On June 20, 2017, the Appeals Court entered a final order on the appeal of Vincent Nguyen (“Mr. Nguyen”) from Arbella Mutual Insurance Company’s (“Arbella”) refusal to provide a legal defense to Mr. Nguyen under his homeowner policy for a suit brought in federal court by one Jeanne Mooney (“Ms. Mooney”) against him for alleged civil rights violations and personal injury claims.
Charges and counter-charges in the Newton Police Department
Ms. Mooney was an employee of the Newton police department who had worked as the executive administrator for the chief of police.
On March 15, 2013, Ms. Mooney filed a federal lawsuit alleging the chief of police, a police lieutenant, and Mr. Nguyen, a civilian employee of the police department, conspired to coerce her into accepting added duties, in violation of a union contract, as retaliation for Ms. Mooney’s objecting to both the potential contract violation and the chief of police improperly obtaining an “exceptional service” pay raise.
She also alleged that the police chief and Mr. Nguyen, to obtain leverage over her, conspired to stage a false “I-Team Investigation” by a television station regarding her use of her break time. The ruse relied on photographs that Mr. Nguyen took, during working hours, of Ms. Mooney outside the police station and of Ms. Mooney’s truck outside her home. These video activities by Mr. Nguyen allegedly violated her privacy rights.
She further alleged that the chief, the lieutenant, and Mr. Nguyen conspired to stage a purported theft of police department funds and to falsely name her as the thief to have her terminated, in retaliation for her reporting to others the chief’s alleged wrongdoing. As as result of the accusation, she was placed on administrative leave, and was criminally charged with and tried for the theft, only to be acquitted.
Ms. Mooney’s suit against the chief of police, the police lieutenant, the City of Newton, the mayor of Newton, and Mr. Nguyen alleged violations of her federal and state constitutional rights, civil conspiracy, intentional infliction of emotional distress, intentional interference with contractual relations, interference with advantageous business relations, invasion of privacy, and defamation.
Once served with Ms. Mooney’s suit, Mr. Nguyen put his homeowner insurer, Arbella, on notice of the Federal suit and demanded they pay for the cost of his defense.
Arbella denies any defense under homeowner policy because of “business pursuits” exclusion
Arbella instead of issuing a reservation of rights denied the claim for defense summarily citing the policy exclusion in Mr. Nguyen’s homeowner’s policy for “business pursuits.”
[Injury a]rising out of or in connection with a ‘business’ engaged in by an ‘insured.’ This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the ‘business.'”
The policy’s definitions section states that “‘[b]usiness’ includes trade, profession or occupation.”
Mr. Nguyen then filed a declaratory judgment and a request for a preliminary injunction seeking an order that Arbella was bound to provide him a defense of the suit by Ms. Mooney in Federal court. After a summary judgment decision against him in the Superior Court, Mr. Nguyen appealed to the Appeals Court seeking a reversal of the order denying him a defense by Arbella.
Mr. Nguyen claims one or more allegations relate to matters outside his employment
On appeal Mr. Nguyen argued Arbella must defend him in connection with Ms. Mooney’s federal suit because under Massachusetts law he only needed to show based on the complaint’s general allegations that one of Ms. Mooney’s liability claims possibly fell within the insurance coverage.
Under Mr. Nguyen’s Arbella policy, “Personal injury” meant injury arising out of one or more of these offenses:
- False arrest, detention or imprisonment, or malicious prosecution;
- Libel, slander or defamation of character; or
- Invasion of privacy, wrongful eviction or wrongful entry.
Ms. Mooney’s complaint alleged that Mr. Nguyen had: Instigated the prosecution and participated in the investigation against her for theft; had participated in violating her privacy by videotaping her at various places, including her home; and had defamed her.
Mr. Nguyen argued that these allegations in Ms. Mooney’s complaint, did not relate to any functions involved with his civilian employment by the police department. And under the definition of personal injury in his homeowner policy he was entitled to, at least, a legal defense of these claims in Ms. Mooney’s complaint.
In that case, however, under Massachusetts law, if Arbella had to defend one of Ms. Mooney’s claims, it had to defend all the claims in the complaint, whether covered or uncovered.
Arbella argues concocted police investigation and staged theft not homeowner risk
Arbella repeated its successful argument from the Superior Court on appeal. According to Arbella the underlying complaint were not reasonably susceptible to any such interpretation as Mr. Nguyen claimed. Ms. Mooney’s suit only involved allegations of a concocted investigation and a staged theft in the workplace of the Newton Police Department, where Mr. Nguyen was employed.
None of the allegations in Ms. Mooney’s lawsuit against Mr. Nguyen addressed “risks associated with the home or activities related to the home.”
Since the policy defined “business” in the business exclusion as including “trade, profession or occupation, Mr. Nguyen had no coverage for claims arising out of or in connection with his employment.
Court finds conspiracy in workplace allegations have no coverage under business pursuits exclusion
On appeal, while acknowledging that an insurer’s duty to defend broadly applies to claims, the court noted it is, “settled that, in applying the business pursuits exclusion, “[t]he terms ‘arising out of’ and ‘in connection with’ are not . . . to be construed narrowly but are read expansively.”
The Arbella business pursuits exclusion barred coverage for claims either “arising out of” or “in connection with” a policyholder’s business activities. The court, citing prior cases decided under Massachusetts law affirmed, ‘arising out of’ is ordinarily held to mean ‘originating from, growing out of, flowing from, incident to or having connection with'” while “‘in connection with’ is ordinarily held to have even a broader meaning than ‘arising out of’ and is defined as ‘related to, linked to, or associated with.’
The court reflecting on the expansive meaning given the terms “arising out of” and “in connection with” stated they had no difficulty concluding that all of Ms. Mooney’s claims against Mr. Nguyen alleged injuries “[a]rising out of or in connection with [Mr. Nguyen’s] ‘business,'” which the policy defines as including his “trade, profession or occupation.”
Mr. Nguyen’s occupation was as a clerical worker in the office of Newton’s chief of police: Ms. Mooney was his fellow employee in that office. The court noted the actions Ms. Mooney alleged Mr. Nguyen had taken were, allegedly, a part of various conspiracies with the chief of police and a police lieutenant allegedly aimed at coercing or retaliating against Ms. Mooney for her on-the-job conduct.
The court ruled, “Nothing in the complaint alleges any conduct by Mr. Nguyen that is unconnected to his work at the police department” and affirmed Arbella had correctly denied Mr. Nguyen’s request for a defense of Ms. Mooney’s lawsuit.
No request for further appellate review
Following the Appeals Court decision Mr. Nguyen had twenty days to request the Supreme Judicial Court to review his case by his applying for further appellate review. Mr. Nguyen made no such request and the decision for Arbella is now final.
