NATIONAL WASTE ASSOCIATES, LLC v. TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA, SC 18380

Judicial District of Hartford

 Insurance; Duty to Defend and Indemnify; Whether Unemployment Claim Constituted "Administrative or Regulatory Proceeding" for Purposes of Prior Litigation Exclusion in Employment Practices Liability Insurance Policy. The plaintiff purchased insurance from the defendant to insure against damages and defense costs arising from claims of wrongful employment practices.  The policy covered the period from February 15, 2007, to February 15, 2009.  The plaintiff sought coverage under the policy in connection with a lawsuit filed against it by a former employee on May 12, 2007.  In her action, the former employee alleged wrongful termination and invasion of privacy based on her claim that the plaintiff had suspended her without pay because she refused to provide it with copies of her private cell phone records.  After the defendant refused to provide a defense or indemnification, the plaintiff brought this action seeking damages for breach of contract and a declaratory judgment as to its rights under the policy.  The defendant moved for summary judgment, asserting that, in May of 2005, the same former employee had filed a claim for unemployment benefits based on the same factual allegations as those of her present action and that the plaintiff had been  aware of the claim but had failed to disclose it on its application for insurance.  In light of the foregoing, the defendant claimed that it had no duty to defend or indemnify the plaintiff because coverage was barred under policy provisions that exclude coverage (1) for claims relating to wrongful acts alleged "in any prior or pending . . . administrative or regulatory proceeding" against the plaintiff as of, or prior to, the "prior and pending proceeding date," which was February 15, 2006 (prior litigation exclusion); (2) for claims arising out of wrongful acts about which any executive officer of the plaintiff had knowledge prior to the "continuity date," which was also February 15, 2006 (Exclusion 6); and (3) in the event of any misrepresentation in the application for insurance (Condition U).  The trial court granted the motion for summary judgment, finding that the prior litigation exclusion barred coverage.  The court rejected the plaintiff's arguments that the former employee's claim for unemployment benefits did not constitute an "administrative or regulatory proceeding" for purposes of the prior litigation exclusion and that the prior litigation exclusion should not be triggered by the unemployment claim because the policy does not provide coverage for unemployment claims.  The plaintiff challenges the trial court's decision in this appeal.  As alternate grounds for affirming the trial court's decision, the defendant claims that it had no duty to defend or indemnify the plaintiff because coverage was also barred under Exclusion 6 and Condition U.