Hartford Cas. Ins. v. LITCHFIELD MUT. FIRE

• Decision Date: 19 July 2005
• Docket Number: No. 17146, No. 17147.
• Citation: 274 Conn. 457,876 A.2d 1139
• Court: Connecticut Supreme Court
• Parties: HARTFORD CASUALTY INSURANCE COMPANY et al. v. LITCHFIELD MUTUAL FIRE INSURANCE COMPANY.

876 A.2d 1139

274 Conn. 457

HARTFORD CASUALTY INSURANCE COMPANY et al. v. LITCHFIELD MUTUAL FIRE INSURANCE COMPANY.

Nos. 17146, 17147.

Supreme Court of Connecticut.

Argued January 4, 2005.

Decided July 19, 2005.

Susan L. Miller, with whom, on the brief, was Joel J. Rottner, Hartford, for the appellant in Docket No. SC 17146, appellee in Docket No. SC 17147 (defendant).

Philip F. von Kuhn, for the appellees in Docket No. SC 17146, appellants in Docket No. SC 17147 (plaintiffs).

BORDEN, KATZ, PALMER, VERTEFEUILLE and ZARELLA, Js.

Opinion

VERTEFEUILLE, J.

These appeals arise from an action in which the plaintiffs, Hartford Casualty Insurance Company (Hartford Casualty) and Mitch Wylie, sought a declaratory judgment that the defendant, Litchfield Mutual Fire Insurance Company, had a duty both to defend and to indemnify Wylie pursuant to an insurance policy that it had issued to Wylie. Upon their appeals following our grants of certification, the defendant challenges the Appellate Court's judgment concluding in part that the defendant had a duty to indemnify Wylie, and the plaintiffs challenge the Appellate Court's judgment concluding in part that the defendant had no duty to defend Wylie. We conclude that the defendant had a duty to defend Wylie and that, under the circumstances of the present case, it also had a duty to indemnify him. Accordingly, we reverse the judgment of the Appellate Court as to the plaintiffs' appeal and affirm the judgment of the Appellate Court as to the defendant's appeal.

The Appellate Court's decision sets forth the following undisputed facts and procedural history. "On March 15, 1997, Hartford Casualty issued a homeowner's insurance policy to Wylie for a term of one year. On June 27, 1997, [the defendant] issued two insurance policies, a commercial premises only policy to Wylie as owner of 309 Albany Turnpike [in Canton] and an identical policy to [Strictly Dirt, Inc. (Strictly Dirt)], as lessee of the subject property. Wylie was the president and sole stockholder of Strictly Dirt, a company engaged in the business of buying and selling dirt bikes, dirt bike parts and accessories.

"On February 21, 1998, two year old Samantha Bard was bitten by Wylie's dog while on the premises of [Strictly Dirt]. On February 14, 2000, Bard, through her parent and next friend, Stacey Busque; Stacey Busque individually; and Troy Bard filed a thirty count complaint against Wylie and [Strictly Dirt] [Bard action] seeking damages in connection with the dog bite incident. Fifteen counts were directed against Wylie as the owner and/or keeper of the dog and fifteen counts were directed against [Strictly Dirt] as the owner and/or keeper of the dog on its business premises. The defendant defended [Strictly Dirt] but refused to defend Wylie. Hartford Casualty defended Wylie and ultimately settled all claims against him.¹ While the dog bite suit was pending, Hartford Casualty and Wylie filed the present declaratory judgment action seeking a judgment that [the defendant] had a duty to defend and indemnify Wylie in the dog bite suit, that the coverage under the two commercial policies issued by [the defendant] was primary and that the coverage under the homeowner's policy issued by Hartford Casualty was excess." (Internal quotation marks omitted.) Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 80 Conn.App. 364, 367-68, 835 A.2d 91 (2003).

The plaintiffs thereafter filed a motion for summary judgment with respect to the defendant's duty to defend Wylie, and the defendant filed a cross motion for summary judgment, asserting that Wylie's policy did not provide coverage for the injury alleged in the Bard action. The trial court granted the defendant's motion for summary judgment and denied the plaintiffs' motion. The plaintiffs appealed from the judgment to the Appellate Court, which concluded that the defendant did not have a duty to defend Wylie in the dog bite action, but it did have a duty to indemnify him for that claim. Thereafter, we granted the defendant's petition and the plaintiffs' cross petition for certification to appeal, limited to the following questions: "Did the Appellate Court properly conclude that the defendant had a duty to indemnify . . . Wylie?" Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 268 Conn. 912, 845 A.2d 414 (2004); and "Did the Appellate Court properly conclude that the defendant had no duty to defend . . . Wylie?" Hartford Casualty Ins. Co. v. Litchfield Mutual Fire Ins. Co., 268 Conn. 913, 845 A.2d 414 (2004).

The plaintiffs claim that the Appellate Court improperly concluded that the defendant did not have a duty to defend Wylie. Specifically, the plaintiffs claim that the insurance policy issued by the defendant provides that the defendant will defend the insured when a complaint is made that may be covered under the policy. The complaint against Wylie alleged that the injured child was an invitee at Wylie's place of business, so the plaintiffs contend that there was at least the possibility that the injury occurred as a result of Wylie's business conduct. Thus, the plaintiffs claim that the allegations in the complaint were sufficient to have invoked the defendant's duty to defend. Further, the plaintiffs contend that the defendant continued to refuse to defend Wylie even after it became clear through information provided by Wylie that the alleged dog bite injury fell within the policy coverage.

The defendant responds that Wylie and Strictly Dirt requested only "owners, landlords, [and] tenants" liability coverage, not general liability coverage, and that, absent an allegation suggesting a connection between the dog and the premises of Strictly Dirt, the defendant had no duty to defend Wylie. The defendant further claims that the underlying complaint in the Bard action against Wylie did not allege that Wylie was an employee of Strictly Dirt or that he kept the dog for business purposes. The defendant asserts that, because the Bard action was based only on Wylie's personal ownership of the dog, it did not come within the coverage provided by the defendant's commercial policy, and the defendant had no obligation to defend Wylie. Finally, the defendant contends that the underlying complaint did not relate to Wylie's ownership of the dog, to his ownership or maintenance of the insured premises, or any operations that were necessary or incidental to the insured premises, and that the policy issued by the defendant covers only liability that arises from the use or condition of the insured building, not any and all liability incurred by Wylie. We agree with the plaintiffs in their appeal, and conclude that the defendant did have a duty to defend Wylie in the Bard action. We further conclude that, because the defendant breached its duty to defend Wylie, it is liable for the cost of the defense as well as the amount of the settlement.

We begin by setting forth the well settled standard of review for interpreting insurance contracts. "[C]onstruction of a contract of insurance presents a question of law for the court which this court reviews de novo." (Internal quotation marks omitted.) Board of Education v. St. Paul Fire & Marine Ins. Co., 261 Conn. 37, 40, 801 A.2d 752 (2002). "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 . . . ." (Internal quotation marks omitted.) QSP, Inc. v. Aetna Casualty & Surety Co., 256 Conn. 343, 351-52, 773 A.2d 906 (2001).

In construing the duty to defend as expressed in an insurance policy, "[t]he obligation of the insurer to defend does not depend on whether the injured party will successfully maintain a cause of action against the insured but on whether he has, in his complaint, stated facts which bring the injury within the coverage. If the latter situation prevails, the policy requires the insurer to defend, irrespective of the insured's ultimate liability. . . . It necessarily follows that the insurer's duty to defend is measured by the allegations of the complaint. . . . Hence, if the complaint sets forth a cause of action within the coverage of the policy, the insurer must defend." (Internal quotation marks omitted.) Board of Education v. St. Paul Fire & Marine Ins. Co., supra, 261 Conn. at 40-41, 801 A.2d 752. "If an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured." (Emphasis added; internal quotation marks omitted.) Moore v. Continental Casualty Co., 252 Conn. 405, 409, 746 A.2d 1252 (2000).

This court has concluded consistently "that the duty to defend means that the insurer will defend the suit, if the injured party states a claim, which, qua claim, is for an injury covered by the policy; it is the claim which determines the insurer's duty to defend; and it is irrelevant that the insurer may get information from the insured, or from any one else, which indicates, or even demonstrates, that the injury is not in fact covered. The insurer has promised to relieve the insured of the burden of satisfying the tribunal where the suit is tried, that the claim as pleaded is groundless." (Internal quotation marks omitted.) Keithan v. Massachusetts Bonding & Ins. Co., 159 Conn. 128, 139, 267 A.2d 660 (1970); see also Flint v. Universal Machine Co., 238 Conn. 637, 647, 679 A.2d 929...