Insurance Coverage: Court finds that CGL insurer may have a duty to defend a store and employee for the employee’s alleged illegal selling of drugs

The plaintiff, Acceptance Indemnity Insurance Co., moved for summary judgment on the issue of its duty to defend the defendants. An underlying complaint filed by the administrator of the estate of Elle Migneault alleged that an individual used his position as an employee at Sam’s Food Store to procure illegal drugs and provide them to the decedent who suffered an overdose and subsequently passed away. The underlying complaint was also directed against the defendant owner, Mohammad Iqbal, as the operator of Sam’s Food Stores, alleging that he was responsible for hiring the employee who was previously arrested for drug-related offenses including possession of a controlled substance while working at Sam’s Food Store and selling tobacco to minors. Iqbal’s commercial liability policy insures “Mohammad Iqbal d/b/a Sam’s Food Store” against qualifying damage “arising out of … [t]he ownership, maintenance, or use of” Sam’s Food Store. Furthermore, the insurance policy provides coverage for “bodily injury” and “property damage” only if they are caused by an “occurrence,” which the policy defines as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policy contains an exclusion for any bodily injury or property damage “expected or intended from the standpoint of the insured.” Plaintiff asserts that coverage was not triggered because no accident occurred, or that in the alternative, the intentional conduct exclusion applies to the employee’s alleged conduct. The court denies the insurer’s motion for summary judgment as to the employee on the grounds that death caused by drug overdose will only be expected or intended if either the provision of the drug is so “inherently harmful” that death would be a natural consequence or that the employee had knowledge that the drugs were harmful enough that the decedent might perish as a result of taking them. The court does not find sufficient facts to determine which scenario applies and therefore denies the insurer’s motion. The court also denies the motion as to Mohammad on the grounds that the facts leave open a possibility that even if the employee’s conduct was intentional and Mohammad had no actual knowledge of the employee’s conduct, Mohammad still “failed to install and maintain appropriate security at [Sam’s Food Store] so as to deter or prevent illegal activity.” Because the complaint alleges “facts that potentially could fall within the scope of coverage,” the “duty to defend is triggered”. The insurer failed to establish that Mohammad’s conduct was not accidental. Therefore, the court denies the insurer’s motion for summary judgment. Acceptance Indem. Ins. Co. v. Migneault, No. 3:21CV0510 (JBA), 2022 WL 16553218 (D. Conn. Oct. 31, 2022).