Authored by: Joseph Ciollo 

Superior Court – Vehicle Rental Agreement – Coverage Exclusions

In Marrero-Valentin et al v. GEICO Indemnity Company et al, the plaintiffs were the operator/renter and passengers of a rental vehicle that was struck by another vehicle whose operator had no insurance.  The operator/renter of the rental vehicle received Uninsured Motorist (“UM”) coverage from his own insurer, GEICO.  The operator/renter and passengers of the rental vehicle filed suit against the rental company CAMRAC, LLC (“CAMRAC”) for UM coverage.  CAMRAC filed a motion for summary judgment on the basis that its rental agreement with the operator/renter validly excluded liability and uninsured motorist coverage; and the plaintiffs were not in the class of persons that the law required CAMRAC to insure.  There was no dispute that as an owner and self-insurer, CAMRAC was required under Connecticut law to have UM coverage for the protection of those insured thereunder.  The question presented in this case was whether in addition to providing UM insurance coverage to its employees and agents, CAMRAC was also required to provide UM insurance to its renters and any occupants invited by the renter.  The court’s analysis largely centered around Regulations of Connecticut State Agencies § 38a-334-5(d), which provides that liability insurance “shall apply for the benefit of the named insured and any other person or organization using the motor vehicle within the scope of his permission from the named insured.”  The court found that the permissive liability exclusion regulation must apply equally to self-insured entities.  If commercial insurers are permitted to exclude liability coverage for vehicles while rented to others by the named insured, it follows that self-insurers can do the same.  The court rejected the plaintiffs’ attempts to distinguish liability coverage from UM coverage under these circumstances.  One has no UM coverage unless he or she is a covered person for liability insurance.  Unless provided otherwise, an exclusion from a liability policy is also an exclusion from UM coverage under that policy.  Of note, the passenger plaintiffs did not purchase liability insurance from CAMRAC making them persons insured under a policy with CAMRAC for purposes of the required coverage.  The court concluded that the application of the permissive liability exclusion regulation to the passenger plaintiffs did not deprive them of a right under authorizing statutes or offend a policy established by the authorizing statutes.  Here, CAMRAC did not seek to limit UM coverage in such a way as to preclude persons who purchased liability insurance from them.  In the final portion of its analysis, the court found that CAMRAC met its burden to show that it informed its renter that CAMRAC was not providing liability coverage, that it offered to sell the renter liability coverage, and that the renter declined to purchase it.  The motion for summary judgment was granted.

Superior Court – Direct Action Statute – Final Judgment Requirement

In Case v. Hanover Insurance Company, a jury delivered a verdict in favor of the plaintiff based on the negligence and recklessness of a group home.  The plaintiff then filed a direct action against Hanover as the liability insurer for the group home, alleging that Hanover breached the terms of its insurance policy when it did not pay the judgment entered against the group home within thirty days.  Hanover filed a late appeal of the jury verdict, which was accepted by the Appellate Court.  Hanover filed this motion to dismiss the on the basis that the plaintiff lacks standing because there is not a final judgment under Connecticut General Statutes § 38a-321.  In response, the plaintiff argued that the jury verdict, which was accepted by the court is a final judgment, and further that if the jury verdict was not a final judgment, then the Appellate Court would not have the jurisdiction to hear the case.  Hanover argued that the plaintiff conflated a final judgment for the purpose of appeal with a final judgment for purposes of direct action under § 38a-321.  Although there is a lack of Appellate Court authority addressing the status of an appealed jury verdict within the meaning of a final judgment under § 38a-321, the court in the present case reviewed applicable statutory language and Superior Court decisional law and agreed that a jury verdict is a final judgment under § 38a-321.  Alternatively, Hanover argued in its motion to dismiss, that if the court did find that there was a final judgment, the court should stay the current proceedings Practice Book § 61-11(a) until the Appellate Court has issued its ruling.  The court determined that it would violate Practice Book § 61-11(a) to enforce a judgment which was under appeal, and ordered that the proceedings be stayed until the resolution of the appeal.  The court explained that although Hanover was not the party filing the appeal, its payment of the jury verdict was undoubtedly intertwined with the appealed judgment.

U.S. District Court – Duty to Defend – Wrongful Death Claim

In Ohio Security Insurance Company v. Veteran Construction Services, LLC et al, the plaintiff insurer sought a declaratory judgment that it had no duty to defend or indemnify Veteran Construction Services (“Veteran”) for any damages claimed in two lawsuits resulting from a tragic workplace accident that killed two individuals.  In response to Veteran’s initial claim for coverage relating to the underlying lawsuits, the insurer advised Veteran that the loss occurred outside the policy period of its policies.  The insurer further argued that even if the loss occurred within the policy period, coverage would be excluded under several exclusions within the policy.  The court noted that given the settled and closed status of one of the underlying lawsuits, there was no live dispute with respect to coverage in that action.  Therefore, assuming without deciding that there was an actual controversy regarding the that action for purposes of the Declaratory Judgment Act, the court declined to exercise its jurisdiction to issue a judgment in favor of the insurer as to that action.  As to the substantive coverage issues pertaining to the other underlying lawsuit, the court observed that even if the alleged negligence of Veteran was considered an “occurrence” and may have occurred during the policy period, Coverage A , which pertained to bodily injury and property damage, would apply only if the claimed bodily injuries themselves occurred during the relevant policy period.  Because the injuries occurred well outside the policy period, the court concluded that the insurer had no duty to defend Veteran.  The Court also found that the insurer had no duty to defend or indemnify Veteran under Coverage B, which applied to “personal and advertising injury,” arising out of false arrest, malicious prosecution, wrongful eviction, slander or libel, violations of a person’s right of privacy, the use of another’s advertising idea, or infringing upon another’s copyright, trade dress, or slogan.  The court agreed with the insurer that, in order to trigger coverage under Coverage B, the underlying injury must have been caused by one of the enumerated offenses.  According to the court, the allegations in the underlying lawsuit could not support even an inference of a claim under any of the enumerated torts.  For these reasons, the court granted the insurer’s motion for summary judgment, ruling that the insurer had no duty to defend or indemnify Veteran in the pending underlying lawsuit.