Opinion
No. X04-CV-03-0103483S
April 6, 2005
MEMORANDUM OF DECISION RE MOTIONS TO STRIKE EXHIBITS AND MOTIONS FOR PARTIAL SUMMARY JUDGMENT
This action, seeking damages and a declaratory judgment, arises out of the defendant insurance companies' alleged breach of insurance contracts and breach of the implied covenant of good faith and fair dealing in failing to defend plaintiffs in an underlying lawsuit. The plaintiffs move for partial summary judgment on three of the four counts in the complaint, claiming that the defendants breached their duty to defend as a matter of law. The defendants move to strike the exhibits submitted with plaintiffs' motions on the grounds that such evidence is irrelevant to the court's determination. The defendants also move for partial summary judgment. The primary carrier maintains the underlying claims are not covered under the subject policy. The excess carrier claims the primary policy limits were not exhausted and it, therefore, had no duty to defend or contribute to a settlement. For the reasons stated in detail below, the court denies the motions to strike because a court may consider extrinsic evidence in determining whether a duty to defend exists under the circumstances of this case. Further, the court grants the plaintiffs' motions for partial summary judgment and denies the defendants' motions for partial summary judgment, concluding that the duty to defend arose because there was the possibility that at least some of the claims set forth in the underlying complaint were covered by the subject insurance policies.
I. FACTS AND PROCEDURAL HISTORY
The plaintiffs, Joseph Fortin ("Fortin"), Samuel Kofkoff ("S. Kofkoff"), Robert Kofkoff ("R. Kofkoff") and Kofkoff Egg Farm, LLC ("Kofkoff Egg"), commenced this breach of contract and declaratory judgment action against Hartford Underwriters Insurance Company ("Hartford") and North River Insurance Company ("North River"), for their failure to defend them under certain policies of insurance in an underlying action commenced against them in May of 1988. These plaintiffs were cited in as third-party defendants by Julius Rytman and Dora Rytman in the case of Connecticut National Bank v. Julius Rytman et al., Docket No. CV-87-505741-S ("CNB action"), filed in the Connecticut Superior Court for the Judicial District of New London at New London.
The plaintiffs claim that they promptly notified the defendant insurance companies of the action and requested coverage under the liability insurance policies issued to them. The Rytmans filed additional claims against these plaintiffs in the CNB action between 1988 and 1991, and the plaintiffs notified the defendants of the additional claims. Hartford retained counsel to provide a defense for the plaintiffs in March of 1991, and appeared to take control of the defense of the CNB action. In January of 2002, after the filing of an amended cross complaint in November of 2001, Hartford notified the plaintiffs that it would provide no further coverage under the policy, that it would provide no counsel to the plaintiffs, and that it would provide no monies toward any settlement of the claims. This notification came at the time of an approaching mediation and trial date. North River, which carried the umbrella insurance coverage over the underlying policy issued by the Hartford, refused to defend the plaintiffs or participate in the settlement discussions when informed of the coverage dispute with the Hartford.
Plaintiffs were compelled to retain separate counsel. At the conclusion of the mediation in 2002, plaintiffs reached a monetary agreement with the Rytmans to settle all claims related to the CNB action. Neither of the defendant insurance companies contributed monies toward the settlement. The plaintiffs commenced the present action seeking a declaratory judgment and claiming breach of contract and breach of the covenant of good faith and fair dealing. All parties have filed motions for partial summary judgment on the issue of the duty to defend. Additionally, the defendants filed motions to strike the exhibits submitted by the plaintiffs, claiming extrinsic evidence is irrelevant to the determination of this very limited issue. A hearing on the motions was held on December 13, 2004. For the reasons set forth below, the court finds that extrinsic evidence is permissible in determining whether a duty to defend exists and denies the defendants' motions to strike exhibits. Further, the court finds that a duty to defend exists as a matter of law under the circumstances of this case and grants the plaintiffs' motions for partial summary judgment as to counts one, three and four of the plaintiffs' complaint and accordingly denies the defendants' motions for partial summary judgment.
II. LEGAL STANDARD
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." LaFlamme v. Dallessio, 261 Conn. 247, 250, 802 A.2d 63 (2002); QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 351, 773 A.2d 906 (2001); Alvarez v. New Haven Register, Inc., 249 Conn. 709, 714, 735 A.2d 306 (1999); Practice Book Sec. 17-49.
The party moving for summary judgment bears the burden of proving the absence of a genuine dispute as to any material fact; and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. "Equally well settled is that the trial court does not sit as the trier of fact when ruling on a motion for summary judgment . . . [T]he trial court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." (Citations omitted; internal quotation marks omitted.) Field v. Kearns, 43 Conn.App. 265, 269-70, 682 A.2d 148, cert. denied, 239 Conn. 942, 684 A.2d 711 (1996). "To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact." Witt v. St. Vincent's Medical Center, 252 Conn. 363, 373 n. 7, 746 A.2d 753 (2000); D.H.R. Construction Company v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980).
In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. The test is whether a party would be entitled to a directed verdict on the same facts. Sherwood v. Danbury Hospital, 252 Conn. 193, 201, 746 A.2d 730 (2001); Serrano v. Burns, 248 Conn. 419, 424, 727 A.2d 1276 (1999); Forte v. Citicorp Mortgage, Inc., 66 Conn.App. 475, 784 A.2d 1024 (2000). In Connecticut, "[a] trial court should direct a verdict for a defendant if, viewing the evidence in the light most favorable to the plaintiff, [the trier of fact] could not reasonably and legally reach any other conclusion than that the defendant is entitled to prevail." (Internal quotation marks omitted.) Colombo v. Stop Shop Supermarket Co., 67 Conn.App. 62, 64, 787 A.2d 5 (2001), cert. denied, 259 Conn. 912, 789 A.2d 993 (2002).
III. DISCUSSION A. Defendants' Motions to Strike
Before addressing the issue of the duty to defend, the court must first determine whether it can consider extrinsic evidence in its analysis of this issue. The defendants have moved to strike the exhibits submitted with plaintiffs' motions for partial summary judgment, claiming Connecticut law clearly provides that a court can only consider the allegations of the underlying complaint and the terms of the relevant insurance policy in determining whether a duty to defend exists in any particular case. The defendants maintain that the "four corners" rule precludes this court from considering this irrelevant material.
The court disagrees with defendants' characterization of Connecticut case law. The long-established principle is that "the duty to defend does not depend on facts disclosed by the insurer's independent investigation where the third-party's complaint appears to be within the coverage . . . [I]t is the claim which determines the insurer's duty to defend; and it is irrelevant that the insurer may get information from the insured, or from any one else, which indicates, or even demonstrates, that the injury is not in fact covered." (Citations omitted; internal quotation marks omitted.) Missionaries of Mary, Inc. v. Aetna Casualty Surety Co., 155 Conn. 104, 112, 230 A.2d 21 (1967). In other words, an insurer may not use extrinsic evidence to defeat its duty to defend if the claim is potentially covered when reference is made to the underlying complaint and insurance policy alone.
Extrinsic evidence may be considered in determining whether the duty to defend exists under the circumstances of a particular case. "Our Supreme Court has held that a determination of whether an insurer has such a duty is not necessarily confined to an examination of the allegations of the underlying complaint. Keithan v. Massachusetts Bonding Ins. Co., 159 Conn. 128, 141-42, 267 A.2d 660 (1970). There thus may be cases in which an insurer has access to additional facts that supplement the complaint so as to trigger a duty to defend." Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 80 Conn.App. 364, 369-70, 835 A.2d 91 (2003). "[I]n certain circumstances, a court may consider known or discoverable facts and other extrinsic evidence in determining whether the insurer has a duty to defend This exception to the four corners rule is applied when the allegations of a complaint indicate a lack of coverage, but the insurer possesses extrinsic information, obtained through its own investigation, that the claims are in fact covered." (Citations omitted; internal quotation marks omitted.) Nationwide Mutual Insurance Co. v. Mortensen, 222 F.Sup.2d 173, 181 (D.Conn. 2002).
A recent superior court decision, in addressing this argument, carefully reviewed the case law on this issue and concluded as follows:
"The exclusive pleading rule states that the duty to defend does not depend on facts disclosed by the insurer's independent investigation where the third-party's complaint appears to be within the coverage . . . Because the defendant reasons, it is the claim which determines the insurer's obligation toward its insured, a court deciding whether the insurance company has a duty to defend is bound by the underlying complaint, even when doing so would defeat the insured's claim of a duty to defend. This court finds that such an application of the exclusive pleading rule would do violence to the purposes of the rule and would violate the principles that courts use when construing insurance contracts and the exclusions contained therein . . . [I]t should be noted that the exclusive pleading rule has never been used in Connecticut to defeat an insurer's duty to defend. This court has undertaken an exhaustive review of relevant Connecticut law and the law of other jurisdictions, and has found no case that applies the exclusive pleading rule in the manner that the defendant suggests . . . The Connecticut Supreme Court . . . intended the exclusive pleading rule to expand, not contract, the insurer's duty to defend." (Emphasis in original.) (Citations omitted; internal quotation marks omitted.) Conway v. Travelers Casualty Surety Co., Superior Court, judicial district of Hartford, Docket No. CV-99-0588119, 2000 Ct.Sup. 15602, 15614-15 (December 15, 2000, Rubinow, J.)
This court agrees with the reasoning in the Conway decision and finds that the use of extrinsic evidence to establish the insurer's duty to defend is permissible under the circumstances of this case. Accordingly, the defendants' motions to strike the exhibits submitted with the plaintiffs' motions for partial summary judgment are denied.
B. Plaintiffs' Motions for Partial Summary Judgment
1. As to the Hartford
The plaintiffs seek summary judgment as to counts one and four of the plaintiffs' complaint dated May 22, 2003. Count one claims breach of Hartford's contractual duty to defend the plaintiffs in the CNB case and count four seeks a declaratory judgment as to Hartford's obligation to provide a defense to the plaintiffs in the CNB case. The insurance policy at issue is a policy of liability insurance, policy No. 43 PNC FF2255W (the "policy"), purchased from the Hartford by the plaintiffs on or about October 1, 1984, and covering the period from October 1, 1984 to October 1, 1985.
On May 6, 1988, the Rytmans served the plaintiffs with a Motion To Cite as Third-Party Defendants in the CNB action. The plaintiffs notified the Hartford of the action, requested it to defend them in the CNB action and forwarded copies of the third-party complaint as it was revised from time to time. The Hartford did not acknowledge its intention to provide a defense until January 17, 1991, when it informed the plaintiffs that it would provide a defense under a full reservation of rights. Hartford retained counsel to defend the plaintiffs in the CNB action between March 16, 1991 and January 14, 2002.
An amended cross complaint was filed by the Rytmans on November 30, 2001. By letter dated January 14, 2002, the Hartford notified the plaintiffs that it disclaimed any and all coverage as to that amended cross complaint. The cross complaint was subsequently amended on January 8, 2002, and April 24, 2002, with no material changes, and the Hartford reaffirmed its position that it would not provide the plaintiffs with a defense in the CNB action. The April 24, 2002 third-party complaint was the last complaint filed prior to the settlement of the CNB action in September of 2002. The defendant claims it no longer had a duty to defend once certain allegations, present in the November 2, 1990 cross complaint, were removed from the amended November 30, 2001 cross complaint and the subsequently amended cross complaints.
"The question of whether an insurer has a duty to defend its insured is purely a question of law . . ." Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., 254 Conn. 387, 395, 757 A.2d 1074(2000). "An insurer's duty to defend, being much broader in scope and application than its duty to indemnify, is determined by reference to the allegations contained in the [underlying] complaint . . . The obligation of the insurer to defend does not depend on whether the injured party will successfully maintain a cause of action against the insured but on whether he has, in his complaint, stated facts which bring the injury within the coverage. If the latter situation prevails, the policy requires the insurer to defend, irrespective of the insured's ultimate liability . . . Indeed, if an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured . . . On the other hand, if the complaint alleges a liability which the policy does not cover, the insurer is not required to defend." (Emphasis added.) (Citations omitted; internal quotation marks omitted.) Id., 398-99. "[A] determination of whether an insurer has such a duty is not necessarily confined to an examination of the allegations of the underlying complaint . . . There thus may be cases in which an insurer has access to additional facts that supplement the complaint so as to trigger a duty to defend." (Citation omitted.) Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 80 Conn.App. 364, 369-70, 835 A.2d 91 (2003). A court need only find that the policy covers one of the allegations set forth in the underlying complaint in order to establish the insurer's obligation to defend. Moore v. Continental Casualty Co., 252 Conn. 405, 409, 746 A.2d 1252 (2000).
The court, in determining whether the Hartford had a duty to defend the plaintiffs in the underlying CNB action, will review the allegations in such complaint and any extrinsic evidence relevant to the claimed duty to defend. The subject insurance policy provisions must be examined to determine whether the claimed injuries fall even possibly within the coverage. "In ascertaining the meaning of the terms of the insured's policy, we . . . are guided by well-established principles. The interpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy . . . The determinative question is the intent of the parties, that is, what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . [I]t is axiomatic that a contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . The policy words must be accorded their natural and ordinary meaning . . . [and] any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy . . . A necessary predicate to this rule of construction, however, is a determination that the terms of the insurance policy are indeed ambiguous . . . The fact that the parties advocate different meanings of the [insurance policy] does not necessitate a conclusion that the language is ambiguous." (Citations omitted; internal quotation marks omitted.) Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., supra, 399-400. "[W]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law." (Citation omitted; internal quotation marks omitted.) Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994).
Neither party claims that the language in the subject policy is ambiguous. The issue is whether the allegations in the underlying cross complaint in the CNB action possibly fall within the coverage as provided for in the insurance contract. Specifically, as narrowed by the parties in their briefs, do the allegations set forth in counts seven, twelve and fourteen of the Second Revised Amended Third-Party Complaint dated April 24, 2002, trigger the Hartford's duty to defend the plaintiffs under the personal injury, bodily injury or property damage provisions of the liability policy.
The parties agree that this is the most recently amended complaint prior to the ultimate settlement of the CNB case in September of 2002. Hartford's position is that its duty to defend ended on November 30, 2001, when that amended pleading deleted certain allegations contained in the previous complaint, and that there remained no duty to defend up through the filing of the last operative pleading of April 24, 2002. Indeed, the court finds it is appropriate to base its analysis on the operative complaint of April 24, 2002. See Nationwide Mutual Ins. Co. v. Mortensen, 222 F.Sup.2d 173, 182 (D.Conn. 2002).
The subject policy with the Hartford is a comprehensive general liability insurance policy covering the following named insured: Kofkoff Egg Farms, Ltd., now known as Kofkoff Egg Farm, LLC; Samuel Kofkoff, General Partner; and Robert Kofkoff, Gertrude Kofkoff, Richard Kofkoff and Sherri Kofkoff, Limited Partners. The policy period is from October 1, 1984 to October 1, 1985. The key provisions of the subject policy for purposes of the present duty to defend analysis are as follows:
GENERAL POLICY PROVISIONS
COVERAGE
Insurance is afforded by the Coverage Parts forming a part hereof, subject to such limits of liability as are stated therein and subject to all the terms of the policy having reference thereto.
DEFINITIONS
When used in this policy (including endorsements forming a part hereof):
"bodily injury" means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom;
"occurrence" means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured;
"property damage" means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period;
COMPREHENSIVE GENERAL LIABILITY INSURANCE COVERAGE PART
I. COVERAGE A — BODILY INJURY LIABILITY COVERAGE B — PROPERTY DAMAGE LIABILITY
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
COVERAGE A — bodily injury or
COVERAGE B — property damage to which this insurance applies, caused by an occurrence . . .
SPECIAL BROAD FORM COMPREHENSIVE GENERAL LIABILITY ENDORSEMENT
II. PERSONAL INJURY AND ADVERTISING INJURY LIABILITY COVERAGE
(A) The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business . . .
(B) This insurance does not apply:
(3) to personal injury or advertising injury arising out of libel or slander or the publication or utterance of defamatory or disparaging material concerning any person or organization or goods, products or services, or in violation of an individual's right of privacy, made by or at the direction of the insured with knowledge of the falsity thereof;
(D) Additional Definitions
"Personal injury" means injury arising out of one or more of the following offenses committed during the policy period:
(3) a publication or utterance
(a) of a libel or slander or other defamatory or disparaging material.
In comparing the allegations of the third-party complaint dated April 24, 2002 with the provisions of Hartford's insurance policy, the court concludes that there are at least some allegations in the underlying complaint which possibly fall within Hartford's coverage thereby triggering Hartford's duty to defend. Because the insurer's obligation to defend is established if the policy covers even one of the allegations set forth, Moore, supra at 409, this court will focus only on a few of the claims which it finds potentially within the policy's coverage.
Count twelve of the underlying complaint directed against, among others, Samuel Kofkoff, Robert Kofkoff, Joseph Fortin and Kofkoff Egg, alleges that one or more of the third-party defendants' actions described in paragraph 10 negligently inflicted emotional distress upon Julius and Dora Rytman. It is further alleged that as a direct and proximate result of these negligent acts, the Rytmans suffered "severe and grievous mental and emotional suffering, anguish, nervousness and anxiety, resulting in physical ailments."
There are several alleged negligent acts enumerated in paragraph 10, but the ones pertinent to possible coverage are the following:
10. Third-party defendants, Kofkoff Egg, Colehester Foods, Samuel Kofkoff, Robert Kofkoff and Joseph Fortin, engaged in the following actions:
a. Kofkoff Egg Joint Venture With Colchester Egg
i) In 1978, Colchester Egg entered into a joint venture with Kofkoff Egg to service customers of Valley Egg.
ii) Pursuant to the joint venture, third-party plaintiff, Colchester Egg and third-party defendant, Kofkoff Egg supplied eggs to Valley Egg, which then sold the eggs to customers.
iii) Beginning in October 1984, Samuel Kofkoff of Kofkoff Egg, stopped paying Kofkoff Egg's share of the cost of egg cartons and commissions owed to Valley Egg. At the time, Samuel Kofkoff demanded repayment of Kofkoff Egg's investment in the joint venture.
iv) As a result of Kofkoff Egg's refusal to pay the commissions and costs of the cartons, Colchester Egg began to have cash flow problems.
v) The day after, Samuel Kofkoff made demand for repayment of the investment, he attended an Advisory Board meeting at Connecticut National Bank ("CNB"). Samuel Kofkoff is a member of the CNB Board and, by and through his business, he was also a customer of CNB.
vi) That same day, and after the meeting, a loan officer from CNB contacted Julius and Dora Rytman and informed them that something was not right with their account.
vii) Following the Board meeting, CNB demanded that Julius and Dora Rytmans' businesses be investigated by a fraud expert and that Julius and Dora Rytman pay for the investigation.
viii) A fraud expert examined Julius and Dora Rytmans' businesses and found no fraud.
ix) At the time of the investigation, Julius and Dora Rytman were not in default of any of their obligations to CNB.
The plaintiffs claim the allegations in count twelve trigger the duty to defend under the bodily injury liability provisions in the policy. The company contracted to pay on behalf of the insured all sums the insured became legally obligated to pay as damages because of bodily injury caused by an occurrence. An occurrence is defined as an accident resulting in bodily injury neither expected nor intended by the insured. Bodily injury means bodily injury, sickness or disease sustained by any person during the policy period.
Count twelve alleges that the conduct described in paragraph 10 negligently inflicted emotional distress. The conduct itself centers about alleged statements made by Samuel Kofkoff at an Advisory Board meeting at CNB. From the allegations set forth in paragraph 10(a)(i)-(ix), it is claimed that Samuel Kofkoff had a dispute with Julius Rytman and attended the meeting at CNB the day after Samuel Kofkoff demanded payment of certain monies from Mr. Rytman. Mr. Kofkoff was a member of the CNB Board because of his business, Kofkoff Egg, and was also a customer of CNB. Following the meeting, on the same day, a loan officer from CNB contacted the Rytmans and questioned the status of their loan accounts. They were told a fraud expert would be examining the Rytmans' businesses at the Rytmans' expense. From these allegations, it can reasonably be inferred that negative statements were made by Samuel Kofkoff, resulting in a fraud investigation, to the detriment of the Rytmans.
Moreover, extrinsic evidence further buttresses these inferences. The Rytmans' position statement, dated March 14, 2002, submitted for purposes of the mediation and provided to the Hartford, alleges that "Samuel Kofkoff, who was a member of CNB's Advisory Board, began to make statements maligning the Rytmans' financial position in order to protect his own interests with CNB." When questioned at a deposition about the statements he made at the subject meeting, Mr. Kofkoff indicated that the Rytmans owed his business, Kofkoff Egg, a considerable sum of money and he was concerned that CNB would question the amount of Kofkoff Egg's overdue accounts receivable. Mr. Kofkoff wanted CNB to know that the Rytmans' debt had been problematic but that it would not increase in amount. From the position statement and deposition testimony, it is apparent that Mr. Kofkoff's remarks could possibly fall within the definition of an occurrence because, although perhaps negligently made, there was no intent to defame the Rytmans. Additionally, nothing has been presented to the court which would indicate that the subject statements were made with knowledge that they were false.
The bodily injury definition, which includes "bodily injury, sickness or disease," could possibly cover the alleged damages suffered by the Rytmans, i.e., "severe and grievous mental and emotional suffering, anguish, nervousness and anxiety, resulting in physical ailments." (Emphasis added.) The defendant argues that bodily injury must be more than emotional distress, but Hartford overlooks the fact that the plaintiffs in the third-party complaint allege they have suffered physical ailments. These allegations in count twelve are sufficient to trigger the duty to defend under the bodily injury liability provisions in the policy.
Furthermore, the allegations in count twelve possibly fall within the coverage of the personal injury liability provisions of the policy. The Hartford contracted to pay on behalf of the insured all sums the insured became legally obligated to pay as damages because of personal injury sustained by any person or organization arising out of the conduct of the named insured's business. Personal injury means injury arising out of an utterance of slanderous, defamatory or disparaging material.
It can reasonably be inferred that the subject remarks by Mr. Kofkoff at the CNB meeting were negative or disparaging remarks about the Rytmans, given the allegations that a fraud investigation was required by CNB immediately following the meeting. From the allegations in the underlying complaint and the extrinsic evidence previously referenced, Mr. Kofkoff's alleged remarks were made in order to protect his interests in his business, Kofkoff Egg, an insured of the policy. The damages alleged by the Rytmans in count twelve could certainly fall within the coverage for personal injury, defined as an "injury arising out of a publication or utterance of a libel or slander or other defamatory or disparaging material." The court concludes that the allegations of the underlying complaint possibly fall within the personal injury liability provisions of the policy, thereby triggering the Hartford's duty to defend the plaintiffs.
Although the Hartford argues at length that all of the elements of an actionable defamation claim have not been pleaded in the CNB action, the court finds that the allegations are sufficient to trigger the duty to defend under the policy provisions. If personal injury results from remarks that are slanderous, defamatory or disparaging, there may be coverage. Count twelve claims that these remarks of Mr. Kofkoff negligently inflicted emotional distress upon the Rytmans, resulting in physical ailments. It is not a count in libel or slander.
Having concluded that the Hartford's duty to defend was triggered by count twelve as to the bodily injury and personal injury liability provisions of the policy, it is not necessary to review the plaintiffs' additional claims under counts seven and fourteen of the CNB action. Accordingly, the court grants the plaintiffs' motion for partial summary judgment as to the Hartford's duty to defend set forth in counts one and four of the plaintiffs' complaint.
2. As to North River
The plaintiffs seek summary judgment as to counts three and four of the plaintiffs' complaint dated May 22, 2003. Count three claims breach of North River's contractual duty to defend the plaintiffs in the CNB case and count four seeks a declaratory judgment as to North River's obligation to provide a defense to the plaintiffs in the CNB case. The insurance policy at issue is a commercial comprehensive catastrophe liability policy, No. 523 303334 1 (the "policy"), purchased from North River by the plaintiffs on or about July 31, 1984, and covering the period from July 31, 1984 to October 1, 1985.
North River, for purposes of the plaintiffs' motion, accepts the Undisputed Material Facts set forth in the plaintiffs' memorandum in support of their motion for partial summary judgment. In addition to the undisputed or uncontested facts concerning the Hartford previously referenced in this decision, the court notes the following: North River's policy covered as insured Kofkoff Egg Farm, Samuel Kofkoff and Robert Kofkoff, the policy served as the umbrella coverage over and above plaintiffs' underlying insurance policy with the Hartford; North River was notified of the CNB action on September 7, 1988; North River was notified as additional claims were filed in the CNB action; the Hartford provided the plaintiffs with a defense in the CNB action between March 16, 1991 and January 14, 2002; the plaintiffs notified North River on April 4, 2002 that the Hartford withdrew its defense of them in the CNB action and that the Hartford refused to participate in settlement negotiations; and that the plaintiffs notified North River of the final mediation session scheduled for September 10, 2002 and invited North River to attend, which it did not do.
The key provisions of the subject policy for purposes of the present duty to defend analysis are as follows:
INSURING AGREEMENTS
I. COVERAGE
The Company agrees to pay on behalf of the insured the ultimate net loss in excess of the retained limit hereinafter stated, which the insured may sustain by reason of the liability imposed upon the insured bylaw, or assumed by the insured under contract for:
(a) Bodily Injury Liability,
(b) Personal Injury Liability,
(c) Property Damage Liability, or
(d) Advertising Liability, arising out of an occurrence.
II. DEFENSE SETTLEMENT
With respect to any occurrence covered by the terms and conditions of this policy, but not covered, as warranted, by the underlying policies listed in Schedule A hereof or not covered by any other underlying insurance collectible by the insured, the company shall:
(a) defend any suit against the insured alleging such injury or destruction and seeking damages on account thereof . . . (Emphasis added.)
III. DEFINITIONS
2. "BODILY INJURY" "Bodily Injury" means:
(a) bodily injury, sickness, disease, disability, shock, mental anguish and mental injury including death at any time resulting therefrom.
3. "PERSONAL INJURY
"Personal Injury" means injury, such as but not limited to, libel, slander, defamation of character, discrimination, false arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution or humiliation which occurs during the policy sustained by a natural person, but excluding any such injury included within the definition of advertising liability.
9. "OCCURRENCE" "Occurrence" means:
(a) with respect to Bodily Injury Liability or Property Damage Liability, injurious exposure to conditions which results in Bodily Injury or Property Damage neither expected nor intended from the standpoint of the insured . . . (b) with respect to Personal Injury Liability, an offense which results in Personal Injury, other than an offense committed with actual malice or the willful violation a penal statute or ordinance committed by or with the knowledge of consent of the insured.
The unambiguous language of the insurance policy issued by North River provides that the company shall defend any suit against the insured with respect to any occurrence covered by the terms and conditions of the policy, but not covered as warranted by the underlying policy. When the third-party complaint in the CNB action was served in 1988, the plaintiffs notified both its primary carrier, the Hartford, and its excess carrier, North River, of the lawsuit. The Hartford did not provide the plaintiffs with defense counsel until March 16, 1991. North River, by the express terms of the policy, had the duty to defend the plaintiffs in the CNB action between 1988 and the time Hartford provided a defense if the allegations in the underlying action fell even possibly within the coverage of North River's policy. Community Action for Greater Middlesex County Inc., supra, 398-99. Whether or not it was obligated to pay any damages on the plaintiffs' behalf is a separate issue, because, as North River claims, its umbrella policy only covered losses after the limits of the primary policy were exhausted. Nevertheless, there is a clear duty to defend at this point if, indeed, there was an occurrence covered by North River's policy. The Hartford, the underlying policy, was not covering the claimed occurrence as warranted by its policy and it was then incumbent upon North River to defend the plaintiffs in the CNB action.
As to whether or not the allegations of the CNB third-party complaint would constitute an "occurrence" covered by North River's policy, the court relies on its analysis in the previous section addressing the Hartford's duty to defend. Although the definitions of "occurrence," "bodily injury" and "personal injury" are slightly different in the two policies, the court concludes that a comparison of the allegations in the underlying complaint with North River's policy provisions warrant the conclusion that they possibly fall within coverage and the duty to defend is triggered.
The Hartford retained counsel for the defense of the plaintiffs in the CNB action on March 16, 1991, and continued providing a defense until January 14, 2002. During that time period, North River, as the excess carrier, was not required to defend the plaintiffs. When, however, North River was notified on April 4, 2002, that the Hartford refused to continue the defense of the plaintiffs, it again became the responsibility of North River to take up the defense of the plaintiffs under the unambiguous language of its policy.
Accordingly, the court finds that North River had the duty to defend the plaintiffs during those periods of time when the Hartford refused to provide a defense and grants the plaintiffs' motion for partial summary judgment as to counts three and four of the complaint.
C. Defendants' Motions for Partial Summary Judgment
For all of the foregoing reasons in granting the plaintiffs' motions for partial summary judgment as to the insurers' duty to defend, the court must deny the defendants' reciprocal motions for partial summary judgment. There is, however, one additional issue raised in the Hartford's motion which the court will address. The Hartford claims that most of the allegations in the underlying complaint are not directed against a named insured of the policy and instead arise out of the alleged conduct of a joint venture between Colchester Egg and Kofkoff Egg, which joint venture is not a named insured, or the alleged conduct of individuals in their individual capacities and not as representatives of any of the named insured.
This argument is without merit. Count twelve of the underlying complaint, which is the count the court focused on for purposes of the duty to defend analysis, incorporates the allegations in count seven. It is clear, when the allegations are read as a whole, that Samuel Kofkoff was a member of the CNB Board and a customer of CNB through his business, Kofkoff Egg. Further, as previously noted, he was concerned about protecting the interests of that business with CNB in connection with certain of Kofkoff Egg's accounts receivable which were long overdue. The allegations concerning the subject remarks of Mr. Kofkoff reasonably relate to the Kofkoff Egg business and not the joint venture. The underlying complaint, therefore, does concern alleged conduct of an insured of the Hartford's policy.
IV.
CONCLUSION
For all of the foregoing reasons, the court grants plaintiffs' motions for partial summary judgment as to counts one, three and four of the plaintiffs' complaint and denies the defendants' motions for partial summary judgment as to those counts.
BY THE COURT
BARBARA M. QUINN, Judge