LLC v. The Travelers Indemnity Co. and Underwriters, Inc. (2010)

MEMORANDUM OF DECISION RE TRAVELERS' MOTION FOR SUMMARY JUDGMENT

This case arises from the occurrence of a “flash flood” in Stamford, Connecticut on October 11, 2007 at and near the business location of the plaintiff Razor's Auto Body & Service, LLC (Razor's) on East Main Street apparently the result of heavy rainfall coupled with backed-up sewers and drains.   The flood caused serious damage to approximately forty automobiles and seven motorcycles owned by Razor's and approximately fourteen vehicles owned by Razor's customers.   According to Razor's owner, Charles Razor, by late afternoon or early evening the water on the business premises and in the associated buildings was over waist high, and caused property damage of about $118,000.

Razor's had two insurance policies written by the defendant Travelers and obtained through a second defendant, Underwriters, Inc. for the period July 2, 2007 to July 2, 2008.   The first policy was Commercial Business Automobile Insurance Policy, BA-4515C452-07-SEL.   The second policy was Business Body Repair and Collision Shops Insurance Policy, I-680-645D6580-CPF-07.   Travelers has denied Razor's claims on both policies, and Razor's has sued Travelers claiming breach of contract, breach of the covenant of good faith and fair dealing, and violations of the Connecticut Unfair Trade Practices Act, General Statutes §§ 42-110a et seq.  (CUTPA).

The defendant Travelers has moved for summary judgment dismissing all the counts against it.¹

II. Scope of Review-Summary Judgment

Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.  “In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  Appleton v. Board of Education, 254 Conn. 205, 209 (2000).   Summary judgment “is appropriate only if a fair and reasonable person could conclude only one way.”  Miller v. United Technologies Corp., 233 Conn. 732, 751 (1985).  “The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to judgment as a matter of law.”  Appleton v. Board of Education, supra, 254 Conn. 209.  “A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Internal quotation marks omitted.)   United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379 (1969).   The trial court, in the context of summary judgment motion, may not decide issues of material fact, but only determine whether such genuine issues exist.  Nolan v. Borkowski, 206 Conn. 495, 500 (1988).

“Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact [question] ․ a party opposing summary judgment must substantiate its adverse claim by showing that there is genuine issue of material fact together with the evidence disclosing the existence of such an issue.   It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.”  Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554 (1998).  “[T]he party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.”  Appleton v. Board of Education, supra, 254 Conn. 209.

III. Discussion

The interpretation of an insurance contract is based on the intent of the parties, that is the coverage the insured expected to receive coupled with the coverage that the insurer expected to provide, as expressed by the language of the entire policy.  Wentland v. American Equity Insurance, 267 Conn. 592, 600-01 (2004).   The language used in the policy is to be given its natural and ordinary meaning, and any ambiguity is to be resolved in favor of the insured.  Id. 600.   Ordinarily, the question of intent is a question of fact;  however, where there is no ambiguity the interpretation is a matter of law.  Nationwide Mutual Insurance Co. v. Allen, 83 Conn.App. 526, 537 (2004).   A contract is ambiguous if the intent of the parties is not clear and certain from the language used.  Id. [quoting Detels v. Detels, 79 Conn.App. 467, 472 (2003) ].   The fact that parties advance different interpretations does not necessarily mean the language is ambiguous.  United Illuminating Co. v. Wisvect-Connecticut, LLC, 259 Conn. 665, 670 (2002).   See generally Connecticut Medical Insurance Co. v. Kulakowski, 286 Conn. 1, 5-6 (2008).

In moving for summary judgment, Travelers contends there is no genuine issue of material fact that the Commercial Business Auto Insurance Policy by its very terms does not provide coverage for the flood damage claim.   The heart of Travelers' argument is that on the Coverage Part Declaration page of the Policy BA-4615C452-07-SEL under a heading “Physical Damage Coverage” there are no premiums payable indicated.   Further, Travelers points out on the following page, in capital letters, it is stated “THE ABSENCE OF ANY ENTRY IN PREMIUM SPACES FOR A COVERAGE SHALL MEAN THAT INSURANCE IS NOT AFFORDED FOR THE DESIGNATED AUTO.” Affidavit of Lorelei Foster, dated August 25, 2010, Exhibit A [The so-called “Coverage Declarations Page” is the eleventh page of Exhibit A;  it is numbered “page 1 of 1” and is entitled “Business Auto Coverage Part Declarations” and begins with “Item Four.” The capitalized quote appears on the twelfth page of Exhibit A;  everything on this untitled and unnumbered page is in capital letters].

Based on the foregoing, Travelers asserts that the Business Auto Policy provided only liability coverage and not physical damage insurance.   Although not precisely stated by Travelers liability coverage is admitted apparently because on the tenth page of the policy, an unnumbered page and not obviously part of Business Auto Part Declarations, certain premiums are set forth for “liability” and “med pay.”   According to Travelers, liability coverage means Travelers will “pay all sums an insured becomes liable to pay as damage caused by an accident.   This language appears in Section II of the Business Auto Coverage Form (CA 00 01 10 01) at pages 2 through 5 of 11 pages.

Opposing summary judgment, Razor's contends that the Policy BA 4515C452-07-SEL also contains property damage coverage, and points to Section III of the Business Auto Coverage Form (CA 00 01 10 01) at page 5 through 7 of 11 pages entitled “Physical Damage Coverage.”   This provision provides:

1.  We will pay for “loss” to a covered “auto” or its equipment under:

a.  Comprehensive Coverage

From any cause except:

(1) The covered “auto” collision with another object;  or

(2) The covered “autos” overturn.

b. Specified Causes Of Loss coverage Caused by:

(1) Fire, lighting or explosion;

(2) Theft;

(3) Windstorm, hail or earthquake;

(4)Flood;  ․

Razor's also submits an affidavit of Thomas McKiernan, dated September 27, 2010.   Exhibit 2, to Razor's Opposition to Travelers Motion for Summary Judgment.   McKiernan is the president of a property and casualty insurance agency as well as a former claims adjuster, underwriter, and executive with Kemper Group Insurance.   In his affidavit McKiernan states:

4.  I have been retained by the Plaintiff to testify as an expert witness in the above entitled matter which stems from a flood claim on October 11, 2007.

5. I have been deposed on three separate occasions in this matter and have reviewed voluminous discovery documents, deposition transcripts, insurance policies, and Travelers' policies of insurance for the Plaintiff, Razor's Auto Body & Service, Ind. (Razor's).

7.  Travelers' wrote and produced Commercial Automobile Insurance Policy Number BA-4515C452-07-SEL.  (“Commercial Policy ”), for the period of July 7, 2007, 2006(sic)to July 2, 2008, which Commercial Policy contains written contractual terms including Physical Damage Coverage, Comprehensive Coverage for Razor's vehicles' lost due to a flood on October 11, 2007 ․

8.  The Commercial Policy Endorsement provides that Physical Damage Coverage is limited to the actual cash value of the vehicle as of the time of loss.

9. The Commercial Policy does not specially exclude Physical Damage coverage in an Endorsement nor on the Declarations page.

10. By the Commercial Policy's own terms, the Physical Damage provision is controlling which provision is an apparent conflict with the Declaration pages.

McKiernan's statement that the physical damage coverage is controlling certainly puts a major fact question at issue in this case, and his interpretation of the Travelers policy is squarely at variance with Travelers' position.   At the very least, McKiernan controverts Travelers' argument that its policy is unambiguous.   While the excerpts of McKiernan's deposition transcripts do not provide as much support for Razor's position as is contended in Razor's opposition, the affidavit provides grounds for denying summary judgment.

In addition to the effect of McKiernan's affidavit, this court finds the policy as a whole to be ambiguous with the significant potential to be confusing.   The melange of numbered and unnumbered pages, the lack of clarity as to what is a declarations page and what is not, the inconsistency of page headings;  the inclusion of the capitalized sentence upon which Travelers relies within an entire page of capitalized phrases and clauses, and on a page not readily identifiable as part of the declarations, and finally the inclusion of a clear property damage coverage provision without any disclaimer whatsoever, together and separately, are ambiguous and confusing.

IV. Conclusion

Because there is a material fact at issue, and because the policy language and statute is ambiguous and confusing, the court cannot find as a matter of law that the policy does not insure Razor's property damage.   The motion for summary judgment is denied.

TAGGART D. ADAMS

SUPERIOR COURT JUDGE

FOOTNOTES

FN1. Defendant Underwriters, Inc. has also moved for summary judgment.   That motion is the subject of a separate memorandum of decision issued today..  FN1. Defendant Underwriters, Inc. has also moved for summary judgment.   That motion is the subject of a separate memorandum of decision issued today.

Adams, Taggart D., J.