Lancia v. State National Insurance, 134 Conn. App. 682

Lancia's law firm, Law Office of Maurizio D. Lancia, P.C., was the named insured under a professional liability policy issued by State National; First Mercury served as the claims adjuster.
In 2007, Lancia was sued in four underlying actions (Sommers, Reynoso, McClardy, Zayas) arising from alleged fraudulent real estate transactions, with State National/First Mercury refusing to defend.
Lancia sued for breach of contract on April 8, 2008, alleging the defendants failed to defend and indemnify in the four actions; defendants counterclaimed for declaratory judgment of no duty to defend.
The underlying complaints allege Lancia, as owner of Royal Financial Services, LLC (a mortgage broker), was involved in real estate loans and transactions, with fiduciary, misrepresentation, and related claims; plaintiffs argue he acted as their attorney/agent in various ways.
The policy includes an exclusion purporting to bar coverage for any claim arising out of the insured's activities as an officer/partner/etc of any entity other than the named insured or prior law firm, with narrow bar association carve-out.
The trial court granted partial summary judgment to Lancia, then the matter was fully appealed; the appellate court ultimately reversed, holding the exclusion unambiguously defeats coverage and directing judgment for the defendants.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty to defend under the policy	Lancia argues some underlying claims arise from his legal practice for the firm and thus are within coverage.	State National/First Mercury contend all underlying claims arise from Royal, a non-firm business, and are excluded.	No duty to defend; exclusion defeats coverage for all underlying actions.
Application of the exclusion to the underlying claims	Some claims might be grounded in legal services for the named insured and could escape the exclusion.	All claims arise from Lancia's activities as Royal's owner/mortgage broker, clearly within the exclusion.	Exclusion unambiguously applies to all claims; no duty to defend.
Scope of the insured versus exclusion language guidance	Policy should be construed in favor of insured when ambiguity exists; some allegations could fall outside the exclusion.	Exclusion language is clear and unambiguous; coverage is defeated.	Policy language is unambiguous; exclusion controls.

Hartford Cas. Ins. Co. v. Litchfield Mut. Fire Ins. Co., 274 Conn. 457 (2005) (duty to defend measured by allegations, even if meritless)
Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245 (2003) (exclusion construction and insured-friendly approach)
Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1 (2008) (ambiguous policy terms construed in favor of insured)
Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., 254 Conn. 387 (2000) (duty to defend based on allegations of covered occurrence)
Schwartz v. Stevenson, 37 Conn. App. 581 (1995) (insurer must defend unless exclusion clearly applies)
Brooks v. Sweeney, 299 Conn. 196 (2010) (summary judgment standard and burden allocation)