coming in at 6:00 p.m. and would be working on the platform, and that Dishon made no request to the Schindler crew that they raise the sling to mitigate the obvious hazards. Whether the parties here anticipated that Benderson's supervision would be " hands-off" or " micro-management" in degree, his omission is squarely an act of negligence on the part of a Benderson agent while in the general supervision of Schindler's work. As such, it leaves open the possibility that a verdict would have required indemnification on Zurich American's part and thus the conclusion that its exclusionary language would not have provided it a defense.
Zurich American cites the case of Citizens Mutual Insurance Co. v. Employers Mutual Liability Insurance Co. of Wisconsin, 49 Mich.App. 694, 212 N.W.2d 724 (Mich.App. 1973), which concluded that certain accident-preventative measures were beyond the scope of a developer's " general supervisory" duty. The event giving rise to injury in that case was an unanticipated rupture of a hydrant near a trench in which the victim was working, and the fault alleged against the developer was that it was not in possession of a shutoff key that would have permitted someone to turn off the hydrant in an emergency situation. That occurrence is different in kind from the one which occurred here, where a fall was an obvious possibility and the means of reducing its likelihood required nothing more than a simple direction to the elevator employees.
b) Benderson Negligence Apart From Supervision of Schindler
At the same time, plaintiffs take their interpretation of the contract's coverage provisions a step too far when they essentially claim that it insulates their behavior against every sort of claim. The exclusion clause makes clear that whereas " general supervision" of work of Schindler was covered, " the acts or omissions of this plaintiff or its own employees" were not. Benderson contends in effect that because the decedent and Dishon were in the zone in which Schindler's work had been performed, whatever Benderson did constituted supervision of the elevator contractor.
Burkhammer's category three includes the estate's claims that Dishon violated OSHA requirements in more than forty discrete respects, and that he failed certain common-law duties to Millett such as ascertaining the danger facing him and providing for his safety, and failing to properly train and supervise Millett. Paine was prepared to support those allegations by his testimony that Dishon's duties included overall supervision of the worksite, and that this translated into a duty to perceive the hazards inherent in a task and on his own take the necessary steps to ensure that Millett was not placed in an unsafe position. Further, building upon the conflation of status of independent contractor and employee as described above, he would testify that Millett was just a reluctant servant of Dishon as he stepped over the guardrails and went out upon the platform, that Benderson had a duty that was site specific to train him as to fall hazards and so any generic training Millett might have received was insufficient, and that given the hazard in question Dishon had a duty to make sure that Millett was hooked up while he was working in that area as opposed to merely assuming that Millett would undertake that precaution on his own. In the mediation, Benderson raised the obvious defense that Millett was an independent contractor responsible for the means and methods of his work, including the implementation of appropriate and necessary safety practices, and that the OSHA regulations and common-law principles governing employee safety are thus not applicable. It might have prevailed on that defense, but only after it had safely threaded its way through some formidable hazards. It relies upon Archambault v. Soneco/Northeastern, Inc., 287 Conn. 20, 946 A.2d 839 (2008), and Std., Oil of Conn., Inc. v. Adm'r, Unemployment Comp. Act, 320 Conn. 611, 623, 134 A.3d 581 (2016). Archambault holds that a general contractor may delegate safety duties to a sub on a particular job and consequently be immune to an action brought by a person injured by the negligence of the sub. The facts of that case are distinguishable, particularly the Court's focus upon the detailed written contract between the general and the sub that had included an extensive discussion of the sub's duties to control the excavation work where plaintiff was injured when a trench collapsed. Here, the formation of the oral contract between Benderson and " Weld for U/Liberty Welding" likely took five minutes to form, and likely included no discussion of safety responsibilities.
Those regulations and principles might have applied to Millett's company, although their enforcement following its owner's death is a practical impossibility.
Std. Oil was a case examining whether an entity was required to purchase workers' compensation insurance for individuals which might have been categorized as employees or as independent contractors. The case includes an extensive inquiry into the aspects of a long-standing relationship between that master and its servants, and concludes that under the pertinent statutes the individuals fit more properly into the latter category. The case had nothing to say about tort liability or the considerations which might bring that about, and so stands mainly for points not germane to the present dispute.
Next, Benderson takes issue with Zurich American's claim that the Court's holding in Pelletier v. Sordoni/Skanska Constr. Co., 264 Conn. 509, 825 A.2d 72 (2003) applies to the facts of this case. Pelletier I holds that there are exceptions to the rule that a general contractor may not be held liable for injuries to the employees of its subs, " among them these: If the work contracted for be unlawful, or such as may cause a nuisance, or is intrinsically dangerous, or in its nature is calculated to cause injury to others, or if the contractee negligently employ an incompetent or untrustworthy contractor, or if he reserve in his contract general control over the contractor or his servants, or over the manner of doing the work, or if he in the progress of the work assume control or interfere with the work, or if he is under a legal duty to see that the work is properly performed, the contractee will be responsible for resultant injury"; 264 Conn. 509, 518, 825 A.2d 72. In that list lie a number of nuggets which adverse parties in any trial of the underlying case would seize upon to argue that the nonspecific and vague contract with Millett or his company erodes any independent contractor defense for Benderson, and that it should share in if not be entirely responsible for the injuries sustained by Millett.
Then there is the Pelletier II case, 286 Conn. 563, 945 A.2d 388 (2008), which superficially would seem to support Benderson's position. In a 4-3 decision the Court overruled a jury verdict for Pelletier exceeding $41,000,000 which had been rendered after its 2003 ruling. It did so entirely on the basis that the event leading to Pelletier's injuries--he was hit when a two-ton beam fell after being installed upon a flange that had been defectively welded, with all the work done by a sub-contractor--was too unforeseeable as to create any duty upon the general's part to take precautions against it. The Court's reasoning at pages 593-99 builds up to its negative conclusion on the issue of foreseeability, and is highly dependent upon the specific fact that the failure of the flange was a surprise to all. The scene which would confront jurors in the instant case is fundamentally distinguishable from that depicted in Pelletier II. The question that would be posed to them here is whether it was foreseeable that a person working untethered on a piece of plywood next to a thirty-seven-foot hole could come to harm. Any hypothetical reasonable person would calculate the odds of that happening as significantly greater than zero, while an acrophobiac might say it approaches certainty.
I need not rule today whether or not Benderson would have prevailed on a pre-or post-trial motion which might take a determination of its negligence away from the jury. It is sufficient to hold that no authority it has cited involving duties of general contractors to individuals working at their behest categorically establishes that Burkhammer's third category is without content. Therefore, a finding of liability on Benderson's part due to its own acts or omissions had to be considered as more than a remote possibility.
4). Potential for a Verdict Against Both Schindler and Benderson
The discussion of potential outcomes against either Schindler or Benderson sufficiently lays out the foundation for this fourth scenario as well, for the only difference that it envisions is the potential for a verdict against both contractors. In that event, the jurors would additionally have had to determine whether in Benderson's case its behavior fit the contract's provisions for coverage, or failed to do so, or, possibly, that its agents had engaged in some combination of covered and noncovered behavior. In any event, both insurers faced exposure to a payment in some as yet undetermined amount.
C. Settlement Impact
Noting the parties' prediction, as discussed above, that the odds of plaintiff succeeding at trial were less than even, it is my belief that if the estate beat those odds it would have done so in a manner that exposed both sets of defendants in the underlying case to an adverse verdict. The jury would then have proceeded to define what portion of their verdict should be apportioned to each. Jurors pointing a finger at one or the other in light of the plaintiff's case's difficulties might well have perceived no strong logical basis for favoring one defendant over the other. Consequently, I would rank the outcome described as scenario 4 as more likely to occur than either scenarios 2 or 3, thus presenting both insurers here with real exposure until the matter came to its final conclusion.
In the trial before me, Zurich American adduced the testimony of Connecticut Attorney Anthony Natale as an expert on the subject of settlement practices in complex construction suits. The witness began on a somewhat idealistic note, indicating that lawyers and adjusters assess settlement options in light of the law and the facts of a given case, implicitly dispassionately. As his testimony ensued, he added dimension to that outline by weaving into it such realistic factors as the appearance of witnesses, the admissions (possibly inculpatory) that they might have made along the way, the nature of the injuries involved, the presence of conscious pain and suffering, the quality of the advocates for each side, and the sympathy factor.
According to this witness, Dishon in his deposition had used words to the effect that he should have seen what would happen to Millett, and that it was his responsibility to make sure that this " employee" was properly tied off. This goes to support my observations regarding Benderson's potential noncovered liability as discussed in section V(B)(3)(b).
This factor, or its absence, was recognized as a significant component in an early allocation-of-settlement-costs case, Employers Mut. Liability Ins. Co. of Wis. v. Hendrix, 199 F.2d 53 (4th Cir. 1952). The defendant in the underlying case was a bit of a local scoundrel and the court held that his insurer ought to have taken into account in the settlement discussions that due to " the hostility thus manifested by the local community . . . [he] . . . stood little chance of a favorable verdict or even a fair trial upon the counterclaims if they should be submitted to a jury from the local community."
He deemed the most critical part to be the division of responsibility among the various defendants as agreed upon in their contract. Thereupon he analyzed the contract between the parties here in light of the Archambault holding, supra, and concluded that Benderson had transferred responsibility for the elevator shaft to Schindler and thus had no general supervisory (category two) duties left to perform, and hence no liability covered by the OCP. I don't quarrel with his enumeration of the factors that influence settlement, but for reasons outlined above neither do I share his opinion that the general supervision clause is as clear and as limiting as he suggests.
Settlement of intensely disputed claims requires calculations different from those that go into analyzing how a case should turn out in light of its particular facts and legal parameters. The same logic by which the insurers agreed to pay real money to settle what they describe as a weak claim with the Millett plaintiffs applies to their present dispute over which pocket should be opened to advance any fraction of that payment.
Previously, they each have put up fifty percent of the settlement total they assigned to themselves. Is fifty/fifty the best allocation, or would some disparate allocation (in either direction) be more equitable? Each insurer here has claimed the issues were black and white with nary a touch of gray, and neither has pleaded, tried, argued, or briefed the case as one of shared exposure and likely shared liability. Compared to the evidence that a jury would have assessed, and which presumably was known to my hypothetical adjusters, I have seen only the tip of the iceberg of this case. That portion of the whole, however, reveals no factor overwhelmingly favoring either insurer. Accordingly, it is my judgment that the appropriate result is for each to share equally in the settlement payment. It is nothing more than a coincidence that each paid that amount under their respective reservation of rights without conceding the duty to do so.
VII. Orders
For the foregoing reasons:
Judgment shall enter on the complaint declaring that defendant, Zurich American Insurance Company, owed a duty to plaintiffs under the Owners and Contractors Protective Liability Policy (#OCP 6634753) to indemnify them in part with respect to the claims brought against them in the Millett suit;
Judgment shall enter declaring that the obligation of Zurich American Insurance Company to indemnify plaintiffs is primary, with respect to certain allegations of the Millett complaint, to those of Great Divide;
Great Divide's and Zurich American's share of the total one-million dollar settlement involved here is determined to be $500,000 each;
No reimbursement or interest is awarded to Great Divide;
Judgment shall enter on the counterclaim against Zurich American, as the court concludes that it did have a limited obligation to indemnify plaintiffs as to the allegations of the Millett suit, in light of the facts of this case;
No reimbursement or interest is awarded to Zurich American;
No costs shall be taxed to either party.
It is so ORDERED.