Meanachem Gurevitch v. James River Insurance Co. (2014)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (# 121)

Preliminary Statement

The plaintiff was the President of Bradley Gardens, Inc. (“Bradley Gardens”) a condominium association for a condominium complex located in Waterbury, Connecticut.   In 2007, Building 8 of the complex had an extensive fire.   Following the fire and during the efforts to rebuild Building 8, seven owners of units within Building 8 brought suit against the plaintiff alleging a variety of both statutory and common law claims.   That matter is on this court's docket and is captioned Rosado v. Bradley Gardens et al., with Dkt No. X10 UWY CV 094019259.   In this action, the plaintiff is seeking a declaratory judgment that the defendant is obligated, pursuant to the terms of a certain commercial general liability policy, to provide a defense and indemnification with respect to the claims brought in the Rosado action.   The defendant filed a motion for summary judgment on the grounds that as a matter of law, under the terms of the policy at issue, the defendant is entitled to neither a defense nor indemnification.   The plaintiff, in response, filed a limited cross motion for summary judgment seeking a determination that the defendant is obligated to provide a defense, leaving the question of indemnification to another day.   For the reasons set forth below, the defendant's motion for summary judgment is GRANTED.

Standard of Review

The required showing to prevail on a motion for summary judgment is well established.   A party seeking summary judgment has the very heavy burden of demonstrating the absence of any genuine issue of material facts which, under applicable principles of law, entitle him to judgment as a matter of law.   PB § 17–44;  Appleton v. Board of Education, 254 Conn. 205 (2000).

Discussion

Insurance policies are interpreted and construed under the general principals of contract construction.  Simses v. North American Co. for Life & Health Ins., 175 Conn. 77, 84 (1978).

The determinative question is the intent of the parties, that is, what coverage the [insured] expected to receive and what the [insurer] 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, [w]hen 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 ․ Our jurisprudence makes clear, however, that [a]lthough 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.

(Citations omitted;  internal quotation marks omitted.)  Galgano v. Metropolitan Property and Casualty Insurance Co., 267 Conn. 512, 519 (2004).   “A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ․ Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.”  Tallmadge Brothers, Inc., v. Iroquois Gas Transmissions Systems, L.P. 252 Conn. 479, 498 (2000), quoting, Pesino v. Atlantic Bank of New York, 244 Conn. 85, 91–92 (1998).

Whether an insurer has a duty to defend is purely a question of law for the court.  Misiti, LLC v. Travelers Property Casualty Company of America, 308 Conn. 146, 155–56 (2013);  Community Action for Greater Middlesex County, Inc. v. American Alliance Insurance Co., 254 Conn. 387, 398–99 (2000).   It is determined by comparing the allegations of the complaint brought against the insured with the language of the policy under which the right to a defense is asserted.  Id. at 154.   See also, Wentland v. American Equity Insurance Co., 267 Conn. 592, 599 n.7 (2004).  “The duty to defend is considerably broader than the duty to indemnify.”  DaCruz v. State Farm Fire and Casualty Co., 268 Conn. 675, 688 (2004).   See also, Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 256 (2003).  “The obligation of the insurer to defend does not depend on whether the injured party will successfully maintain a cause of action against the insured but on whether he has, in his complaint, stated facts which bring the injury within the coverage.   If the latter situation prevails, the policy requires the insurer to defend, irrespective of the insured's ultimate liability ․ It necessarily follows that the insurer's duty to defend is measured by the allegations of the complaint.”  Id., quoting, Security Insurance Co. of Hartford v. Lumbermens Mutual Casualty Co., 264 Conn. 688, 711–12 (2003).   If the allegations in the underlying complaint fall, “even possibly,” or “potentially” within the policy's coverage, then the obligation to defend is triggered.   Id., See also, Moore v. Continental Casualty Co., 252 Conn. 405, 409 (2000).

The Rosado Complaint

Here, the operative allegations of the Rosado complaint relied upon by the plaintiff as triggering the defendant's duty to defend are found at count seven which alleges negligence and count fourteen which alleges defective construction.¹

Count seven first incorporates the first eighteen paragraphs of the complaint.   Those paragraphs set forth the identities of the parties, the date and nature of the fire in Building 8, the identity of the insurance policies which covered the fire losses, the repair to neighboring buildings 1 and 7, as well as the timing of efforts to rebuild Building 8. The complaint avers that Gurevitch owed a duty of reasonable care to the plaintiff's arising from his position as President of Bradley Gardens.  (Compl.¶ 19.)   He is alleged to have breached this duty “by his negligent actions” to include:

a. failing and refusing to give notice of and hold association meetings in violation of the condominium By-laws and C.G.S. § 47–250.

b. failing and refusing to hold elections of 1/2 of the executive board of the association every year in violation of the condominium By-laws;

c. failing to prepare an operating budget for review and ratification by the unit owners, in violation of C.G.S. § 47–245(c) and failing to adopt and ratify an operating budget as provided in the By-laws of the condominium, since 2005;

d. collecting common charges from Plaintiffs but failing to maintain a capital reserve account for payment of expenses of the condominium association;

e. failing and refusing to allow plaintiffs to inspect and copy the books and records of the association in violation of C.G.S. § 47–260(a);

f. failing and refusing to proceed with repair and reconstruction of Building 8;

g. failing and refusing to account to plaintiffs for the insurance proceeds;

h. failing and refusing to allow plaintiffs or their legal representative to attend the mediation with Mr. Hawley Insurance Co., or to provide any information on the status of the mediation;

i. failing to obtain adequate insurance coverage for the condominium association for repair and replacement of the damaged property, as well as for lost rental income and management fees, in violation of C.G.S. § 47–255(a);

j. failing to rebuild Building 8 in a workmanlike manner and concealing the defects from the plaintiffs.

(Emphasis added.)  (Complaint, ¶ 20.) ²  Count fourteen is titled “Defective Construction.”   It first incorporates paragraphs 1–7 which identify the individual Rosado plaintiffs.   The complaint avers that following the receipt of the insurance proceeds paid as a result of the fire, Gurevitch undertook the reconstruction and rehabilitation of Building 8. He is alleged to have undertaken these efforts in a negligent and careless manner, paraphrased as follows:

a. Gurevitch did not have expertise in reconstruction of the fire destroyed units or the fire damaged units;

b. Gurevitch was not licensed as a contractor to perform the work;

c. The work performed by Gurevitch was performed negligently and carelessly insofar as he:

1. failed to install and/or supervise the installation of the electrical system within the units;

2. failed to install and/or properly supervise the installation of the plumbing in many of the units, thus causing substantial water and/or sewage leaks in Building 8, Units 7A, 9A, and 12A;

3. failed to install and/or properly supervise the installation of sheet rock, in that, after water leaks in the new portion of Building 8 were discovered, the wet sheet rock was not removed, but rather was covered over with new sheetrock, causing substantial mold issues in many of the units.

The Rosado plaintiffs allege, as a result, damages to the personal property within the units as well as loss of use of some of the units.

The question raised in the motions for summary judgment is whether these allegations trigger the defendant's duty to defend under the commercial general liability policy at issue.³

The Insurance Contract

From May 31, 2004 through May 31, 2007, the defendant issued a series of commercial general liability policies to Bradley Gardens, Inc., each with a one year period of coverage.   As the fire occurred in February of 2007 and the efforts at reconstruction shortly thereafter, both parties cite to the provisions of the policy in place from May 31, 2006 through May 31, 2007 with respect to the arguments advanced herein.⁴  This policy is Policy No. 00004515–2.   It is issued by the defendant with named insureds of Bradley Gardens Inc. and Garden of Waterbury LLC. Plaintiff, as both President of Bradley Gardens, Inc. and as a member and the manager of Garden of Waterbury LLC, is an “insured” under the policy subject to a limitation which does not appear to have application here.

The policy provisions which define the initial scope of coverage are contained in the Commercial General Liability Coverage Form, CG0001–100l.   The policy states:

1. Insuring Agreement

a.  We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies.   We will have the right and duty to defend the insured against any “suit” seeking those damages.   However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.   We may at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result.⁵

b. This insurance applies to ․”property damage” only if:

(1) the ․”property damage” is caused by an “occurrence” that takes place in the “coverage territory”;

The policy contains the following relevant definitions:

“Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.6

“Property Damage” means:

a.  Physical injury to tangible property, including all resulting loss of use of that property.   All such loss of use shall be deemed to occur at the time of the physical injury that caused it;  ․

The defendant's first argument is that the Rosado complaint does not seek damages sustained as the result of “an occurrence.”   The defendant argues that the various breaches of both statutory, fiduciary and contractual obligations alleged by the Rosado plaintiffs are not “an occurrence” under the policy.   In large measure, the plaintiff does not disagree and, as indicated, relies only upon certain of the allegations of counts seven and the allegations in count fourteen, the negligence and defective construction counts.   With respect to count seven, he relies upon the allegations that Gurevitch failed and or refused to rebuild Building 8, and/or that the work he did perform was not workmanlike, and he concealed the construction defects.   He relies on the entirety of count fourteen.

With respect to the “occurrence” question, the plaintiff argues:  “Obviously, the occurrence, which led to the property damage alleged in Count Seven of the operative complaint (the destruction of Building 8) was the Feb. 11, 2007 fire and the occurrence, which led to the property damage alleged in Count Fourteen of the operative complaint, was the attempt to repair the property damage to Building 8.” The plaintiff provides no analysis to support this proposition but summarily concludes that the definition of “occurrence” “surely encompasses both the February 11, 2007 fire as well as the subsequent repair efforts.”   And although plaintiff criticizes the defendant for going “as far as to argue that unless the Plaintiff actually caused the February 11, 2007 fire, there would not be a causal connection to the alleged property damage,” he offers no analysis on this argument other than to dismiss the argument as “not set forth in the relevant language of the policy.”   With respect to his claim that the fire was the “occurrence” this court disagrees.

Under the plain and unambiguous terms of the policy, the defendant is obligated to defend any suit seeking damages for “property damage” for which the insured may be liable “caused by ‘an occurrence.’  “ The Rosado plaintiffs do not seek to hold the plaintiff liable for any property damage caused by the fire.   His allegedly negligent conduct occurs after the fire with respect to the reconstruction of Building 8. The “property damage” alleged, if any, is not due to the fire but due to the plaintiff's alleged negligence following the fire.   Thus, the fire is not a property damage producing “occurrence” for which the plaintiff might be held liable under the allegations of the Rosado complaint.

Alternatively, plaintiff argues that the “occurrence” which caused the “property damage” was the negligent and defective reconstruction of Building 8, as alluded to in count seven and as detailed in count fourteen.

“The word ‘accident’ has been defined as ‘[a]n unintended and unforeseen injurious occurrence’ ․ ‘an occurrence for which no one is responsible ’ ․ and ‘an event of unfortunate character that takes place without one ‘is foresight or expectation.’  “ (Citations omitted;  emphasis in original.)   Allstate Ins. Co. v. Barron, supra, 269 Conn. 394, 408 n.10 (2004).  “[T]he term ‘accident’ is to be construed in its ordinary meaning of an ‘unexpected happening.’  “ Capstone Building Corp. v. American Motorists Insurance Co., supra., 308 Conn. 774, quoting, Buell Industries, Inc. v. Greater New York Mutual Insurance Co., 295 Conn. 527, 541 (2002).  “[T]he definition of occurrence is unambiguous and refers to something that happens unexpectedly without design.”  (Internal quotation marks omitted.)  Id. at 775.

Faulty or negligent workmanship can be “an occurrence” under a CGL policy.   With respect to a CGL policy whose provisions were identical in all material respects to those present here, the Supreme Court held:  “A deliberate act, performed negligently, is an accident if the effect is not the intended or expected result;  that is, the result would have been different had the deliberate act been performed correctly ․ We have held that an accident is an event that is unintended from the perspective of the insured ․ In the context of a homeowner's insurance policy, the motive of the acting party is determinative of whether an act is intentional or accidental ․ Accordingly, because negligent work is unintentional from the point of view of the insured, we find that it may constitute the bases of an “accident” or an “occurrence” under the plain terms of the commercial general liability policy.”  (Internal quotations and citations omitted.)  Id. at 775–76.

Defendant argues however that claims for property damage caused by the work performed, alluded to in count seven and detailed in count fourteen, is excluded under the policy.⁷

The commercial general liability policy is a standard form developed by the Insurance Services Office, Inc., and has been used throughout the United States since 1940 ․ It begins with a broad grant of coverage in the “insuring agreement” followed by a series of “exclusions” (and exceptions to the exclusions) that define the contours of coverage.

Capstone Building Corp., v. American Motorists Insurance Co., supra, at 773–74.  “Commercial general liability policies generally do not cover contract claims arising out of the insured's defective work or product, but this is by operation of the policy's business risk exclusions.”  (Internal quotations and citation omitted.)  Id. at 788.   The burden of proving that an exclusion applies is on the insurer.   Id. n.24.

Here, the policy provides that “we will not have a duty to defend the insured against any ‘suit’ seeking damages for ‘property damage’ to which this insurance does not apply.”   In this vein, the policy contains a number of exclusions from coverage.   The defendant relies principally on the exclusion located at Section 2j, which provides:

2.  Exclusions

This insurance does not apply to:  ․

j. Damage to Property

‘Property damage’ to:

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations;  or

(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

“Your work” is defined as “(1) Work or operations performed by you or on your behalf;  and (2) Materials, parts, or equipment furnished in connection with such work or operations,” to include:  “(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of “your work,” and (2) The providing of or failure to provide warnings or instructions.”

The defendant avers that the “property damage,” if any, from the faulty and unworkmanlike repair and reconstruction of Building 8, was damage to “that particular part of real property on which [Gurevitch] or any contractors or subcontractors working directly or indirectly on [Gurevitch's] behalf” performed operations and that such damage arises out of those operations.   The defendant further argues that the property damage, if any, alleged in the Rosado action, was to “that particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.”   The plaintiff does not address this argument other than to say that any policy exclusions relied upon by the defendant, do not apply.   He provides no analysis.

A review of the Rosado complaint reveals that the Rosado plaintiffs are indeed, seeking damages for conduct which is specifically excluded from coverage under both Exclusion 2j(5) and Exclusion 2j(6).   Thus, the defendant has no duty to defend those allegations.

In sum, the defendant has no duty to defend the plaintiff against the claims brought against him in the Rosado action.   Because the duty to defend is significantly broader than the duty to indemnify, “where there is no duty to defend, there is no duty to indemnify” (Internal quotations omitted.)   DaCruz v. State Farm Fire and Casualty Co., supra, 268 Conn. at 609.   See also, QSP, Inc. v. Aetna Casualty & Surety Co., 256 Conn. 343, 382, 773 A.2d 906 (2001).   The defendant's motion for summary judgment is granted.

SO ORDERED.

K. Dooley, J.

FOOTNOTES

FN1. The complaint includes multiple counts against multiple defendants.   The defendant addressed each but insofar as the plaintiff relies only upon counts seven and fourteen, the duty to defend as to all other counts is not discussed herein.   If even a single count triggers a duty to defend, the insurer must defend the entirety of the suit.   See, Capstone Building Corp v. American Motorists Insurance Co., 308 Conn. at 811–16..  FN1. The complaint includes multiple counts against multiple defendants.   The defendant addressed each but insofar as the plaintiff relies only upon counts seven and fourteen, the duty to defend as to all other counts is not discussed herein.   If even a single count triggers a duty to defend, the insurer must defend the entirety of the suit.   See, Capstone Building Corp v. American Motorists Insurance Co., 308 Conn. at 811–16.

FN2. The plaintiff relies upon paragraphs (f) and (j)..  FN2. The plaintiff relies upon paragraphs (f) and (j).

FN3. The defendant argues that the allegations of original complaint filed in 2009 should govern the court's inquiry as this was the only complaint tendered to the defendant as required under the contract.   Count fourteen, the defective construction count did not appear in that complaint.   The court does not decide this issue as it is not necessary to resolution of the motion..  FN3. The defendant argues that the allegations of original complaint filed in 2009 should govern the court's inquiry as this was the only complaint tendered to the defendant as required under the contract.   Count fourteen, the defective construction count did not appear in that complaint.   The court does not decide this issue as it is not necessary to resolution of the motion.

FN4. Whether one of the earlier policies might be implicated by the allegations contained in the Rosado action, is not determined herein.   There does not appear to be any dispute that there are no substantive differences in the various policies with respect to the provisions which determine the outcome of this motion..  FN4. Whether one of the earlier policies might be implicated by the allegations contained in the Rosado action, is not determined herein.   There does not appear to be any dispute that there are no substantive differences in the various policies with respect to the provisions which determine the outcome of this motion.

FN5. There is no question that the Rosado plaintiffs do not seek damages for “bodily injury.”.  FN5. There is no question that the Rosado plaintiffs do not seek damages for “bodily injury.”

FN6. There is no claim that the “occurrence” here involved the repeated exposure clause of the policy..  FN6. There is no claim that the “occurrence” here involved the repeated exposure clause of the policy.

FN7. The defendants also argue that the Rosado plaintiffs do not seek damages for “property damage,” as is also required under the policy.   The court does not reach this issue..  FN7. The defendants also argue that the Rosado plaintiffs do not seek damages for “property damage,” as is also required under the policy.   The court does not reach this issue.

Dooley, Kari A., J.