An appellate court in Connecticut, reversing a trial court's decision, has ruled that the "business pursuits" exclusion in a personal umbrella insurance policy barred coverage for claims asserted by an employee for injuries suffered as a result of an intruder's attack in the insured's home office.
The case
Sara Socci was an employee of Pasiak Construction Services LLC, and worked out of an office located on the second floor of Jeffrey S. Pasiak's home. One day while she was working alone at the office, a masked intruder entered the office carrying a gun and demanded that she open the safe. Unaware that a safe even existed in the home, she couldn't provide the intruder with the safe's combination. The intruder led her into a bedroom, where he tied her hands, gagged her, and blindfolded her. At one point, he pointed a gun at her head and threatened to kill her family if she didn't give him the combination.
Pasiak returned home during the incident and was attacked by the intruder. During the ensuing struggle, Pasiak pulled off the intruder's mask, revealing him to be Richard Kotulsky, a friend of his. Pasiak began talking to Kotulsky and inquired about Socci. Kotulsky led Pasiak to the bedroom, where he found Socci on the floor, crying and hysterical. Pasiak picked her up and removed her restraints, all the while conversing with Kotulsky.
Socci asked to leave, but Pasiak told her to stay and sit down. After further discussions with Kotulsky, Pasiak allowed him to leave the house.
(Photo: Thinkstock)
Socci then told Pasiak about the threats that Kotulsky had made to her and her family, but he wouldn't call the police. She said that he told her to stay with him and refused to let her call the police or to discuss the incident further. She said she remained with him for several hours, in fear that, if she left, she or her family might be harmed. She said that only after he drove her to discuss the incident with a mutual friend did he allow her to leave.
Eventually, the police were contacted, ultimately leading to Kotulsky's arrest and subsequent conviction.
As a result of the incident, Socci developed post-traumatic stress disorder, requiring extensive therapy, and was unable to return to work.
She and her husband, Kraig Socci, sued Pasiak, alleging causes of action for false imprisonment, negligence, intentional, reckless and negligent infliction of emotional distress, and loss of consortium.
A jury returned a general verdict in favor of the Soccis. It awarded Sara Socci compensatory damages of $628,200 and punitive damages of $175,000, and awarded Kraig Socci $32,500 for loss of consortium.
(Photo: Shutterstock)
3 insurance policies in effect
At the time of the incident at issue in the Socci action, Pasiak had three insurance policies in effect, all issued by Nationwide Mutual Insurance Co. and Nationwide Mutual Fire Insurance Co.: an automobile policy, a homeowner's policy and a personal umbrella policy.
Although the insurers provided Pasiak with counsel in the Socci action, they notified him by letter that they were reserving their right to contest coverage.
Thereafter, the insurers went to court for a declaration that they did not have a duty to defend Pasiak in the Socci action under any of his policies. Prior to the verdict in the Socci action, the insurers moved for summary judgment in the declaratory judgment action seeking a determination that they did not have a duty to defend the Socci action.
The trial court ruled in favor of Pasiak, ruling that the business pursuits exclusion of the umbrella policy did not preclude him from obtaining indemnification from the insurers for his liability in the Socci action.
The insurers appealed. They argued that Pasiak's coverage claim fell within the scope of the exclusion because the incident giving rise to the claim — essentially, Pasiak's refusal to let Socci leave his presence and her resulting injuries — arose out of the operation of his construction business. More particularly, they argued that Socci would not have been attacked by Kotulsky, and consequently would not have been threatened and restrained by Pasiak, if she had not been at the office of his construction business performing her duties as an employee.
Connecticut Appellate Court in Hartford. (Photo: Connecticut Appellate Court website)
The umbrella policy
The umbrella policy provided that "Excess liability and additional coverages do not apply to … [a]n occurrence arising out of the business pursuits or business property of an insured."
It defined "occurrence" as "an accident including continuous or repeated exposure to the same general conditions. It must result in bodily injury, property damage, or personal injury caused by an insured."
The term "business" was defined as "a trade, profession, occupation, or employment including self-employment, performed on a full-time, part-time or temporary basis."
The Connecticut Appellate Court's decision
The appellate court reversed, finding that the language of the business pursuits exclusion in the umbrella policy established an expansive standard of causation between the incident giving rise to a claim for coverage and the insured's business pursuits. Because the facts found by the trial court satisfied that "expansive standard of causation," the appellate court agreed with the insurers that the trial court improperly concluded that the business pursuits exclusion did not apply.
In its decision, the appellate court found that Pasiak's operation of his construction business, and his employment of Socci in support thereof, constituted "business pursuits" under his umbrella policy.
Then, it decided that Socci's injuries arose out of the operation of Pasiak's construction business. It stated that "the sine qua non of [Mr. Pasiak's] tortious conduct was Socci's presence at his business office fulfilling her responsibilities as his employee." The appellate court concluded that it was sufficient for the insurers to demonstrate that the tortious acts and resulting injuries in the underlying action "were connected with, had their origins in, grew out of, flowed from, or were incident to" Pasiak's business pursuits to establish the necessary causal connection.
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