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. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x 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. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x 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

2 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,

(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.,

(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,

(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.,

(2000). ʺBecause the duty to defend

3 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.,

(2004) (quoting QSP, Inc. v. Aetna Cas. & Surety Co.,

(2001)).

Insurance policies are interpreted according to general contract law

principles. Lexington Ins. Co. v. Lexington Healthcare Grp., Inc.,

, 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.

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

at 38 (quoting

Johnson v. Conn. Ins. Guar. Assʹn,

, 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

4 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

5 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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