Admiral Ins. Co. v. Versailles Med. Spa, LLC

• Docket Number: CIVIL CASE NO. 3:20-CV-0568 (JCH)
• Decision Date: 25 October 2022
• Citation: 636 F.Supp.3d 295
• Parties: ADMIRAL INSURANCE COMPANY, Plaintiff, v. VERSAILLES MEDICAL SPA, LLC, et al., Defendants.
• Court: U.S. District Court — District of Connecticut

636 F.Supp.3d 295

ADMIRAL INSURANCE COMPANY, Plaintiff, v. VERSAILLES MEDICAL SPA, LLC, et al., Defendants.

CIVIL CASE NO. 3:20-CV-0568 (JCH)

United States District Court, D. Connecticut

Signed October 25, 2022

Paul G. Roche, Litchfield Cavo LLP, Simsbury, CT, Chelsea R. Sousa, Ogletree Deakins Nash Smoak & Stewart, P.C., Stamford, CT, for Plaintiff.

James Borden Rosenblum, Diana M. Carlino, Rosenblum Newfield, LLC, Stamford, CT, for DefendantsVersailles Medical Spa, LLC, Marie Saade, Robin Nye.

RULING RE: MOTIONS FOR SUMMARY JUDGMENT

Janet C. Hall, United States District Judge

I.INTRODUCTION

PlaintiffAdmiral Insurance Company("Admiral") brings this action against the following defendants: Versailles Medical Spa, LLC("Versailles"), a medical spa in Connecticut; Marie Saade("Saade"), the spa's founder and CEO; and Robin Nye("Nye"), a nurse who worked at Versailles during the relevant period.Admiral seeks a declaratory judgment that it has no duty to defend or indemnify the defendants in an underlying action filed in Connecticut Superior Court.SeeLillian Voigt v. Robin Nye, RN, etal., FST-CV-19-6039874-S (Conn.Sup. Ct. 2019).In response, the defendants have filed Counterclaims alleging four counts of bad faith against Admiral.See Corrected Third Am. Answer (Doc. No. 92).

Now before the court are the defendants' Motion for Summary Judgment as to Admiral's claims(Doc. No. 100) and Admiral's Motion for Partial Summary Judgment as to the defendants' bad faith Counterclaims (Doc. No. 102).For the reasons explained below, the court denies the defendants' Motion and grants Admiral's Motion as to the defendants' Counterclaims.

II.BACKGROUND

The underlying action arises out of treatments that Versailles provided to Lillian Voigt("Voigt") in August 2016.SeePlaintiff's LocalRule 56(a)2 Stmt. of Facts¶ 6 (Doc. No. 101-2)("Pl.'s 56(a)2 Stmt.");Defendants' LocalR. 56(a)1 Stmt. of Facts¶ 6 (Doc. No. 100-2)("Defs.' 56(a)1 Stmt.").To remove brown spots from Voigt's legs, the spa administered a course of Intense Pulse Light ("IPL") treatments to burn the darkened areas and break up the pigmentation.Pl.'s 56(a)2 Stmt.¶ 2;Defs.'56(a)1 Stmt. ¶ 2.The parties agree that the treatment burned Voigt's legs.Pl.'s LocalR. 56(a)2 Statement of Additional Material Facts¶ 6 (Doc. No. 101-1)("Pl.'s AMF");Defendants' Reply to Plaintiff'sAMF ¶ 6 (Doc. No. 101-6)("Defs.'Reply AMF").However, they dispute whether the burns were a normal side effect of IPL treatment.SeeDefendants' Memorandum in Support of Motion for Summary Judgmentat 21("Defs.'Mem.")(Doc. No. 100-1);Smola Affidavit¶ 7(citing Defendants' Answer in Underlying Case¶ 18, Lillian Voigt v. Robin Nye, RN, etal., FST-CV-19-6039874-S (Conn. Sup. Ct. 2019)(Doc. No. 101-2 at 7)).

They also disagree as to whether, around one month later, Voigt emailed the defendants.SeePl.'sAMF ¶ 2;D's ReplyAMF ¶ 2.Admiral has produced a copy of an email sent by Lillian Voigt on September 29, 2016, which states "I would like to discuss my legs with you and Marie.They are completely discolored . . . [and] were sever[e]ly burned . . . .I would like to be reimbursed . . . ."SeePl.'sAMF ¶ 2;Def.'s ReplyAMF ¶ 2;Sept. 29, 2016 Email (Doc. No. 100-12).However, the defendants deny having received this email, and the email itself is addressed not to the defendants, but to "Laurie Overby", who is a friend of Voigt and not a Versailles employee.SeeDefs.'56(a)1 Stmt. ¶ 10;Defs.' ReplyAMF ¶ 2;Sept. 29, 2016 Email;Feb. 11, 2022 Dep. of Lillian Voigtat 38(Doc. No. 100-8).Further complicating matters, Voigt's testimony as to whether she sent the email to the defendants has changed over time.In her February 4, 2021 Deposition in the underlying action, Voigt stated: "I believe I wrote [the email] to Robin and cc'd Marie on it."Feb. 4, 2021 Voigt Depositionat 15-17(Doc. No. 66).By contrast, in her February 11, 2022 deposition for the instant action, she denied having sent the email to the defendants.SeeFeb. 11, 2022 Voigt Depositionat 38, 41.In any case, it is undisputed that defendant Saade met with Voigt on September 30, 2016, regarding Voigt's legs, and Saade agreed to waive certain costs of therapy from there on.Pl.'s AMF ¶ 6;Defs.' ReplyAMF ¶ 6.Voigt sent a 'second' email to Saade on November 17, 2016, which states, in part, "I was thinking about coming in and doing lights on my legs once.I am not seeing much improvement."Pl.'sAMF at ¶ 3;Nov. 17, 2016 Email (Doc. No. 101-2at 5).Voigt continued receiving care at Versailles through early 2017. Pl.'s 56(a)2 Stmt. at ¶ 6.

In May 2017, Versailles applied to renew its professional liability insurance coverage.Pl.'s 56(a)2 Stmt.¶ 12;Defs.'56(a)1 Stmt. ¶ 12.To apply, the defendants filled out a form (the "Policy Application") that asked whether any Claims had been filed against Versailles or any of its employees.See Policy Application (Doc. No. 100-13).The defendants responded "no."Id. at 6.After receiving the form, Admiral issued a professional liability policy ("the Policy") to Versailles for a policy period stretching from May 17, 2017 to May 17, 2018.See Policy (Doc. No. 100-16).

Several sections of the Policy are relevant to the pending Motions.First, the Policy defines a "Claim" as "a written demand for money or services by any Insured resulting from a Professional Incident . . . ."Pl.'s56(a)2 Stmt. ¶ 19;Defs.'56(a)1 Stmt. ¶ 19; Policy § IV(E).It elaborates that a "Professional Incident" is "a negligent act, error, or omission in the rendering of or failure to render Professional Services by the Insured . . . ."Policy § IV(SS).Second, the Policy's "Insuring Agreement"(the "Insuring Agreement") requires that a Claim first be made during the policy period in order to fall within the Policy's coverage.SeePolicy§ 1, Coverage A. Third, the Policy carves out several exclusions, including a "Prior Knowledge" exclusion (the "Prior Knowledge Exclusion"), which absolves Admiral of liability for any "Claim . . . of which the person signing the Application for this Policy . . . was aware prior to the effective date of this Policy."SeePolicy§ VI(1)(A)(2).Finally, the Reporting of Claims provision requires that "notices of Claims . . . must provide" information including "the circumstances by which the Insured first became aware of the specific Claim."SeePolicy§ X(5).

Admiral contends that Voigt's September 29, 2016 email constituted a Claim as defined in the Policy.SeePl.'s56(a)2 Stmt. ¶ 14.The defendants disagree that the Policy's definition of a Claim applies to the Policy Application and assert that the September 29, 2016 email does not constitute a Claim.Defs.' Defs.'56(a)1 Stmt.¶ 11.

On December 21, 2017, Voigt's attorney wrote to Saade and Versailles, informing them that Voigt had obtained counsel to represent her in relation to "injuries she sustained" on her legs and forehead during the August 23, 2016 procedure at Versailles.Defs.'56(a)1 Stmt.¶ 16;Dec. 21, 2017 Letter from Attorney Green (Doc. No. 100-14).The defendants state that Admiral was aware of Attorney Green's letter by January 4, 2018, but Admiral disagrees.Defs.'56(a)1 Stmt.¶ 17;Pl.'s56(a)2 Stmt. ¶ 17.

Voigt filed the underlying action on January 4, 2019, and in February 2019, Admiral hired Morrison Mahoney, LLP ("Morrison Mahoney"), to defend Versailles, Saade, and Nye in that matter.Pl.'s 56(a)2 Stmt.¶ 25.On December 30, 2019, Admiral sent the defendants a letter, copying Morrison Mahoney, disclaiming coverage and informing them that Admiral would no longer pay for their defense.Pl.'s 56(a)2 Stmt.¶ 27.Morrison Mahoney moved to withdraw on February 3, 2020.Id.¶ 27;Defendants' Exhibit Q, Motion to Withdraw as Counsel(Doc. No. 100-19).Voigt then sought a prejudgment remedy against Versailles, Saade, and Nye.Pl.'s 56(a)2 Stmt.¶ 28.In response, the three defendants retained new counsel, Brennan Law Firm, LLC, to demand that Admiral provide coverage.Id.¶ 29.On February 24, 2020, Admiral withdrew its disclaimer of coverage.Id.¶ 30.Admiral hired a new law firm to represent the defendants in the underlying action, providing a defense pursuant to a complete reservation of Admiral's rights.Id.¶ 30-31.

On April 28, 2020, Admiral brought this action in federal court, seeking a declaratory judgment.See Complaint ("Compl.")(Doc. No. 1).The defendants filed an Answer on September 8, 2020, which they twice amended within the month.See Answer (Doc. No. 20); Amended Answer (Doc. No. 23); Second Amended Answer (Doc. No. 24).Before engaging in discovery, Versailles filed its first Motion for Summary Judgment, seeking a declaratory judgment that it had no duty to defend or indemnify Versailles in the underlying action.SeePlaintiff's First Motion for Summary Judgment(Doc. No. 26).Specifically, Admiral argued:

(1) the Policy's Insuring Agreement is not satisfied, and therefore does not cover Versailles, because the Voigt's Claim against Versailles was first made prior to the effective date of the Policy;

(2) the Policy's Prior Knowledge Exclusion bars coverage because Versailles had knowledge of Voigt's Claim prior to the effective date of the Policy;

(3) Versailles is not covered under the Policy because it breached the Reporting of Claims provision, which required Versailles, in reporting a claim to Admiral, to provide the circumstances by which Versailles first became aware of the specific Claim; and

(4) Versailles is not covered under the Policy because "Condition G" of the Policy requires that statements made in the Policy Application be truthful and accurate, and Versailles indicated on its May 2, 2017 Policy Application that they had not received any claims and were not aware of circumstances which might result in a claim against them.

Ruling Denying Plaintiff's First Motion for Summary Judgmentat 2(Doc. No. 85)(citingPlaintiff's Memorandum in Support of First Motion...