Frank Ruksznis v. Argonaut Insurance Company

Appointed Plumbing Inspector Held to Have "Employment" Relationship with Town under Insurance Policy
US District Court for the District of Maine, No. 13-2474
Thursday, December 18, 2014

Frank Ruksznis served as appointed plumbing inspector in the Town of Sangerville, Maine from 1993 to 2010. Ruksznis categorized himself as an independent contractor: he set his own hours and paid for his tools, education, and other expenses.

During a public select board meeting, one of the board members made negative comments about Ruksznis’s work performance.  At the next meeting, the same board member took actions that caused Ruksznis to be removed from his appointed position, and, although it appeared that the removal procedure violated state law, Ruksznis was blocked from being reappointed. Ruksznis brought claims in the U.S. District Court for Maine for slander and for due process violations pursuant to §1983.  The case ultimately settled for $100,000.

The Town had two insurance policies through the defendant, Argonaut Insurance: a Commercial General Liability ("CGL") policy and a Public Officials Liability ("POL") policy. Both policies covered personal injury claims, but both also had exclusions for “employment-related” activities, although the terms “employment” and “employment-related” were not defined in the contracts. Argonaut took the position that Ruksznis had an employment relationship with the Town and, therefore, was barred from recovery under both policies.

The District Court held that the employment exclusions did apply, thus barring Ruksznis’s recovery under either policy. In doing so, the Court determined that the language in the exclusions was unambiguous. Because the terms “employment” and “employment-related” were not defined by the policy, the Court looked to the dictionary definitions of the terms. Even if Ruksznis was technically an independent contractor, the definitions of “employ” and “employment” are broad (e.g. "the act of employing" or "engag[ing]" the services" of someone”) and support the conclusion that he had an employment relationship with the Town under the policy exclusions. In other words, the Court declined to confine its determination to the distinctions between an “employee” and an “independent contractor” that are critical in the context of collecting unemployment benefits or workers' compensation. Instead, it found that this distinction was immaterial because “the ordinary person appreciates that either status is a form of employment." The Court applied the same analysis to Ruksznis’s argument that, as an appointed official, he could not have an employment relationship with the Town.