In Travelers Property Casualty Company of America v. Continental Casualty Company, 2010 Conn. Super. LEXIS 1169 (Conn. Super. Ct. May 27, 2010) (Cosgrove, J.), Halloran & Sage’s Insurance Coverage Group successfully obtained summary judgment in a declaratory judgment action involving an insurance coverage dispute arising from a slip-and-fall at a construction site.

In the underlying action, Donald Rollo, an employee of a sub-subcontractor, allegedly sustained injuries when he slipped and fell in a parking lot near the construction site. As a result, Rollo initiated a negligence action against the owner and construction manager of the project. Id. at *3. In his complaint, Rollo alleged that he “arrived at the [the construction site] for the purposes of obtaining materials utilized during the work on the W.W. Backus Hospital Project” and that as he exited his vehicle, which was parked in the designated parking area, “he slipped and fell on ice within the gravel parking lot, thus causing him . . . injuries and damages.” Id. at *4. The complaint further alleged that, at the time of the incident, Rollo “was an employee of Incor Group, Inc.” Id. at *3.

The construction manager of the project, Barr & Barr, Inc., was insured by Travelers Property Casualty Company of America (“Travelers”). Prior to the incident, Barr & Barr sought and received the benefit of being named as an “additional insured” on the subcontractor’s commercial general liability policy. Id. at *1. The subcontractor was Tucker Mechanical, Inc. After the Rollo action was commenced, Travelers wrote to Tucker, demanding on behalf of its insureds that a defense and indemnification be provided by Tucker’s insurer, Continental Casualty Company (“Continental”), asserting that there was coverage for Barr & Barr as an additional insured under the policy it issued to Tucker. Id. at *7. Continental denied coverage for Barr & Barr. Id. at *7-8. Thereafter, Travelers commenced a declaratory judgment action seeking a declaration that Continental had a duty to defend and indemnify Barr & Barr as well as the owner of the project, William W. Backus Hospital, in the Rollo action and that such coverage was primary. Id. at *6-8.

Continental’s policy contained three additional insured endorsements: (1) the “Additional Insured—Owners, Lessees, or Contractors” endorsement; (2) the “Additional Insured—Designated Person or Organization endorsement; and (3) the “Contractor’s Scheduled and Blanket Additional Insured Endorsement with Product-Completed Operations Coverage.” Id. at *9-11. In particular, the “Additional Insured—Owners, Lessees, or Contractors” endorsement provided, in pertinent part, that an organization required by written contract to be an insured is an insured under the policy, “but only with respect to liability arising out of ‘your work’ for that insured by or for you.” Id. at *9. The policy defined “your work” to mean “work or operations performed by you or on your behalf.” Id.

Travelers and Continental filed cross motions for summary judgment in the declaratory judgment action. Id. at *2-3. Travelers argued that each of the three additional insured endorsements contained in Continental’s policy provided coverage for Barr & Barr and Backus Hospital. Id. at *12-13. Conversely, Continental argued that it had no duty to defend or indemnify Barr & Barr or Backus Hospital because the Rollo complaint specifically alleged that Rollo’s injuries were caused by the negligence of Barr & Barr and Backus, not Tucker. Indeed, the Rollo complaint did not even mention Tucker. Thus, Continental argued that the complaint lacked any allegations that Rollo’s injuries arose out of work or operation performed by Tucker or on Tucker’s behalf. Id. at *14.

The Court agreed with Travelers’ position and held that the “Additional Insured—Owners, Lessees, or Contractors” endorsement provided coverage for the Barr & Barr and Backus Hospital in the Rollo action. Id. at *21-22. Because it held that this endorsement provided coverage, the Court did not address whether the other two endorsements gave rise to a duty to defend. Id. at *22. In analyzing the coverage issue, the Court looked to the allegations of the complaint as well as evidence outside of the complaint. First, the Court noted that the Rollo complaint alleged that Rollo was injured while he was present in the parking lot to obtain materials used as part of his work on the construction project. Id. at *19. The complaint further alleged that at the time of the accident Rollo was an employee of Incor Group and that Incor Group was subcontracted to install insulation for the construction project. Id. at *18-19.

Next, the Court determined that the subcontract agreement at issue clearly demonstrated that Incor Group was hired to perform work on Tucker’s behalf. Id. at *20. The Court relied upon evidence outside of the complaint because such evidence suggested that there was coverage for Barr & Barr and Backus Hospital. Id. Specifically, the Court observed that Hartford Casualty Ins. Co. v. Litchfield Mut. Fire Ins. Co., 274 Conn. 457, 467 (2005) held that “[an insurer is required] to provide a defense when it has actual knowledge of facts establishing a reasonable probability of coverage.” Id. at *18. Thus, although the complaint did not detail the relationship between Incor Group and Tucker, the Court held that Continental clearly had sufficient knowledge and information that Incor Group was performing work on Tucker’s behalf. Accordingly, the Court held that Rollo’s injuries “arose out of” Tucker’s work, which under Continental’s policy, includes work or operations performed on behalf of Tucker. Id. at *20-21. In reaching this conclusion, the Court also emphasized that the phrase “arising out of” has been broadly construed in Connecticut and includes an accident or injury that “had its origins in” or “was incident to” the occurrence or offense. Id. at *19.

With respect to the duty to indemnify, the Court noted that “[w]here an insurer is guilty of a breach of its contract to defend, it is liable to pay to the insured not only his reasonable expenses in conducting his own defense but . . . the amount of a judgment [or settlement] obtained against the insured . . . .” Id. at *25-26 (quoting Hartford Casualty Ins. Co., 274 Conn. at 470). Accordingly, having determined that Continental breached its duty to defend, the Court additionally held that Continental was responsible for the defense and settlement costs incurred by Barr & Barr and William Backus in the Rollo action. Id. at *26.

The Court’s decision highlights that with respect to additional insured endorsements the phrases “arising out of” and “your work” have broad meanings under Connecticut law. The Court’s decision also cautions against basing a denial of coverage upon the perceived lack of fault of an insured under such circumstances, instead of the policy language at issue.