Week of July 29

Welcome to our Supreme and Appellate Court summaries webpage.  On this page, I provide abbreviated summaries of decisions from the Connecticut appellate courts which highlight important issues and developments in Connecticut law, and provide practical practice pointers to litigants.  I have been summarizing these court decisions internally for our firm for more than 10 years, and providing relevant highlights to my municipal and insurance practice clients for almost as long.  It was suggested that a wider audience might appreciate brief summaries of recent rulings that condense often long and confusing decisions down to their basic elements.  These summaries are limited to the civil litigation decisions based on my own particular field of practice, so you will not find distillations of the many criminal and matrimonial law decisions on this page.  I may from time to time add commentary, and may even criticize a decision’s reasoning. Such commentary is solely my opinion . . . and when mistakes of trial counsel are highlighted because they triggered a particular outcome, I will try to be mindful of the adage . . . “There but for the grace of God . . ..”  I hope the reader finds these summaries helpful. – Edward P. McCreery

Posted July 29, 2014

• SC19089 - Travelers Casualty & Surety Co. of America v. Netherlands Ins. Co.

Travelers brought a declaratory judgment action, claiming that the Netherlands Insurance Company had to participate in the defense costs of Lombardo Brothers over the claims of the UConn Law School Library leaking.  After declaratory judgment in favor of Travelers, Netherlands appealed.  The State contracted with Lombardo in 1994, and the work was completed in 1996.  The State sued in 2008 to recover $18 million in repair costs.  Travelers insured the contractor from 1994 to 1998 with CGL coverage.  From 1998 to 2000, the insured was covered by a Lumberman’s CGL policy.  From 2000 to 2006, the insured was covered by a Netherlands CGL policy.  Netherlands refused to participate in the defense, and Travelers commenced this action after spending over $500,000 in defense costs.  Travelers sought pro rata sharing of the costs, declaration that the contractor had to share in any underinsured period for reimbursement of the pro rata defense costs paid to date.  The Trial Court found it was alleged that water intrusion occurred during the Netherlands policy period and this was an “occurrence” that triggered the duty to defend.  The Trial Court found Netherlands responsible for 48% of the defense costs by dividing its 70 months of coverage by the period of time the damage was occurring…….144 months.

On appeal, Netherlands first claimed that Travelers did not have standing to bring the declaratory judgment action because it was not a party to its insurance contract with the contractor.  The Supreme Court disagreed, noting that declaratory judgments are commonly used to resolve disputes over insurance policies.  Siding with the majority of federal and “sister state authorities,” the Court held that a declaratory judgment may be sought by one insurer against the other over coverage for the same insured, even though they have no relationship with one another when the policies both embrace the same controlling issue.

Next, the Court rejected Netherlands’ claim that the underlying complaint by the State of Connecticut did not allege an occurrence.  Relying upon the four corners test and the duty to defend obligation, which is broader than the duty to indemnify, it held that the allegations of frequent water intrusions that were continuing and progressively causing property damage triggered a duty to defend.  The property damage alleged extended into the Netherlands policy period. Contrary to Netherlands’ argument, it did not matter that the property damage progressed and took different forms over time, because the plain language of the policy did not require the occurrence to take place within the policy period, only that the resulting property damage occur during the policy period.  The Court also rejected Netherlands’ claim that the contractor knew that the damage had begun prior to the Netherlands policy period, and thus, the claim was excluded under the known injuries or damage clause.  First, the Court acknowledged that in addition to policy language, there was a common law known loss doctrine that insurance will not provide coverage for known events.  But the Court found it unnecessary to be the first appellate authority in Connecticut to examine the known loss doctrine, nor compare it to similar contractual policy language, nor to review whether the Trial Court  confused the common law doctrine with the policy exclusion, because although the underlying complaint left an inference that the contactor knew of the property damage before the Netherlands policy period, such conclusion was not compelled as a matter of law.  In the underlying complaint the State claimed it gave notice to the contractor when the water problems began, but only made a broad reference to the months and years following the project’s completion.  There was no fact pled that categorically stated the contractor was told of the leaks before acquiring the Netherland’s policy.  If that turned out to be true, it might defeat the indemnity, but the duty to defend was triggered in the interim.

Next, Netherlands challenged the allocation of defense costs, citing the Securities Insurance v Lumberman’s Mutual coverage case. Netherlands argued their exposure was only for one year.  The Court said Netherlands was misreading that decision, and what the Court actually did was adopt an “injury-in-fact trigger” under which progressive injuries that span multiple policy periods trigger all policies in effect during the progression of the injury . . . a/k/a the “continuous trigger” rule.  The Securities Insurance v. Lumberman’s, continuous trigger rule was developed for personal injury claims arising out of the initial inhalation of asbestos where the injury occurs later over time….but it is equally applicable to property damage claims that occur over time.  Connecticut does not follow the “exposure trigger rule.”  Finally, Netherlands claimed that Travelers had information in its files to show the contractor knew of the claims before being insured under their policy, and thus Travelers, by not disclosing this information, was guilty of unclean hands.  The Court held that the Trial Court properly denied as untimely a motion to amend two weeks before trial to add this defense.

• SC18866, SC18867 - State v. Albino
• SC18866, SC18867 Concurrence - State v. Albino

Plaintiff hired defendant as a general contractor to build an addition to a big box store.  The contract included a standard AIA clause that all claims and disputes shall be decided by arbitration in accordance with the Construction Industry Rules of the American Arbitration Association.  The defendant contractor submitted a claim for arbitration, and the owner participated in the first thirty-five sessions before declaring the matter not arbitrable, and refusing to participate in the last two hearings.  The arbitrator entered an award in favor of the defendant. In the interim, however, the plaintiff had initiated a declaratory judgment action to declare the underlying contract void, which was then consolidated with the defendant’s application to confirm the award.  The plaintiff appealed the confirmation of the award, claiming that the underlying contract, and thus the arbitration agreement, was void because the defendant did not carry state licenses as an engineer, even though he was providing professional engineering services.  The Appellate Court held that the plaintiff failed to preserve the issue for appeal, because he did not challenge the legality of the parties’ contract, and thus, its arbitration clause during the arbitration proceedings, and therefore waived any right to appeal over that issue.  In order to challenge the arbitrability of a dispute, the party may either (1) refuse to submit to arbitration and compel judicial determination of the issue of arbitrability, or alternatively, (2) the issue of arbitrability may be left to the arbitrator, along with the merits of the dispute, followed by an objection to an arbitration award on the grounds that the arbitrator disregarded the parties’ limitations on arbitration, followed by an appeal to the court.  Here, the plaintiff pursued neither option.  It participated in the arbitration, but never raised the issue of arbitrability.  A passing reference by counsel to the arbitrators of a “suspicion” that the contract was illegal was not enough.

Defendant owned a rear lot on a lake that was accessed via a deeded right-of-way over the plaintiff’s parcel to the front.  The rear lot was left undeveloped for some time, and in the interim, predecessors to the plaintiff installed their septic system in the right-of-way, without permits.  When the defendant informed the current owner that he intended to clear the right-of-way in preparation for construction, the plaintiff claimed it had acquired the right-of-way through adverse possession or prescriptive easement.  The Trial Court ruled that the plaintiff failed to prove extinguishment of the right-of-way, which was clearly spelled out in deeds of record.  The plaintiff unsuccessfully appealed.  Three months later, the plaintiff filed a second lawsuit against the defendant, this time citing in the neighbors on the other side of the right-of-way.  After judgment was entered setting the location of the right-of-way, the plaintiffs appealed again, and the matter was remanded, directing the Trial Court to follow the instructions in the deed, that the right-of-way would follow the center line of an old abandoned highway.  The plaintiffs then filed a third lawsuit against the defendants, claiming they were bound by the second decision, even though they had not participated in the appeal and the remand.  The Trial Court held that these issues were already resolved, and all the claims the plaintiffs were making now in a third lawsuit either were, or could have been litigated in the prior two actions, and that continued prosecution of litigation by the plaintiffs was vexatious.  Reviewing the difference between the doctrines of res judicata and collateral estoppel, the this decision held the Trial Court properly concluded that the plaintiffs’ claims in this action were precluded.  The Court refused to review the Trial Court’s finding that the third lawsuit was vexatious, saying the comment was mere “dicta.”  [Although a Footnote suggests the Court was making this comment only with respect to the credibility of a witness, such a finding can also be relevant to the Practice Book’s allowance for the Trial Court to make a finding that litigation was vexatious, so that in a subsequent vexatious litigation action, the aggrieved party has prima fascia grounds for the claim.  I can only wonder if the Trial Court was attempting to make such a specific Practice Book finding.]

Tenured professor attended a seminar and submitted a request for reimbursement to the University.  When an administrator grew suspicious, they contacted the forum and was informed that the professor had neither attended nor spoken at the conference as claimed.  The administrator sent his findings to the university president, along with an e-mail from the forum university, stating that the signature on the registration receipt had been forged.  The matter was referred to the University’s police department, and the plaintiff was arrested for larceny.  Subsequently, the charges were nolled under the AR program, and the plaintiff sued several university officials, claiming false arrest, malicious prosecution and defamation.  Plaintiff’s chutzpa became evident when in both state and federal court depositions he admitted under oath, that he forged the conference registration receipt, and that he had not presented a paper at the conference.  The defendants then moved for summary judgment, which was granted and appealed by the plaintiff.The Appellate Court held that it did not matter whether the claims were pled as a common law false arrest claim or a § 1983 action, because the analysis would be identical.  The Appellate Court agreed with the Trial Court that the defendants offered substantial evidence that they utilized the proper legal channels to report their complaints against the plaintiff.  There was ample documentation in support of their claim that they demonstrated reasonable suspicions of fraudulent conduct which, in turn, was ratified by the plaintiff’s sworn deposition testimony.  Summary judgment was properly granted,The plaintiff also appealed the grant of summary judgment against his defamation claim, claiming the university president issued a press release that the plaintiff’s arrest and firing was needed to clean up the school.  The decision held it was not enough for the plaintiff to merely assert that the statements were false when he did not also deny that he actually submitted altered receipts, and sought reimbursement for a conference he never attended.  [Wow - time for a reality check.]

• AC35995 - Watkins v. Watkins

 

The facts and holdings of any case may be redacted, paraphrased or condensed for ease of reading.  No summary can be an exact rendering of any decision, however, so interested readers are referred to the full decisions.  The docket number of each case is a hyperlink to the Connecticut Judicial Department online slip opinion.  ©2014 Pullman & Comley, LLC. All Rights Reserved.