Monroe v. Discover Property & Casualty Ins. Co.
151 A.3d 848
| Conn. App. Ct. | 2016Background
- Monroe purchased a Public Entity Errors & Omissions policy from Discover (2005).
- Bellsite Development sued Monroe (2006), alleging breach of an agreement to place police communications equipment on a wireless tower; claims included breach of contract, promissory estoppel, and negligent misrepresentation.
- Discover denied coverage and declined to defend; Monroe defended the underlying action and lost at trial but won on appeal (this Court reversed and entered judgment for Monroe).
- Monroe then sued Discover for declaratory relief and breach of duty to defend; Discover moved for summary judgment, arguing a policy exclusion for construction/procurement contracts and other exclusions barred coverage.
- The trial court granted summary judgment for Discover, holding the allegations fell within the contract exclusion; Monroe appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the negligent misrepresentation claim in the underlying complaint was excluded by the policy's contract/procurement exclusion | The complaint did not necessarily establish an enforceable contract; negligent misrepresentation is a separate tort and could exist independent of any contract | The negligent misrepresentation incorporated the contract allegations and thus arose out of the alleged contract, triggering the exclusion | Reversed: because the complaint left open the possibility the tort did not arise out of a contract, the duty to defend was not precluded |
| Whether the contract exclusion applies when the tort and contract claims arise from the same facts | Even if facts overlap, a tort claim can be separate and not necessarily ‘‘arising out of’’ a contract | Overlap means exclusion applies | Held for plaintiff: overlap alone does not necessarily trigger exclusion; where possibility exists that tort arose independent of contract, duty to defend remains |
| Whether the policy’s personal profit exclusion barred coverage | No; underlying complaint did not allege Monroe obtained profit, advantage, or remuneration | Underlying allegations show Monroe received uncompensated work, thus personal profit exclusion applies | Rejected: complaint did not allege Monroe gained profit or remuneration it was not entitled to |
| Whether underlying relief sought were covered "damages" under the policy | The complaint sought compensation for expenditures—covered damages | The relief sought was restitution/compensation not within policy’s definition of damages | Rejected: the complaint sought compensatory money damages that fell within policy coverage |
Key Cases Cited
- Wentland v. American Equity Ins. Co., 267 Conn. 592 (Connecticut 2004) (insurer’s duty to defend is determined by complaint allegations; duty broader than duty to indemnify)
- R.T. Vanderbilt Co. v. Continental Casualty Co., 273 Conn. 448 (Connecticut 2005) (summary judgment standards and duty-to-defend principles)
- Moore v. Continental Casualty Co., 252 Conn. 405 (Connecticut 2000) (duty to defend depends on whether complaint alleges facts bringing claim within coverage)
- New London County Mut. Ins. Co. v. Bialobrodec, 137 Conn. App. 474 (Conn. App. 2012) (insurer prevails under exclusion only if complaint clearly and unambiguously establishes applicability)
- Bellsite Development, LLC v. Monroe, 155 Conn. App. 131 (Conn. App. 2015) (appellate disposition of underlying action treating contract and negligent misrepresentation claims as distinct)
- Nationwide Mut. Ins. Co. v. Pasiak, 161 Conn. App. 86 (Conn. App. 2015) (discussion of broad meaning of "arising out of" in negligence contexts)
- Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., 254 Conn. 387 (Connecticut 2000) (compare complaint language to policy language to determine duty to defend)
- Schwartz v. Stevenson, 37 Conn. App. 581 (Conn. App. 1995) (exclusions not applicable where complaint facts do not clearly establish exclusion)