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DOMINGOS GABRIEL ET AL. v. MOUNT VERNON
FIRE INSURANCE COMPANY
(AC 40174)
Sheldon, Elgo and Eveleigh, Js.
Syllabus
The named plaintiff, who had sustained severe injuries when a van in which
he was a passenger went off the road and crashed into a building, and
his wife brought this subrogation action seeking to recover damages
under the terms of a $1 million umbrella automobile insurance policy
issued by the defendant to its insured, P, the operator of the vehicle
involved in the crash. At the time of the accident, P was driving the van
for his employer, P Co., and the van was covered by a primary business
insurance policy issued by N Co. to P Co., which had a policy limit of
$300,000. Prior to commencing the present action, the plaintiffs recov-
ered judgments in the total amount of $1.8 million from P and P Co.,
and N Co. paid the plaintiffs $300,000 toward their judgments. The
defendant, however, refused to apply its $1 million umbrella coverage
to the unpaid balance of the plaintiffs’ judgments on the ground that
the primary insurance policy provided bodily injury liability coverage
of less than $500,000, which the defendant claimed was not sufficient to
trigger excess coverage. P subsequently assigned the umbrella insurance
policy to the plaintiffs, who commenced the present action. After the
case was tried on a stipulation of facts, the trial court rendered judgment
in favor of the plaintiffs, finding that the umbrella insurance policy
declared unambiguously that the failure to maintain underlying insur-
ance policies covering the loss that meet minimum limits would not
invalidate the policy but would merely adjust the net loss to be paid by
the defendant. On the defendant’s appeal to this court, held:
1. The trial court did nor err in finding that the business insurance policy
qualified as underlying insurance, thereby triggering excess coverage, as
the umbrella insurance policy unambiguously provided excess coverage
even when the insured’s primary policy is maintained at a lower level
than specified: the failure to maintain the proper amount of primary
coverage generally does not invalidate the excess coverage, the umbrella
insurance policy’s terms did not override that general rule, as there was
no language indicating that a primary policy with a minimum coverage
of $500,000 was a condition precedent to insurance coverage, and even
if the policy included such language, the savings clause anticipated
inadequate primary coverage and specifically provided that, in such a
case, the defendant is not responsible for any gap in coverage up to the
$500,000 limit; moreover, the defendant could not prevail on its claim
that the savings clause, which provided that the defendant is not required
to provide coverage if the insured fails to maintain his underlying insur-
ance, was inapplicable because it only contemplated situations in which
an insured has underlying insurance at the requisite level when the
umbrella insurance policy becomes active and fails to keep up the
underlying policy, as that claim hinged on the meaning of the term
‘‘maintain’’ as used in the policy, the defendant’s definition of ‘‘maintain’’
was not the only natural and ordinary meaning of that word and was
not likely to align with a layperson’s reasonable reading of the word and
the policy provision, and the plaintiffs’ interpretation that to ‘‘maintain’’
insurance means to obtain insurance reflected an insured’s reason-
able expectations.
2. The trial court properly determined that the umbrella insurance policy’s
business exclusion did not apply because qualifying underlying insur-
ance existed at the time of the accident; the policy’s business exclusion,
which eliminated coverage of a loss caused by the insured’s business
or business property unless underlying insurance provided coverage for
the loss, was inapplicable because underlying insurance, namely, the
business insurance policy, existed at the time of the accident, and that
policy qualified as underlying insurance even though the coverage was
for $300,000 instead of for $500,000 or more.
3. The defendant could not prevail on its claim that the trial court erred
in its determination of damages, which was based on the defendant’s
assertion that the court improperly denied it a $200,000 credit to be
charged against the sum that the defendant owed toward the unsatisfied
portion of the plaintiffs’ underlying judgments; nothing in the umbrella
insurance policy provided for such a credit, the defendant already
received the benefit of a $200,000 credit because it was obligated to
pay only for recovery exceeding $500,000, and the cases on which the
defendant relied to support its claim were distinguishable from the
present case in that they concerned a theory of recovery that the plain-
tiffs were not pursuing.
Argued September 17—officially released November 20, 2018
Procedural History
Action to recover proceeds allegedly due under an
umbrella automobile insurance policy issued by the
defendant, and for other relief, brought to the Superior
Court in the judicial district of Fairfield and tried to
the court, Krumeich, J., on a stipulation of facts; judg-
ment for the plaintiffs as to liability; thereafter, the
court denied the defendant’s motion to open and vacate
the judgment; subsequently, the court granted in part
the plaintiffs’ amended motion to assess damages and
for postjudgment interest, and the defendant appealed
to this court. Affirmed.
Dennis M. Carnelli, with whom were Emily McDo-
nough Souza and, on the brief, Joseph J. Andriola, for
the appellant (defendant).
Michael S. Burrell, with whom were Joseph P. Krevo-
lin and, on the brief, Joram Hirsch, for the appellees
(plaintiffs).
Opinion
EVELEIGH, J. The defendant, Mount Vernon Fire
Insurance Company, appeals from the judgment of the
trial court in favor of the plaintiffs, Domingos Gabriel
and his wife, Laurinda Gabriel.1 On appeal, the defen-
dant argues that the trial court erred in (1) finding that
the plaintiffs’ primary insurance policy qualified as an
underlying policy entitling the plaintiffs to excess cover-
age; (2) finding that the business exception of the plain-
tiffs’ umbrella insurance policy did not apply; and (3)
its determination of damages. We affirm the judgment
of the trial court.
The following stipulated facts and procedural history
are relevant to the resolution of this appeal. On Septem-
ber 6, 2011, at approximately 1 p.m., Domingos Gabriel
was the passenger in a van operated by Domingos Pires,
on Route 58 in Easton, Connecticut, that went off the
road and crashed into a building. The accident caused
severe injuries to Domingos Gabriel, including injuries
to his spine, which rendered him permanently wheel-
chair bound and severely limited the use of his arms.
At the time of the accident, Pires was driving the van
for D.A.J., LLC, doing business as Pools Plus, Inc. (Pools
Plus), a pool maintenance company. Pires was
employed by Pools Plus and his wife, Ana Pires, was
a principal in the company.
When the accident occurred, Pires was insured under
a $1 million umbrella liability insurance policy (policy),
issued by the defendant. The van was covered by a
primary business insurance policy issued by National
Grange Mutual Insurance Company (NGM) to Pools
Plus. The NGM policy was effective from January 1,
2008 through September 7, 2011, and had a policy limit
of $300,000.
Domingos Gabriel brought actions, in 2012, against
Pires and, in 2013, against Pools Plus to recover dam-
ages for his injuries and losses. Laurinda Gabriel, was
also a plaintiff in those actions and sought to recover
damages for loss of consortium. The plaintiffs recov-
ered judgments in the total amount of $1,800,000 from
Pires and Pools Plus.2 NGM paid the plaintiffs $300,000
toward their judgments.3 The defendant, however,
refused to apply its $1,000,000 umbrella coverage to
the unpaid balance of the plaintiffs’ judgments. The
defendant denied coverage because ‘‘the NGM policy
provided bodily injury liability coverage of less than
$500,000,’’ which, the defendant argues, was not suffi-
cient to trigger excess coverage.
After the defendant denied Pires’ claim, Pires
assigned the policy to the plaintiffs.4 The plaintiffs then
commenced the present action to enforce the policy
and to recover the excess coverage from the defendant.
The trial court tried the case based on stipulated facts.
On November 16, 2016, the court found in favor of the
plaintiffs, stating: ‘‘[T]he policy declares unambiguously
[that] the failure to maintain underlying policies cov-
ering the loss that meet minimum limits would not
invalidate the policy but merely adjusts the net loss to
be paid by the insurer.’’ This appeal followed. Additional
facts and procedural history will be set forth as nec-
essary.
Before analyzing the merits of the defendant’s claims
on appeal, we set forth the applicable standard of
review. ‘‘[C]onstruction of a contract of insurance pre-
sents a question of law for the court which this court
reviews de novo.’’ (Internal quotation marks omitted.)
Lexington Ins. Co. v. Lexington Healthcare Group,
Inc., 311 Conn. 29, 37, 84 A.3d 1167 (2014). Because
all of the defendant’s claims on appeal relate to an
interpretation of the policy, our review is plenary.
I
The defendant first argues that the court erred in
finding that the NGM policy qualified as ‘‘underlying
insurance,’’ thereby triggering excess coverage. Specifi-
cally, the defendant argues that applicable ‘‘underlying
insurance’’ never existed. The plaintiffs argue that the
trial court’s finding was correct because failing to obtain
a primary policy with a $500,000 minimum did not invali-
date the policy; rather, it shifted the $200,000 gap in
coverage5 to be borne by the insured. We agree with
the plaintiffs.
The following well established legal principles
regarding the interpretation of insurance contracts are
relevant to this claim. ‘‘It is axiomatic that a contract
of insurance must be viewed in its entirety, and the
intent of the parties for entering it derived from the
four corners of the policy. . . . The policy words must
be accorded their natural and ordinary meaning . . .
[and] any ambiguity in the terms of an insurance policy
must be construed in favor of the insured because the
insurance company drafted the policy.’’ (Citation omit-
ted; internal quotation marks omitted.) Imperial Casu-
alty & Indemnity Co. v. State, 246 Conn. 313, 324–25,
714 A.2d 1230 (1998). Additionally, ‘‘the appropriate
viewpoint from which to read the policy . . . is that
of the insured . . . .’’ National Grange Mutual Ins. Co.
v. Santaniello, 290 Conn. 81, 99, 961 A.2d 387 (2009).
‘‘When interpreting [an insurance policy], [the court]
must look at the contract as a whole, consider all rele-
vant portions together and, if possible, give operative
effect to every provision in order to reach a reasonable
overall result.’’ (Internal quotation marks omitted.) Lex-
ington Ins. Co. v. Lexington Healthcare Group, Inc.,
supra, 311 Conn. 38.
The policy at issue is an umbrella insurance policy.
Umbrella policies are meant to provide an insured with
excess coverage when his or her primary policy or
policies have been exhausted. See Heyman Associates
No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 760
n.3, 653 A.2d 122 (1995). Policies that provide excess
coverage usually ‘‘[require] the insured to maintain a
lower level of insurance coverage at a stated monetary
level.’’ 15 L. Russ & T. Segalla, Couch on Insurance (3d
Ed. 2005) § 220:35. When the insured’s primary policy is
maintained below a stated monetary level, ‘‘[g]enerally,
depending upon the wording of the policy, the excess
insurer’s obligation remains the same as though the
underlying coverage was maintained at the proper
level.’’ Id. In the absence of policy terms to the contrary,
‘‘[t]he failure to maintain the proper amount of primary
coverage does not invalidate the excess coverage.’’ Id.
The defendant claims that the policy’s terms override
the general rule by expressly providing that the failure
to obtain a primary policy with the requisite minimum
coverage invalidates the policy. We disagree. Three pro-
visions of the policy, in particular, are relevant to this
argument. First, § I (R) defines underlying insurance,
in relevant part, as ‘‘the policy with the greater limit of
. . . [t]he limit shown for that policy in the DECLARA-
TIONS in Item 6., Required Underlying Insurance Cover-
age . . . .’’ Second, item 6 on the policy declarations
page reads as follows: ‘‘Required Underlying Insurance
Coverage: You agree that the higher of the MINIMUM
UNDERLYING LIMITS below . . . (1) is in force and
will continue in force; and (2) insures all . . . automo-
biles . . . owned by, leased or regularly furnished to
you.’’ Third, § IV of the policy provides, in relevant part,
as follows: ‘‘These are things you must do for us. We
may not provide coverage if you do not . . . [A] . . .
maintain your underlying insurance. You agree to
maintain all insurance policies affording in total the
coverage and the greater of the limits shown in the
DECLARATIONS in Item 6., Required Underlying Insur-
ance Coverages . . . . If Required Underlying Limits
are not maintained, or are not maintained at the greater
of the limit of liability shown in Item 6., Required Under-
lying Insurance Coverages . . . you will be responsible
for paying the amount of loss or loss adjustment
expense that would have been paid by that policy had
its full limit of liability been available. . . . Your failure
to comply with the foregoing paragraphs will not inval-
idate this policy, but in the event of such failure, we
shall be liable under this policy for indemnity and/or
defense expense only to the extent that we would have
been liable had you complied with these obligations.’’
(Emphasis altered.)
Looking at the four corners of the policy from the
viewpoint of the insured, there is no language indicating
that a primary policy with minimum coverage of
$500,000 is a condition precedent to insurance cover-
age. Furthermore, an insured would not understand
item 6 of the declaration page, which reads, ‘‘[y]ou agree
that the higher of the MINIMUM UNDERLYING LIMITS
below . . . is in force and will continue in force,’’ com-
bined with the schedule below the item, to mean that
he or she has to obtain primary insurance at $500,000
to make his or her excess policy effective.
Even if we assume, arguendo, that the policy clearly
indicated that existing primary insurance with a limit
of $500,000 is a prerequisite to excess coverage, the
defendant’s argument is undercut by the savings clause
in § IV (A).6 As stated in the preceding paragraph, § IV
(A) provides in relevant part: ‘‘Your failure to comply
with the foregoing paragraphs will not invalidate this
policy, but in the event of such failure, we shall be
liable under this policy for indemnity and/or defense
expense only to the extent that we would have been
liable had you complied with these obligations.’’
Although the defendant argues that the failure to obtain
primary coverage at the requisite level bars excess cov-
erage, the savings clause anticipates inadequate pri-
mary coverage and specifically provides for such an
event. If the policy was conditioned on obtaining
‘‘underlying insurance’’ at a specified level, such a
clause would be unnecessary. To adopt the defendant’s
interpretation of the savings clause would be to read
it out of the contract almost entirely, which undermines
the principle that a court is to read a contract so as to
give effect to all provisions therein. See Lexington Ins.
Co. v. Lexington Healthcare Group, Inc., supra, 311
Conn. 38. It is clear, therefore, that the clause listed in
§ IV (A) means that the defendant is not responsible
for any gap in coverage up to the $500,000 limit.
The defendant argues that the savings clause in § IV
(A) is inapplicable because it only contemplates situa-
tions in which an insured has ‘‘underlying insurance’’
at the requisite level when the umbrella policy becomes
active and fails to keep up the underlying policy. This
argument hinges on the meaning of the word ‘‘main-
tain.’’ The defendant argues that ‘‘maintain’’ means only
to keep up something that is already in existence. The
plaintiffs counter that this definition is overly narrow
and that there is nothing in the policy to preclude an
insured from reasonably understanding ‘‘maintain’’
insurance to mean obtain insurance.
Because the word ‘‘maintain’’ is not defined in the
policy, the term should be accorded its natural and
ordinary meaning. See New London County Mutual
Ins. Co. v. Zachem, 145 Conn. App. 160, 166, 74 A.3d
525 (2013). Additionally, ‘‘[i]t is a basic principle of
insurance law that policy language will be construed
as laymen would understand it and not according to
the interpretation of sophisticated underwriters . . . .
[T]he policyholder’s expectations should be protected
as long as they are objectively reasonable from the
layman’s point of view.’’ (Internal quotation marks omit-
ted.) R.T. Vanderbilt Co. v. Continental Casualty Co.,
273 Conn. 448, 462–63, 870 A.2d 1048 (2005). While
the defendant’s definition of ‘‘maintain’’ is one possible
meaning of the term, it is not likely to align with a
layperson’s reasonable reading of the word and the
policy provision. Under the defendant’s interpretation
of ‘‘maintain,’’ an insured would be barred from claim-
ing excess coverage if the insured obtained a primary
policy with the requisite limit just one day after procur-
ing umbrella coverage, but before an accident for which
the insured seeks coverage. We conclude, therefore,
that the plaintiffs’ understanding of ‘‘maintain’’ reflects
an insured’s reasonable expectations, and that the
defendant’s definition is not the only natural and ordi-
nary meaning of the word.
In Israel v. State Farm Mutual Automobile Ins. Co.,
259 Conn. 503, 509, 789 A.2d 974 (2002), our Supreme
Court interpreted a similar savings clause in an umbrella
insurance policy. The court in Israel held that the
umbrella policy at issue was ambiguous because it con-
tained two inconsistent clauses. Id., 512. One provision
of the policy in Israel ‘‘indicate[d] that in the event of
an insured’s failure to maintain underlying coverage,
the insured will be responsible for any loss up to the
amount of the required underlying coverage before the
umbrella takes effect.’’ Id., 509. Another provision of
the policy provided that ‘‘the insured forfeits umbrella
coverage completely if he or she does not maintain the
requisite underlying coverage.’’ Id. Because ‘‘it [was]
not possible to give effect to both of these provisions
in a manner that resolves the ambiguity created by the
policy language’’; id., 510; the court in Israel construed
the umbrella policy against the insurance company that
drafted the policy and ‘‘in a manner that affords cover-
age to the insured.’’ Id., 512. In so doing, the court
determined that the umbrella policy provided excess
coverage to the insured. Id.
Unlike the insurance policy in Israel, the policy in the
present case does not contain contradictory provisions
and, therefore, is not ambiguous. The provisions in the
policy indicate that a gap in coverage will not invalidate
the policy. Moreover, unlike the policy in Israel, the
policy in the present case does not provide that the
failure to maintain underlying insurance forfeits the
entire umbrella policy. We conclude, therefore, that
unlike the policy in Israel, the policy in the present
case unambiguously provides excess coverage, even
when the insured’s primary policy is maintained at a
lower level than specified.
II
The defendant’s second claim on appeal is that, even
if the policy provided excess coverage, the trial court
erred in finding that the policy’s business exclusion did
not apply. Specifically, the defendant argues that the
business exclusion applies because the NGM policy that
covered the van at the time of the accident does not
qualify as ‘‘underlying insurance.’’ The plaintiffs argue
that the trial court properly determined that the policy’s
business exclusion does not apply because qualifying
‘‘underlying insurance’’ existed at the time of the acci-
dent. We agree with the plaintiffs.
‘‘In an insurance policy, an exclusion is a provision
which eliminates coverage where, were it not for the
exclusion, coverage would have existed.’’ (Internal quo-
tation marks omitted.) Hammer v. Lumberman’s
Mutual Casualty Co., 214 Conn. 573, 588, 573 A.2d 699
(1990). Section III (G) of the policy eliminates coverage
of a loss ‘‘[c]aused by [the insured’s] business or busi-
ness property unless underlying insurance provides
coverage for the loss.’’ (Emphasis in original.)
Section I (D) of the policy defines business as ‘‘any
employment, trade, profession, occupation or any other
enterprise in which the insured has a financial interest
. . . .’’ (Emphasis in original.) It is uncontested that
the van was being used for business purposes, within
the policy’s definition of the term, at the time of the
accident.
The second clause of § III (G)—‘‘unless underlying
insurance provides coverage for the loss’’—however,
makes the exclusion inapplicable in the present case.
(Emphasis in original.) It is uncontested that Pires had
insurance through NGM that provided business automo-
bile coverage for the van when the accident occurred.
The defendant argues that the NGM policy did not qual-
ify as ‘‘underlying insurance,’’ as required by the second
clause of the exclusion. The defendant relies on the
same reasoning as in its first claim to support its asser-
tion that the second clause of the business exception
does not apply, since the coverage did not contain the
$500,000 limit. Specifically, the defendant argues that
‘‘[t]he exception to the business exclusion is not at
issue because ‘underlying insurance’ never existed.’’ As
discussed in part I of this opinion, however, the NGM
policy qualified as ‘‘underlying insurance,’’ even though
the coverage was $300,000 instead of $500,000 or more.
Because there was ‘‘underlying insurance’’ that covered
the loss caused by the accident, the trial court correctly
determined that the business exclusion does not apply.
III
The defendant’s final claim is that, even if excess
coverage existed and the business exception did not
apply, the trial court erred in the determination of dam-
ages. Specifically, the defendant argues that the trial
court improperly denied it a $200,000 credit to be
charged against the sum the defendant owes toward
the unsatisfied portion of the plaintiffs’ judgments. The
plaintiffs argue that nothing in the policy provides for
such a credit and that the defendant is already receiving
the benefit of a $200,000 credit because it is only obli-
gated to pay for recovery exceeding $500,000. We agree
with the plaintiffs.
Section II (A) of the policy states: ‘‘If you are legally
liable to pay damages for a loss to which this insurance
applies, we will pay your net loss in excess of the
retained limit.’’ (Emphasis omitted.) Section I (J)
defines net loss, in relevant part, as ‘‘[t]he amount you
are legally obligated to pay as damages for personal
injury, bodily injury or property damage including
prejudgment interest. . . . All reasonable expenses
you incur in the investigation, settlement and defense
of any claim or suit at our request. This does not include
expenses covered by another policy or expenses we
incur under the Defense and Settlement section of this
policy and salaries of your employees . . . .’’ (Empha-
sis in original.) There is nothing in the terms of the
policy, however, to support the defendant’s argument
that it is entitled to a credit.
The defendant’s argument relies on the proposition
that ‘‘an excess carrier is entitled to a credit, not from
the primary carrier’s settlement, but from the amount
allocable to the primary under its policies. In other
words, the excess carrier is entitled to a credit for the
full amount of the primary carrier’s coverage before it is
required to pay any cleanup expense.’’ UMC/Stamford,
Inc. v. Allianz Underwriters Ins. Co., 276 N.J. Super.
52, 69, 647 A.2d 182 (1994); accord Chemical Leaman
Tank Lines, Inc. v. Aetna Casualty & Surety Co., 177
F.3d 210, 227 (3d Cir. 1999). As the plaintiffs correctly
point out, however, these cases are distinguishable from
the present case in that they deal with drop-down cover-
age, a theory of recovery that the plaintiffs are not
pursuing in this case. The defendant received the bene-
fit of the $200,000 gap in coverage by not being required
to pay any money until after the requisite $500,000 limit.
On the basis of the foregoing, we conclude that the trial
court properly determined that the defendant was not
entitled to a $200,000 credit under the policy.
The judgment is affirmed.
In this opinion the other judges concurred.
1
We refer to Domingos Gabriel and Laurinda Gabriel, collectively, as the
plaintiffs, and individually by name where appropriate.
2
Domingos Gabriel recovered judgments in the amount of $1,200,000 from
Pires and Pools Plus, and Laurinda Gabriel recovered judgments in the
amount of $600,000 from Pires and Pools Plus.
3
The plaintiffs also recovered $450,000 from a settlement with Monroe
Insurance Center, Inc., the insurance broker that sold Pires the policy. See
Pires v. Monroe Ins. Center, Inc., Superior Court, judicial district of Fairfield,
Docket No. CV-XX-XXXXXXX-S (May 31, 2016).
4
Because the plaintiffs stand in the shoes of Pires, the term plaintiffs will
also be used when referring to Pires’ actions before he assigned his rights
under the umbrella policy to the plaintiffs. See Brown v. Employer’s Reinsur-
ance Corp., 206 Conn. 668, 673, 539 A.2d 138 (1988).
5
The $200,000 gap is derived from the difference between the $300,000
underlying coverage and the $500,000 limit in the policy.
6
Indeed, if said language did exist, it would create an ambiguity in the
policy. Instead, we agree with the plaintiffs that the policy language is clear
and unambiguous.