Certified questions to Connecticut. Northfield Ins. Co. v. Derma Clinic Inc. involved allegations of sexual assaults by a masseuse. The plaintiffs in those actions also sued the massage company and its onwer. The company and owner were sued for failing to advise the plaintiffs in these actions that there had been complaints against the employee, failure to investigate the allegations, continuting to employ the employee, failing to report the employee to the proper authorities and other claims stemming from these allegations.
The company and its owner relied on two insurance companies to cover their defense against the claims. The first policy was a professional liability policy and covered the company and its executive officers and directors (but only with respect to their duties as the company's officers and directors. The policy describes the business of the company as "massage therapist." This policy exluded any damages arising out of any dishonest, fraudulent, criminal or malicious act or omission of any insured or "employees."
The second policy on which the company and its owner relied was a commerical general liability policy. The policy excludes coverage for bodily injury arising out of the rendering or failure to render any professional services, including bu t not limited to . . . massage.
The Insurance Company disclaimed coverage and commenced a declaratory judgment, seeking a determination that their insurance policies did not obligate it to defend or indemnify the company.
The Insurance Company moved for summary judgment, and the District Court granted the motion, holding that neither policy covered the claims.
he Second Circuit certified four questions to be answered by the Supreme Court of Connecticut. The questions are:
1. In a policy with multiple coverage parts, does a criminal acts exclusion in the Commerical Crime Coverage Form apply to disputes arising under the Commercial General Liability Form?
2. Can an employee's pleas of nolo contendere and the resulting conviction be used to trigger an insurance policy's criminal acts exclusion?
3. When applied to the business of massage therapy, does the term "professional services" include acts ancillary to the business of a massage therapist, e.g., the investigating, training, monitoring, supervising of masseurs?
4. Under the language of the commercial coverage policy, do the negligence claims against the company and its owner arise out of the rendering of professional services when the underlying acts involve physical and sexual assualts during the performance of a message.
The decision was rendered on March 6, 2006 and can be found on the Second Circuit website.