Many construction professionals in Connecticut, and in particular those who do business with the State, are well aware of the Connecticut Supreme Court’s decision in State v. Lombardo Bros. Mason Contractors, Inc., 307 Conn. 412, 420-21, 54 A.3d 1005 (2012). The Court in Lombardo Bros. held that statutes precluding a private party from pursing a claim after the expiration of specified time periods do not apply to the State. Thus, the State can pursue claims against contractors or design professionals in perpetuity, regardless of how long ago the design or construction work was performed.
Less well known is a more recent Supreme Court decision, Travelers Casualty and Surety Company of America v. The Netherlands Insurance Company, 312 Conn. 714; 95 A.3d 1031 (2014), which involved a related dispute among two insurers for Lombardo Bros. At issue was the allocation of responsibility among multiple insurance carriers for payment of Lombardo Bros.’ defense costs.
Travelers had issued a commercial general liability policy providing coverage for Lombardo Bros. from 1994 to 1996, which was the time period when the UConn Law School Library was originally constructed. Travelers complied with its obligation to cover Lombardo Bros.’ defense costs, and initiated a separate action against other insurers who had provided subsequent CGL coverage for Lombardo Bros., seeking a declaratory ruling that these other insurers were responsible for paying a pro rata share of the defense costs. One of those carriers was Netherlands, whose policy provided coverage from 2000-2006.
After the trial court issued a declaratory judgment in favor of Travelers, the Supreme Court took the appeal directly and agreed with the majority of other jurisdictions that an insurer who has paid, or is obligated to pay, for the insured’s defense costs, has the right to bring such an action against other potentially responsible insurers.
From the insured’s perspective, this decision could prove beneficial in that it gives insurers the freedom to defend and settle claims against their insured with the knowledge that the insurer will have the future opportunity to pursue other carriers for contribution in defense costs.