Arrowood Indem. Co. v. King

• Decision Date: 27 March 2012
• Docket Number: No. 18658.,18658.
• Citation: 304 Conn. 179,39 A.3d 712
• Court: Connecticut Supreme Court
• Parties: ARROWOOD INDEMNITY COMPANY v. Pendleton KING et al.

304 Conn. 179

39 A.3d 712

ARROWOOD INDEMNITY COMPANY

v.Pendleton KING et al.

No. 18658.

Supreme Court of Connecticut.

Argued Dec. 5, 2011.Decided March 27, 2012.

Daniel P. Scapellati, with whom were Coleman C. Duncan, and, on the brief, Ralph W. Johnson III, for the appellant (substitute plaintiff Arrowood Indemnity Company).

James T. Hargrove, with whom was Frederic P. Rickles, for the appellees (defendants).

Robert G. Oliver, with whom were James D. Hine II and Michael J. Pinto, and, on the brief, Francis J. Drumm III, New Haven, for the appellee (third party defendant National Surety Corporation).

ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, McLACHLAN, EVELEIGH and HARPER, Js.

HARPER, J.

This case, on certification from the United States Court of Appeals for the Second Circuit, presents questions regarding the proper construction of terms in a homeowners insurance contract under Connecticut law. The predecessor insurance companies to the plaintiff, Arrowood Indemnity Company, brought a declaratory judgment action in the United States District Court for the District of Connecticut claiming that they did not have a duty to defend or to indemnify the defendants, Pendleton King, Daphne King and their minor child, Pendleton King, Jr. (Pendleton, Jr.) (collectively, the Kings), for any liability arising out of injuries sustained by a third party while Pendleton, Jr., was driving his parents' all-terrain vehicle (ATV) on a private road in a private residential community where the Kings resided because, inter alia, the accident had not occurred “on an insured location” and the Kings' notice of a claim was untimely.¹ The District Court rendered summary judgment in favor of the plaintiff; see footnote 1 of this opinion; without reaching the issue of notice. Royal Indemnity Co. v. King, 512 F. Sup.2d 117 (D.Conn.2007). The Kings then appealed to the Circuit Court of Appeals, which, sua sponte, certified the following three questions of unresolved state law to this court: “(1) With respect to a claim for negligent entrustment under a liability policy that excludes coverage for ‘[a]rising out of ... [t]he entrustment by an insured’ ‘to any person,’ ‘of a motor vehicle’ other than ‘[a] motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and ... [o]wned by an insured and on an insured location,’ is the insured location

“(a) the place where the entrustment of the vehicle took place, or

“(b) the place where the vehicle is garaged, or

“(c) the place where the accident occurred?

“(2) In the absence of a policy definition of ‘premises', should a private road located within a residential development owned by the insured's homeowners association be considered ‘premises used ... in connection with a [residence] premises' under the terms of a homeowner's insurance policy if the portion of the road where the liability arose is not regularly used by the insured, although other portions of the road are so used?

“(3) Under Connecticut law, where a liability insurance policy requires an insured to give notice of a covered claim ‘as soon as practical,’ do social interactions between the insured and the claimant making no reference to an accident claim justify a delay in giving notice of a potential claim to the insurer?” (Emphasis in original.) Arrowood Indemnity Co. v. King, 605 F.3d 62, 80 (2d Cir.2010). The Second Circuit noted that Connecticut trial courts had adopted conflicting approaches to the first certified question ² and that it could find no Connecticut case law resolving the second and third certified questions.

Pursuant to General Statutes § 51–199b, we accepted the certification and conclude that: (1) the relevant location is the site of the accident; (2) such a private road does not fall under the coverage provision; and (3) social interaction making no reference to an accident does not justify delayed notice, but an insurer must prove prejudice to disclaim its obligation to provide coverage based upon untimely notice.

The record certified by the Second Circuit contains the following undisputed facts relevant to resolving these questions. The plaintiff provides homeowner's insurance that covers the Kings' residence. This residence is located in Deer Park, a private residential development in Greenwich that is managed by an incorporated homeowners association. Pursuant to a warranty deed, the Kings have a right to travel along the private roads leading from their premises to and from the public road. The residence is situated on Deer Park Court, which terminates at one end at Midwood Road. The northern portion of Midwood Road is a dead end; the southern portion of Midwood Road leads to the development's exit and a public roadway.

The present litigation arose out of an incident that occurred in 2002. Pendleton, Jr., then fourteen years old, was driving an ATV owned by his parents and using a nine foot rope attached to the ATV to tow his friend, Conor McEntee, on a skateboard. While the two boys were on the dead-end portion of Midwood Road north of the Kings' residence, McEntee let go of the tow rope and subsequently fell, suffering a severe head injury that resulted in hospitalization and a temporary coma. The accident occurred approximately fifty to seventy-five feet from the Kings' property. Following the accident, the King and McEntee families socialized, and the McEntees did not indicate that they intended to bring an action related to the accident. More than one year after the accident, however, a letter from an attorney representing the McEntees alerted the Kings that an action might be filed, at which point the Kings, through New England Brokerage Corporation; see footnote 1 of this opinion; notified the plaintiff of the potential claim. The present declaratory judgment action followed. Additional facts will be set forth as necessary.

I

We begin by considering the first two certified questions, which require us to determine whether, in an action alleging liability on the basis of negligent entrustment, the ATV accident in this case is covered under the terms of the Kings' homeowner's insurance policy. Specifically, we must determine whether the accident falls within the scope of an exception to the policy's general exclusion of liability coverage for accidents involving motor vehicles.

The relevant provisions of the exclusions section of the policy provide that “1. Coverage ... do[es] not apply to bodily injury or property damage ...

“f. Arising out of:

“(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an Insured;

“(2) The entrustment by an Insured of a motor vehicle or any other motorized land conveyance to any person. ...

“ This exclusion does not apply to ...

“(2) A motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and:

“(a) Not owned by an Insured; or

“(b) Owned by an Insured and on an Insured location ....” (Emphasis added.) There is no dispute in this case that the ATV at issue qualifies as “[a] motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration” and that the Kings owned the ATV. To fall within the scope of coverage, therefore, the ATV also must have been “on an [i]nsured location....” The proper interpretation of this phrase is at the heart of the first two certified questions.

We note that, although the questions certified by the Second Circuit conceivably could be answered without reference to the specific contract out of which they arise, it is the practice of this court to analyze such questions with respect to the specific contract at issue, where such analysis can yield an appropriate answer. See Enviro Express, Inc. v. AIU Ins. Co., 279 Conn. 194, 199, 901 A.2d 666 (2006) (employing principles of contract interpretation to answer certified question posed in more general terms). In interpreting an insurance contract, “[t]he determinative question is the intent of the parties, that is, what coverage the ... [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy.... If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning.... Under those circumstances, the policy is to be given effect according to its terms.... When interpreting [an insurance policy], we must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result....

“In determining whether the terms of an insurance policy are clear and unambiguous, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity.... Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.... As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading.... Under those circumstances, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy.” (Internal quotation marks omitted.) Johnson v. Connecticut Ins. Guaranty Assn., 302 Conn. 639, 643, 31 A.3d 1004 (2011). Under this holistic approach, if the policy sufficiently specifies the general contours of coverage, such that it is readily apparent that a particular claim falls within the scope of coverage, we are bound to give effect to that clearly expressed intent even when a particular term is not susceptible to a definite meaning. With these principles in mind, we turn to the...