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Where the town of Dracut has requested a ruling that the defendant insurance company has a duty to defend and indemnify the town in connection with a civil action brought by a former employee, the insurer’s motion for summary judgment should be allowed because the policy’s employment contract exclusion applies.

“In this single-count declaratory judgment action, the Town of Dracut (‘Town’) seeks a ruling that MIIA Property & Casualty Group, Inc. (‘MIIA’) has a duty to defend and indemnify the Town and certain employees in connection with a civil action brought against them by a former employee. The case is before me on cross-motions for summary judgment. For the reasons set out below, I must deny the Town’s motion and allow MIIA’s motion. …

“On May 1, 2023, Leonard Wagner (‘Wagner’), a former Town police officer, filed suit in the Middlesex Superior Court, Civil Action No. 23-1233 (‘the Wagner Matter’), against the Middlesex District Attorney’s Office and an Assistant District Attorney (‘the DA Defendants’), and against the Town, its Chief of Police, and its Deputy Chief of Police (‘the Town Defendants’). …

“On June 17, 2011, the Town, Wagner, and Wagner’s union, the New England Police Benevolent Association, entered into an Agreement to Resolve Personnel Issue (‘the Agreement’). …

“As is relevant here, MIIA insures the Town under a Public Officials Liability Coverage policy (Contract #DRA00216-06-22) (‘the Policy’). The Policy provides two potentially relevant types of coverage: insurance against ‘wrongful acts’ (‘Coverage A’), and insurance against employment practices violations (‘Coverage B’). …

“The Town argues that it is entitled to defense and indemnity under Coverage B because, as against the Town Defendants, the Wagner Matter seeks damages for an ‘employment practices violation.’ MIIA contends that the Wagner Matter does not reasonably allege an ‘employment practices violation’ under Coverage B and, even if it did, the policy does not cover the Wagner Matter because Wagner’s claim against the Town Defendants arises out of the Agreement, which triggers the Employment Contract Exclusion. MIIA also argues the Town Defendants are not insured under Coverage A because of the Breach of Contract Exclusion. …

“To the extent the Town argues it is entitled to defense and indemnity under Coverage B because the Wagner Matter concerns an ‘employment practices violation’ by the Town Defendants, I agree with MIIA that the Wagner Matter is excluded from coverage. The Employment Contract Exclusion makes clear that ‘Coverage B does not apply to any damages, costs, ‘claims’, or ‘suits’ … [a]rising out of or in any way related to any actual or alleged breach of any written or oral employment contract or agreement.’ Policy §I(B)(2)(q) (emphasis added).

“The Town argues that the Agreement, which resolves disciplinary charges, is a settlement agreement, not an ‘employment contract or agreement’ and therefore the Employment Agreement Exclusion does not apply. According to the Town, the phrase ‘employment contract or agreement,’ which the Policy does not define, can be reasonably read to refer to a contract or agreement setting forth the terms and conditions of employment. It asserts that the exclusion only applies to an initial or foundational agreement between employer and employee outlining their respective obligations during the employment relationship, e.g., the collective bargaining agreement between the Town and Wagner’s union.

“I disagree that the plain meaning of the phrase ‘employment contract or agreement’ can be reasonably construed so narrowly. … As suggested by the broad language used in the exclusion, the plain language of the phrase ‘employment contract or agreement’ encompasses all contracts and agreements concerning employment, not simply the initial contract or agreement between an employer and an employee. …

“… Ultimately, the Agreement, when viewed as a whole, concerns Wagner’s continued employment with the Town and the terms thereof. …

“It is hereby declared and adjudged that defendant does not have a duty to defend or indemnify the Town of Dracut, Chief of Police Peter Bartlett, and Deputy Chief of Police David J. Chartrand, Jr. in connection with the lawsuit brought against them by Leonard Wagner in the Middlesex Superior Court, Civil Action No. 23-1233.”

Town of Dracut v. MIIA Property & Casualty Group, Inc. (Lawyers Weekly No. 09-027-25) (10 pages) (Krupp, J.) (Suffolk Superior Court) (Civil No. 24-590-BLS1) (Feb. 4, 2025).

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