U.S. District Court – Assignment of Insurance Proceeds

In American Guarantee & Liability Ins. Co. v. 51 Roses Mill LLC, a fire destroyed property that was owned by Bridge33 Capital LLC (“Bridge33”), insured by Plaintiff American Guarantee & Liability Insurance Company (“American Guarantee”), and under contract for sale to Defendant 51 Roses Mill LLC (“51 Roses”).  The contract included an assignment of insurance proceeds payable for the loss.  American Guarantee sought a declaratory judgment that Bridge33’s assignment of its insurance claim to 51 Roses following the fire was invalid or that, if the assignment was valid, the amount that 51 Roses may recover under the policy was the actual cash value of the lost Property and did not include any claim to replacement cost value.  American Guarantee argued that no assignment of the right to receive replacement cost value occurred because, at the time of assignment, Bridge33 had not satisfied the condition precedent of rebuilding the destroyed structure within two years and American Guarantee had not consented to any such assignment.  In opposition, 51 Roses asserted that once the loss occurred, any and all insurance proceeds arising from that loss that were contemplated by the policy became assignable regardless of the existence of any conditions precedent to receiving those proceeds.  The Court noted that Connecticut follows the clear majority rule that contractual anti-assignment clauses do not bar assignment of an insured’s claim after the loss that is the subject of the claim has occurred.  The Court also observed that the idea behind the majority rule is that, once the insured-against loss has occurred, the policy-holder essentially is transferring a cause of action rather than a particular risk profile.  Moreover, the Court noted a lack of legal authority in which an assignment was invalidated because the insured failed to meet any post-loss contingencies or conditions prior to the assignment.  For these reasons, the Court granted summary judgment for 51 Roses to the extent that it sought a determination that the assignment from Bridge33 included the right to seek replacement cost value under the terms of the policy.

Superior Court – Underinsured Motorist Benefits

In Merisier v. GEICO Indemnity Company, the plaintiff alleged that she was injured while she was a passenger on a city bus that was struck by a motor vehicle negligently operated by the tortfeasor. The tortfeasor had a liability insurance policy with limits of $20,000 / $40,000 per person / accident.  The plaintiff received $8,000 in settlement proceeds from the tortfeasor out of the $20,000 available liability limits.  The plaintiff had an underinsured motorist policy with GEICO with the same limits as the liability insurance policy, and argued that she was entitled to benefits in the amount of $12,000.  Citing to Connecticut’s statutory scheme for underinsured motorist benefits, the Court noted that the purpose of underinsured motorist coverage is to provide an insured who is injured in an accident with the same resources he would have had the tortfeasor had liability insurance equal to the amount of underinsured motorist coverage, and not to guarantee full compensation for a claimant’s injuries.  The Court further noted that to determine whether a tortfeasor’s vehicle is underinsured, one compares the total liability limits of the tortfeasor’s policy (and not the amount actually received by the claimant) against the claimant’s underinsured motorist coverage.  In granting summary judgment in GEICO’s favor, the Court found that the plaintiff’s settlement for less than the $20,000 that was available to her under the tortfeasor’s policy was irrelevant to making the initial determination as to whether the plaintiff’s vehicle was underinsured within the meaning of the statutory scheme.  Here, the plaintiff was not underinsured pursuant to the statutory scheme because the tortfeasor’s liability limits and GEICO’s underinsured motorist limits were the same.

U.S. District Court – Priority of Coverage – Duty to Defend

In Allied World Assurance Company (U.S.), Inc. v. Great Divide Insurance Company, two insurers mutually insured a subcontractor, Precision Trenchless LLC (“Precision”).  After Precision’s allegedly defective work on a construction project caused property damage, the employer and general contractor brought a lawsuit against it.  Precision requested that both Allied World and Great Divide defend it in the suit, and Allied World began defending it. The underlying suit subsequently settled. During the pendency of that suit, Allied World sought a judicial declaration that Great Divide had a co-primary duty to defend Precision, as well as reimbursement for Great Divide’s portion of the defense.  Allied World contended that Great Divide’s defense obligation was co-primary, rather than excess, because the two policies did not insure the same risk.  Great Divide contended that its coverage was excess to Allied World’s coverage without consideration of identity of risk, and, alternatively, that the policies insured the same risk.  Allied World’s policy provided that its coverage will be primary notwithstanding the availability of other applicable insurance, except that it will equally share coverage with another policy that, by its terms, is also primary. Great Divide’s policy provided that its coverage will be in excess of all other applicable insurance unless that other insurance is specifically in excess.  The Court found no conflict between these clauses and reasoned that Allied World’s policy afforded the sole primary coverage in this circumstance because Great Divide’s policy, by its terms, applied only after the coverage afforded by Allied World’s policy was expended.  The Court next focused its analysis on whether the two policies insured the same risk.  Allied World’s policy covered physical injury to tangible property caused by an accident, but it excluded from coverage physical injury to tangible property caused by the discharge of a contaminant such as waste. Great Divide’s policy covered physical injury to tangible property arising from an accidental discharge of a contaminant such as waste.  In applying relevant standards for an insurer’s duty to defend, the Court found that the underlying action alleged facts that could potentially fall within both policies, and because the insurers’ broad duties to defend were thus triggered, those policies insured the same relevant risk, which was Precision’s defense in the underlying action.

U.S. District Court – Assault and Battery Exclusion

In Tudor Insurance Company v. Ryan’s Pub, LLC et al, the insurer sought a declaratory order concerning its coverage obligations to its insured, for whom it was providing a defense in connection with a pending action stemming from a shooting that occurred on the insured’s premises.  Specifically, the insurer sought an order that any available coverage for the underlying action under the applicable policy was limited to the $300,000 limit set forth in the policy’s Assault and Battery Coverage Endorsement.  The defendants argued that the declaratory judgment action was not ripe because it had not yet been established in the underlying action if the shooter acted intentionally, recklessly, or negligently.  Relatedly, the defendants argued that if the shooter acted negligently, the Assault and Battery Coverage Endorsement would not apply because assault and battery cannot be established through mere negligence.  The Court rejected these arguments and explained that assault and battery in the civil context can indeed be established through negligence.  Thus, even if the evidence in the underlying action established that the shooter acted negligently, it would not affect the outcome of the declaratory judgment action because the shooter’s mental state is irrelevant as to whether there was an assault and/or battery triggering limited coverage under the Assault and Battery Coverage Endorsement.  The parties also disputed whether there was sufficient evidence in the record to establish an absence of genuine dispute of whether the shooter’s act of shooting and killing the decedent constituted an “assault and/or battery” under the policy.  Relying on similar authority as it did on the issue of ripeness, the Court noted that an assault and battery under Connecticut law may be intentional, reckless, or negligent, and thus the shooter’s state of mind is not a material fact.  For these reasons, the Court granted summary judgment for the insurer and declared that any available coverage for the underlying action under the applicable policy was limited to the aforementioned $300,000 limit. 

Superior Court – Property Insurance Appraisal

In Kellogg v. Middlesex Assurance Company, the plaintiff was the owner of an historic property that was insured through a restorationist policy issued by the defendant insurer.  In 2010, the property was damaged when a four and one-half ton tree fell onto the roof and chimney during a storm.  After the plaintiff filed a claim with the insurer, the parties’ were unable to agree on the amount of the loss.  The insurer invoked the policy’s appraisal provision, whereby the parties were to each appoint one appraiser to serve as an arbitrator, and those two appraisers would then choose a neutral third arbitrator to act as an umpire.  In September 2013, after the panel’s arbitration award was issued, the plaintiff filed in the Superior Court an application to vacate the award.  Over the next several years, the litigation went through various stages within Connecticut’s Superior Court, Appellate Court and Supreme Court.  Earlier in 2022, the Appellate Court reversed an earlier denial of the insurer’s motion for summary judgment and remanded the case to the Superior Court for a proper consideration of the motion for summary judgment.  Ultimately, the motion was granted on all counts.  Of note, it was undisputed that the parties entered an unrestricted arbitration involving arbitrators who were empowered to decide issues of law and fact, and that the arbitration award had been confirmed by the Supreme Court.  The insurer argued that the award constituted a binding judgment and that the doctrine of res judicata barred the breach of contract claim.  The plaintiff argued that there was a genuine issue of material fact concerning whether the insurer properly carried out the terms of the agreement.  The Court found nothing in the record to indicate that the appraisal panel did not consider everything in the agreement and everything that occurred.  The plaintiff could have raised the breach of contract action in the arbitration.  Thus, the Court agreed that the breach of contract action based on the confirmed unrestricted arbitration award was barred by the doctrine of res judicata.  As for the plaintiff’s claims for violations of the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act on the basis of alleged misrepresentations by the insurer, the Court found that the claims were all barred by the applicable statute of limitations and further, that the continuing course of conduct doctrine could not apply to toll the claims.  Finally, the Court rejected the plaintiff’s claim for promissory estoppel upon finding that the parties had a valid written contract, noting that such a claim generally lies when there is no written contract, or the contract cannot be enforced for some reason.