Euchner-USA, Inc. v. Hartford Casualty Insurance
754 F.3d 136
2d Cir.2014Background
- Hartford issued Euchner CGL and an employee benefits liability endorsement covering benefit-program administration.
- Scali, a former Euchner employee, sued for sexual harassment, wrongful termination, and misclassification that allegedly deprived her 401(k) benefits.
- Hartford initially disclaimed coverage for the Scali action as employment-related; it later considered ERISA-based claims in the amended complaint and disclaimed again.
- The amended complaint added ERISA claims arguing misclassification as an independent contractor affected benefits; Hartford denied coverage citing subparts of the policy and an exclusion for wrongful conduct.
- Euchner defended and settled the Scali action; Euchner sued Hartford to determine defense/indemnity rights and §349 claims.
- District court granted Hartford summary judgment on defense to the evidence of intentional conduct; on appeal, court vacated in part and remanded for potential defense if reasonable possibility of coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend ERISA claims | Euchner | Hartford | Duty to defend if reasonable possibility of coverage |
| ERISA claims arising from plan administration | ERISA claims arise from misclassification affecting benefits | Administration scope limited | Reasonable possibility of coverage under administration interpretation |
| Exclusion for intentional conduct | ERISA claims not framed as intentional misconduct under exclusion | Exclusion could bar coverage | Not exclusively within exclusion; coverage possible |
| § 349 Deceptive Practices | Dispute involves deceptive practices in business | Private contract dispute; not consumer-oriented | Affirm dismissal of § 349 claim |
Key Cases Cited
- Auto. Ins. Co. v. Cook, 7 N.Y.3d 131 (N.Y. 2006) (duty to defend broader than indemnity; allegations trigger defense when possible coverage exists)
- Servidone Constr. Corp. v. Sec. Ins. Co. of Hartford, 64 N.Y.2d 419 (N.Y. 1985) (distinguishes duty to defend from duty to indemnify)
- Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435 (N.Y. 2002) (duty to defend arises from reasonable possibility of recovery under policy)
- Nationwide Mut. Ins. Co. v. Mortensen, 606 F.3d 22 (2d Cir. 2010) (ERISA claims analyze under common-law employee-versus-independent-contractor test)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20 (N.Y. 1995) (private contract disputes generally not within § 349)