In Mervin Harris v. Hermitage Insurance Company, 2009 Conn. Super. LEXIS 2723 (Conn. Super. Ct., J.D. of Hartford at Hartford, October 13, 2009), the Connecticut Superior Court (Aurigemma, J.) held that the defendant-insurer did not owe a duty to defend or indemnify its insured, D&S Entertainment d/b/a The Bar with No Name (“D&S”), under a commercial general liability policy.

The Court found the following facts to be undisputed: On November 27, 2004, Mervin Harris, was a patron at The Bar with No Name in Hartford, Connecticut.  At some point during that evening, Harris was assaulted by two employees of the establishment and consequently sustained injuries.

As a result, Harris instituted a lawsuit against D&S seeking compensation for the injuries he sustained.  In that action, Harris alleged that he was “physically attacked and assaulted by John Doe 1 and John Doe 2.”  He also alleged that the injuries he sustained were the result of the negligence and carelessness of D&S in that it failed to adequately supervise and train its employees, failed to implement policies and procedures and failed to exercise reasonable care to protect its customers from the violent propensities of its employees. The second count of the underlying complaint alleged that the plaintiff was injured as a result of the reckless or wanton misconduct of D&S for failing to adequately supervise and train its employees, failing to implement policies and procedures and failing to exercise reasonable care to protect its customers from the violent propensities of its employees. In the underlying complaint, the plaintiff sought compensatory damages and punitive damages, including attorney’s fees.

D&S ultimately assigned its rights, claims and interests to a cause of action against Hermitage Insurance Company (“Hermitage”) arising out of the November 27, 2004 incident to the plaintiff.  At that same time, D&S also entered into a stipulated judgment with the plaintiff in which D&S admitted liability for the November 27, 2004 incident and agreed that the court would determine the fair, just and reasonable damages.  On December 14, 2007, the court entered a stipulated judgment against D&S in the amount of $164,087.40.

Harris then brought this lawsuit pursuant to the Connecticut Direct Action Statute, Conn. Gen. Stat. §38a-321, in an attempt to recover the amount of the stipulated judgment from Hermitage.  It was Hermitage that issued the commercial general liability policy that covered D&S at the time of the November 27, 2004 incident.  However, after an investigation of the November 27, 2004 incident, Hermitage previously disclaimed coverage under the policy.

Thus, in his complaint, Harris alleged that Hermitage was liable for breach of contract, negligence, breach of the covenant of good faith and fair dealing and violations of the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act.  Each of these counts stemmed from allegations that Hermitage breached its duty to defend and indemnify D&S in the underlying action.

In response to these allegations, Hermitage filed a motion for summary judgment.  After briefing and argument, Judge Aurigemma granted summary judgment in favor of Hermitage on all grounds upon which it moved.  Overall, the Court rejected Harris’ claims that the underlying complaint sounded in negligence and also rejected Harris’ claims that Hermitage should be estopped from asserting that there was no occurrence since it did not originally disclaim coverage on that basis.

In the first instance, the Court determined that the November 27, 2004 incident was not an “occurrence” under the Hermitage policy.  The policy defined an “occurrence” as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.  Under Connecticut law, an accident is an unintended occurrence.  Citing the Connecticut Supreme Court’s determination that the last event in the causal chain is what should be examined in order to determine whether an “occurrence” has been alleged, the Court focused only on the alleged assault to determine if there was coverage in this case, as the alleged assault was the actual event that caused the injury.   Despite the plaintiff’s claims, the Court held that the underlying negligence claims against D&S were irrelevant.  The Court reached this determination as there were no allegations that the assault occurred accidentally or unintentionally.  Accordingly, the Court held that all the injuries caused by the November 27, 2004 incident were intentional.  As no accident took place, there was no “occurrence” as defined by the insurance policy and no coverage was available for the injuries sustained in the alleged assault.

The Court reached this conclusion despite the plaintiff’s claims that Hermitage should be estopped from asserting that there was no occurrence because it waived its right to do so.  The Court held that not only does the law of Connecticut prevent the extensions of coverage by waiver and estoppel, but Hermitage expressly “reserve[d] the right to rely in the future on any policy provision or upon applicable law, regardless of whether or not that policy provision or law [was] addressed in the [denial] letter.”  Accordingly, neither waiver nor estoppel could be relied upon by the plaintiff to defeat this basis for Hermitage’s motion for summary judgment.

In addition to ruling that the November 27, 2004 incident did not constitute an occurrence under the Hermitage policy, the Court went on to hold that even if the incident fell within coverage in the first instance, the policy’s Assault and/or Battery Exclusion precluded coverage for the incident.  Specifically, the exclusion provided that an assault and/or battery “shall not be deemed an accident” and excluded coverage for any bodily injury arising or alleged to arise out of an assault and/or battery caused by or at the direction of: the insured, his agent or employee; any patron of the insured; or any other person.  The exclusion also stated that the insurer was not obligated to pay or defend any claim alleging an assault and/or battery no matter how it was alleged to have occurred.  Based upon this language and the facts of the case, the Court determined that any and all liability asserted against D&S arose out of an assault and/or battery and, therefore, was excluded from coverage under the policy by virtue of the exclusion.  In coming to this conclusion, the Court highlighted the fact that the phrase “arising out of” is construed broadly under Connecticut law, and attempting to disguise claims arising out of an assault and/or battery as claims of negligence will not defeat such an assault and/or battery exclusion.  The Court held that because the November 27, 2004 incident arose out of the intentional assault by the two D&S employees, the exclusion applied and no coverage was available for the injuries sustained.

Likewise, the Court held that coverage was barred for any and all claims arising out of the November 27, 2004 incident as a result of the Intentional Acts Exclusion, which was contained within the policy.  That exclusion provided that the policy did not cover “‘Bodily Injury’ or ‘Property Damage’ expected or intended from the standpoint of the insured.'”  The Court noted that the appellate courts of Connecticut have held that in applying the plain meaning of the word “intent,” assaults are intentional within the meaning of policy exclusions similar to the one at issue in this case.  As the plaintiff did not argue that the assault by the employees was anything other than intentional, there was no coverage for the plaintiff’s claims.

Consequently, summary judgment was entered in favor of Hermitage with respect to the plaintiff’s breach of contract and negligence claims.  In so holding, the Court emphasized that Hermitage had a reasonable basis for refusing to defend and indemnify D&S under the policy in that the policy either did not provide coverage to the insured and/or excluded coverage to the insured.  Thus, Hermitage’s failure to defend or indemnify D&S could not constitute a breach of the covenant of good faith and fair dealing nor could it constitute an unfair, oppressive, unethical or unscrupulous practice.  Summary judgment was, therefore, entered in favor of Hermitage as to plaintiff’s claims that it breached the covenant of good faith and fair dealing and violated the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act.

Hermitage Insurance Company was represented by Halloran & Sage’s Insurance Coverage Group.