469_C361
Realty
Project Qualified As Business Pursuit
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Homeowners |
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Business
Pursuits |
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From February
1, 2004, through February 1, 2005, John Sakon was a
named insured under a homeowners policy on his
residence in Avon, Connecticut, issued by Cambridge Mutual Fire Insurance
Company. Sakon was also a named insured under a
personal umbrella policy with Cambridge Mutual.
In December
2004, Sakon filed suit against Joyce Manager and
several other parties, alleging breach of a prior settlement agreement relating
to Sakon's proposed development of property in
Glastonbury, Connecticut. According to Sakon, the
parties breached the agreement by speaking against his development project at
public hearings.
In response
to Sakon's allegations, Manager filed a counterclaim
alleging that Sakon unlawfully attempted to deter her
from speaking at the public hearings. Sakon sought
indemnification and a defense from Cambridge Mutual under his homeowners policy. Cambridge Mutual filed a declaratory
judgment action asking the court to find that the business pursuits
exclusion in Sakon's policy precluded coverage of the
counterclaim. The court found in favor of Cambridge. Sakon
appealed.
The homeowners policy excluded personal liability coverage for
matters "[a]rising out of or in connection with a business engaged in by
an insured." The business exclusion "applie[d]
but [was] not limited to an act or omission, regardless of its nature or
circumstance, involving a service or duty rendered, promised, owed, or implied
to be provided because of the nature of the business." "[B]usiness includes trade, profession or occupation." The
umbrella policy excluded from coverage "business pursuits or business
property of an insured." "Business pursuits" were defined as
"any employment, trade, occupation, profession, or enterprise in which an
insured has any financial interest."
On appeal,
the Appellate Court of Connecticut noted that the Supreme Court of Connecticut
had previously concluded that the term "business pursuit" in the
context of an insurance policy exclusion contemplated a "continuous or
regular activity engaged in by the insured for the purpose of earning a profit
or a livelihood," and that it did not necessarily have to be "limited
to [the insured's] sole occupation or employment. Thus, whether or not
Cambridge Mutual had a duty to defend Sakon depended
on whether his development activities were regular and continuous and for
profit.
Manager's
counterclaim repeatedly referred to Sakon's plan to
build a shopping center at the Glastonbury property as "The Project."
The lower court had determined that it could be inferred from the allegations
that Sakon was a real estate developer and the
Appellate Court found nothing to the contrary. Thus, the court concluded that
the continuity requirement was met. The court also concluded that the
activities were for profit within the meaning of the policy, emphasizing that
the underlying civil action and the counterclaim would not have occurred in the
absence of Sakon's commercial development plan. The
court concluded that the business pursuits exclusion
applied in favor of Cambridge Mutual.
The decision
of the lower court in favor of Cambridge Mutual was affirmed.
Cambridge
Mutual Fire Insurance Company vs. Sakon-No. 32109-Appellate Court of
Connecticut-December 6, 2011-2011 WL 590346 (Conn. App)