Opinion
No. CV 04-4002006S
July 27, 2006
MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
In this case, the plaintiff, Travelers Property Casualty Company of America, (hereinafter referred to as "Travelers"), is seeking a declaratory judgment that it has no duty to defend or indemnify the defendant, Laticrete International, Inc. (hereinafter referred to as "Laticrete") in an action brought against Laticrete, by Bellagio, LLC and MGM Mirage Design Group (hereinafter referred to as "Bellagio"), in the state of Nevada.
I. Facts and Procedural History
On July 24, 2003, Bellagio filed a complaint in the District of Clark County in the state of Nevada against Laticrete and Carrara Marble Company of America, Inc. On July 24, 2004, it filed a second amended complaint against the original defendants and added allegations against Hansen Mechanical Contractors, Inc. and Sierra Glass Mirror, Inc. That case is still pending before the Nevada court.
The underlying complaint asserts claims arising out of the alleged defects in the design and construction of showers in approximately 2,568 guestrooms in the Bellagio Hotel in Las Vegas, Nevada. As to Laticrete, the underlying complaint asserts claims of negligence, strict product liability and breach of express warranty.
Essentially, Bellagio's allegations in the underlying action against Laticrete are that Laticrete's west regional sales manager improperly modified the design of the shower pans and/or that the waterproof membrane in the approximately 2,568 shower pans failed. As a result, Bellagio alleges that the surrounding shower areas were exposed to water and mold intrusion resulting in significant property damage to the surrounding walls, floors, steel studs, insulation, drywall, metal door frames, carpeting, wall coverings, etc.
On August 12, 2004, Travelers filed a complaint for declaratory judgment with this court on the grounds that the alleged damage to Bellagio had occurred after its insurance policy with Laticrete had expired. On October 14, 2004 Laticrete answered, denying the occurrence transpired after the expiration of coverage. On March 10, 2006 Travelers filed this motion for summary judgment asserting it had no duty to defend or indemnify Laticrete in the underlying action.
II. Standard of Review
Summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Practice Book § 17-49; Rivera v. Double A Transportation, Inc., 248 Conn. 21, 24, 727 A.2d 204 (1999); Peerless Ins. Co. v. Gonzalez, 241 Conn. 476, 481, 697 A.2d 71 (1997) (internal quotation marks omitted); Nichols v. Lighthouse Restaurant, Inc., 246 Conn. 156, 163, 716 A.2d 71 (1998); Alvarez v. New Haven Register, Inc., 249 Conn. 709, 714, 735 A.2d 306 (1999).
The party moving for summary judgment bears the burden of proving the absence of a dispute as to any material fact which, under applicable principles of substantive law, entitle him to a judgment as a matter of law; and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. Rivera v. Double A Transportation, Inc., supra, 248 Conn. 24.
In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. The test is whether a party would be entitled to a directed verdict on the same facts. Connell v. Colwell, 214 Conn. 242, 246-47, 571 A.2d 116 (1990). In Connecticut, a directed verdict may be rendered only if, on the evidence viewed in the light most favorable to the non-movant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed. United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 380, 260 A.2d 596 (1969); Vuono v. Eldred, 155 Conn. 704, 705, 236 A.2d 470 (1967).
In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist. Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1998); Telesco v. Telesco, 187 Conn. 715, 718, 447 A.2d 752 (1982).
III. Duty to Defend
Travelers issued to Laticrete three Commercial General Liability policies and three catastrophe umbrella policies that provided coverage during the policy period. Travelers alleges it has no duty to defend Laticrete in the underlying action because the general liability and umbrella catastrophe policies issued to Laticrete at 12:01 a.m. on January 10, 1996, expired at 12:01 a.m., February 1, 1998, prior to the date the alleged property damage occurred.
The insuring agreement of the CGL policies issued to Laticrete state in relevant part that:
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 policies provide the definition of an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful condition."
The wording varies only slightly from policy to policy and the relevant provisions, Travelers concedes, are essentially the same.
Therefore, the ultimate question before this court is whether there is a dispute as to the material fact of when the damage first occurred.
Both parties stipulate the laws of Connecticut and Nevada are the same on this issue, therefore no conflict of laws is present.
To determine if there is a duty to defend, the Court will initially compare the insurance policy with the allegations of conduct in the underlying complaint. Imperial Casualty and Indemnity Co. v. Connecticut, 246 Conn. 313, 323 n. 6 323-33, 714 A.2d 1230 (1998). Upon this comparison, the court will rule in the insured's favor if the alleged damage "falls even possibly within coverage." "It is beyond dispute that an insurer's duty to defend, being much broader in scope and application than its duty to indemnify is determined by reference to the allegations contained in the complaint . . . The obligation of the insurer to defend does not depend on whether the injured party will successfully maintain a cause of action against the insured but on whether he has, in his complaint, stated facts [that] bring the injury within the coverage." Wentland v. American Equity Insurance Co., 267 Conn. 592, 600, 840 A.2d 1158 (2004) (citations omitted; internal quotation marks omitted); see Imperial Casualty and Indemnity Co. v. Hilton Hotels USA, Inc., 809 F.Sup. 809, 814 n. 2 (D.Nev. 1995). The existence of a duty to defend is determined by what is found within the four corners of the complaint; it is "not affected by facts disclosed by independent investigations including those that undermine or contradict the injured party's claim." Cole v. East Hartford Estates Ltd. Partnership, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV 95-0547179S (May 15, 1996, Sheldon, J.) ( 16 Conn. L. Rptr. 579).
Travelers' main contention is that no property damage occurred during the policy period. Instead it contends the property damage occurred on some date after the policy expired on February 1, 1998. To support this contention, Travelers cites to the underlying compliant, which does not allege a specific date of occurrence, but rather asserts that water leakage was first discovered sometime around March 1998, after the policy expired.
However, unlike a singular event such as a lightning strike, damage occurring from water or mold intrusion may occur over a period of time. Our Supreme Court has acknowledged that the word "occurrence," as used in policies containing a continuous or repeated exposure clause, is broadened to include a "situation where damage occurs (continuously or repeatedly) over a period of time." Metropolitan Life Ins. Co. v. Aetna Casualty Surety Co., 255 Conn. 295, 311, 765 A.2d 891 (2001). "Insurance coverage defined to encompass `continuous repeated exposure to conditions which result in . . . property damage' appears to contemplate a developing condition that may be difficult to locate in a specific time frame." Plasticrete Corporation v. American Policyholder Ins. Co., 184 Conn. 231, 237, 439 A.2d 968 (1981).
Therefore, the date at which this repeated exposure to water and mold began is paramount to the court's resolution of the plaintiff's motion. Travelers is correct in asserting that the underlying complaint does not allege a specific date when the property damage occurred that is within the policy period. However, in viewing the record in a light most favorable to the plaintiff, it is conceivable that the property damage began at some point during the policy period.
If the alleged property damage began sometime between the installation of Laticrete's shower pans in September of 1996 and the expiration of the policy period on February 1, 1998, then Travelers would have a duty to defend Laticrete.
While this court should not undertake mental gymnastics to imagine scenarios unsupported by the facts (see Stamford Wallpaper Co. v. TIC Insurance, 138 F.3d 75, 80-81 (2nd Cir. 1998)), given the nature of the underlying complaint, property damage conceivably could have begun to occur the moment water was first turned on in the shower. This is especially true under the strict product liability claim, whereby Bellagio asserts that the waterproof membrane began deteriorating after exposure to water.
As Travelers correctly observes in its reply motion, the triggering event is not the installation of Laticrete's allegedly defective waterproofing product; rather, the triggering event is the water leaking through the membrane and causing physical injury to tangible property.
The record sets forth that sometime around February 1997, within the policy period, flood tests were performed on an unknown quantity of shower pans. Given the possibility that at least some shower pans were exposed to water during the policy period, the plaintiff's motion for summary judgment must be denied. See Palace Laundry Co. v. Hartford Accident and Indemnity Co., 27 Conn.Sup. 222, 234 A.2d 640 (1967) (holding that "tenuously set forth" allegations substantiated holding of insurer's duty to defend). In Schwartz v. Stevenson, 37 Conn.App. 581, 657 A.2d 244 (1995), the Appellate Court rejected an insurer's attempt to avoid a duty to defend where, although the complaint in the underlying action lacked allegations specifically bringing the claim within coverage, the complaint contained no allegations affirmatively precluding coverage.
In Aetna Casualty Surety Co. v. Abbott Lab., Inc., 636 F.Sup. 546, 551 (D.Conn. 1986), the Court acknowledged that a duty to defend would not exist if the underlying complaint excluded the possibility of proof; however, in this case, the mere absence of an alleged occurrence date in the underlying complaint is not a substitute for an affirmative fact which would bar the possibility that none of the shower pans were exposed to water prior to the policy expiration date.
Because the allegations in the underlying complaint and the record lead to a reasonable inference that the triggering event, water exposure, "possibly" occurred within the coverage period, Travelers motion for summary judgment must be denied.
IV. Duty to Indemnify
Because this court holds that there is a possibility that Travelers has the duty to defend Laticrete in the underlying action, Travelers' motion for summary judgment as to its duty to indemnify must also be denied. See Hartford Accident Indemnity Co. v. Williamson, 153 Conn. 345, 216 A.2d 635 (1966). The Connecticut Superior Court recently held that when "an insurer's duty to defend has not been the subject of a successful challenge, there remains the possibility that the facts addressed in the underlying action will demonstrate that the insurer also has a duty to indemnify." DeCruz v. State Farm Fire Casualty Co., 268 Conn. 675, 689, 846 A.2d 849 (2004). Therefore it would be inappropriate for the court to grant summary judgment on the duty to indemnify when it has denied summary judgment on the duty to defend. See Trumbull Ins. Co. v. Braunstein Todisco, LLC, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 397358 (June 10, 2004, Levin, J.).
V. Conclusion
For the foregoing reasons, Travelers' motion for summary judgment as to both its duty to defend and its duty to indemnify is denied.