Connecticut Ins. Guar. Ass'n v. Drown, No. 33112.

• Decision Date: 13 March 2012
• Docket Number: No. 33112.
• Court: Connecticut Court of Appeals
• Parties: CONNECTICUT INSURANCE GUARANTY ASSOCIATION v. Joshua DROWN et al.

134 Conn.App. 140

37 A.3d 820

CONNECTICUT INSURANCE GUARANTY ASSOCIATION

v.Joshua DROWN et al.

No. 33112.

Appellate Court of Connecticut.

Argued Oct. 20, 2011.Decided March 13, 2012.

Mark D. Robins, pro hac vice, with whom was Thomas P. O'Connor, Greenwich, for the appellant (plaintiff).

Sean K. McElligott, with whom, on the brief, was David M. Bernard, Bridgeport, for the appellees (defendants).

DiPENTIMA, C.J., and ALVORD and WEST, Js.

DiPENTIMA, C.J.

In this appeal, we consider whether the trial court improperly concluded that a professional liability insurance policy covered certain medical malpractice claims brought against a professional corporation under the doctrine of vicarious liability. The plaintiff, Connecticut Insurance Guaranty Association (association), appeals from the judgment of the trial court granting the cross motion ¹ for summary judgment filed by the defendants, Susan Drown and Rodney Drown, individually and on behalf of their minor son, Joshua Drown,² and Associated Women's Health Specialists, P.C. (Health Specialists). On appeal, the association argues that the court improperly concluded that (1) an exclusion to the policy issued by Medical Inter–Insurance Exchange (Exchange) did not apply and (2) the association was estopped from enforcing the policy provisions.³ We reverse the judgment of the trial court.

The following facts and procedural history are relevant to this appeal. The association is a nonprofit unincorporated legal entity created pursuant to the Connecticut Insurance Guaranty Association Act (guaranty act), General Statutes § 38a–836 et seq., and its purpose is to provide compensation for policyholders and claimants whose remedy otherwise would be unavailable by virtue of insurer insolvency. General Statutes §§ 38a–839 and 38a–841; see Connecticut Ins. Guaranty Assn. v. State, 278 Conn. 77, 86, 896 A.2d 747 (2006). In May, 2000, the Drowns filed the underlying medical malpractice action against Health Specialists and two physicians, Frances Bourget and Richard Holden. The Drowns alleged that Bourget and Holden failed to diagnose a placental abruption resulting in brain damage to Joshua Drown, and physical injuries to Susan Drown. The Drowns also alleged that Health Specialists was liable vicariously for the physicians' alleged malpractice.

From 2000 to 2001, Health Specialists was insured through a professional liability insurance policy issued by Exchange (policy). There was no dispute that Health Specialists turned the underlying malpractice claims over to Exchange in a timely manner in 2000. Without asserting a reservation of rights, Exchange provided counsel to Health Specialists to defend the underlying malpractice action. In September, 2006, however, the counsel provided by Exchange failed to participate in pretrial mediation scheduled by the court. In October, 2006, by letter to Health Specialists, Exchange denied coverage of the claims, asserting that exclusion (i) of the policy applied. This provision excludes coverage for the insured “corporation/partnership under Coverage Agreement B with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.” In December, 2006, Exchange failed to attend or send counsel to a second court-ordered pretrial mediation in the underlying action. The court then rendered a default judgment against Health Specialists. In March, 2007, Susan Drown, individually and on behalf of Joshua Drown, and Health Specialists executed a settlement agreement whereby Health Specialists agreed to pay the amount of the policy, $2 million, and Susan Drown, individually and on behalf of Joshua Drown, agreed not to proceed directly against the assets of Health Specialists.⁴ The court then dismissed the underlying action against Health Specialists.⁵

In April, 2008, a United States Bankruptcy Court in New Jersey declared Exchange insolvent, and ordered that it be liquidated. By virtue of Exchange's insolvency, the association became obligated to pay certain “covered claims” arising out of and within the coverage of the policy pursuant to the guaranty act.⁶ In February, 2009, the association brought a declaratory judgment action, pursuant to General Statutes § 52–29, to determine the rights and obligations of the parties under General Statutes § 38a–838 (5) with respect to the underlying claims. In June, 2009, the association filed a motion for summary judgment on the ground that exclusion (i) of the policy precluded coverage of the underlying claims. The defendants filed a cross motion for summary judgment on the grounds that the underlying claims were covered under the policy and that the association was obligated statutorily to pay three covered claims to the Drowns in the amount of $1,199,700.⁷ The court denied the association's motion for summary judgment and granted the defendants' cross motion for summary judgment. The association filed a motion to reargue or for reconsideration, which was denied. This appeal followed.

Our standard of review is well settled. “In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact.... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent.... Our review of the trial court's decision to grant [a] motion for summary judgment is plenary.” (Internal quotation marks omitted.) Employers Reinsurance Corp. v. Muro, 86 Conn.App. 551, 554, 861 A.2d 1216 (2004), cert. denied, 273 Conn. 907, 868 A.2d 747 (2005). Therefore, we must determine “whether the court's conclusions are legally and logically correct and are supported by the record.” (Internal quotation marks omitted.) Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 252, 819 A.2d 773 (2003).

I

The association argues that the court improperly concluded that exclusion (i) of the policy did not apply. Specifically, the association argues that exclusion (i) unambiguously excludes coverage in the present case. We agree with the association.

We first set forth the legal principles governing the construction of insurance policies. “[C]onstruction of a contract of insurance presents a question of law for the court which this court reviews de novo.... It is the function of the court to construe the provisions of the contract of insurance.... The [i]nterpretation of an insurance policy ... involves a determination of the intent of the parties as expressed by the language of the policy ... [including] what coverage the ... [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy.... [A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy ... [giving the] words ... [of the policy] their natural and ordinary meaning ... [and construing] any ambiguity in the terms ... in favor of the insured.... 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.... As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading.” (Citation omitted; internal quotation marks omitted.) Auto Glass Express, Inc. v. Hanover Ins. Co., 293 Conn. 218, 231–32, 975 A.2d 1266 (2009). “The fact that the parties advocate different meanings of the exclusion clause does not necessitate a conclusion that the language is ambiguous.” (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 545, 791 A.2d 489 (2002).

Section I of the policy, entitled “Coverage Agreements,” lists three types of coverage: “Coverage A—Individual Professional Liability”; “Coverage B—Corporate/Partnership Liability”; and “Coverage C—Paramedical Employee Liability.” With respect to Coverage B, § I provides in relevant part: “[Exchange] will pay on behalf of the insured all sums that the insured shall become legally obligated to pay as damages because of ... [i]njury arising out of the rendering of or failure to render ... professional services by any person for whose acts or omissions the corporation/partnership insured is legally responsible.” ⁸ Section II of the policy outlines the exclusions from coverage. As noted previously, exclusion (i) of § II excludes coverage for the insured “corporation/partnership under Coverage Agreement B with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.”

In the present case, the court concluded that the policy language in exclusion (i) was ambiguous because the association reasonably read the exclusion as limiting Exchange's obligation to pay damages, while the defendants adopted a reasonable, but more expansive reading of the policy language, which would encompass claims made against physicians employed by Health Specialists. The court further determined that the ambiguous language in exclusion (i) should be construed in favor of the insured,...