Yale University v. Cigna Ins. Co.

Decision Date16 July 2002
Docket NumberNo. Civ.A. 3:97 CV 2341(SRU).,Civ.A. 3:97 CV 2341(SRU).
Citation224 F.Supp.2d 402
CourtU.S. District Court — District of Connecticut

William J. Doyle, Wiggin & Dana, Steven Berglass, Sloan W. Farrell, John W. Sullivan, Seeley & Berglass, New Haven, CT, for Plaintiff.

Philip J. O'Connor, Gordon, Muir & Foley, Hartford, CT, Paul A. Leodori, Brian Fox, Siegal & Napierkowski, Cherry Hill, NJ, John W. Lemega, Halloran & Sage, Hartford, CT, William Gerald McElroy, Jr., Erin Morrae Magley, Jonathan H. Koenig, Zelle, Hofman, Voelbel, Mason & Gette LLP, Waltham, MA, Sherri N. Robinson, Lustig & Brown, New York City, James J. Duggan, Stephanie S. Gelber, Lustig & Brown, Buffalo, NY, Darren P. Renner, Lustig & Brown, Stamford, CT, Brian W. Smith, Richard J. Buturla, Thomas Galvin Cotter, Warren L. Holcomb, Berchem, Moses & Devlin, P.C., Milford, CT, Frank H. Santoro, Danaher, Tedford, Lagnese & Neal, Hartford, CT, Kathleen F. Munroe, Litchfield Cavo, Avon, CT, Patrick J. Dwyer, Mark D. Speed, Mario Castellitto, Polstein, Ferrara, Dwyer & Speed, New York City, for Defendants.


UNDERHILL, District Judge.

Yale University ("Yale") seeks a declaration that it is entitled to insurance coverage under certain third-party liability and first-party property insurance policies issued by the defendants for expenditures Yale incurred to address the presence of lead and asbestos in buildings it owns. Several of the defendant insurers (collectively the "Insurers") have moved for summary judgment raising various policy-based defenses to coverage.1 Yale has vigorously opposed the Insurers' motions.

After hearing oral argument and considering the parties' submissions, the court concludes that the Insurers are entitled to summary judgment on the third-party liability policies because Yale has failed to come forward with any evidence that the expenses for which it seeks coverage were incurred because of third-party property damage as required by the policies. The court further concludes that the Insurers are entitled to partial summary judgment on the first-party property policies. Specifically, the Insurers are entitled to summary judgment on Yale's claims for coverage under the all risk policies for property loss or damage in the form of asbestos contamination because such property loss or damage is excluded from coverage by the all risk policies' "Contaminant or Pollutant" exclusions. The Insurers are also entitled to summary judgment on Yale's claims for coverage under the all risk policies for lead-paint contamination, except to the extent that Yale seeks coverage for costs it incurred to remediate non-voluntary lead-based paint remediation. Finally, the Insurers are entitled to summary judgment on Yale's claims for coverage under the specified peril policies because Yale has failed to come forward with any evidence of the existence of applicable coverage.


Under Rule 56(c) of the Federal Rules of Civil Procedure, if there is "no genuine issue as to any material fact ... the moving party is entitled to a judgment as a matter of law ... where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), on remand, 807 F.2d 44 (3d Cir.1986), cert. denied, 481 U.S. 1029, 107 S.Ct. 1955, 95 L.Ed.2d 527 (1987). The burden to demonstrate that no genuine issue of material fact exists falls solely on the moving party Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317 (2d Cir.1975). In addition, the trial court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Eastway Construction Corp. v. New York, 762 F.2d 243, 249 (2d Cir.1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226. (1987).

"As to materiality, the substantive law will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. The parties agree that Connecticut substantive law governs the construction and application of the insurance policies at issue in this case.

In Heyman Assocs. No. 1 v. Insurance Co. of the State of Pa., 231 Conn. 756, 653 A.2d 122 (1995), the Connecticut Supreme Court summarized the status of the pertinent Connecticut insurance law as follows:

Under [Connecticut] law, the terms of an insurance policy are to be construed according to the general rules of contract construction. The determinative question is the intent of the parties, that is, what coverage the ... plaintiff expected to receive and what the defendant was to provide, as disclosed by the provisions of the policy. If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning. However, when the words of an insurance contract are, without violence, susceptible of two equally responsible interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted. This rule of construction favorable to the insured extends to exclusion clauses.

Our jurisprudence makes clear, however, that although ambiguities are to be construed against the insurer, when the language is plain, no such construction is to be applied. Indeed, courts cannot indulge in a forced construction ignoring provisions or so distorting them as to accord a meaning other than that evidently intended by the parties.

Id. at 770-71, 653 A.2d 122 (citations and internal quotations and brackets omitted). "Interpretation of an insurance policy like the interpretation of other written contracts involves a determination of the intent of the parties as expressed by the language of the policy.... Unlike certain other contracts, however, where absent statutory warranty or definitive contract language the intent of the parties and thus the meaning of the contract is a factual question subject to limited appellate review ... construction of a contract of insurance presents a question of law...." Aetna Life & Casualty Co. v. Bulaong, 218 Conn. 51, 58, 588 A.2d 138 (1991).


The Insurers issued several third-party liability policies to Yale. Those policies provide, in pertinent part, that the Insurers will pay "on behalf of the insured all sums which the insured shall become legally obliged to pay as damages because of ... property damage to which this insurance applies, caused by an occurrence."3 Property damage is defined by the policies as "(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period." The insurance does not apply, however, to "property damage to: (1) property owned or occupied by or rented to the insured; (2) property used by the insured; or (3) property in the care custody or control of the insured or as to which the insured is for any purpose exercising physical control...." (The "Owned-Property Exclusion"). In short, the policies provide coverage for sums that Yale becomes legally obligated to pay because of damage to third-party property.4

The Insurers argue that, applying the unambiguous language of the policies to the undisputed facts of this case, Yale can not recover under the liability policies because Yale has not come forward with evidence of legal damages it has incurred because of third-party property damage. Specifically, the Insurers argue that Yale removed and cleaned up the asbestos and lead in its buildings in anticipation of potential future harm, not because of any actual third-party property damage. The Insurers argue that the sums expended by Yale are business costs and prophylactic measures, and are therefore simply not "damages" incurred by Yale because of actual third-party property damage. Finally, the Insurers argue that many of the costs for which Yale seeks coverage were incurred by Yale as part of campus-wide renovation and restoration projects, not in response to the governmental directives aimed at Yale.

In response, Yale argues that it is not seeking costs related to renovation projects, but rather costs expended to remove lead and asbestos at the direction of federal, state and local governments. Yale argues that it reasonably interpreted these governmental directives, which were addressed to specific pieces of property owned by Yale, to require Yale to undergo campus-wide removal efforts. At best, Yale argues, the reasonableness of its interpretation of the third-party directives it received presents a disputed issue of material fact precluding summary judgment.

Yale's argument, however, misses the point. The mere existence of third-party directives is not enough to demonstrate a material issue of fact concerning coverage under the policies' "property damage" provisions. To be sure, Yale's litany of third-party directives is directly relevant to the important issue of whether the clean-up costs constitute sums that Yale was "legally obligated to pay" "as damages." See, e.g., Avondale Indus. Inc. v. Travelers, 887 F.2d 1200 (2d Cir.1989) (applying N.Y. law); Gerrish Corp. v. Universal Underwriters Ins., 947 F.2d 1023 (2d Cir.1991) (applying VT law); REO Inc. v. Travelers, No. 950372522S, 1998 WL 285836 (Conn.Super. May 20, 1998); Linemaster Switch Corp. v. Aetna Life & Cas. Corp., No. CV91-0396432S 1995 WL 462270 (Conn.Super. July 25, 1995)....

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