The Connecticut Supreme Court recently ruled that a New York insurance carrier could be subject to litigation nationwide, even in states where it does not issue policies, based exclusively on the defense and indemnification obligations in a commercial automobile insurance policy. This decision is significant – if other courts apply the same rationale, insurers will be forced to defend themselves in states where they have little to no ties as injured parties and policyholders seek to draw insurers into litigations in historically policyholder-friendly venues.
The case, Samelko v. Kingstone Ins. Co., 329 Conn. 249, 184 A.3d 741 (2018), arose out of a third-party motor vehicle accident. Kingstone is a New York based insurance carrier that was not licensed to issue insurance policies in Connecticut. The insurer did not maintain any offices in Connecticut or participate in any business transactions in that state. The policy as it issue, a business automobile insurance policy that covered a vehicle operated by Geraldo Cardozo, was written in New York where the vehicle was garaged. Among the coverages afforded by the policy included coverage for accidents or losses occurring within the United States.
The court found this language significant and characterized the policy as providing “nationwide coverage.” This characterization proved important as the court’s decision ultimately turned on the meaning of the phrase “to be performed” contained in Connecticut’s long-arm statute (long arm statutes are the legal means by which state courts can, subject to certain requirements, obtain jurisdiction over an out-of-state corporation). The court interpreted “to be performed” as encompassing “the performance that the parties contemplated in the contract, without regard to whether it has actually occurred.” Id. at 749. Since the policy required Kingstone to defend and indemnify its insureds for accidents nationwide, it expressly contemplated the carrying out of that contractual obligation in Connecticut- the site of the accident in this case. By extension, the court reasoned, Kingstone was required to defend itself in the litigation filed in Connecticut that arose out of the motor vehicle accident.
Whether other states will follow Connecticut’s lead in this respect remains unclear, some states’ long-arm statutes refer to specific acts while others are similar to Connecticut’s and confer jurisdiction more broadly. In the short term, this ruling may force insurers, who have no insurance ties to Connecticut, to defend themselves in more litigations in that state. Our office will continue to monitor this issue as it develops.