Connecticut Hands Down a Case Insurers Will Love
In a decision handed down this week, the Connecticut Supreme Court held that although the phrase “arising out of” is broad, it isn’t limitless. The Court also split on the often-disputed question of whether an insured may rely on facts outside the complaint to trigger an insurer’s duty to defend. The majority refused to consider the extrinsic facts on the ground that did not support the duty to defend. The minority disagreed with how the facts stacked up, and further suggested that the court could have selectively considered only those outside facts that did support coverage.
The plaintiff in the coverage dispute owned a commercial property that included premises leased to three commercial tenants (including a tavern) and a riverside park area. A woman sued the property owner for injuries she suffered when she fell in the park area. In her complaint, the woman recited the addresses of the commercial tenants and alleged that she was on the property as a business invitee at the time she fell; she made no specific reference to the tavern or the other tenants.
The property owner, who was an additional insured under the tavern’s general liability policy “with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to” the tavern, tendered the defense of the suit to the tavern’s insurer, Travelers, but it refused to defend. The property owner sued Travelers. During the coverage case, the parties, while disputing the relevance of the information, stipulated to additional facts. Those facts established that before the personal injury claimant fell, she and a business colleague had given a business presentation to one of the other tenants, had something to eat at the tavern, and then had walked through the park area to look at the river.
The majority of the Court backed Travelers. The majority held that although the duty to defend is broad and the phrase “arising out of” is expansive enough that the Travelers policy would cover injuries “connected with” or “incident to” use of the insured premises, the policy still requires “an adequate” causal connection between the injury and the use of the premises. That connection, the majority concluded, was missing from the claimant’s allegations.
Further, the majority declined to consider the additional facts to which the parties had stipulated. Connecticut law permits reliance on facts outside the complaint if they support the duty to defend, but the majority concluded that here, the stipulated facts “undermined” the owner’s contention that Travelers had a duty to defend.
Relying on cases from other jurisdictions, the dissent vigorously argued that the stipulation establishing that the personal injury claimant had eaten at the tavern before she fell was sufficient to establish the requisite “minimal” causal connection between her injuries and the use of the tavern. Indeed, the dissent suggested that even if some of the facts the parties stipulated to undermined the argument for coverage, the court could and should have considered only those facts that supported coverage.
While insurers will frequently cite this decision for the position that the phrase “arising out of” requires some causal connection, it leaves open several questions. Would Travelers have been obligated to defend if the claimant had alleged in her complaint that she had eaten at the tavern before the fall, or was more required to create a possibility of coverage? (The majority suggests in a footnote that it would have required more.) Is the dissent correct that if there are facts outside the complaint that are known to the insurer, a court may look only to those facts that support coverage and ignore the others?
About Anne: I specialize in Insurance Law and Litigation at Anderson & Kreiger, primarily in the areas of professional malpractice, commercial liability and D&O insurance. My most recent post for Between the Lines explores an IL case that sheds light on how no-apology policies may fare under MA’s increasingly pro-apology medmal regime.