Vt. Mut. Ins. Co. v. Ciccone

• Decision Date: 22 October 2012
• Docket Number: No. 3:09–CV–00445 (CSH).,3:09–CV–00445 (CSH).
• Citation: 900 F.Supp.2d 249
• Court: U.S. District Court — District of Connecticut
• Parties: VERMONT MUTUAL INSURANCE COMPANY, Plaintiff, v. Paul E. CICCONE, et al., Defendants.

900 F.Supp.2d 249

VERMONT MUTUAL INSURANCE COMPANY, Plaintiff,

v.Paul E. CICCONE, et al., Defendants.

No. 3:09–CV–00445 (CSH).

United States District Court, D. Connecticut.

Oct. 22, 2012.

Kathleen F. Adams, Melicent B. Thompson, Litchfield Cavo LLP, Simsbury, CT, for Plaintiff.

Alan R. Messier, New London, CT, Jose M. Rojas, The Rojas Law Firm, Hartford, CT, for Defendants.

RULING ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

HAIGHT, Senior District Judge:

I. Introduction and Summary of Facts

As the Court previously discussed in its Order Regarding Supplemental Briefing [Doc. 47], this action for a declaratory judgment arises out of a commercial liability and business owner's policy (“the Policy” or “the insurance policy”) issued by Plaintiff Vermont Mutual Insurance Company (“Vermont Mutual”) to Paul E. Ciccone, Karen Ciccone, and Elm Ridge Development, LLC (collectively “the Ciccones”), with a policy period running from March 1, 2007 through March 1, 2008. Under the Policy, Vermont Mutual agreed to defend the Ciccones against any suit alleging bodily injuries caused by an occurrence within the coverage territory during the policy period, and to indemnify the Ciccones with respect to any liability adjudged against them in such a suit. Vermont Mutual's obligations under the insurance policy were subject to specific policy exclusions that included workers' compensation, employer's liability, and professional services.

In August of 2007—i.e., within the policy period—Miguel Martinez fell from a roof upon which he was working during renovationsto a building at 171 Garfield Avenue, New London, Connecticut, which Martinez alleges was either owned or occupied by Paul Ciccone or Elm Ridge Development, LLC. Martinez claims that the fall caused him serious injuries. In December 2008, Martinez filed a complaint in Connecticut Superior Court, Judicial District of New London (“the Underlying Action”) to recover for those injuries.¹ This 2008 complaint was made against Paul Ciccone both individually and as the sole owner of a business called “PC Properties,” and against Elm Ridge Development, LLC (hereafter, the “Defendants”). The Underlying Action is advancing on the Connecticut court's trial calendar. In May of 2010, Martinez filed a revised complaint against the Defendants in the Underlying Action, again seeking damages for the injuries he claims were sustained in a fall at 171 Garfield Avenue. That revised complaint (“the Underlying Complaint”) is the operative pleading for purposes of this Ruling.

In March of 2009, Vermont Mutual commenced the captioned action in this Court by filing a declaratory judgment complaint against the Defendants [Doc. 1] (“the DJA Complaint”). The First Count of the DJA Complaint begins at ¶¶ 6–17 with a series of factual allegations drawn from a number of sources outside of the Underlying Action's pleadings which purport to show, in Vermont Mutual's perception, that at the time of his accident, Martinez was an employee of the Defendants. The DJA Complaint concludes with prayers for judicial declarations that Vermont Mutual is “not obligated to defend Paul E. Ciccone individually or d/b/a PC Properties, or Elm Ridge Development LLC as to the claims asserted against them” in Defendant Martinez's Underlying Action “WHEREFORE” prayer at sub-paragraph (a); ² that Vermont Mutual “is not obligated to indemnify” those DJA Defendants “for any amounts Defendant Martinez recovers against them” in the Underlying Action, sub-paragraph (b); that Vermont Mutual “is not obligated to defend” the DJA Defendants “as to Defendant Martinez's workers' compensation claims against them,” sub-paragraph (c); and that Vermont Mutual “is not obligated to indemnify” the DJA Defendants “as to Defendant Martinez's workers' compensation claims against them,” sub-paragraph (d). In the body of the DJA Complaint, these prayers are preceded by six Counts: two each for the Policy exclusions of workers' compensation (Counts First and Second); employer's liability (Counts Third and Fourth); and professional services (Counts Fifth and Sixth).³

The case is presently before the Court on the Defendants' motion pursuant to Rule 56, Fed.R.Civ.P., for partial summary judgment dismissing Counts Third and Fifth of the DJA Complaint. The Third Count alleges that at the time of the accident, Martinez “was an employee” of Defendants, and that therefore “the monetary damages Martinez seeks from [Defendants] in the State Court action are excluded from coverage by virtue of the Policy's exclusion for Employer's Liability.” [Doc. 1] at ¶ 20. It follows, the Third Count continues, that “Vermont Mutual is therefore entitled to a declaration that it does not have a duty to defend [Defendants] as to [Martinez's] claims against them in the State Court action.” ¶ 21. The Fifth Count likewise alleges that “the monetary damages Martinez seeks from [Defendants] are excluded from coverage by virtue of the Policy's exclusion for Professional Services,” and, accordingly, that “Vermont Mutual is therefore entitled to a declaration that it does not have a duty to defend [Defendants] as to [Martinez's] claims against them in the State Court action.” ¶¶ 20–21.⁴

While Vermont Mutual has thus far paid for the Defendants' legal defense to the Underlying Action, subject to a reservation of its right to deny coverage under the Policy, Vermont Mutual seeks to put an end to a continuing duty to defend the Defendants through this declaratory judgment action (“DJA”). In aid of that effort, Vermont Mutual proffers, or expresses a determination to obtain, evidence from a number of sources, some outside the pleading in the Underlying Action, which Vermont Mutual claims will tend to show that one or another of the Policy exclusions applies to Martinez's claims against the Defendants.

Indeed, Vermont Mutual's chief theory of the case in this DJA appears to be that because facts external to the Underlying Complaint render the damages claimed therein excluded from coverage under the Policy by one exclusion or another, Vermont Mutual has neither a duty to defend the Defendants in the Underlying Action nor a duty to indemnify the Defendants from liability found against them in the Underlying Action. As an alternative theory, Vermont Mutual argues in its Supplemental briefing that, even if the Underlying Complaint is taken as true, and read entirely without additional outside facts or information, either the Policy's contractual language concerning Vermont Mutual's duty to defend, or the Policy's language concerning its employers and professional services liability exclusions, could serve to preclude Plaintiff's duty to defend Defendants in the Underlying Action.

In moving for summary judgment on the Third and Fifth Counts of Vermont Mutual's DJA Complaint, Defendants first contend that allegations contained within this Complaint have the effect of making the duty of Vermont Mutual to defend the Defendants in the Underlying Action against the Defendants conditioned upon Vermont Mutual's duty to indemnify the Defendants for any liability under that action. That proposition, Defendants argue, is contrary to Connecticut case law governing an insurance company's duty to defend its insured in circumstances such as those presented by the case at bar. Defendants further aver that the allegations contained within the four corners of the Underlying Complaint require Plaintiff to defend Defendants under the Policy Plaintiff issued to Defendants.

This Ruling resolves the Defendants' Motion for Summary Judgment on the Third and Fifth Counts of Plaintiff's DJA.

II. Standard of ReviewA. Jurisdiction

This Court exercises subject matter jurisdiction over the present action based on diversity of citizenship under 28 U.S.C. § 1332. There is complete diversity of citizenship between Plaintiff Vermont Mutual and all Defendants and the amount in controversy exceeds $75,000.⁵ Accordingly, this Court has jurisdiction to render declaratory judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201.

B. Declaratory Judgment

Plaintiff Vermont Mutual requests that this Court render declaratory judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201, under which, in “a case of actual controversy within its jurisdiction” a federal court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” ⁶ The Declaratory Judgment Act “created an opportunity, rather than a duty, to grant a new form of relief,” and in so doing has afforded courts “unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286–88, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). An action under the Declaratory Judgment Act “must be sufficiently real and immediate” to allow for “specific and conclusive relief,” as well as be “ripe for adjudication.” Colony Ins. Co. v. Jack A. Halprin, Inc., 2012 WL 2859085, at *6 (D.Conn. Jul. 11, 2012) (internal quotation marks omitted).

Connecticut law has made clear that “[t]here is no question that a declaratory judgment action is a suitable vehicle to test the rights and liabilities under an insurance policy.” St. Paul Fire & Marine Ins. Co. v. Shernow, 22 Conn.App. 377, 380, 577 A.2d 1093 (1990). In determining whether it will exercise jurisdiction over the action in question, the district court may consider whether “practicality and wise judicial administration will predominate.” Middlesex Ins. Co. v. Mara, 699 F.Supp.2d 439, 444 (D.Conn.2010) ( quoting U.S. Underwriters Ins. Co. v. Kum Gang, Inc., 443 F.Supp.2d 348, 352–3 (E.D.N.Y.2006)).

C. Summary Judgment

A court may properly address the merits of a declaratory judgment action—the purpose of which, as discussed supra, “is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between ...