Connecticut Property and Casualty Insurance Law Newsletter – August 2023
August 29, 2023
Superior Court – Property Loss – Coverage Exclusion In Marzo et al v. Liberty Mutual Group, Inc., the insured plaintiffs sustained damage to their home’s basement when water seeped in following heavy rainfall. Liberty Mutual denied the plaintiffs’ claim. In a trial before the Court, the dispute involved the potential application of multiple coverage exclusions relating to the specific origin and nature of claimed water damage. The dispositive exclusion barred coverage for loss caused by growth of trees, shrubs, plants or lawns whether or not such growth is above or below the surface of the ground. The Court agreed with the plaintiffs that a blockage in the curtain drain (also known as a collecting drain) resulted directly in the property’s water management system failing to clear the rainwater and that rainwater instead backed into the basement, through the floor and wall joint, from the water management system. However, the critical question of what caused the blockage remained. The plaintiffs argued that the blockage was caused by dirt and debris. The plaintiffs’ expert went so far as to speculate that an animal may have journeyed some 40 feet into the pipe to build a nest in the curtain drain. The defendant relied on the eyewitness testimony of the plaintiff’s contractor who cleared the obstruction to argue that it resulted from a growth of roots into the pipe. The Court found the contractor to be highly credible in light of his directly relevant background experience, demeanor, lack of any interest in the litigation (having been hired to clear the pipe, not to testify in court) and his first-hand observations of the blockage cause. The plaintiffs’ expert testified about the general growth of trees and tree roots, but according to the Court he went beyond his field of expertise as an engineer, and thus was not credible on that subject. The plaintiffs also relied on the testimony of landscape designer who grows and sells trees, and who did not believe that roots were present in the curtain drain. However, the landscape designer never spoke to the aforementioned contractor about what he found. Moreover, the landscape designer was told by one of the insureds that leaves and twigs were pulled out, not that the contractor found heavy roots. The Court found the landscape designer’s testimony to be of limited value because he was not given accurate information about what was found in the curtain pipe. In light of the evidence, the Court found that the obstruction in the curtain drain was organic roots which grew into the drain. The Court was not required to determine the type of tree, the exact location of the tree or even if they were tree or shrub roots. According to the Court, it was obvious that roots would not have been in the pipe when first installed. Testimony indicated that misaligned or cracked pipes can allow roots into the pipe. The Court found that the growth of roots into the curtain drain caused the blockage, which in turn caused the subsurface water to enter into the plaintiffs’ basement and damage it. Judgment was entered for the defendant.
Superior Court – Underinsured Motorist Benefits – Determination of Occupying a Vehicle In Golden v. Soto et al, the plaintiff sought to recover underinsured motorist benefits from defendant United Ohio Insurance Company (“United Ohio”) following an accident that occurred while the plaintiff was operating a motorcycle. The defendant tortfeasor’s vehicle had allegedly turned in front of the plaintiff’s motorcycle. The plaintiff’s mother had an insurance policy with United Ohio which insured one vehicle, a 2014 Dodge Journey, and listed only the plaintiff’s mother as a driver on the policy. The plaintiff owned the motorcycle, which was insured by Progressive. United Ohio moved for summary judgment on two grounds. First, United Ohio argued that coverage was excluded because the plaintiff owned the motorcycle that she was occupying at the time of the accident and thus the motorcycle was not insured under the policy. Second, United Ohio argued that under the “other insurance” provision of its policy, the only underinsured motorist coverage that was applicable to the plaintiff’s claim was the coverage from Progressive. In opposition, the plaintiff argued that United Ohio’s policy exclusion was not substantially congruent with the governing statute and regulation, and that United Ohio failed to prove that the plaintiff was “occupying” her motorcycle at the time that she sustained a “bodily injury.” In addition, the plaintiff made a distinction between the time of the accident and the time when she sustained bodily injury, claiming that there was a genuine issue of material fact regarding whether she was occupying the motorcycle when she sustained bodily injuries. As recently as 2018, the Connecticut Appellate Court reaffirmed the “physical contact” test in defining the term “occupying” in the context of uninsured/underinsured motorist coverage. In that case, the underlying policy defined “occupying” as “in, on, entering or exiting.” The Appellate Court stated that both physical contact with the insured vehicle in order for one to “occupy” it. In the present case, the Court noted that United Ohio failed to meet its burden in establishing that there was no genuine issue of material fact regarding physical contact between the plaintiff and the motorcycle when the injuries were sustained. This same issue of material fact prevented the Court from determining whether the “other insurance” provision applied. For these reasons, the Court denied United Ohio’s motion for summary judgment.
Superior Court – Property Loss – Duty to Defend In C.J. Fucci, Inc. v. National Shoring, LLC et al, the insured plaintiff sought a declaratory judgment against its commercial general liability insurer, Travelers. The underlying dispute arose out of an incident at a construction site allegedly caused by the plaintiff’s contractors. The University of Connecticut retained Dimeo Construction Company (“Dimeo”) to serve as the construction manager for construction of a project. Dimeo entered into a subcontract with the plaintiff to provide labor, equipment, materials and services for the project. The plaintiff retained Earthwork Engineering, Inc. (“Earthwork”) to design a support of excavation system that would temporarily retain the earth to allow for safe construction of structures below grade. The plaintiff also entered into a contract with National Shoring, LLC (“National Shoring”) to provide labor, equipment, materials and services for the project. On the incident date, a steel H-pile installed by National Shoring failed and laterally displaced into the excavation. As a result, the connected timber lagging boards released, causing the sloughing of retained soil into the excavation. The H-pile failure caused a multitude of damages to the project. A firm retained to determine the cause of the H-pile failure attributed the incident to the construction activities of both National Shoring and Earthwork. Dimeo asserted that it intended to hold the plaintiff responsible for all damages incurred because of the H-pile failure. Dimeo withheld money from the plaintiff’s contract payments for costs that Dimeo claimed to have incurred as a result of the H-pile failure. In addition to the damages that Dimeo withheld, the plaintiff incurred monetary damages arising out of National Shoring and Earthwork’s deficient performance of their respective scopes of work. The plaintiff withheld money from National Shoring’s contract payments. The plaintiff argued that the Travelers policy covered Dimeo’s claim against it because the H-pile failure was an “occurrence” that resulted in “property damage” to various utilities. The plaintiff put Travelers on notice of Dimeo’s claim and tendered the claim for defense and indemnity. Travelers filed a motion to strike the plaintiff’s claim for breach of contract as well as the claim for declaratory judgment. Travelers argued that as no suit had been filed against the plaintiff, both claims must be stricken. Insofar as Travelers’ arguments were premised on policy language relating to the duty to defend, the Court was unable to consider striking the claim on said grounds because the specific policy language relied upon by Travelers was not attached to the plaintiff’s complaint. Travelers also argued that it had no duty to cover the subject claim because the plaintiff did not allege property damage but instead sought coverage for money it was allegedly owed by Dimeo, as well as money that it sought from other parties because of their alleged negligence. Travelers further contended that these purely economic damages did not constitute property damage. The plaintiff argued that this case was not about seeking reimbursement for debt; rather, the plaintiff was seeking indemnification for Dimeo’s claim, which was one for property damage. The Court noted that Dimeo’s claims included damages from physical injury to the excavation and the utilities, both of which constituted tangible property. Accordingly, it could not be said that the plaintiff sought to recover from Travelers pure economic losses unrelated to property damage. Travelers also argued that debts are not property damage and that the money Dimeo withheld from the plaintiff and the money that the plaintiff withheld from National Shoring do not constitute property damage. However, the Court found that the plaintiff sufficiently alleged that it sought coverage for loss that at least partially resulted from physical injury to tangible property. Therefore, the motion to strike was denied.
Appellate Court – Underinsured Motorist Benefits – Policy Must Comply With Statute In Curley v. The Phoenix Insurance Company, the plaintiff appealed from the judgment of the Trial Court rendering summary judgment for the defendant. The Trial Court ruled that the plaintiff was not an insured within the meaning of the commercial automobile liability insurance policy issued by the defendant to the plaintiff’s employer, the University of Bridgeport, because she was not occupying a covered vehicle for purposes of the underinsured motorist coverage endorsement. On appeal, the plaintiff argued, inter alia, that the Trial Court improperly rendered summary judgment for the defendant because the Court’s construction of the University’s policy violated the controlling statute for underinsured motorist coverage. The evidence demonstrated that the plaintiff was operating a rental vehicle at the time of the accident, that the University neither owned nor leased said vehicle, and that the vehicles owned or leased by the University were not out of service. The plaintiff argued that (1) she was an insured under the policy because the University had authorized her to rent the vehicle for use in performing her job duties, (2) allowing an employer and insurer to conspire to deny employees statutorily required coverage would violate public policy, and (3) because drivers were required by statute to maintain minimum amounts of liability insurance for any vehicle, including rental vehicles, the University’s policy, by its terms, provided coverage for the rental vehicle in the present case. It was undisputed that the plaintiff was an insured for purposes of liability coverage. Connecticut law requires that each automobile liability policy provide uninsured and underinsured motorist coverage to a class of persons that is coextensive with that insured under the liability section of the policy. Connecticut General Statutes § 38a-336(f) provides in relevant part: “[A]n employee of a named insured injured while occupying a covered motor vehicle in the course of employment shall be covered by such insured’s otherwise applicable uninsured and underinsured motorist coverage.” The Appellate Court found no indication in this statutory language that the legislature intended to distinguish between a covered motor vehicle for liability coverage and a covered motor vehicle for uninsured and underinsured motorist coverage. Through its analysis of the uninsured / underinsured statute, the Appellate Court noted that the defendant could not rely on the language of § 38a-336(f) to avoid its statutory obligations by limiting uninsured / underinsured motorist coverage, by policy definition, to injuries arising out of an insured’s use of a specified vehicle. The Appellate Court further observed that the uninsured / underinsured statute is remedial in nature, intended to promote the well-established and deliberate policy in favor of insuring the risk of loss resulting from the negligence of uninsured and underinsured motorists. Consequently, reading the statute as a whole, the “otherwise applicable” language of § 38a-336 (f) clearly and unambiguously required that the defendant comply with the other provisions of § 38a-336 before reducing the limits of uninsured and underinsured coverage to an amount less than the limits of liability coverage under the policy. Therefore, because there was no evidence that the University expressly waived the statutorily mandated coverage, as required by § 38a-336 (a) (2), the Trial Court improperly rendered summary judgment for the defendant, requiring the Appellate Court to reverse the decision and remand the case to the Trial Court.