Nationwide Mut. Ins. Co. v. Pasiak

• Decision Date: 10 November 2015
• Docket Number: No. 36922.,36922.
• Citation: 127 A.3d 346,161 Conn.App. 86
• Court: Connecticut Court of Appeals
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY et al. v. Jeffrey S. PASIAK et al.

161 Conn.App. 86

127 A.3d 346

NATIONWIDE MUTUAL INSURANCE COMPANY et al.

v.Jeffrey S. PASIAK et al.

No. 36922.

Appellate Court of Connecticut.

Argued May 19, 2015.

Decided Nov. 10, 2015.

Charles W. Fortune, with whom were Heather L. McCoy and, on the brief, Robert D. Laurie, West Hartford, for the appellants (plaintiffs).

David J. Robertson, with whom, on the brief, were Madonna A. Sacco, Christopher H. Blau and Alyssa M. Tornberg, Bridgeport, for the appellees (defendants).

KELLER, PRESCOTT and WEST, Js.

PRESCOTT, J.

In this declaratory judgment action, the plaintiffs, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company, appeal from the judgment of the trial court determining that, pursuant to a personal umbrella insurance policy issued by the plaintiffs in favor of the defendant Jeffrey S. Pasiak,¹ the plaintiffs had a duty to defend the defendant and to indemnify him for damages awarded against him in a tort action brought by Sara Socci, a former employee of his business, and her spouse, Kraig Socci. See Socci v. Pasiak, 137 Conn.App. 562, 49 A.3d 287, cert. denied, 307 Conn. 919, 54 A.3d 563 (2012). The dispositive issue in this appeal is whether the court properly determined that a provision in the umbrella policy excluding occurrences "arising out of the business pursuits or business property of an insured" from coverage did not bar the defendant's indemnification claim.² We conclude that the court improperly concluded that the business pursuits exclusion did not apply and, accordingly, reverse the judgment of the trial court and remand the case with direction to render judgment in favor of the plaintiffs.

Before turning to the relevant facts, as set forth in the trial court's memorandum of decision, and procedural history underlying this appeal, we first recount the facts as set forth in our decision in Socci v. Pasiak, supra, 137 Conn.App. at 562, 49 A.3d 287 the underlying tort action that gave rise to this insurance coverage dispute. Sara Socci was an employee of the defendant's company, Pasiak Construction Services, LLC, and worked out of an office located on the second floor of the defendant's home. Id., at 565–66, 49 A.3d 287. On May 9, 2006, while she was working alone at the office, a masked intruder entered the office carrying a gun and demanded that she open the safe. Id. Unaware that a safe even existed in the home, she could not provide the intruder with the safe's combination. Id., at 566, 49 A.3d 287. The intruder led her into a bedroom, where he tied her hands, gagged her and blindfolded her. Id. At one point, he pointed a gun at her head and threatened to kill her family if she did not give him the combination. Id.

The defendant returned home during the incident and was attacked by the intruder. Id. During the ensuing struggle, the defendant pulled off the intruder's mask, revealing him to be Richard Kotulsky, a friend of the defendant. Id. The defendant began talking to Kotulsky and inquired about Sara Socci. Id. Kotulsky led the defendant to the bedroom, where the defendant found Sara Socci on the floor, crying and hysterical. Id. The defendant picked her up and removed her restraints, all the while conversing with Kotulsky. Id. She asked to leave, but the defendant told her to stay and sit down. Id. After further discussions with Kotulsky, the defendant allowed him to leave the house. Id. Sara Socci then told the defendant about the threats that Kotulsky had made to her and her family, but the defendant would not call the police. Id. He told Sara Socci to stay with him and refused to let her call the police or to discuss the incident further.

Id., at 566–67, 49 A.3d 287. She remained with the defendant for several hours, in fear that, if she left, she or her family might be harmed. Id., at 567, 49 A.3d 287. Only after he drove Sara Socci to Greenwich to discuss the incident with a mutual friend did he allow her to leave. Id. Eventually, the police were contacted, ultimately leading to Kotulsky's arrest and subsequent conviction. Id.

As a result of the incident, Sara Socci developed post-traumatic stress disorder, requiring extensive therapy, and was unable to return to work. Id. In March, 2008, she and her husband, Kraig Socci, filed a civil action against the defendant alleging causes of action for false imprisonment, negligence, intentional, reckless, and negligent infliction of emotional distress, and loss of consortium (Socci action). Id., at 567–68, 49 A.3d 287. On February 23, 2010, a jury returned a general verdict in favor of the Soccis. Id., at 568, 49 A.3d 287. It awarded Sara Socci compensatory damages of $628,200 and punitive damages of $175,000, and awarded Kraig Socci $32,500 for loss of consortium. Id.

At the time of the incident at issue in the Socci action, the defendant had three insurance policies in effect, all issued by the plaintiffs: an automobile policy, a home-owner's policy, and a personal umbrella policy. Although the plaintiffs provided the defendant with counsel in the Socci action, they notified him by letter on March 13, 2008, that they were reserving their right to contest coverage. In December, 2008, the plaintiffs filed the present action. Count one of their amended complaint sought a declaration that the plaintiffs did not have a duty to defend the defendant in the Socci action under any of his policies with the plaintiffs. Count two sought a declaration that the plaintiffs had no duty to indemnify the defendant under those policies. Count three sought a declaration that the defendant had breached his policies by failing to tender timely notice to the plaintiffs of the occurrence alleged in the Socci action and, therefore, had forfeited any right to coverage or defense.³

On July 28, 2009, prior to the verdict in the Socci action, the plaintiffs filed a motion for summary judgment in the declaratory judgment action seeking a determination that they did not have a duty to defend the Socci action.⁴ The defendant filed a memorandum of law in opposition to the plaintiffs' motion for summary judgment and also filed a cross motion for summary judgment seeking to establish the plaintiffs' duty to defend. Following a hearing, the court, Brazzel–Massaro, J., issued a memorandum of decision, concluding as follows: "[T]he court finds that the allegations of the amended complaint fall within the acts covered by both the homeowner's policy and the umbrella policy.⁵

Thus, the court finds that the plaintiff[s] [have] a duty to defend. The declaratory judgment is denied and the defendant's cross motion for summary judgment as to the duty to defend is granted.

"As a result of the court finding that there is a duty to defend and the Supreme Court decision that a duty to indemnify should not be decided on a summary judgment, and the lack of any supporting argument by the plaintiff[s] regarding the duty to indemnify, the court determines that judgment cannot enter at this time in favor of the plaintiff[s] in this declaratory judgment as to the duty to indemnify." (Footnote added.)

Regarding the plaintiffs' argument that their duty to defend was barred pursuant to the policies' business pursuits exclusions, the court found that although it was undisputed that the defendant owns and operates a construction business that employed Sara Socci to assist in office related work, the complaint did not expressly allege that Sara Socci was injured as a result of her employment. The allegations regarding the tortious conduct of the defendant related to his treatment of her after the attempted robbery of his home. According to the court, "[h]er employment or the relation thereto is not an element in the basis of her claims of his negligent and/or intentional acts." The court suggested that because there were no allegations connecting Sara Socci's work duties to the incident or the injuries claimed and "[t]here [was] no element of any regular activity of the business that is related to the events," the business pursuit exclusion did not apply.

The plaintiffs filed a second motion for summary judgment on April 18, 2011, asking the court to determine that they had no duty to indemnify the defendant for the damages awarded by the jury in the Socci action. According to the plaintiffs, the policies at issue only provided coverage for accidents, not intentional or criminal conduct or claims of emotional distress. The plaintiffs further contended that coverage for damages arising out of business pursuits or employee injuries covered under workers' compensation was expressly excluded. The court granted the plaintiffs' motion for summary judgment with respect to the homeowner's policy, concluding that coverage under that policy was limited to physical injuries and that the policy expressly excluded coverage for damages related to emotional distress not tied to a physical injury.⁶ The court denied the motion, however, with respect to the plaintiffs' duty to indemnify the defendant pursuant to the umbrella policy. The court concluded that the umbrella policy contained broader coverage than the homeowner's policy with respect to emotional distress and that none of the exclusions relied on by the plaintiffs precluded indemnification as a matter of law.

On August 29, 2012, the court conducted a bench trial on the issue of whether the plaintiffs had a duty to indemnify the defendant pursuant to the terms of the umbrella policy. The parties submitted trial briefs. The court issued its memorandum of decision on April 25, 2004.

With respect to the plaintiffs' argument that indemnification was barred by the policy's business pursuits exclusion, the court stated that the "real issue" was "whether the actions of [the defendant] in response to the robbery arose out of the business pursuits for the [defendant's] business or as the defendant contends because he was trying to protect a lifelong friend." The court ultimately concluded that the exclusion did not apply because the evidence ...