Vermont Mutual Insurance Co. v. Ciccone
An insurance company's duty to defend is based solely on the allegations in the underlying complaint, even if information not included in the complaint indicates that the injury is not covered. In 2007, Miguel Martinez allegedly fell from a New London roof on a property owned by Paul Ciccone or Elm Ridge Development LLC. Martinez sued Ciccone and Elm Ridge Development in New London Superior Court. Vermont Mutual Insurance Co. filed the present suit for a declaratory judgment from the U.S. District Court that Vermont Mutual is not required to defend Ciccone and Elm Ridge Development in Superior Court. Vermont argued that the terms of the insurance policy excluded an "employer's liability," and that Martinez was the employee of Ciccone and Elm Ridge Development. If an action falls even possibly within coverage, the insurance company must defend the insured. The allegations in Martinez's underlying complaint indicated that coverage existed, and the court rejected Vermont Mutual Insurance Co.'s argument it should be allowed to present facts that were not included in the underlying complaint. The policy's exclusion for employees did not apply, because the underlying complaint appeared to indicate that a third party, Javier Rivera, could be the employer of Martinez. The underlying complaint did not allege that the defendants were the employers of Martinez. Vermont Mutual Insurance Co. also argued that the policy's exclusion for "professional services" applied. The underlying complaint did not allege that Martinez fell because Ciccone and Elm Ridge Development provided or failed to provide a supervisory "professional service." "The Court does not find it at all convincing," wrote the District Court, "that a property owner could render his professional services to individuals working on his property for him, either directly or as employees of a subcontractor." The court found that the "professional services" exclusion did not affect the insurance company's duty to defend.