Double or treble damages imposed pursuant to Connecticut General Statutes § 14-295 are not insurable because it would be against public policy to insure such damages which are imposed as a penalty because of a public wrong.  That is what the Connecticut Supreme Court held eighty years ago in Tedesco v. Maryland Casualty Co., 127 Conn. 533 (1927).  That has to be the law then, right?  Not according to Senior United States District Judge Warren W. Eginton.

In Farm Family Casualty Insurance Company v. Scarlett L. Burke, et al, 2007 WL 2904213 (D. Conn. Oct. 1, 2007), Farm Family brought a declaratory judgment action seeking, among other things, a ruling that its policy did not afford coverage to its insured, Scarlett Burke, in the event that she were found liable for double or treble damages pursuant to Connecticut General Statutes § 14-295.  In support of its request for a declaratory ruling, Farm Family relied upon the punitive damage exclusion contained in its policy and, in addition, it relied upon the Connecticut Supreme Court's holding in Tedesco.  The punitive damage exclusion in the Farm Family policy specifically barred coverage for "punitive or exemplary damages."  However, the policy did not define "punitive or exemplary damages" which, under Connecticut law, are damages that are intended to compensate a plaintiff for his costs of litigation.  In Judge Eginton's view, because statutory double or treble damages, such as those awarded pursuant to Connecticut General Statutes § 14-295, were not included within the definition of "punitive or exemplary damages," the policy exclusion in and of itself did not operate to bar coverage for such damages.  Judge Eginton then proceeded to hold, based upon the Connecticut Appellate Court's decision in Caufield v. Amica Mutual Insurance Co., 31 Conn. App. 781, cert. denied, 227 Conn. 913 (1993), an uninsured motorist case, that there were no policy considerations "militat[ing] against the assessment of statutory double or treble damages against [Farm Family]."  As such, the judge denied Farm Family's request for a declaration that its policy did not afford coverage for statutory double or treble damages.   

In our opinion, Judge Eginton overlooked the holding of the Connecticut Supreme Court in Tedesco.  Indeed, the court's decision does not cite to the Tedesco case.  The court's ruling currently is the subject of an unopposed motion for reconsideration, and that motion requests that Judge Eginton address the statutory double or treble damages issue in the context of the holding in Tedesco.  We assume that once Judge Eginton focuses upon Tedesco, he will grant the motion for reconsideration and reverse his decision.  There is a lesson to be learned from all of this, however.  Specifically, the public policy considerations discussed in Tedesco aside, if carriers wish to unambiguously exclude coverage for "punitive damages," they should be certain that they include, within the definition of punitive damages, statutory double or treble damages as well as punitive or exemplary damages.