THOMAS NAPOLITANO v. ACE AMERICAN INSURANCE COMPANY et al., SC 20922

Judicial District of Hartford

      Contracts; Whether Notice of Cancellation of Workers' Compensation Insurance Policy Was Definite, Certain, and Unambiguous Such That Policy Was Effectively Cancelled Under General Statutes § 31-348. The plaintiff, Thomas Napolitano d/b/a Napolitano Roofing, had a workers' compensation insurance policy issued by the defendant, ACE American Insurance Company (ACE).  On March 28, 2018, ACE sent the plaintiff notice that a charge would be imposed if he did not provide certain records needed to complete an audit.  On April 5, 2018, ACE sent the plaintiff two notices.  The first, titled "Noncooperation of Audit Current Coverage," stated that he had not complied with the records request and that his failure to comply would result in cancellation of his policy if the audit was not conducted prior to the effective date of cancellation.  The second, titled "Workers Compensation and Employers Liability Policy Cancellation," stated that the policy "is cancelled in accordance with its terms as of the effective date of cancellation indicated," which was April 25, 2018.  On April 10, 2018, an agent for the plaintiff's insurance producer informed him that his tax returns had been received and that he was compliant at that time.  On April 16, 2018, an agent for ACE emailed the plaintiff that he still had audit documents missing, but the plaintiff did not respond.  On May 29, 2018, one of the plaintiff's employees was injured in the course of his employment and filed a workers' compensation claim.  ACE denied the claim and refused to defend or indemnify the plaintiff because the policy had been terminated prior to the date of loss.  The plaintiff brought this action seeking a declaratory judgment that the cancellation of the policy was ineffective and damages against ACE for, among other things, breach of contract for refusing to defend or indemnify him under the policy.  The plaintiff moved for summary judgment, claiming that the second April 5 notice did not cancel the policy because it was not "certain and unequivocal" when read with the other notices.  Pursuant to General Statutes § 31-348, a workers' compensation insurance policy is not effectively cancelled until fifteen days after notice is filed with the chairperson of the Workers’ Compensation Commission, and, under Dengler v. Special Attention Health Services, Inc., 62 Conn. App. 440 (2001), the notice must be certain and unequivocal.  The trial court granted the motion and awarded the plaintiff damages.  The defendant appealed.  The Appellate Court (219 Conn. 110) reversed, holding that the trial court erred in rendering summary judgment for the plaintiff because the second April 5 notice cancelled the policy.  The Appellate Court found that the requirements of § 31-348, including that the notice be certain and unequivocal, were met because the second April 5 notice expressly stated that the effective date of cancellation was April 25, 2018, and it was filed with the chairperson of the Workers' Compensation Commission at least fifteen days prior to the date of cancellation.  The Appellate Court noted that the plaintiff's subjective understanding as to when the policy was cancelled was irrelevant.  The plaintiff sought certification to appeal, which the Supreme Court granted as to the question of whether the Appellate Court correctly concluded that the second April 5 notice constituted a definite, certain, and unambiguous notice of cancellation that effectively cancelled the plaintiff's workers' compensation insurance policy under § 31-348.