The Supreme Court of Connecticut recently affirmed a 2006 Superior Court decision that a liability insurer for a subcontractor was required to provide a defense for the general contractor in connection with a lawsuit alleging workplace injuries to employees of the subcontractor allegedly injured on the job.  Royal Indemnity Company v. Terra Firma, Inc., 287 Conn. 183, 947 A.2d 913 (June 3, 2008).  The court’s decision to require the provision of a defense ultimately turned on the “additional insureds” clause of the relevant liability insurance policy, and in particular the breadth of the phrase “arising out of.”

During construction, two employees of the subcontractor were allegedly injured on the job when a trench collapsed, and they sued the subcontractor and contractor.  The subcontractor prevailed on a summary judgment motion on the basis that, because the injured workers were in the subcontractor’s employ, workers’ compensation was their exclusive remedy with respect to the subcontractor.  Following the subcontractor’s dismissal from the lawsuit, the injured workers prevailed on a motion to exclude any evidence at trial of the subcontractor’s negligence.

At that point, the subcontractor’s insurer, which had to that point provided defense counsel for the contractor, sought a declaratory judgment that it owed no duty to defend the contractor.  The insurer based its argument on the “additional insureds” clause of the insurance policy, which provided in part that additional insureds were covered “only with respect to liability arising out of [the subcontractor’s] work.”  Because the trial court had excluded evidence of the subcontractor’s negligence, the insurer argued that liability could only arise out of the contractor’s work, and not the subcontractor’s work.

In rejecting the insurer’s argument, the trial court noted the traditionally broad construction Connecticut courts have given the phrase “arising out of”: “It is generally understood that for liability for an accident or injury to be said to arise out of an occurrence of offense, it is sufficient to show only that the accident or injury was connected with, had its origins in, grew out of, flowed from, or was incident that occurrence or offense, in order to meet the requirement that there be a causal relationship between the accident or injury and that occurrence or offense.” Under such a broad reading, the trial court concluded that the accident “arose out of” the subcontractor’s work because the collapsed trench was part of the excavation work performed by the subcontractor.

The Connecticut Supreme Court, in affirming the trial court, expressly adopted the trial court’s statement of the facts and the applicable law, which it described as “concise and well reasoned.”

For a full copy of the Connecticut Supreme Court’s opinion, please click here.