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RECALL TOTAL INFORMATION MANAGEMENT,

INC., ET AL. v. FEDERAL INSURANCE

COMPANY ET AL.

(AC 34716)

Lavine, Keller and Sullivan, Js.

Argued October 11, 2013—officially released January 14, 2014

(Appeal from Superior Court, judicial district of

Hartford, Complex Litigation Docket, Berger, J.)

Edmund M. Kneisel, pro hac vice, with whom were

Lawrence G. Rosenthal, and, on the brief, Matthew T.

Wax-Krell, and Brian K. Epps, pro hac vice, for the

appellants (plaintiffs).

Melicent B. Thompson, with whom was Eric S. Lankton, for the appellee (named defendant).

Robert D. Laurie, with whom, on the brief, was Elizabeth F. Ahlstrand, for the appellee (defendant Scottsdale Insurance Company).
Opinion

LAVINE, J. This breach of an insurance contract dispute involves the interpretation of a personal injury

clause in a commercial general liability policy. The

plaintiffs, Recall Total Information Management, Inc.

(Recall) and Executive Logistics, Inc. (Ex Log), appeal

from the grant of summary judgment in favor of the

defendants, Federal Insurance Company (Federal) and

Scottsdale Insurance Company (Scottsdale).1 On

appeal, the plaintiffs claim that the trial court improperly construed the insurance contract at issue by concluding that (1) the defendants did not have a duty to

defend, and (2) the losses associated with a data-loss

incident were not personal injuries. We affirm the judgment of the trial court.

The following facts, as agreed to in the parties’ stipulation of facts, are germane to the resolution of this

appeal. In October, 2003, Recall entered into a vital

records storage agreement with International Business

Machines (IBM) whereby Recall agreed to transport

and store various electronic media belonging to IBM.

In February, 2006, Recall entered into a subcontract

with Ex Log to provide transportation services for the

electronic media. Under the subcontract with Recall,

Ex Log was required to maintain various insurance policies, including a $2 million commercial general liability

policy and a $5 million umbrella liability policy, all naming Recall as an additional insured. The defendants

issued the required insurance.2

On February 23, 2007, Ex Log dispatched a transport

van to move computertapes (tapes)from an IBM facility

in New York to another location. During transport, a

cart containing the tapes fell out of the back of the

van near a highway exit ramp. The parties agree that

approximately 130 of the tapes were removed from the

roadside by an unknown person and never recovered.

The tapes that were never recovered contained

employment-related data for some 500,000 past and present IBM employees. This information included social

security numbers, birthdates, and contact information.

After being notified that the tapes had been lost, IBM

immediately took steps to prevent harm from any dissemination of this personal information. These steps

included notification to potentially affected employees

and the establishment of a call center to answer inquiries regarding the lost data. IBM also provided those

who could be affected by the loss with one year of

credit monitoring to protect against identity theft. IBM

claimed a total of more than $6 million in expenses3

for the mitigation measures it took and entered into a

negotiated settlement with Recall for the full amount

of the loss.

Thereafter, Recall sought indemnification from Ex

Log. Ex Log then filed claims against the policy, but
the defendants denied coverage. Following the denial

of coverage, Recall and Ex Log entered into a settlement

agreement and on June 22, 2009, Ex Log signed a promissory note in favor of Recall for $6,419,409.79 and

assigned all of its rights under the policy to Recall.

The plaintiffs commenced the present action against

the defendants on July 24, 2009. The complaint alleged

several counts, including breach of an insurance contract. The defendants filed motions for summary judgment with respect to the count alleging breach of an

insurance contract on the ground that, as a matter of

law, they had no duty to defend and that the plaintiffs’

loss was not covered by the policy. The trial court

granted the motions for summary judgment, concluding

that the defendants had not waived their coverage

defenses and that the plaintiffs’ losses were not covered

under either the property damage or the personal injury

provisions of the policy.

With respect to whether the defendants had waived

their coverage defenses, the trial court concluded that,

under the policy, the defendants only had a duty to

defend against a ‘‘suit.’’ The trial court found that the

term ‘‘suit’’ was unambiguous and declined to interpret

that term to include mere negotiations. The trial court

then turned to whether the loss associated with the lost

tapes was covered under the terms of the policy. The

trial court addressed whether the loss was covered

under the property damage provision of the policy and

determined that the data loss constituted intangible

property, which was expressly excluded from

coverage.4

Next, the trial court addressed whether there was

coverage under the personal injury provision of the

policy. The trial court noted that the plaintiffs did not

allege that the information contained on the tapes was

ever accessed by anyone following the incident in which

the tapes were lost. Accordingly, the trial court reasoned: ‘‘[T]here has also been no injury to a person.

IBM paid notification costs, but IBM is not a person5

and there is no allegation that its right to privacy was

violated. Additionally, there is no evidence—even now,

some four years after the incident—that any person

suffered identity theft or that the privacy of any IBM

employee was violated as a result of the loss or theft of

the data tapes.’’ The trial court then rendered summary

judgment in favor of the defendants. The plaintiffs filed

a motion for reargument, which was denied. This

appeal followed.6

On appeal, the plaintiffs contend that the trial court

erred when it construed the policy and concluded that

(1) the defendants did not have a duty to defend, and

(2) the loss of the tapes did not constitute a personal

injury. We disagree.

‘‘Our standard of review of a trial court’s decision to
grant a motion for summary judgment is well established. . . . The judgment sought shall be rendered

forthwith if the pleadings, affidavits and any other proof

submitted show that there is no genuine issue as to any

material fact and that the moving party is entitled to

judgment as a matter of law. . . . A material fact is a

fact that will make a difference in the result of the case.

. . . The facts at issue are those alleged in the pleadings. . . . The party seeking summary judgment has

the burden of showing the absence of any genuine issue

as to all material facts, which, under applicable principles of substantive law, entitle him to a judgment as a

matter of law. . . . [T]he party adverse to such a

motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material

fact. In deciding a motion for summary judgment, the

trial court must view the evidence in the light most

favorable to the nonmoving party. . . . The test is

whether a party would be entitled to a directed verdict

on the same facts. . . .

‘‘While the court must view the inferences to be

drawn from the facts in the light most favorable to the

party opposing the motion . . . a party may not rely

on mere speculation or conjecture as to the true nature

of the facts to overcome a motion for summary judgment. . . . On appeal, however, the burden is on the

opposing party to demonstrate that the trial court’s

decision to grant the movant’s summary judgment was

clearly erroneous.’’ (Citations omitted; internal quotation marks omitted.) Norse Systems, Inc. v. Tingley

Systems, Inc., 49 Conn. App. 582, 590–91, 715 A.2d 807

(1998). Finally, ‘‘[o]urreview of the trial court’s decision

to grant [a] motion for summary judgment is plenary.

. . . Moreover, [c]onstruction of a contract of insurance presents a question of law for the court which

this court reviews de novo.’’ (Citation omitted; internal

quotation marks omitted.) R.T. Vanderbilt Co. v. Continental Casualty Co., 273 Conn. 448, 456, 870 A.2d

1048 (2005).

I

We first address the issue of whether the defendants

have waived their coverage defenses. The plaintiffs contend that the trial court erred in ruling that the defendants did not have a duty to defend. The trial court

found, on the basis of the policy, that the defendants

had not breached their duty to defend, and consequently, had not waived their coverage defenses pursuant to our Supreme Court’s ruling in Black v. Goodwin,

Loomis & Britton, Inc., 239 Conn. 144, 160, 681 A.2d

293 (1996) (when insurer breaches duty to defend,

insurer will be bound when insured enters into settlement agreement in good faith). On the basis of our own

construction of the policy, we agree with the trial court.

‘‘Where, as in the present case, an insured alleges

that an insurer improperly has failed to defend and
provide coverage for underlying claims that the insured

has settled the insured has the burden of proving that

the claims were within the policy’s coverage . . . .’’

Metropolitan Life Ins. Co. v. Aetna Casualty & Surety

Co., 249 Conn. 36, 55, 730 A.2d 51 (1999).7

The policy provides, in relevant part, that: ‘‘[s]ubject

to all of the terms and conditions of this insurance, we

will have the right and duty to defend the insured against

a suit, even if such suit is false, fraudulent, or groundless.’’ The policy defines a ‘‘suit’’ as ‘‘a civil proceeding

in which damages, to which this insurance applies are

sought . . . [and] includes arbitration or other dispute

resolution proceeding . . . to which the insured must

submit or does submit with our consent.’’

The plaintiffs’ claim is based on the following additional facts. Following the incident in which the tapes

were lost, IBM retained a consultant and took remedial

actions. IBM also made a demand against Recall on

March 30, 2007, for all of the costs that it incurred or

would incur in connection with the lost tapes. Recall,

as an additional insured under Ex Log’s policy, notified

the defendants of IBM’s demand; however, both of the

defendants denied coverage and declined to participate

in the negotiations between IBM and Recall. On April

28, 2008, the negotiations concluded and Recall agreed

to reimburse IBM $6,192,468.30.

Recall maintains that it engaged in nearly two years

of settlement negotiations—first with IBM, then with

Ex Log—and that such negotiations constituted a ‘‘suit’’

or ‘‘other dispute resolution proceeding,’’ which the

defendants had a duty to defend. The plaintiffs argue

that because the defendants have breached their duty

to defend, they are liable for the full amount of Recall’s

settlement with IBM. We do not accept this unduly

broad reading of the policy.

‘‘[C]onstruction of a contract of insurance presents

a question of law for the court which this court reviews

de novo. . . . An insurance policy is to be interpreted

by the same general rules that govern the construction

of any written contract . . . . In accordance with

those principles, [t]he determinative question is the

intent of the parties, that is, what coverage the . . .

[insured] expected to receive and what the [insurer]

was to provide, as disclosed by the provisions of the

policy. . . . If the terms of the policy are clear and

unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded

its natural and ordinary meaning. . . . Under those circumstances, the policy is to be given effect according

to its terms. . . . When interpreting [an insurance policy], we must look at the contract as a whole, consider

all relevant portions together and, if possible, give operative effect to every provision in orderto reach a reasonable overall result. . . .
‘‘In determining whether the terms of an insurance

policy are clear and unambiguous, [a] court will not

torture words to import ambiguity where the ordinary

meaning leaves no room for ambiguity . . . . Similarly,

any ambiguity in a contract must emanate from the

language used in the contract rather than from one

party’s subjective perception of the terms. . . . As with

contracts generally, a provision in an insurance policy

is ambiguous when it is reasonably susceptible to more

than one reading. . . . Under those circumstances, any

ambiguity in the terms of an insurance policy must be

construed in favor of the insured because the insurance

company drafted the policy. . . . This rule of construction may not be applied, however, unless the policy

terms are indeed ambiguous.’’ (Internal quotation

marks omitted.) National Grange Mutual Ins. Co. v.

Santaniello, 290 Conn. 81, 88–89, 961 A.2d 387 (2009).

On the basis of a plain reading of the policy, we

cannot conclude that the term ‘‘suit’’ or phrase ‘‘other

dispute resolution proceeding’’ was meant to encompass the mere negotiations that took place in this case.

First, the plaintiffs fail to cite any authority for this

interpretation. Second, such an interpretation would

create internal inconsistency within the policy as it

would merge the term ‘‘claim’’ with ‘‘suit.’’ For example,

under the express terms of the policy, the insured owes

a duty to the insurer to provide notice of both ‘‘claims’’

and ‘‘suits,’’ but the insurer only has the duty to defend

against ‘‘suits.’’ Our Supreme Court has held that ‘‘a

demand letter from a potential plaintiff in a personal

injury action is a claim. Such a demand letter falls short

of a suit, broadly defined as ‘an attempt to recover a

right or claim through legal action’ . . . because it has

no immediate legal effect and therefore cannot be considered legal action.’’ (Citation omitted; emphasis omitted.) R.T. Vanderbilt Co. v. Continental Casualty Co.,

supra, 273 Conn. 469.

Thus, to construe ‘‘suit’’ to include mere negotiations

following a demand, would obliterate the distinction

between ‘‘suit’’ and ‘‘claim.’’ This construction must be

rejected. ‘‘A construction of an insurance policy which

entirely neutralizes one provision should not be adopted

if the contract is susceptible of another construction

which gives effect to all of its provisions and is consistent with the general intent.’’ (Internal quotation marks

omitted.) Hansen v. Ohio Casualty Ins. Co., 239 Conn.

537, 548, 687 A.2d 1262 (1996).

We also share the concern articulated in the trial

court’s memorandum of decision: ‘‘If the [settlement

negotiations] [were] found to be an ‘other dispute resolution proceeding,’ every discussion, however informal,

between an insured and a third party could be deemed

a dispute resolution proceeding.’’ We decline to give

the word ‘‘suit’’ such an expansive reading so at odds

with its usual usage.
Finally, even if the phrase ‘‘other dispute resolution

proceeding’’ included the negotiations that took place

in the present case, this alone would not trigger the

duty to defend as the policy requires that the defendants

consent to the proceeding. As there is no genuine issue

of material fact that the defendants did not consent to

the negotiations, the duty to defend was not triggered.

We agree with the trial court that the defendants have

not breached their duty to defend and thus have not

waived their coverage defenses.

II

We next address the plaintiffs’ claim that the trial

court erred in its interpretation of the policy. The plaintiffs maintain that the personal injury provision in the

policy covered the cost of notifying the affected employees following the loss of the tapes. Specifically, the

plaintiffs claim that (A) the loss of the tapes constitutes

personal injury as defined in the policy, and (B) the

loss of the tapes triggered the remedial provisions of

certain state privacy laws, such that personal injury can

be presumed. We disagree.

A

In determining whether the trial court properly concluded that there was no coverage under the personal

injury provision of the policy, we must examine the

language of the policy as it applies to the facts alleged

in the pleadings and averred in the parties’ affidavits

submitted in conjunction with the summary judgment

proceedings. See Missionaries of the Co. of Mary, Inc.

v. Aetna Casualty & Surety Co., 155 Conn. 104, 110,

230 A.2d 21 (1967). In interpreting the language of the

policy, we rely on the principles of construction as set

forth in part I of this opinion.

The policy provides, in relevant part: ‘‘[W]e will pay

damages that the insured becomes legally obligated to

pay by reason of liability: imposed by law; or assumed

in an insured contract; for advertising injury or personal

injury to which this coverage applies.’’ The policy

defines ‘‘personal injury’’ as: ‘‘injury, other than bodily

injury, property damage or advertising injury, caused

by an offense of . . . electronic, oral, written or other

publication of material that . . . violates a person’s

right to privacy.’’ (Emphasis added.)

Turning to the complaint, the plaintiffs allege: ‘‘[b]y

virtue of the loss and theft of the IBM tapes . . . the

personal information that was stored on the tapes,

including social security information and other private

data, has been published to the thief and/or other persons unknown . . . thereby subjecting [the plaintiffs]

to potential claims and liability . . . including liability

for the cost of notifying the persons whose data was

lost and for providing credit monitoring services to

persons who requested it.’’ (Emphasis added.)
On the basis of our review of the policy, we conclude

that personal injury presupposes publication of the

personal information contained on the tapes. Thus, the

dispositive issue is not loss of the physical tapes themselves; rather, it is whether the information in them has

been published. The plaintiffs contend that the mere

loss of the tapes constitutes a publication, and has

alleged that the information was published to a thief.

The plaintiffs have failed to cite any evidence that the

information was published and thereby failed to take

their allegation beyond the realm of speculation. See,

e.g., Norse Systems, Inc. v. Tingley Systems, Inc.,

supra, 49 Conn. App. 591 (speculation or conjecture

will not overcome motion for summary judgment). As

the complaint and affidavits are entirely devoid of facts

suggesting that the personal information actually was

accessed, there has been no publication.

The plaintiffs argue that the trial court used an

improper definition of publication when it construed

the definition of personal injury. In its memorandum

of decision, the trial court held that publication required

communication ‘‘to a third party,’’ adopting the definition of publication our Supreme Court has instructed

we use in the defamation context. See Springdale

Donuts, Inc. v. Aetna Casualty & Surety Co. of Illinois,

247 Conn. 801, 810, 724 A.2d 1117 (1999).

The plaintiffs urge that we adopt the definition of

publication set forth in Webster’s Third New International Dictionary, which defines publication as the

‘‘communication (as of news or information) to the

public.’’ Even if we accept this definition, however, our

analysis would remain unchanged. Regardless of the

precise definition of publication, we believe that access

is a necessary prerequisite to the communication or

disclosure of personal information.8

In this regard, the

plaintiffs have failed to provide a factual basis that the

information on the tapes was ever accessed by anyone.

There is nothing in the record suggesting that the

information on the tapes was ever accessed by anyone.9

A letter from IBM to the affected employees, a copy of

which accompanied the affidavit of Dawn Zanfardino,

a data privacy manager at IBM, stated: ‘‘We have no

indication that the personal information on the missing

tapes, which are not the type that can be read by a

personal computer, has been accessed or has been used

for any improper purpose.’’ Moreover, because the parties stipulated that none of the IBM employees have

suffered injury as a result of the tapes being lost, we

are unable to infer that there has been a publication.

As there is no genuine issue of material fact that there

was publication, we agree with the trial court that the

settlement Recall reached with IBM was not covered

under the policy’s personal injury provision. See QSP,

Inc. v. Aetna Casualty & Surety Co., 256 Conn. 343,

356, 773 A.2d 906 (2001) (‘‘[w]here a plaintiff cannot
prove a fundamental element of the underlying tort,

e.g., defamation, a claim for personal injury coverage

will be denied’’).

B

Finally, the plaintiffs claim that certain statutes

required IBM to notify its affected employees of the

data loss and that the triggering of those statutes are

‘‘presumptive invasions of privacy.’’ Essentially, the

plaintiffs contend that when such a notification statute

is triggered, there has been an invasion of privacy. We

disagree with this logic.

The plaintiffs cite two statutes, one in New York;

N.Y. Gen. Bus. Law § 899-aa (2) (McKinney 2005); and

one in Connecticut; General Statutes § 36a-701b; both

of which require certain actions be taken when personal

information is compromised.

In this case, IBM claims to have suffered a loss of

more than $6 million related to the alleged compliance

with these notification statutes. While we do not speculate as to whether these expenditures were required by

law, we conclude that they do not constitute a personal

injury as defined in the policy. These notification statutes simply do not address or otherwise provide for

compensation from identity theft or the increased risk

thereof, they merely require notification to an affected

person so that he may protect himself from potential

harm. Accordingly, merely triggering a notification statute is not a substitute for a personal injury. See, e.g.,

QSP, Inc. v. Aetna Casualty & Surety Co., supra, 256

Conn. 376 (coverage cannot extend to ‘‘other torts, not

specifically enumerated, which bear [only] some similarity to those listed in the policy’’ [internal quotation

marks omitted]). We therefore conclude that the trial

court properly granted the defendants’ motions for summary judgment.

The judgment is affirmed.

In this opinion the other judges concurred.

1 Sinclair Risk and Financial Services, LLP, was a defendant before the

trial court but is not a party to this appeal.

2 Federal issued a commercial general liability policy containing a per

occurrence limit of $1 million and an aggregate limit of $2 million. Scottsdale

issued a commercial liability umbrella policy containing a per occurrence

limit of $4 million. Although these are two separate policies, the relevant

provisions are nearly identical. For the purposes of this opinion, we use

the term ‘‘policy’’ in the singular and quote the language from the policy

issued by Federal.

3

In addition to providing credit monitoring to the affected employees,

IBM provided credit restoration to some of its employees. The parties agree

that no identity theft incident could be traced to the loss of the IBM

tapes, however.

4 This determination is not challenged on appeal.

5 We interpret the court’s statement to mean that IBM is not a person for

the purposes of privacy law. See 3 Restatement (Second), Torts, Invasion

of Privacy § 652I, comment (c), p. 403 (1977) (‘‘[a] corporation, partnership

or unincorporated association has no personal right to privacy’’).

6 The parties stipulated that the remaining counts alleged against the

defendants are not viable in the absence of a breach of an insurance contract.

The trial courtrendered judgment in accordance with the parties’ stipulation.
Thus, there has been a final judgment for the purposes this appeal. See

Practice Book § 61-3.

7 The settlement agreement between IBM and Recall specifically did not

waive Recall’s liability to IBM for ‘‘any future claim by IBM for indemnity

from Recall for monetary damages paid by IBM . . . .’’

8 We observe that the term publication may carry slightly different meanings depending on the particular privacy right at issue. As the precise definition of publication is not essential to our disposition of this appeal, we

express no opinion as to whether the trial court properly adopted the definition as set forth in Springdale Donuts,Inc., and in the context of defamation.

9

Indeed, there is nothing in the record that suggests the unknown party

even recognized that the tapes contained personal information.