Opinion
No. CV X05 CV 03 0196619 S
February 2, 2005
MEMORANDUM OF DECISION REGARDING MOTIONS FOR SUMMARY JUDGMIENT
The plaintiffs, Times Fiber Communications and Amphenol, (collectively referred to as "plaintiffs" or "Times Fiber"), and defendants, Travelers Property Casualty Company of America (f/k/a Travelers Indemnity Company of Illinois), Travelers Indemnity Company of Connecticut, Travelers Indemnity Company, Travelers Indemnity Company of America, Charter Oak Fire Insurance Company, and Phoenix Insurance Company (collectively "Travelers" or "Defendants"), have filed cross motions for summary judgment in this action.
FACTS AND BACKGROUND
The plaintiffs have requested defense and coverage from Travelers in connection with two actions commenced against Times Fiber by one of its customers, Southwestern Bell Video Services, Inc. ("SBVS"). On or about April 5, 2002, SBVS filed an action entitled Southwestern Bell Video Services, Inc. v. Times Fiber Communications, Inc. in the Texas District Court, Dallas County, No. 02-03162, (The "Texas Action"). Times Fiber first provided notice to Travelers of the alleged "occurrence or claim on or about May 6, 2002. On or about September 3, 2002, SBVS filed a third party complaint against Times Fiber in federal court in the Northern District of California in an action captioned Civic Center Drive Apartments Limited Partnership and North Ninth Street Limited Partnership v. Southwestern Bell Video Services, Inc., N.D.Cal. Case No. 0-02-02955 JCS ARB, (The "California Action") (collectively the two actions are referred to herein as the "Underlying Actions"). In that action, Times Fiber retained its own defense counsel and provided notice to Travelers later in the fall of 2002.
Both actions arise out of Times Fiber's sale of a twin cable marketed under the name Teleidrop, which is comprised of a pairing of coaxial strand and telephone wire in a single cable (the "Twin Cable"). According to SBVS's allegations, it purchased approximately 4.7 million feet of Twin Cable from Times Fiber at a cost of approximately $500,000 during the period from August 1998 through August 2001. SBVS alleges it disclosed to Times Fiber that it intended to use the Twin Cable in apartment complexes and similar multi-dwelling units ("MDUs") and that, at an early point in the supply under its contract, it raised a concern whether the Twin Cable had a gel coating which would make it unsuitable for indoor residential use. SBVS claims that Times Fiber responded that the Twin Cable did not have a gel coating and was in fact suitable for residential uses. Thereafter, SBVS installed approximately 3.5 million feet of the Times Fiber Twin Cable in approximately 30,000 MDUs across 100 projects or properties. SBVS has claimed that because the Twin Cable was to be used in dwelling units, it needed to meet the requirements of the National Electric Code ("NEC") and it should have been approved and listed as such by Underwriters Laboratories, Inc. ("UL"). SBVS claims that in late August 2001, it was notified by a building inspector on one of its MDU projects that the Times Fiber Twin Cable was not UL listed and therefore did not meet the applicable building code. SBVS investigated and determined that the Times Fiber Twin Cable did not meet NEC standard and could not be UL listed. SBVS then notified its various customers that the Twin Cable from Times Fiber was not UL listed and began replacing Times Fiber Twin Cable with UL listed/NEC compliant cable. SBVS alleged that its potential remediation costs might run as high as $20,000,000 and it therefore sought that amount, plus the $500,000 paid to Times Fiber for the Twin Cable, and punitive damages, attorneys fees, and indemnity from potential claims by third parties.
Times Fiber tendered SBVS's claims to Travelers under five primary policies covering the period May 30, 1998 through May 30, 2003. Based on the allegations made against Times Fiber in the Texas Action, Travelers denied that it had any obligation under the Policies to defend Times Fiber and disclaimed any duty to indemnify Times Fiber for SBVS's claims. Thereafter, Times Fiber made demand for Travelers to review the decision denying both defense and indemnity obligations under the Policies. Travelers did so and affirmed its denial. Subsequently, Times Fiber submitted the California action for defense and indemnity in the fall of 2002. On March 28, 2003 Travelers issued letters denying coverage as to the California Action and supplementing its prior declination of coverage in the Texas Action.
The five primary policies ("Policies") at issue are as follows:
1. TC2J-GLSA-186K5973-TIL-98 5/30/98-5/30/99
2. TC2J-GLSA-186K5973-TIL-99 5/30/99-5/30/00
3. TC2J-GLSA-186K5973-TIL-00 5/30/00-5/30/01
4. TC2J-GLSA-186K5973-TIL-01 5/30/01-5/30/02
5. TC2J-GLSA-186K5973-TIL-02 5/30/02-5/30/03.
Times Fiber settled with SBVS for $5,650,000 in May 2003.
On April 16, 2003, the plaintiffs commenced this action, alleging in forty (40) separate counts that Travelers breached the duty to defend Times Fiber under each of the five Policies for the Texas action, breached the duty to indemnify Times Fiber under each of the five Policies for the Texas action, breached the duty to defend Times Fiber under each of the five Policies for the California action, breached the duty to indemnify Times Fiber under each of the five Policies for the California action, and seeking declaratory judgment concerning defense obligations under each of the five Policies for the Texas action, declaratory judgment concerning indemnity obligations under each of the five Policies for the Texas action, declaratory judgment concerning defense obligations under each of the five Policies for the California action, and declaratory judgment concerning indemnity obligations under each of the five Policies for the California action.
Plaintiffs and defendants have now filed cross motions for summary judgment on the issue of the duty to defend.
LEGAL STANDARD A. Summary Judgment
Summary judgment "shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue of any material fact and that the moving party is entitled to judgment as a matter of law." Thompson and Peck, Inc. v. Division Drywall, Inc., 241 Conn. 370, 374, 696 A.2d 326 (1997). "The question of whether an insurer has a duty to defend its insured is purely a question of law, which is to be determined by comparing the allegations of [the underlying] complaint with the terms of the insurance policy." Wentland v. Am. Equity Ins. Co., 267 Conn. 592, 600, 840 A.2d 1158 (2004). "There is no question that a declaratory judgment is a suitable vehicle to test the rights and liabilities under an insurance policy." St. Paul Fire Marine Ins. Co. v. Shernow, 22 Conn.App. 377, 380-81, 577 A.2d 1093 (1990), 1 aff'd, 222 Conn. 823, 610 A.2d 1281 (1992).
Here, summary judgment is particularly appropriate. The facts are not in dispute and the parties are cross-moving for the Court's decision as a matter of law upon the agreed-upon factual record.
B. The Duty to Defend
Connecticut courts "adhere to `broad interpretation' standards in construing insurance policies." QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 376, 773 A.2d 906 (2001). The Connecticut Supreme Court has repeatedly stated that "the duty to defend is considerably broader than the duty to indemnify." DaCruz v. State Farm Fire Cas. Co., 268 Conn. 675, 687, 846 A.2d 849 (2004). This broad nature of an insurer's duty to defend has been recognized as follows:
The duty to defend an insured arises if the complaint states a cause of action which appears on its face to be within the terms of the policy coverage . . . Because the duty to defend has a broader aspect than the duty to indemnify and does not depend on whether the injured party will prevail against the insured . . . if an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured.
Lightowler v. Continental Insurance Co., 255 Conn. 639, 643 n. 7, 769 A.2d 49 (2001). (Emphasis added; internal quotation marks omitted.) "[A]n insurer's duty to defend its insured is triggered without regard to the merits of its duty to indemnify." Wentland v. Am. Equity Ins. Co., 267 Conn. 592, 600, 840 A.2d 1158 (2004). See, QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 352, 773 A.2d 906 (2001) (insurer has duty to defend even if pleadings indicate that claim may be meritless). "If the complaint states different causes of action or theories of recovery against the insured and one such cause is within the coverage of the policy, the insurer is bound to defend the whole suit." Schurgast v. Schumann, 156 Conn. 471, 490, 242 A.2d 695 (1968). "[I]f the plaintiff's complaint against the insured alleged facts which would have supported a recovery covered by the policy, it [is] the duty of the [insurer] to undertake the defense, until it [can] confine the claim to a recovery that the policy [does] not cover." Aetna Casualty Surety Co. v. Abbott Laboratories, Inc., 636 F.Sup. 546 (Conn. 1986).
Under Connecticut law, whether a duty to defend exists is a question of law for the court to determine by comparing the allegations in the complaint against the insured with the terms of the insurance policy. Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245 (2003). See Dark's Construction, Inc. v. Shelby Insurance Companies, 2002 WL 31894718, at *4 (Conn.Super. Dec. 4, 2002) ( 33 Conn. L. Rptr. 498) (copy attached), citing Community Action for Greater Middlesex County, Inc. v. American Alliance Insurance Co., 254 Conn. 387, 395 (2000).
In Connecticut it has long been recognized that the duty to defend is determined solely by reference to the allegations of the underlying claims against the insured. The "insurer's duty to defend is measured by the allegations of the complaint." DaCruz v. State Farm Fire and Casualty Co., 268 Conn. 675, 687-88 (2004), quoting Security Insurance Co. of Hartford v. Lumbermens Mutual Casualty Co., 264 Conn. 688, 711-12 (2003). This rule has been recognized as the so called "four corners rule" under which the duty to defend is determined solely on the basis of what is found within the four corners of the complaint and is not affected by facts disclosed by independent investigation, including those which undermine or contradict the injured party's claim. Stamford Wallpaper Company, Inc. v. TIG Insurance, 138 F.3d 75, 79 (2d Cir 1998), quoting Cole v. East Hartford Estates Ltd. Partnership, 1996 WL202135 (Conn.Super.Ct. May 15, 1996) (Sheldon, J.) ( 16 Conn. L. Rptr. 579) (copy attached).
C. The Policies
The Commercial General Liability ("CGL") policy form CG 00 01 10 93 of the Policies contains the Insuring Agreement which provides in pertinent part as follows:
SECTION I — COVERAGES COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or" property damage" to which this insurance applies. We will have the right and duty to defend the insured against any" suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply . . .
b. This insurance applies to "bodily injury" and "property damage" only if: (1) `The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and (2) The "bodily injury" or "property damage" occurs during the policy period.
Section V of the CGL policy form CG 00 01 10 93 defines "property damage" under the Policies as:
15. "Property damage" means:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.
Accordingly, the policies define "property damage" as "physical injury to tangible property, including all resulting loss of use of that property." Property damage is also defined as "loss of use of tangible property that is not physically injured." By definition, therefore, property damage includes any loss of use of tangible property whether or not it has been physically damaged.
D. Allegations of the Complaint
The following is alleged in the First Party Complaint in the California action:
The California First Party Complaint was incorporated by reference into the Third Party Complaint and referred to in the Third Party Complaint as "the principal action."
As of April 5, 2002, the Owners had not only installed drywall to enclose the cable within walls, but had already rented approximately 35% of the units at The Esplanade to tenants, while the Civic Center Apartments were nearing completion, as well. As opposed to the time when Southwestern Bell discovered the non-conforming cable months earlier, as of April 5, 2002, the process to remove and replace the non-conforming cable was significantly more complicated and disruptive, requiring not only the removal, replacement and restoration of drywall and related finishes, but the relocation and accommodation of displaced tenants, and protection of their furnishings . . . Civic Center has incurred and will incur damages: (1) to correct the installation errors by Southwestern Bell; (2) to repair physical damage to the units resulting from the removal and replacement of non-conforming cable; (3) for loss of rental revenues while performing corrective work; and (4) for the diminution in the fair-market value of the Project due to the extensive and intrusive nature of the corrective work required.
Furthermore, the damages as alleged in the First-Party Complaint in the California action included "judgment against Southwestern Bell Video Services, Inc. and in favor of Civic Center Drive Apartments Limited Partnership, for compensatory damages in an amount to be proven at trial, but including the costs to remove and replace the non-conforming cable, and to remove, replace and restore drywall and related finishes, believed to total approximately $700,000, plus lost rental revenue and diminution to the fair-market value of the Project, to be determined."
The Third-Party Complaint in the California action, in addition to incorporating the allegations of the First-Party Complaint, set forth, inter alia, the following allegations:
The principal action alleges, among other things, that SBVS has engaged in conduct entitling Plaintiffs to damages. If SBVS is found liable to Plaintiffs as a result of the allegations described therein, SBVS's liability will be solely derivative based on an obligation imposed by law and not resulting from any wrongful conduct. Therefore, SBVS would be entitled to total implied indemnity from Times Fiber . . . Times Fiber is responsible, in whole or in part, for the injuries, if any, suffered by Plaintiffs. If SBVS is judged liable to plaintiffs in the principal action, Times Fiber shall be required: 1) to pay SBVS a share of Plaintiffs' judgment in proportion to the comparative negligence of Times Fiber responsible for causing Plaintiffs' damages; and 2) to reimburse SBVS for any payments made to Plaintiffs in excess of its proportional share of Times Fiber's negligence.
In addition, the Texas complaint alleges the following:
SBVS spent approximately $500,000 on Times Fiber's twin cable product. It is of no value and must be replaced with a product that meets contract specifications, legal standards, and industry requirements. In addition, SBVS will be responsible to its customers to remediate the MDUs in which the Times Fiber twin cable has been installed. Because the cable is not UL listed and does not comply with NEC standards, building codes, and other industry and local regulations, SBVS may be forced to remove and replace all of the offending Times Fiber cable. This will necessarily involve significant remediation within the MDUs and the individual units affected. As this process has just begun, it is impossible for SBVS to determine and accurately plead its damages at this point, but preliminary estimates approach $20,000,000. SBVS further contends that these damages, once fully determined, will be found to have been proximately caused by the unlawful and [tortious] conduct of Times Fiber.
Finally, in the Texas action, SBVS alleged that under principles of common-law indemnity, TFC was obligated to "defend [SBVS] and hold it harmless from and against any and all liability, loss, damages, costs, attorneys fees, or other expense arising out of any suit or claim for damages by SBVS' customers, or any other person or entity, related to the twin cable product sold to SBVS by Times Fiber." Similarly, in the California action, SBVS sought "implied total indemnity" from TFC for any damages SBVS was found liable for in the first party action. Furthermore, in the California action, SBVS sought an "apportionment of fault" and claimed that if "SBVS is judged liable to Plaintiffs in the principal action, [TFC] shall be required: 1) to pay SBVS a share of Plaintiffs' judgment in proportion to the comparative negligence of Times Fiber responsible for causing Plaintiffs' damages."
E. Property Damage Does Not Included Damages Due to the Removal of the Defective Cable
As stated above, the underlying First-Party complaint in the California action states that: "the process to remove and replace the non-conforming cable was significantly more complicated and disruptive, requiring not only the removal, replacement and restoration of drywall and related finishes, but the relocation and accommodation of displaced tenants, and protection of their furnishings." In addition, the underlying complaint sought damages "to repair physical damage to the units resulting from the removal and replacement of non-conforming cable," and sought damages in the approximate sum of $20,000,000 for remediation of the units, necessitated by the removal of the cable.
The Texas action alleged that "SBVS may be forced to remove and replace all of the offending Times Fiber cable."
As alleged in the complaints, the cable was installed inside of the walls of the MDU units, and encased in drywall. Accordingly, the allegations of the complaints provide that the cable could not be removed from the MDUs without causing substantial disruption and the consequent need for substantial remediation within the MDUs.
The complaints do not allege that the Twin Cable itself failed or caused any harm to any property in that the cable did not leak, or burn, or split or do anything physical to cause any physical injury to any tangible property. Instead, the Complaint alleges that the physical injury is caused by the removal of the alleged defective product as opposed to the defective product itself.
One of the issues before this court then is whether the repairs necessitated by the defective cable, which has and will cause damage to the MDU's drywall, constitute "physical injury to tangible property." Unfortunately, there does not appear to be any Connecticut authority that directly addresses this issue.
A review of cases in other jurisdictions provides some guidance. In Watts Industries, Inc. v. Zurich American Ins. Co., 121 Cal.App.4th 1029, 1035, 18 Cal.Rptr.3d 61 (2004), the Court of Appeals of California affirmed the granting of summary judgment in favor of the plaintiff insured, but only because that court expressly found that the additional lead in the insured's product had caused tangible physical injury to the property of the suing municipalities. "By alleging this water is contaminated with lead, the municipalities have claimed covered property damage . . ." and "the municipalities claim is that increased leaching of lead caused by faulty Jones parts already has caused, and is still causing, serious and health-endangering harm to their water." 121 Cal.App.4th at 1041-42. The Watts court in reliance also expressly recognized that:
Courts applying standard CGL policy language generally agree that the incorporation of a defective component or product into a larger structure or system does not constitute physical injury to tangible property, unless and until the defective component physically injures some other tangible part of the larger system or the system as a whole. In other words, the mere presence of a defective part causing no immediate harm does not produce physical injury.
121 Cal.App.4th at 1044 (emphasis supplied) (citing FH Construction v. ITT Hartford Ins. Co., 118 Cal.App. 4th 364, 371-72, 12 Cal.Rptr.3d 896 (2004)).
In Newark Ins. Co. v. Acupac Packaging, Inc., 328 N.J.Super. 385, 746 A.2d 47 (2000), the Appellate Division of the Superior Court of New Jersey vacated the lower court's granting of summary judgment in favor of the plaintiff insurer based upon an express factual finding that the insured's product had been combined with and had damaged the property of other parties. In Newark the insured supplied pacquettes that were designed to hold a sample skin lotion which was to be attached to a magazine insert card. It was undisputed that a number of the pacquettes leaked and damaged the cards during the binding of the magazines to which they were attached. The insurer conceded these actual damage claims were covered under the policy but disputed whether cards to which the pacquettes had been attached but had not yet been leaked upon were damaged.
Newark emphasizes the critical distinction between insurance coverage for tort liability for physical damages to other persons or property, and protection from contractual liability of the insured for economic loss caused by improper workmanship. The Court noted that ordinarily, coverage is for tort liability for physical damage to others' property and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained. 328 N.J.Super. at 391, 746 A.2d 47. The cases analyzed by the Newark court all emphasized that replacement or repair activities were not covered and that coverage would only be triggered if the insured's product caused physical damage to the property of a third party. See Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 240-41, 405 A.2d 788 (1979), Heldor Industries, Inc. v. Atlantic Mutual Insurance Co., 229 N.J.Super. 390, 395-96, 551 A.2d 1001 (App.Div. 1988). Unfoil Corp. v. CNA Ins. Cos., 218 N.J.Super. 461, 528 A.2d 47 (App.Div. 1987). Newark draws the following example from the Weedo case:
Coverage provided by the insurance policy is generally for tort liability for physical damages to others, and not for contractual liability of the insured for economic losses because the product or completed work is not that for which the damaged person bargained. While the line may be fine, simply put, tort liability is covered while contractual liability due to faulty workmanship is not. To illustrate the distinction, Justice Clifford gave the following example: When a craftsman applies stucco to an exterior wall of a home in a faulty manner and discoloration, peeling and chipping result, the poorly-performed work will perforce have to be replaced or repaired by the tradesman or by a surety. On the other hand, should the stucco peel and fall from the wall, and thereby cause injury to the homeowner or his neighbor standing below or to a passing automobile, an occurrence of harm arises which is the proper subject of risk-sharing as provided by the type of policy before us in this case. The happenstance and extent of the latter liability is entirely unpredictable — the neighbor could suffer a scratched arm or a fatal blow to the skull from the peeling stonework. Whether the liability of the businessman is predicated upon warranty theory or, preferably and more accurately, upon tort concepts, injury to persons and damage to other property constitute the risks intended to be covered under the [policy].
328 N.J.Super. at 396, 746 A.2d at 53 (quoting Weedo, 81 N.J. at 240-41, 405 A.2d at 788).
On balance the court finds that the allegations of the complaints in this matter are more closely aligned to the case of the stucco needing to be replaced as opposed to a situation where the stucco has fallen off and damaged some other property. In this case there is no allegation that the Times Fiber's Twin Cable harmed anything. Instead, the claims are solely for replacement and repair costs resulting from the removal of the defective cable. It is clear that there would be no coverage if the cable could have been removed without causing damage to the surrounding walls and based on the analysis in Weedo the court finds that the allegations in this case are for contractual liability due to faulty workmanship instead of tort liability for physical damages. Accordingly, this court finds that the allegations of the complaints do not fall within coverage for physical injury to tangible property.
F. The Removal of the Cable Did Result in Loss of Use of Tangible Property
As set forth in the underlying complaints the Texas and California actions do allege loss of use of tangible property.
As of April 5, 2002, the Owners had not only installed drywall to enclose the cable within walls, but had already rented approximately 35% of the units at The Esplanade to tenants, while the Civic Center Apartments were nearing completion, as well. As opposed to the time when Southwestern Bell discovered the non-conforming cable months earlier, as of April 5, 2002, the process to remove and replace the non-conforming cable was significantly more complicated and disruptive, requiring not only the removal, replacement and restoration of drywall and related finishes, but the relocation and accommodation of displaced tenants, and protection of their furnishings . . . Civic Center has incurred and will incur damages: (1) to correct the installation errors by Southwestern Bell; (2) to repair physical damage to the units resulting from the removal and replacement of non-conforming cable; (3) for loss of rental revenues while performing corrective work; and (4) for the diminution in the fair-market value of the Project due to the extensive and intrusive nature of the corrective work required.
(Emphasis added.)
Furthermore, the damages as alleged in the First-Party Complaint in the California action included "judgment against Southwestern Bell Video Services, Inc. and in favor of Civic Center Drive Apartments Limited Partnership, for compensatory damages in an amount to be proven at trial, but including the costs to remove and replace the non-conforming cable, and to remove, replace and restore drywall and related finishes, believed to total approximately $700,000, plus lost rental revenue and diminution to the fair-market value of the Project, to be determined."
Similarly, the Third-Party Complaint in the California action also alleged "loss of use." The Complaint, in addition to incorporating the allegations of the First Party Complaint, set forth, inter alia, the following allegations:
The principal action alleges, among other things, that SBVS has engaged in conduct entitling Plaintiffs to damages. If SBVS is found liable to Plaintiffs as a result of the allegations described therein, SBVS's liability will be solely derivative based on an obligation imposed by law and not resulting from any wrongful conduct. Therefore, SBVS would be entitled to total implied indemnity from Times Fiber . . . Times Fiber is responsible, in whole or in part, for the injuries, if any, suffered by Plaintiffs. If SBVS is judged liable to plaintiffs in the principal action, Times Fiber shall be required: 1) to pay SBVS a share of Plaintiffs' judgment in proportion to the comparative negligence of Times Fiber responsible for causing Plaintiffs' damages; and 2) to reimburse SBVS for any payments made to Plaintiffs in excess of its proportional share of Times Fiber's negligence.
In addition, the Texas complaint alleges the following:
SBVS spent approximately $500,000 on Times Fiber's twin cable product. It is of no value and must be replaced with a product that meets contract specifications, legal standards, and industry requirements. In addition, SBVS will be responsible to its customers to remediate the MDUs in which the Times Fiber twin cable has been installed. Because the cable is not UL listed and does not comply with NEC standards, building codes, and other industry and local regulations, SBVS may be forced to remove and replace all of the offending Times Fiber cable. This will necessarily involve significant remediation within the MDUs and the individual units affected. As this process has just begun, it is impossible for SBVS to determine and accurately plead its damages at this point, but preliminary estimates approach $20,000,000. SBVS further contends that these damages, once fully determined, will be found to have been proximately caused by the unlawful and [tortious] conduct of Times Fiber.
Allegations that tenants had to be relocated and provided with alternate accommodations and that the property owners lost rental revenue are allegations of "loss of use" of tangible property. Allegations that tenants were displaced, that the cable did not conform with applicable local and state building codes, that the MDUs had to undergo substantial remediation, and that the fair market value of the MDUs were diminished due to the "extensive and intrusive nature of the corrective work," are clearly allegations of "loss of use" of the MDUs.
G. Loss of Use of the MDUs Was Not Caused By An Occurrence
While the court has found that there has been a loss of use of tangible property, the allegations of loss of use of the MDUs were not caused by an occurrence, and therefore the allegations do not fall within the possibility of coverage.
The insuring agreement specifically applies only to "property damage" caused by an "occurrence." Section V of the CGL policy form CG 00 01 10 93, defines "Occurrence" under the Policies as:
The term "occurrence" has consistently been held to be unambiguous. Metropolitan Life Insurance Co. v. Aetna Casualty Surety Co., 255 Conn. 295, 306 (2001).
12. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
While the policy uses the word "accident" to define an "occurrence," it does not define the word "accident." Our Supreme Court has stated that "[a]n accident is an unintended occurrence." Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 590, 573 A.2d 699 (1990). "The term `accident' is to be . . . construed in its ordinary meaning of an `unexpected happening' . . . The `accident' was the event causing injury, not the cause of that event." (Citations omitted.) Commercial Contractors Corp. v. American Insurance Co., 152 Conn. 31, 42, 202 A.2d 498 (1964). The Supreme Court also has defined "accidental" to mean "unexpected or unintended." (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Insurance Co., 259 Conn. 527, 541, 791 A.2d 489 (2002).
Finally, the Supreme Court has also stated that "occurrence" means "something that takes place," especially "something that happens unexpectedly without design." Metropolitan Life, supra at 307.
"No accident may be fairly `gleaned' from the allegations of [the] complaint." Covenant Insurance Co. v. Sloat, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 385786 (May 23, 2003, Levin, J.) ( 34 Conn. L. Rptr. 687), citing Flint v. Universal Machine Co., 238 Conn. 637, 648, 679 A.2d 929 (1996). "[T]he inquiry into an insurer's duty to defend focuses on the facts alleged, not legal theories." (Internal quotations marks omitted.) Covenant Insurance Co. v. Sloat, supra. Accordingly, simply because there are allegations of negligence does not necessarily mean there has been an accident.
Our Supreme Court has stated that "the `accident' is `the event' causing the injury, not the cause of that event." In this case the alleged "accident" would have to be the removal of the cable because this was and will be the event causing the injury to the MDUs. The alleged loss of use of property is therefore based entirely on harm which resulted from repair activities necessary to replace the nonconforming cable. The accident was therefore not the installation of the non-conforming cable as claimed by plaintiff. It is also clear that the decision to remove the cable and make repairs was not an accident and therefore not an occurrence. The repairs were not something that happened "unexpectedly without design." Accordingly, there are no allegations of property damage caused by an occurrence in the underlying complaints and the defendants had no duty to defend the plaintiffs in the California or Texas actions.
Even if it is found that the event causing the injury was the installation of the cable the court finds that such installation was not an accident as set forth in the policy.
Finally, the indemnity claims do not change the requirements to determine the defense obligation by what is alleged in the complaints. See Schillberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 255-6 (2003). There are no new factual allegations in the indemnification claims that meet the definition of property damage caused by an occurrence. Instead these claims are prayers for recovery under legal theories. Accordingly, the indemnity claims in the underlying complaints do not create a duty to defend Times Fiber.
CONCLUSION
Because there is no genuine issue of material fact, summary judgment is hereby granted in favor of the defendants.
ROGERS, J.