Authored by: Joseph Ciollo
U.S. District Court – No Coverage for Insured’s Costs of Subpoena Response
In Steadfast Insurance Company v. Shambaugh & Son, L.P., the defendant was a subsidiary of a named insured under various insurance policies issued by the plaintiff. The defendant was served with a third-party / non-party subpoena as part of an ongoing multi-district litigation (“MDL”). The plaintiffs in the MDL sued manufacturers of aqueous film forming foam (“AFFF”), a fire suppressant used to extinguish flammable liquid fires, alleging that it was released into the environment when the systems were installed, tested, maintained, and/or used to extinguish a fire, causing bodily injury and/or property damage. Within the MDL, a chart had been generated where the defendant was identified as a potential distributor defendant. Both the plaintiff and defendant moved for summary judgment on the issue of whether or not the defendant’s costs of responding to the subpoena were covered under the applicable policies. The defendant argued that it had a “claim” under the policies, and that the subpoena and chart alleged liability and responsibility on the defendant’s part. The plaintiff argued that neither the subpoena nor the chart were a “claim” under the policies, and that the costs incurred by the defendant were not covered claim expenses. The Court agreed with the plaintiff, noting that even to the extent that the subpoena and chart stated or suggested that the defendant distributed AFFF, those statements or suggestions did not amount to an allegation of liability or responsibility for a loss as defined by the plain policy language. The Court distinguished cases cited by defendant which concerned policies under which the term “claim” was defined far more broadly than the term is defined in the policy language applicable to this case. The Court also noted that its ruling did not mean that the defendant could never obtain coverage from the plaintiff under a similar policy for those same costs in the future, if and when the defendant initiates a “claim” that complies with the policy’s terms. The plaintiff’s motion for summary judgment was granted and the defendant’s summary judgment was denied.
Superior Court – Equitable Contribution – Two Insurers of Same Property
In Church Mutual Insurance Company v. Twin City Fire Insurance Company, a church owned two different properties, one of which was located within a commercial condominium complex and was damaged by a fire. Church Mutual Insurance Company (“Church Mutual”) insured provided coverage for loss and damage by fire at the two different properties. Twin City Fire Insurance Company (“Twin City”) insured the condominium association. The Twin City policy covered the entire condominium complex. Church Mutual and Twin City made claim payments to the church and the condominium association, respectively. Each insurer also pursued and settled subrogation claims against the entity believed to have caused the fire. Church Mutual brought a claim of equitable contribution against Twin City, alleging that both the Twin City policy and the Church Mutual policy provided coverage for losses and damages to the church’s buildings as a result of losses or damages caused by fire. Church Mutual sought a declaratory judgment determining the relative percentages that it and Twin City were obligated to pay to the church as a result of the fire. Both Twin City and Church Mutual moved for summary judgment on the issue of whether Church Mutual was entitled to equitable contribution. The Court noted that there is no binding appellate authority in Connecticut on the specific issue presented in this case, namely, whether equitable contribution is available where two first-party insurance policies insure the same property for the same risk, but insure different named insureds. However, the Court’s reading of the appellate authority of Connecticut, treatises on the issue, as well as the law of other jurisdictions, led to the conclusion that equitable contribution is available only where first-party insurance policies insure the same insured. The Connecticut Supreme Court has recognized that a claim of equitable contribution requires that the parties have a common interest or liability in a common obligation. Based on its analysis, the Court concluded that Twin City met its burden in establishing that the policies did not insure the same entity. Twin City’s motion for summary judgment was granted and Church Mutual’s motion for summary judgment was denied.
U.S. District Court – Motion to Dismiss – Commercial Property Loss
In Chima Enterprise Inc. et al v. Chubb National Insurance Company et al, the plaintiff owned a commercial property that it leased to over thirty tenants. AT&T had begun work on the rooftop of the property, upgrading old wiring and telecommunication systems. Within a few days of the work beginning, tenants at the property began complaining of toilets not flushing and clogged sinks on the top floor of the building. Technicians hired by the plaintiff discovered trash, bottles, aluminum cans, caution tape, multiple electrical/telecom wires, and other items of debris stuffed in the rooftop plumbing drainpipes near where AT&T had been working. Approximately one month later, a “catastrophic breakage” of a pipe allegedly occurred on the property, causing black water and sewage discharge in the basement. A contracted hired by the plaintiff allegedly discovered telecommunications debris and electrical wires similar to what was found in the rooftop pipe. The plaintiff submitted a claim to the defendant, which created two separate claims, one for each of the reported incidents. A firm hired by the defendant that the first incident was the result of a blockage in the building’s internal pipeline, and the second incident was the result of a pipe break with debris found nearby including common items found in bathrooms as well as electrical and telecommunications wiring. The defendant made initial payments but denied further coverage based on the “Water Exclusion” of the applicable insurance policy. The plaintiff filed suit alleging breach of contract, breach of the implied covenant of good faith and fair dealing, violations of the Connecticut Unfair Trade Practices Act (“CUPTA”) and Connecticut Unfair Insurance Practices Act (“CUIPA”), fraudulent misrepresentation, and negligent infliction of emotional distress. The defendant filed a motion to dismiss for failure to state a claim. The parties disputed the interpretation and application of the policy’s Water Damage provision, Water Exclusion provision, and Water Endorsement provision. The Court held that because the insurance policy was reasonably susceptible to more than one meaning, a breach of the underlying insurance contract was plausibly alleged. On this basis, the motion to dismiss was denied as to the breach of contract claim. The Court also found that the coverage debate over the claim was reasonable, and that the plaintiff did not allege facts demonstrating a sinister motive or any wrongdoing that plausibly rose above negligence. On this basis, the motion to dismiss was granted as to the claim for breach of the implied covenant of good faith and fair dealing. The Court also found that because the plaintiff failed to allege that the defendant engaged in any unfair practices outside of the alleged breach at issue, there was no viable claim under CUIPA; and lacking a viable CUIPA claim, there was no viable claim under CUTPA. On this basis, the motion to dismiss was granted as to the CUTPA/CUIPA claim. The Court also found that the plaintiff failed to plead fraud with sufficient particularity as required by the Federal Rules of Civil Procedure and related decisional law. On this basis, the motion to dismiss was granted as to the fraudulent misrepresentation claim. Finally, while the Court noted that while the defendant’s denial of coverage undoubtedly caused hardship for the plaintiff, there was nothing in the complaint suggesting a plausible entitlement to relief on a negligent infliction of emotional distress claim. On this basis, the motion to dismiss was granted as to that claim.
