Continental Casualty Co. v. Parnoff ( 2019 )

18‐3031‐cv
Continental Casualty Co. v. Parnoff
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A
PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 20th day of December, two thousand nineteen.
PRESENT: ROBERT D. SACK,
DENNY CHIN,
JOSEPH F. BIANCO,
Circuit Judges.
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CONTINENTAL CASUALTY COMPANY,
Plaintiff‐Counter‐Defendant‐
Appellee,
v.
18‐3031
LAURENCE V. PARNOFF, SR.,
Defendant‐Counter‐Claimant‐
Appellant,
LAURENCE V. PARNOFF, P.C.,
Defendant‐Counter‐Claimant,
DARCY YUILLE,
Defendant.
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FOR PLAINTIFF‐COUNTER‐ RICHARD A. SIMPSON (Emily S. Hart,
DEFENDANT‐APPELLEE: on the brief), Wiley Rein LLP,
Washington, D.C.
FOR DEFENDANT‐COUNTER‐ LAURENCE V. PARNOFF, Sr., pro se,
CLAIMANT‐APPELLANT: Bridgeport, Connecticut.
Appeal from a judgment of the United States District Court for the District
of Connecticut (Shea, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Defendant‐counter‐claimant‐appellant Laurence V. Parnoff, Sr., appeals
from a judgment entered in the district court on September 14, 2018, in favor of plaintiff‐
counter‐defendant‐appellee Continental Casualty Company (ʺContinentalʺ). In a ruling
entered September 12, 2018, the district court granted Continentalʹs motion for judgment
on the pleadings as to both Continentalʹs declaratory judgment claim and Parnoffʹs
counterclaims for breach of contract and breach of the implied covenant of good faith
and fair dealing. The district court held that Continental was not obligated to defend or
indemnify Parnoff, an attorney, with respect to a 2013 state lawsuit commenced by his
former client, Darcy Yuille, which resulted in a jury awarding Yuille damages against
Parnoff of $1,480,336, for conversion, civil theft, and prejudgment interest (the ʺYuille
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actionʺ). The district court concluded that the damages awarded in the Yuille action
were not covered by the professional liability insurance policy (the ʺPolicyʺ) that
Continental had issued to Parnoffʹs law firm. We assume the partiesʹ familiarity with
the underlying facts, the procedural history of the case, and the issues on appeal.
This Court reviews de novo a district courtʹs decision to grant judgment on
the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Hayden v. Paterson, 594
F.3d 150, 160 (2d Cir. 2010). All factual allegations in the complaint are accepted as true
and the allegations are construed in the light most favorable to the non‐moving party.
Latner v. Mount Sinai Health Sys., Inc., 879 F.3d 52, 54 (2d Cir. 2018). As in the Rule
12(b)(6) context, documents that are attached to the pleadings or incorporated by
reference may be considered. See L‐7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422
(2d Cir. 2011). Here, the district court properly considered the Policy and exhibits
relating to the Yuille action.
Under Connecticut law, which the parties agree applies in this case, the
question of whether an insurer has a duty to defend its insured is ʺpurely a question of
law, which is to be determined by comparing the allegations of [the injured partyʹs]
complaint with the terms of the insurance policy.ʺ Cmty. Action for Greater Middlesex
Cty., Inc. v. Am. Alliance Ins. Co., 254 Conn. 387, 395 (2000). ʺBecause the duty to defend
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is significantly broader than the duty to indemnify, ʹwhere there is no duty to defend,
there is no duty to indemnify.ʹʺ DaCruz v. State Farm Fire & Cas. Co., 268 Conn. 675, 688
(2004) (quoting QSP, Inc. v. Aetna Cas. & Surety Co., 256 Conn. 343, 382 (2001)).
Insurance policies are interpreted according to general contract law
principles. Lexington Ins. Co. v. Lexington Healthcare Grp., Inc., 311 Conn. 29, 37 (2014).
The court must give effect to a policyʹs terms that are clear and unambiguous, but courts
will construe ambiguous policy terms in favor of the insured. Id. at 37‐38. Courts,
however, ʺwill not torture words to import ambiguity where the ordinary meaning
leaves no room for ambiguity,ʺ and any ambiguity must derive from the language in the
contract rather than ʺone partyʹs subjective perception of the terms.ʺ Id. at 38 (quoting
Johnson v. Conn. Ins. Guar. Assʹn, 302 Conn. 639, 643 (2011)).
In this case, the Policy provides that Continental will pay ʺall sums . . . that
the Insured shall become legally obligated to pay as damages and claim expenses
because of a claim . . . by reason of an act or omission in the performance of legal services
by the Insured.ʺ Appʹx at 41 (emphasis in original). As the district court reasoned, this
text provides that to trigger Continentalʹs duty to defend or indemnify Parnoff, a lawsuit
must arise from acts or omissions that he committed in the course of providing legal
services. Additionally, a separate provision of the Policy excludes several specific
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categories of damages. The Policy provides that ʺ[d]amages do not includeʺ: (1) ʺlegal
fees, costs and expenses paid or incurred or charged by any Insured, no matter whether
claimed as restitution of specific funds, forfeiture, financial loss, set‐off or otherwise, and
injuries that are a consequence of any of the foregoing;ʺ (2) ʺpunitive or exemplary
amounts;ʺ or (3) ʺthe multiplied portion of multiplied awards.ʺ Appʹx at 45 (emphasis
omitted).
The district court correctly concluded that the Yuille action was not covered
by the Policy because the relief that Yuille sought did not fall within the covered
damages and, moreover, fell within an exclusion. Yuilleʹs 2013 lawsuit sought to
recover disputed legal fees that Parnoff had transferred from an escrow account to a
personal account in his and his wifeʹs names while the dispute over the legal fees was on
appeal in state court. Yuille was not seeking damages caused by ʺan act or omission in
[Parnoffʹs] performance of legal services,ʺ Appʹx at 41, but the recovery of monies
(through the remedies of disgorgement and constructive trust) that she claimed Parnoff
had converted. Moreover, she was seeking to recover legal fees charged by Parnoff,
which fell within the exclusion for legal fees charged by the insured. Yuilleʹs requests
for costs and interest were contingent on her recovery of the disputed fee amount and
were thus excluded as ʺinjuries that are a consequence ofʺ Parnoffʹs legal fees. Appʹx at
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45. The treble damages that Yuille sought for her civil theft claim were also excluded
from coverage by the Policyʹs ʺmultiplied portion of multiplied awardsʺ provision. Id.And her request for punitive damages was expressly excluded by the Policyʹs exception
for ʺpunitive or exemplary amounts.ʺ Appʹx at 45. As it was plain from the face of
Yuilleʹs complaint and the clear terms of the Policy that Parnoff was not covered for the
Yuille action, the district court did not err in granting judgment on the pleadings to
Continental.
* * *
We have considered all of Parnoffʹs remaining arguments and conclude
they are without merit. For the foregoing reasons, the judgment of the district court is
AFFIRMED.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk of Court
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