In Travelers Cas. & Surety of America v. The Netherlands Ins., 312 Conn. 714 (2014), the Connecticut Supreme Court held that an insurer had standing to institute a declaratory judgment action against another insurer to determine the existence of a duty to defend and the allocation of defense costs among them. The court’s decision is significant since it effectively expanded the ability of insurers to sue fellow insurers in coverage litigation despite the absence of any contractual relationship or privity between the insurers.
Plaintiffs Travelers Casualty and Surety Co. of America and Travelers Indemnity Co. brought a declaratory judgment action against defendants The Netherlands Insurance Co. and Lombardo Brothers Mason Contractors in connection with an underlying action in which Connecticut sued Lombardo and others for $18 million in alleged defective construction work on the University of Connecticut School of Law library. Several carriers insured Lombardo’s construction work, including Travelers, Netherlands and Lumbermens (all under commercial general liability policies) and Peerless Insurance Co. (under umbrella general liability policies). Before the lawsuit, Lombardo notified its carriers of the state’s potential claim against it, and Travelers agreed to participate in the investigation and related defense. Netherlands refused to participate in the investigation and defense.
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