Royal Indem. Co. v. King

• Decision Date: 28 September 2007
• Docket Number: Civil Action No. 3:03cv2178 (SRU).
• Citation: 512 F.Supp.2d 117
• Court: U.S. District Court — District of Connecticut
• Parties: ROYAL INDEMNITY COMPANY and Royal Insurance Company of America, Plaintiffs, v. Pendleton KING, Daphne King, Pendleton King, Jr., and Conor McEntee, Defendants, Third-Party Plaintiffs, v. National Surety Corporation and New England Brokerage Corporation, Third-Party Defendants.

512 F.Supp.2d 117

ROYAL INDEMNITY COMPANY and Royal Insurance Company of America, Plaintiffs, v. Pendleton KING, Daphne King, Pendleton King, Jr., and Conor McEntee, Defendants, Third-Party Plaintiffs, v. National Surety Corporation and New England Brokerage Corporation, Third-Party Defendants.

Civil Action No. 3:03cv2178 (SRU).

United States District Court, D. Connecticut.

September 28, 2007.

Daniel P. Scapellati, John C. Pitblado, Joseph J. Andriola, Halloran & Sage, Hartford, CT, for Plaintiffs.

Frederic P. Rickles, Gilbride, Tusa, Last & Spellane, Michael J. Jones, Sonia T. Larossa, Ivey, Barnum & O'Mara, Greenwich, CT, James T. Hargrove, Peter F. Durning, Dennis A. Murphy, Goulston & Storrs, Boston, MA, John Quinlan Kelly, The Kelly Group, PC, New York City, for Defendants, Third-Party Plaintiffs.

Kenneth J. Mulvey, Jr., Robert G. Oliver, James D. Hine, Mulvey, Oliver Gould & Crotta, New Haven, CT, Christopher B. Weldon, Robert J. Grande, Lustig & Brown, Stamford, CT, for Third-Party Defendants.

RULING ON MOTIONS FOR SUMMARY JUDGMENT

STEFAN R. UNDERHILL, District Judge.

This dispute arises out of a serious accident involving an all terrain vehicle ("ATV") owned by Pendleton and Daphne King and operated by Pendleton King, Jr. The accident caused Conor McEntee to suffer a life-threatening head injury. McEntee has sued each of the Kings in state court for damages related to the accident. State Court Complaint, doc. # 146-14.¹ The Kings owned a homeowner's insurance policy through Royal Indemnity Company ("RIC"), an umbrella policy through Royal Insurance Company of America ("RICA"), and an excess liability policy through National Surety Corporation ("National"). Upon notice of McEntee's lawsuit, the Kings requested that, pursuant to their insurance policies, their insurance companies provide a defense to the lawsuit, and indemnify them for coverage with respect to McEntee's claims in state court. The state court case is still pending.

RIC and RICA then filed suit in this court seeking a declaration that they have no duty to defend or indemnify the Kings. The Kings subsequently filed counterclaims against RIC and RICA, and a thirdparty complaint against National and New England Brokerage Corporation ("NEBC"), the Kings' insurance broker. NEBC then filed crossclaims against RIC and RICA. All parties have moved for summary judgment.

The arguments presented in the five pending summary judgment motions can be distilled into three broad issues: (1) Whether the Kings' homeowner's policy provides coverage with respect to McEntee's claims; (2) Whether the Kings' umbrella policy provides coverage with respect to McEntee's claims; and (3) Whether NEBC was negligent when it failed to procure an umbrella policy that followed form to the homeowner's policy.

Because the accident did not occur on an "insured location" as the Kings' homeowner's policy defines that term, I hold that the Kings' homeowner's policy does not provide coverage with respect to McEntee's claims. In addition, because the Kings' umbrella policy provided coverage for ATVs only if they were listed on the declarations page of the policy and because no ATVs were listed on that page, I hold that coverage does not exist under the policy's express terms. In addition, RICA effected a valid change to the policy limiting coverage to listed ATVs. Alternatively, even if RICA did not effect a valid change, the Kings have failed to present evidence that they would have been covered under the prior policy. Accordingly, I hold that the Kings' umbrella policy also does not provide coverage with respect to McEntee's claims.

Finally, because the Kings' negligence claim against NEBC hinges on their claim that the homeowner's policy provides coverage with respect to McEntee's claims, and because I hold today that the Kings' homeowner's policy does not provide such coverage, the Kings' negligence claim fails.

I. Background

On May 5, 2002, Pendelton King, Jr., then fourteen years old, was towing his neighbor, Conor McEntee, also fourteen, behind an ATV owned by the Kings. Police Accident Report, doe. # 146-5 at Royal 229. McEntee, not wearing a helmet, was riding a skateboard while holding onto a rope that was attached to the ATV. Id. at Royal 229, 231. The two were traveling around Deer Park Association, a private homeowners' association in which the Kings reside and of which the Kings are members. Pendleton King Aft, doc. # 146-2; Warranty Deed, doc. # 146-3 at KING0121. While towing McEntee, King Jr. swerved off the road onto the grass and McEntee fell off the skateboard onto the street. Police Accident Report, doe. # 146-5 at Royal 233. McEntee's head struck the road causing McEntee to suffer a life-threatening head injury. Id. at 231. The Kings owned a homeowner's policy through RIC, an umbrella policy through RICA, and an excess liability policy through National. NEBC assisted the Kings in procuring their policies.

On August 5, 2003, by letter from counsel, the McEntees informed the Kings they planned to sue them in state court. See Letter from John Q. Kelly, doc. # 146-8 at KING0083. On August 8, 2003, the Kings notified RIC and RICA of the accident and the lawsuit. That case is currently pending in state court. RIC and RICA subsequently filed a complaint in this court seeking a declaration that Royal has no duty to defend or indemnify the Kings under either the homeowner's policy or the umbrella policy.

After RIC and RICA filed suit against the Kings in this court, the Kings asserted counterclaims against RIC and RICA seeking damages under CUTPA, and for breach of contract, and for breach of the covenant of good faith and fair dealing. The Kings also filed a third-party complaint against National and NEBC, seeking declaratory relief, alleging breach of contract against National and NEBC, and alleging negligence and breach of fiduciary duty against NEBC. NEBC then raised cross-claims against RICA for indemnification and contribution, arguing that it is liable only if RICA was negligent in renewing the Kings' umbrella policy. All parties have moved for summary judgment.

A. The Kings' Homeowner's Policy With RIC

The Kings owned a $500,000.00 homeowner's insurance policy, issued by RIC. Kings' Homeowner's Policy, doc. # 146-10 at KING0002. The Kings' homeowner's policy generally excludes coverage for injuries "[a]rising out of 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," or arising out of "[v]icarious liability, whether or not statutorily imposed, for the actions of a child or minor using a conveyance excluded in paragraph (1) or (2) above." Id, at KING0031.

There is an exception to the general exclusion for motor vehicle coverage, however. The policy provides that the general exclusion of vehicle coverage "does not apply to a motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and ... owned by an insured and on an insured location." Id. at KING0031. The policy defines "insured location" as either (a) "the residence premises;" (b) "the part of other premises, other structures and grounds used by you as a residence...;" or (c) "Any premises used by you in connection with a premises." Id. at KING0016. Finally, the policy defines an "insured" as any person "using [a] vehicle on an insured location with [the policyholder's] consent." Id. at KING0016.

B. The Kings' Umbrella Policy With RICA

The Kings also owned a $5,000,000.00 umbrella insurance policy, issued by RICA. The policy that was in effect on May, 5, 2002,² the date of the accident, defines a "covered person" as the, insureds, their family members, or "[a]ny other person ... using a ... `recreational motor vehicle' ... which [the insureds] own." Kings' Umbrella Policy, doc. # 154-4 at KING0044. The policy defines an "occurrence" as "[a]n accident ...: which results, during the policy period, in `bodily injury'...." Id. at KING0045. The policy provides that RICA will "pay up to [its] limit of liability for damages for' which a `covered person' becomes legally liable due to `bodily injury' ... caused by an `occurrence' to which this policy applies." Id. at KING0046. But the Kings"policy contains a general exclusion to coverage for "bodily injury" that arises out of the "use" of a "recreational motor vehicle." Id. at KING0048.

There is an exception to the general exclusion, however, that forms the basis of the claims related to the umbrella policy. Although the policy generally does not cover bodily injury arising from the use of a recreational motor vehicle, the policy does cover "`recreational motor vehicles' described as being covered in the declarations, if covered by `primary insurance.'" Id. at KING0049. The Kings' umbrella policy does not describe the subject ATV on its declarations page. Id. at KING0041.

C. The Renewal of the Umbrella Policy

Although the Kings' umbrella policy does not cover motor vehicles not listed on the declarations page, the Kings argue that the policy nevertheless covers the subject accident because their policy formerly covered the. ATV, and because RICA failed to effect a valid change to the policy to require the Kings to include the ATV on the declarations page.

The Kings have not provided the prior policy under which ATVs, not listed on the declarations page, were covered. Instead, they rely on the testimony of Darold Palme, RICA's Underwriting Support Director. Palme testified that, prior to 2000, the Kings' umbrella policy covered recreational vehicles used on their own personal property. See Palme Dep., doc. # 154-5, at 239.

In 2000, however, RICA changed the Kings' umbrella policy to limit coverage for recreational vehicles to those listed on their declarations page and to require payment of an additional premium for coverage to apply. Palme...