The Loss and Denial of the Claim

On September 20, 2023, at approximately 2:00 a.m., a fire of unknown origin began in the basement of our client’s commercial building. The extensive fire damage rendered the property uninhabitable. The tenant, a restaurant that occupied the space for over 20 years, was insured for its own betterments and improvements, as well as for its inventory, and carried liability insurance. Our client insured the building under a commercial property insurance policy. After the devastating loss, investigators for the local authorities, the tenant’s insurer, and our client’s insurer all investigated the property and agreed on one thing: the fire originated in the basement. Despite multiple investigations, no one at the time could determine precisely how the fire started.

Despite the uncertainty, our client’s insurance company denied coverage. The basis for the denial was a Protective Safeguards Endorsement. According to her insurer, our client had not been in compliance with the endorsement’s requirements, thereby voiding all coverage. A Protective Safeguards Endorsement may read as follows:

Understanding Protective Safeguard Endorsements

Policyholders often learn too late that insurance companies typically require the insured to maintain these protective devices, such as smoke detectors, fire extinguishers, or sprinkler systems, in good working order or if the insured is aware of a problem with them.

The language of a protective safeguard endorsement states that if an insured is aware of a problem with a protective safeguard or is in control of the premises where it is located, the insurance company expects the insured to maintain it in good working order. This exclusionary language is often strictly construed by insurers and, in many jurisdictions, by courts as well. Insurers routinely argue that coverage is barred entirely if the safeguard is not functioning at the time of the loss. However, many endorsements, including the one at issue here, contain both conditions and exclusions, which often do not neatly align, leading to confusion, misinterpretation and potential ambiguities.

Competing Policy Provisions

In our case, it was undisputed that our client had no knowledge of any problems with smoke detectors on the premises. In fact, evidence suggested that there were no traditional smoke detectors in the restaurant at all. Other than an Ansul fire suppression system above the stove and grill, which serves as a detection system during cooking, there was no smoke detection system in place.

Equally as important, our client had no control over the premises. The property was subject to a long-term lease with a tenant for over 20 years. Our client had no keys, no access, and had not been inside the restaurant for many years. In its denial letter and subsequent litigation posture, unsurprisingly, her insurance company argued that none of this mattered. It argued that the “condition” portion of the endorsement imposed an absolute condition that an insured must maintain protective safeguards, regardless of whether they know of a problem or have control over the premises. Our client’s insurer’s position was that, since smoke detectors did not exist and were not maintained, coverage was denied in its entirety.

This interpretation creates a fundamental conflict within the endorsement itself. The exclusionary language requires knowledge or control of the protective safeguard, whereas, according to the insurer, the condition imposed strict liability to maintain it regardless of knowledge or control.

Policyholder Arguments and Their Limits

As a policyholder attorney, many questions arise, and to best assist our clients, we explore several different arguments in these types of cases.

First, it can be argued that the presence of a safeguard would not have changed the devastating outcome. Here, the fire occurred at approximately 2:00 a.m. when no one was present on the premises. Whether smoke detectors existed or not, they would not have prevented or mitigated the loss. Other cases have presented a similar issue, for example, one involving a fire extinguisher. If no one had been present to use the extinguisher, it would not have changed the outcome. While intuitively appealing, courts routinely reject this argument, holding that compliance with the protective safeguard endorsement, not causation, is what matters.

A second argument centers around the fact that the insurance company inspected the property before issuing the policy. There was evidence here that the insurance company conducted a pre-risk inspection of the property and, therefore, knew or should have known that there were no smoke detectors on the property. Policyholder attorneys often argue that this would be viewed as a waiver of the right to rely on a protective safeguard endorsement because the insurer itself had the opportunity to know whether such protective safeguards even existed on the premises. Again, while this is a sensible argument, insurance companies strongly dispute this position, and courts will frequently agree.

Our third argument was undoubtedly the strongest one. We argued that under well-settled rules of policy interpretation, where there is ambiguity, it should be construed in favor of the insured. See Mercedes Zee Corp., LLC v. Seneca Ins. Co., 151 F. Supp. 3d 255, 259 (D. Conn. 2015). Where the policy is susceptible to two interpretations, that which will “sustain the claim and cover the loss must, in preference, be adopted.” Liberty Mut. Ins. Co. v. Lone Star Indus., Inc., 290 Conn. 767, 796, 967 A.2d 1 (2009). Our primary argument centered around the fact that in order to defeat coverage under the exclusion in the protective safeguard endorsement, our client was required to either know that the protective safeguard was not working or that our client had control over the premises. In our case, neither of those conditions existed.

We argued that reading and interpreting the condition as imposing absolute liability would render the exclusion’s knowledge and control requirements meaningless. Under the insurer’s interpretations, the insured was effectively penalized twice, and critical policy language requiring control and knowledge became superfluous. Several courts addressing similar conflicts have held that, at a minimum, these competing provisions render the endorsement language ambiguous, therefore requiring the insurer to prove knowledge or control.

The Importance of a Cause and Origin Investigation

Just as critical to resolving this case was our decision to immediately retain an independent cause-and-origin expert. In any case involving a fire of unknown or undetermined origin, particularly where another party is in control of the premises and carries a liability policy, our firm always retains a cause-and-origin investigator.  This is an essential step. We retained an experienced Connecticut fire investigator. After a thorough examination of the debris, he concluded that the tenant had done electrical work in the basement over the years, had used appliances expressly prohibited from being plugged into extension cords, and had plugged them into an extension cord. Additionally, he determined that wiring running through the walls overheated ultimately igniting combustible materials, causing the fire.

This discovery opened the door to recovery under the tenant’s liability policy. Although the tenant and its insurer denied fault and claimed the cause of the fire could not be definitely proved, the presence of a well-supported expert’s opinion significantly improved our claim.

The Resolution and Key Takeaways for Policyholders

Ultimately, the combination of a compelling policy interpretation regarding the Protective Safeguard Endorsements and credible evidence pointing to tenant negligence led both defendants to conclude that resolving the claim to compensate our client for her loss and damages was in their best interests. Throughout this claim, interesting questions concerning our insurance company’s right to subrogate after it had denied the claim, as well as questions concerning wiring, permits, and causation, were posed. However, the insurance company’s insistence that the Protective Safeguards Endorsement language be strictly interpreted and strictly construed remained the most difficult and important point of discussion.

Protective Safeguard Endorsements are not going away. As experienced property insurance attorneys, our firm has seen an increase in these endorsements being used by insurance companies and referenced on declarations pages, while the detailed requirements and obligations of the insureds are buried elsewhere in the policy.

Under well-settled insurance rules, the insured is responsible for understanding the Protective Safeguard Endorsements and what their language means. If you, the policyholder, has a policy with a Protective Safeguard Endorsement, you need to be aware of and read all obligations. If your policy, like our client’s policy, obligates you to maintain smoke detectors, fire extinguishers, or other protective safeguards, keeping a detailed record of all maintenance work and inspections is extremely important. Ignoring these obligations can, and often will, result in denial when coverage is needed most.

If your claim has been denied based on a Protective Safeguard Endorsement, or if another party’s negligence may have caused your loss, early involvement of experienced coverage counsel and independent experts can make all the difference.

Insurance carriers are required to investigate claims promptly, communicate honestly, and take clear coverage positions. When they fail to do so, insureds are often left in an impossible position and forced to protect their property while their insurer delays or refuses to act. A recent federal appellate decision underscores just how costly that conduct can be for insurers.

In Maxus Metropolitan, LLC v. Travelers Property Casualty Company of America, No. 24-1176 (8th Cir.), the Eighth Circuit affirmed a jury verdict exceeding $27 million against Travelers for both breach of contract and vexatious refusal to pay, finding that the insurer’s claims handling crossed the line into bad faith

After a catastrophic fire destroyed part of a multi-building apartment complex, the insured promptly notified Travelers. Yet Travelers failed to issue a coverage determination for more than two months, only doing so after the insured filed a complaint with the state insurance department

As the claim progressed, Travelers repeatedly delayed responding to expert findings showing widespread soot and water damage. Further, Travelers used testing methods that a jury could reasonably find were designed to minimize the detection of damage. Notably, Travelers also withheld its own consultant’s findings until after the insured had already begun remediation.

Rather than guiding its insured, Travelers repeatedly stated it could not “take a position,” effectively forcing the policyholder to act alone to protect tenant safety and preserve the property.

The court made clear that an insurer cannot hide behind silence. Even where coverage issues are disputed, insurers still have a duty to conduct a reasonable investigation and communicate in good faith. The jury was entitled to conclude that Travelers’ conduct was unjustified, supporting a finding of bad faith.

Importantly, the court rejected the idea that a “reasonably litigable” coverage dispute automatically shields an insurer from bad-faith liability. Under Missouri law, and echoed by courts nationwide, an insurer may still be liable where its claims handling conduct, including delays, inadequate investigation, or refusal to explain decisions, is unreasonable.

Here, Travelers’ prolonged refusal to take a position, coupled with selective testing and delayed disclosure of reports, supported the jury’s bad-faith verdict, even though coverage issues were contested.

At Biller, Sachs & Robert, we see this conduct far too often. Insurers delay decisions, dispute obvious damage, or refuse to meaningfully engage in the hope insureds will exhaust their resources or give up.

Our firm represents homeowners, businesses, and associations in complex property-loss and bad-faith claims, holding insurers accountable when they delay coverage determinations, when they ignore or minimize expert findings, and when they place profits over policy obligations.

The Maxus decision is a powerful reminder: insurers can be held responsible not only for what they deny, but for how they handle claims along the way. When carriers cross that line, experienced policyholder counsel matters. If your insurer is delaying, deflecting, or refusing to take responsibility after a loss, our office is prepared to step in and assist you.

Connecticut has clarified how public adjuster fees are calculated and when they can be collected. The General Assembly’s 2025 update to C.G.S. § 38a-726 (effective October 1, 2025) fixes an alleged ambiguity in subsection (b) that fueled avoidable disputes between policyholders, public adjusters, and insurers.

Our office worked alongside industry professionals, including the Connecticut Association of Public Insurance Adjusters (CAPIA), to support this clarification. The result is a statute that now mirrors real-world claims practice and the Department of Insurance’s long-standing interpretation.

C.G.S. § 38a-726 now confirms in subsection (b) that a public adjuster’s fee is to be calculated  based only on the amount of the insurance settlement proceeds actually paid by the insurer. It verifies that said fees may be collected after the insurer has paid those proceeds.

The former subsection (b) tied fees to proceeds “actually received by the insured,” which created disputes over whether an adjuster could be paid when checks were issued jointly to mortgagees, deposited in escrow, or otherwise delayed from reaching the insured’s personal account. The clarification states, “(b) Any fee charged to an insured by a public adjuster shall be based only on the amount of the insurance settlement proceeds actually paid by the insurer on the account of a loss and shall be collected by such public adjuster after the insurer has paid such settlement proceeds.” Conn. Gen. Stat. Ann. § 38a-726.

Prior to the passage of the recent clarification, a Superior Court judge limited the public adjuster’s fee to only a percentage of what the insured netted after applying some of the insurance proceeds to pay off their mortgage. A public adjuster is entitled to a fee based on what the insurance company pays on account of the loss, however, not what the insured receives after they use the insurance money for purposes other than a repair. The clarified statute addresses any ambiguity or interpretation limiting the public adjuster’s fee.

The 2025 language eliminates that ambiguity by keying both calculation and collection timing to payment by the insurer.

Our office assisted in proposing the changes in Raised Bill 1270 and met with Connecticut legislators. As Executive Counsel for CAPIA, Brianna Robert and Jon Biller helped explain, in plain terms, how public adjusters are paid and why the “actually received by the insured” phrasing was unworkable, especially where mortgagees or other payees are involved. Our firm and CAPIA emphasized that the bill would codify longstanding industry practice and align with the Connecticut Department of Insurance’s historic interpretation.

What This Means

1. Fees are measured by the amount the insurer pays in loss settlement proceeds.
2. Public Adjusters may collect after the insurer pays, avoiding delays caused by mortgage servicing or escrow logistics.
3. Subsection (a) still bars fees when policy limits are offered within 30 days after a covered fire loss.

Although not discussed in the clarified statute, the Connecticut Insurance Department has approved the practice of insurers paying the public adjuster directly. By providing direct payment to the public adjuster, the insurer is able to distribute the remaining funds to the insured without including the public adjuster on the payment.  

The 2025 amendment to § 38a-726(b) confirms and codifies longstanding legal practices: calculate a public adjuster’s fee on the settlement dollars the insurer pays and collect after the insurer pays, regardless of who the funds are paid to. Where the parties agree, the insurer can pay the public adjuster directly, allowing the remaining insurance funds to be paid directly to the insured without inclusion of the public adjuster.

Assisting in the drafting and passage of legislation that impacts insureds and their representatives is one of the ways our office helps our property insurance clients. Our office was pleased to be able to support the testimony that helped get this clarification enacted.

A recent Connecticut Superior Court ruling in Roosevelt v. State Farm Fire and Casualty Company marks an important development for insurance policyholders pursuing claims of unfair practices and bad faith.

The plaintiffs, represented by Biller, Sachs & Robert, alleged that State Farm mishandled a first-party property damage claim. The insurer filed a Motion to Strike, arguing that the plaintiffs’ allegations of violations of the Connecticut Unfair Insurance Practices Act (CUIPA), as enforced through the Connecticut Unfair Trade Practices Act (CUTPA), and bad faith were legally insufficient.

But Judge Robin Wilson disagreed. She denied the motion and allowed these critical allegations to move forward.

On CUIPA/CUTPA Claims

State Farm argued that the plaintiff failed to allege enough facts showing a “general business practice” of unfair settlement handling—something required under CUIPA. However, the court found that the complaint alleged multiple instances of similar misconduct, including repeated delays, low estimates, and failures to conduct fair investigations. These, the court said, were enough to support a plausible inference of a broader pattern, not just an isolated incident.

The court reaffirmed that plaintiffs could survive a Motion to Strike when their complaint alleges more than a one-off mistake, especially when those allegations suggest a pattern of unfair practices that impact others too.

On Bad Faith:

State Farm also claimed that the plaintiffs’ bad faith allegations were too vague or conclusory. Again, the court disagreed. It held that the plaintiffs had pled sufficient factual detail. Specifically, the plaintiffs’ allegations stated that State Farm knowingly undervalued the damage, misrepresented policy coverage, and failed to investigate properly to support a claim of bad faith.

The court emphasized that bad faith does not require proving a breach of contract, just that the insurer acted with “actual or constructive knowledge” that its conduct was unreasonable or unjustified. At this early stage, the court found the complaint met that standard.

This decision is a significant win for policyholders across Connecticut. It reinforces that insurance companies cannot escape scrutiny simply by labeling misconduct as isolated or procedural. If there’s a pattern of mishandling claims, courts are willing to let those allegations proceed.

Biller, Sachs & Robert, who primarily represents policyholders in first-party property claims, sees this as a major affirmation of the rights of insureds to demand fairness and accountability.

Too often, insurers try to sweep these cases aside. This ruling ensures that policyholders can make allegations and pursue them in court when they believe they have been treated unfairly.

Read the decision here:

https://efile.eservices.jud.ct.gov/DocumentInquiry/DocumentInquiry.aspx?crn=4721847&DocumentNo=27999994

While homeowners should obtain their own insurance policies for their homes, there are occasions where mortgage companies for homeowners secure insurance policies on properties on which they hold mortgages. The policies obtained by mortgage companies are commonly referred to as force-placed insurance or lender-placed insurance.

In Thomas Barry and Rising Star Roofing, LLC as assignee of Thomas Barry v. Integon National Insurance Company, the insurance company filed a Motion to Dismiss claiming the plaintiffs lacked standing to sue the insurance company. The insurance policy issued by the defendant insured the plaintiff’s home but was a force-placed insurance policy secured by Mr. Barry’s mortgage company. While the insurance policy was in effect, the home suffered a loss due to a windstorm. The defendant argued that the insurance policy was obtained by the homeowner’s mortgage company and therefore did not provide coverage for the homeowner as a result of the windstorm claim.

The plaintiff argued that the homeowner was an insured pursuant to the language of the insurance policy. Specifically, Biller Sachs & Robert, on behalf of the plaintiffs, argued that the homeowner was insured under the policy as a “borrower.” Attorneys Jon Biller and Brianna Robert analyzed the policy and argued the insurance policy includes a Connecticut endorsement providing coverage to the home, which was owned by the plaintiff. That same Connecticut endorsement in the policy also adds a mortgage clause, which states that the homeowner was insured under the policy. Furthermore, the policy defined “borrower” and the borrower on the Notice of Insurance was the homeowner. As such, Biller Sachs & Robert argued that the policy itself stated that it was issued to the mortgage company and the borrower. There was no question that the borrower was the homeowner.

The plaintiff also argued that if the defendant’s position was that this language in the policy differed from other portions of the policy where the borrower was not listed as an insured, this was an ambiguity in the policy. The plaintiff advised the court that Connecticut law is clear on ambiguities in insurance policies. Connecticut courts have held that insurance policies are contracts of adhesion because the purchaser has limited, if any, bargaining power. As such, any ambiguities within the policy are to be construed against the insurer. See Johnson v. Connecticut Ins. Guar. Ass’n., 302 Conn. 639, 31 A.3d 1004 (2011).

In ruling on the Motion to Dismiss, the court concluded that an ambiguity exists “regarding whether the plaintiff constitutes an insured and whether the plaintiff was an intended third-party beneficiary under the policy.” Thomas Barry and Rising Star Roofing, LLC as assignee of Thomas Barry v. Integon National Insurance Company, Docket No.: TTD-CV-23-6027659-S, Judge Matthew Dallas Gordon decision dated January 22, 2024. The court went on to cite Conboy v. State, 292 Conn. 642, 653-654, 974 A.2d 669 (2009), holding that this was not a case in which the defendant’s Motion to Dismiss could be decided simply on the basis of an affidavit submitted by the defendant and the language of the contract. In further citation to the Conboy case, the court went on to state that an evidentiary hearing would be required to make “critical factual findings as to whether the plaintiff has standing as a third-party beneficiary.” Thomas Barry et al. v. Integon National Insurance Company, Docket No.: TTD-CV-23-6027659-S, Judge Matthew Dallas Gordon decision dated January 22, 2024

The court also cited Anderson v. Town of Bloomfield, 203 Conn. App. 182, 197, 247 A.3d 642, 652 (2021) holding that the resolution of the factual issue was “intertwined with the merits of the case” and therefore resolution of the jurisdictional question should be resolved by ultimate fact finder – the jury or the trial judge – as part of the trial on the merits.

The plaintiff was successful in defending this Motion to Dismiss because of the briefing and advocacy at oral argument by Attorneys Biller and Robert. Shortly after the Motion to Dismiss was denied, the parties were able to resolve the matter without additional further litigation to the mutual satisfaction of the parties.

 
Read the decision here:

https://efile.eservices.jud.ct.gov/DocumentInquiry/DocumentInquiry.aspx?crn=4808058&DocumentNo=26707707

Co-authored by: Jon Biller & Brianna Robert

In a victory for Liberty Automotive, Inc. d/b/a Liberty Mazda of Hartford, our Associate Attorney Niki Abossedgh successfully argued for treble damages under Connecticut General Statutes § 52-564, following a hearing in damages before Judge Robert B. Shapiro in the Connecticut Superior Court, JD of Hartford in Liberty Automotive, Inc. d/b/a Liberty Mazda of Hartford v. Ernest Davis.[1]

The case stemmed from a 2023 incident in which the Defendant took a 2023 Mazda 3 for a test drive under a signed temporary loan agreement but failed to return it and instead, reported it stolen. About 51 days later, the vehicle was ultimately recovered—damaged and found to be in the possession of the Defendant during that 51 day duration.

As a result of the Defendant’s misconduct and false reporting, Liberty Mazda incurred over ten thousand dollars in repair costs. At a hearing in damages held on February 26, 2025, Attorney Abossedgh presented testimonial and documentary evidence demonstrating not only breach of contract but also a willful and wrongful exercise of control over the property—a textbook case of statutory conversion.

Connecticut General Statutes § 52-564 provides that “[a]ny person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages.”[2] In other words, if the conduct qualifies as statutory theft, the plaintiff is entitled to triple the proven damages.

The Superior Court agreed with Attorney Abossedgh’s position and found that the Defendant’s conduct met the statutory criteria for theft.  

Judge Shapiro entered judgment in favor of Liberty Mazda in the full treble damages.

This ruling underscores the remedy that Connecticut’s statutory theft law provides to victims of conversion. As Attorney Abossedgh argued, when a defendant’s conduct rises to the level of intentional misappropriation, courts have discretion to impose treble damages—not merely to compensate the victim, but to deter willful misconduct.     

We are proud to congratulate Associate Niki Abossedgh on her first courtroom win.

[1] See Liberty Automotive, Inc. d/b/a Liberty Mazda of Hartford v. Davis, No. HHD-CV24-6181731-S (Conn. Super. Ct. Mar. 5, 2025).

[2] See Conn. Gen. Stat. § 52-564  

Co-authored by: Brianna Robert, Niki Abossedgh & Luc Shay

Biller, Sachs & Robert secured another important victory for homeowners this past October after a Connecticut Superior Court ordered an insurer to participate in an appraisal proceeding to determine the amount of loss suffered by two homeowners following a windstorm.[1] The homeowners turned to the Biller Law Firm after struggling with their insurer’s conflicting estimates and refusal to proceed with the appraisal process.[2] 

Whenever a homeowner suffers a loss and makes a claim to his or her insurance company, there is always the potential for dispute between the insurer and the homeowner as to how much damage the homeowner’s property suffered or how much it will cost to fix this damage. Connecticut law provides a mechanism to address such disputes under Connecticut General Statutes § 38a-307 and § 38a-308.

Under these statutes, insurers are required to insert a provision into their insurance policies that allows an insured to initiate an appraisal process to determine a value for the amount of loss suffered by that insured.[3] This appraisal provision states that when the insured and the insurer fail to agree on the amount of loss suffered, each party may select its own appraiser to evaluate the loss.[4] The appraisers for each party will first attempt to agree on the amount of loss, but if they cannot do so, the two appraisers can submit their differences to an “umpire” to help decide the value of the loss.[5].

In Shaw v. CSAA Gen. Ins. Co., the homeowners, represented by the Biller Law Firm, attempted to assert their appraisal rights and obtain a determination as to the amount of loss their home suffered as a result of a windstorm.[6] Initially, the Defendant insurance company acknowledged that the homeowners had suffered a loss, however, the insurer initially estimated the value of the loss at only a little more than three thousand dollars.[7]  After the homeowners hired a contractor, the defendant insurer provided the homeowners with a second estimate valuing the loss at around twenty-nine thousand dollars.[8] However, during repairs, the plaintiff’s contractor uncovered further interior damage, prompting the homeowners to submit an updated increased estimate.[9] Even though the defendant insurance company had initially accepted coverage of the claim, the insurance company tried to argue that the additional damage found by the contractor was not a part of the original claim.[10] The defendant insurance company further attempted to argue that if the newly discovered damages were not a part of the original claim, there would be no dispute over the amount of loss and therefore no need for an appraisal.[11]

The court rejected the insurance company’s argument and sided with the Biller Law Firm and its clients thereby granting their Motion to Compel Appraisal.[12] It emphasized that even if there is a coverage dispute, the appraisal process can proceed, ensuring disputes over valuation do not render appraisal clauses meaningless.[13] The court further cited Connecticut Supreme Court precedent, holding that an insurer cannot avoid appraisal by merely disputing coverage.[14] As the court explained, “[n]othing in the language of the appraisal provision in the policy indicates that resolution of a coverage dispute must precede appraisal.”[15] As a result, the court ordered the defendant insurance company to participate in the appraisal process.[16]

This decision underscores another significant victory for Biller, Sachs & Robert clients and a crucial win for Connecticut homeowners. This decision ensures statutory protections for homeowners in disputes with insurers and allows policyholders to assert their rights under appraisal clauses, expediting the resolution of valuation disagreements.

[1] See Shaw v. CSAA Gen. Ins. Co., No. TTD-CV-24-6030570-S, 2024 WL 4441513, at *1 (Conn. Super. Ct. Oct. 2, 2024).

[2] Id.

[3] See Connecticut General Statutes §§ 38a-307 and 38a-308

[4] Con. Gen. Stat. § 38a-307

[5] Id.

[6] Shaw, 2024 WL 4441513, at *1.

[7] Id.

[8] Id.

[9] Id.

[10] Id. at *2

[11] Id.

[12] Id. at *3

[13] Id.

[14] Id.

[15] Id.

[16] Id.

Co-authored by: Brianna Robert & Luc Shay

Attorneys Jon Biller and Brianna Robert successfully argued, on behalf of another plaintiff-property owner, a Motion in Limine before the Connecticut Superior Court, J.D. of Hartford. See Kallmeyer v. Kleen Energy Sys., No. X07-CV-12-5036401-S, 2023 WL 9054174 (Conn. Super. Ct. Dec. 28, 2023). In December of 2023, Superior Court Judge Cesar A. Noble ruled in favor of Attorney Biller’s and Attorney Robert’s client by denying the defendant’s, O&G Industries Inc.’s (“O&G”), Motion in Limine.[1] A Motion in Limine is a pretrial motion whereby a court can disallow a party from presenting certain evidence on an issue at trial or rule on certain evidentiary issues pretrial.[2]

The Kallmeyer v. Kleen Energy Sys. case arose out of a loss suffered by a homeowner after the explosion of a nearby power plant damaged the homeowner’s property.[3] Biller, Sachs & Robert represented the homeowner against the parties charged with carrying on the construction at the power plant.[4]

The defendant advanced several arguments to the court in favor of its motion.[5] Specifically, the defendant argued that the plaintiff should not be allowed to present evidence on the cost to repair the plaintiff’s property; on stigma damages resulting from the explosion; on damages stemming from loss of use of the property; or on certain testimony from one of the plaintiff’s experts.[6]

Pursuant to the stigma damages issue, the defendant O&G Industries argued that a homeowner is not entitled to stigma damages for the loss in value to his home unless he or she actually sells the home and suffers a loss.[7]

Judge Noble accepted the arguments made by Attorneys Biller and Robert that stigma damages, which result in a loss of value to a Connecticut property owner as a result of the negligence of a third party, are recoverable whether the property is sold or not. In    adopting Biller, Sachs, & Robert’s argument, Judge Noble held, “The plaintiff is not required to sell the property to recover damages as a result of stigma.”[8]

Another important issue was the defendant O&G’s argument that it could limit its payment to the homeowner to the pre-loss value of the home as determined by the town assessor or the defendant’s own appraiser.[9] O&G had hired an appraiser and then argued that damages should be limited to that appraiser’s determination of the pre-loss, market value of the home.[10] Once again, ruling in our client’s favor, Judge Noble rejected O&G’s argument.[11]

Instead, Judge Noble wrote that an injured plaintiff could elect to calculate damages using diminution in value or repair costs, at his option.[12] The court held, “[T]he plaintiff need offer only evidence of the cost of repairs or diminution in value. If the former, it is the defendant’s burden to demonstrate that the cost of repair” would be an inadequate measure of damages.[13]

This is an important precedent for Connecticut property owners whose homes or businesses have been damaged by the negligent conduct of another party. Limiting damages to the market value of the property, or to the assessor’s determination of value, often leads to inadequate compensation to the injured party. The rule enunciated by Judge Noble as a result of Biller, Sachs & Robert’s efforts allow a property owner to recover the costs to repair their property as long as the repair cost does not exceed the value of the property. The injured party, at its option, can claim a diminution in value, or repair cost, as well as a claim for stigma damages to the property itself.

Ultimately, the court denied the defendant’s motion and ruled in favor of Biller, Sachs & Robert on every issue for which the defendant O&G sought relief.[14] This decision represents another important victory for Biller, Sachs & Robert clients and for Connecticut property owners.

[1] Id. at *3.

[2] See generally Conn. Practice book § 15-3

[3] See Kallmeyer, 2023 WL 9054174, at *1

[4] . See Am. Compl. at ¶ 2, Kallmeyer v. Kleen Energy Sys., No. X07-CV-12-5036401-S (Conn. Super. Ct. Aug. 14, 2023)

[5] Kallmeyer, 2023 WL 9054174, at *1

[6] Id.

[7] See Mot. in Lim. at 11, Kallmeyer v. Kleen Energy Sys., No. X07-CV-12-5036401-S (Conn. Super. Ct. Jul. 24, 2023)

[8] Kallmeyer, 2023 WL 9054174, at *2

[9] See Mot. in Lim. at 9, Kallmeyer, No. X07-CV-12-5036401-S.

[10] Id.

[11] Kallmeyer, 2023 WL 9054174, at *2.

[12] Id.

[13] Id. (Emphasis added).

[14] Id. at *2-3

Co-authored by: Brianna Robert & Niki Abossedgh

In April 2023, Judge Barbara Jongbloed of the Connecticut Superior Court for the Judicial District of New Haven denied summary judgment to a public utility provider after Biller, Sachs & Robert successfully argued that electricity was a product under the Connecticut Product Liability Act in Clemmons v. Connecticut Light and Power Co.

Judge Jongbloed also agreed with Biller, Sachs & Robert that the electricity supplied to the plaintiffs’ home was defective and was provided in an unreasonably dangerous condition.[1]This ruling followed an electrical fire that caused significant damage to the insured’s residence on March 7, 2018.

After a winter storm caused local power lines to fall, the plaintiff homeowners, Mr. and Mrs. Clemmons, contacted Eversource and immediately advised the company that they had lost their power. The Clemmons’ were unaware at the time that, not only were there widespread power outages, but a very large tree had fallen and caused electrical wires on their property to also come down. When they learned this, they called Eversource back to try to alert the company. Unfortunately, Eversource had changed their telephone prompts in order to decrease their call volume. Specifically, the prompts that were available in the evening, which directed callers to push a specific number if they had wires down, were no longer available the next morning. 

Left with no ability to notify Eversource that there was a tree down on the wires on their property, the Clemmons’ notified the Madison police, who reported to the home and confirmed that the wire on their property was in fact dead.

Moments after the police had left, and without notifying the insured, Eversource restored power to the property, igniting a devastating fire that erupted from that wire. As a result, the fire destroyed the home.

Attorneys Jon Biller and Brianna Robert represented the homeowners in the lawsuit against Eversource. Biller, Sachs & Robert filed a Motion for Summary Judgment in the case claiming electricity was a product under the Connecticut Product Liability Act.

When a utility company has notice of a potentially dangerous condition, and then allows that condition to damage an insured’s property, there are a number of legal theories that may be available to the insured. At issue in Clemmons v. Connecticut Light and Power Co., was the question of when electricity becomes a product as opposed to a service, and if determined to be a product, whether the electricity supplied to the insured’s home was in an unreasonably dangerous condition.

In this case, the utility company attempted to argue, in a cross motion for summary judgment, that electricity was not considered a “product,” but a “service,” within the meaning of the Connecticut Product Liability Act (“CPLA”) and that Public Utilities Regulatory Act (“PURA”) precluded application of the CPLA. It also alternatively argued that the homeowners failed to establish that the electricity provided was in a defective condition unreasonably dangerous to them as consumers.

The Court rejected Eversource’s arguments and determined it was appropriate to apply the doctrine of strict liability to a products liability action involving electricity supplied to a home. Biller, Sachs & Robert provided prior case law to the court, including the Connecticut Superior Court case of Travelers Indem. Co. of Am. v. Connecticut Light & Power Co., to point out that “a majority of courts have held that electricity becomes a product when it passes through the customer’s meter and enters the customer’s premises.”[2] The court agreed and also held that “the weight of authority supports the determination that electricity is a product for purposes of the CPLA.”[3]

The court further rejected Eversource’s argument that PURA precluded liability under the CPLA. Eversource argued that its role in transmitting and delivering electricity is heavily regulated by PURA, classifying it as a “service” provider under these regulations. Eversource claimed PURA’s rules prevent imposing strict liability on public utilities.[4]

The court found the analysis from a prior case cited by Biller, Sachs & Robert involving Eversource, O’Neil v. Connecticut Light & Power Co., persuasive as well. In O’Neil, the court held PURA does not limit liability for negligence or misconduct.[5] The court in O’Neil stated that “there is no precedent cited by Connecticut Light and Power in Connecticut which recognizes the authority of PURA to approve tariffs which include a limitation on the liability of a public utility for even simple negligence, yet alone wanton and willful misconduct….”[6] Therefore, the court concluded that PURA’s regulations do not prevent the application of the CPLA. [7]

The court also found Attorneys Biller and Robert submitted sufficient evidence to establish that the electricity had been sold in a defective condition that was unreasonably dangerous to the consumer for purposes of establishing a CPLA claim. The court stated that whether the electricity was in a defective condition unreasonably dangerous to the consumer or user was a question of fact, which meant the Clemmons’ would be able to pursue their strict liability claim against Eversource in court.[8]

This case represents a significant victory by Biller, Sachs & Robert for consumers, as product liability claims provide important remedies to Connecticut residents who have been injured as a result of companies, including public utility companies, selling defective products.   

[1] Clemmons v. Connecticut Light & Power Co., No. NNHCV-19-6109350-S, 2023 WL 2986797, at *1 (Conn. Super. Ct. Apr. 14, 2023).

[2] Id. at *5, citing Travelers Indem. Co. of Am. v. Connecticut Light & Power Co., No. CV075012441S, 2008 WL 2447351 (Conn. Super. Ct. June 4, 2008) (citing Restatement (Third) of Torts § 19)

[3] Clemmons, 2023 WL 2986797, at *5.

[4] Clemmons, 2023 WL 2986797, at *6; Regs. Conn. State Agencies §16-11-102(a): “[e]very utility shall use every effort to properly warn and protect the public from danger and shall exercise all possible care to reduce the hazard to which employees, customers and others may be subjected by reason of its equipment and facilities.”

[5] O’Neill v. Connecticut Light & Power Co., No. HHDCV186089044S, 2020 WL 1889124, at *11 (Conn. Super. Ct. Feb. 21, 2020).

[6] Id.

[7] Clemmons, 2023 WL 2986797, at *6.

[8] Id. at *3                                                                                                                                                            

Co-authored by: Elizabeth Anderson

Nearly all insurance policies contain a provision that bars policyholder’s ability to sue their insurer once the contractual clock limitation period has expired. Courts have long grappled with what triggers these limitation periods and the enforceability of such clauses. This article explores and reconciles three different court decisions on this issue from the State of New York and the Second Circuit Court of Appeals.

While most written contracts are governed by a six-year statute of limitations, property insurance policies generally contain a shorter timeframe to sue.[1] In New York and Connecticut, the timeframe to sue under a property insurance policy is two years.[2] Other states have varying timeframes to sue, ranging from as little as one year or as long as six years. Most states strictly enforce the timeframe stipulated in the insurance policy: if you do not file a lawsuit within this period, you will surrender the opportunity to pursue your claim and protect your rights.

Often the question arises, when does the timeframe to sue begin? If the date of loss is clear, this date may trigger the timeframe to sue. However, if the insured has not yet discovered its damages, the timeframe might not begin until the insured knew or should have known of its damages. So, what happens if the insured cannot comply with all the policy requirements within the timeframe to sue? Many courts will hold that the timeframe to sue must be extended by the time needed for the insured to comply with any underlying policy conditions. This discussion focuses on when the clock starts ticking for filing a lawsuit under a property insurance policy.

The Court of Appeals for the Second Circuit has held that generic insurance policy language requiring any suit to be commenced within two years “after the date of loss” should be interpreted as the date on which the loss was discovered, not the date on which damage was incurred.”[3] In Fabozzi v. Lexington Ins. Co., Paul and Annette Fabozzi were insured under a homeowner’s insurance policy that barred any action starting two years “after the date of loss.”[4] The Fabozzis filed a claim with their insurer after their ocean-side home on Staten Island, New York, began to collapse due to structural damage.[5] The claim was made approximately one month after the Fabozzis had to support their home to prevent collapse. The carrier conducted an investigation and ultimately denied the claim, citing various policy exclusions.[6] The Fabozzis then sued their insurance carrier for breach of contract and bad faith more than two years after they had submitted their claim.[7]

The District Court for the Eastern District of New York granted the insurer’s motion for summary judgment, ruling that because the insured’s suit was brought more than two years after the date on which damages were incurred, the suit was barred by the policy’s two-year limitation period.[8]

On appeal, the Second Circuit reversed and held that the district court erred in finding that the two-year timeframe to sue ran from the date of “the accident” and failed to consider “what conditions were precedent to filing suit, nor did it determine at what point a breach occurred.”[9] The Second Circuit relied on Steen v. Niagara Fire Ins. Co., in which the New York Court of Appeals held that policy limitations on suits after a certain period “after loss or damage” are triggered “only once the right to bring an action exists.”[10] The Second Circuit found that the district court erred in relying on the more recent decision of Costello v. Allstate Ins. Co., noting that the court in Costello provided little analysis and misstated precedents on the issue.[11] Costello erroneously held that “date of loss” and “after inception of the loss” both refer to the date of the insured catastrophe rather than the date the loss was discovered.[12]

Contrary to the rule stated in Costello, an insurer can claim that the limitation period “only by exceptionally clear language” should run from the date on which damage was incurred.[13] For example, a policy that bars action after a specified period “after the inception of loss” would be clear enough to make the limitation period begin to run on the date of the covered peril rather than on the date the loss was discovered.[14]

The Second Circuit reversed and remanded the case back to the district court to determine “when the Fabozzi’s claim accrued and whether, in light of this determination, their suit was timely.”[15] Following the Second Circuit’s ruling, there were no further proceedings on the time limitation issue.[16] The Fabozzi interpretation of “accrue” pursuant to insurance policy time limitation provisions is widely accepted and there are no competing definitions of “accrual” in the Second Circuit.[17]

The Second Circuit Court of Appeals has also held that an insurance policy’s limitation provision requiring a suit to be commenced within a specified period after the date of loss is unenforceable if the policy contains other conditions that cannot reasonably be satisfied within the specified period.[18] In Exec. Plaza, LLC v. Peerless Ins. Co., the owner of a commercial property in Island Park, New York, held a general liability and property damage insurance policy with Peerless Insurance Company.[19] The policy provided that upon property loss, the insurer was not obligated to pay the replacement cost until the property loss had been repaired or replaced, and unless the repair or replacement was made as soon as reasonably possible.[20] The policy also required that any action be brought within two years after the direct loss or damage occurred.[21]

The property was damaged by fire in February 2007, and the plaintiff promptly notified his insurer and arranged for building repairs and replacement.[22] Building permits were issued twenty-one months later in November 2008.[23] The insurer paid the insured the actual cash value of the property after the fire but notified the policyholder that, pursuant to the policy, it was not obligated to pay the replacement cost until the repairs were completed within a reasonable amount of time.[24] Before the building repairs were competed, the insured brought suit to compel the insurer to provide the replacement costs.[25] The insurer removed the case to federal court and moved to dismiss it as premature because the repairs and replacements were incomplete.[26] The District Court for the Eastern District of New York granted the insurer’s motion to dismiss, holding that the policyholder’s action was barred by the policy’s two-year limitation period.[27]

Once the insured’s repairs and replacements were complete—which exceeded the actual cash value of the property after the fire—they submitted another claim for payments to their insurer.[28] Their insurer denied the claim as being outside the two-year limitation period.[29] The policy holders again filed suit, arguing that the limitation clause was unenforceable because the repairs could not reasonably be completed within two years after the property loss.[30] The district court ruled in favor of the insurer, and the insured appealed to the Second Circuit.[31] The Second Circuit reversed the decision and certified the question to the New York Court of Appeals.[32] The Court of Appeals then addressed whether the policyholder was excused from bringing an action within two years when rebuilding the damaged property within that period was not reasonably possible.[33]

The New York Court of Appeals held that the policy limitation period was unenforceable, reasoning that “it is neither fair nor reasonable to require a suit within two years from the date of loss while imposing a condition precedent to the suit—in this case, the completion of replacement of the property—that cannot be met within that two-year period.”[34] The court pointed to New York’s long-standing precedent that an insurance policy may modify a statute of limitations period to a shorter but reasonable timeframe.[35] The court reasoned that the fairness and reasonableness of a policy’s limitation period should be considered “in view of the circumstances of each particular case . . . . The circumstances, not the time, must be the determining factor.”[36]

The court’s holding in Exec. Plaza is significant because it departed from the typical strict enforcement of the two-year limitation provision in favor of a more just result. Despite the policy’s two-year limitation to sue and the absence of late discovery or other court delays, the appellate court declined to enforce the policy provision. The court noted that the two-year timeframe was reasonable (and had even enforced shorter timeframes in the past), and it became unreasonable when read in conjunction with the provision requiring the policyholder to repair or replace damaged property within a reasonable amount of time.[37]

In light of Exec. Plaza, plaintiffs have successfully argued that insurance policy and other contractual time limitation provisions are unenforceable when the policy contains other conditions that cannot be satisfied within the specified period. However, the Exec. Plaza rule is sometimes rejected by courts when policyholders fail to show the existence of a condition precedent -a critical element in the exception to the strict enforcement of a policy’s time limitations for filing suit.

For example, in another New York District Court case, the plaintiff held an insurance policy that promised payment of additional living expenses in the event of a covered loss to the residence premises and required that action be brought within two years after the occurrence.[38] The repairs took almost two years, and the plaintiff filed suit seeking the additional living expenses promised under the policy.[39] In light of Exec. Plaza, the court held that the coverage for additional living expenses could extend beyond the two-year limitations period, holding that it would be unreasonable to interpret the policy’s limitation provision to require a party to file suit for expenses before they had been incurred or shortly after they were incurred.[40]

In another New York case, a plaintiff held a homeowner’s insurance policy that stated payments would not be made until repairs or replacements were completed.[41] The policy also stated that no action could be brought unless all conditions precedent had been met, including the completion of repairs and replacements, and unless brought within two years after the loss.[42] Applying Exec. Plaza, the court granted a motion for renewal/reconsideration because the record failed to establish whether plaintiffs were able to satisfy the condition precedent in the loss settlement provision of their policy prior to commencing the action.[43]

Despite these successful uses of Exec. Plaza, courts have sometimes rejected the plaintiffs’ reliance on Exec. Plaza because there is no condition precedent. For example, in a Northern District of New York case, the insured held a homeowner’s insurance policy with a two-year limitation period to suit.[44] In February of 2014, the neighbor’s sump pump caused significant water damage to the insured’s home.[45] The insurer kept the case open and active for over three years after the loss and denied the claim two years after the limitation period had expired.[46] The policyholder brought action against his insurer in January of 2018.[47] Relying on Exec. Plaza, the policyholder argued that the claim was not timed-barred because the two-year limitation period was unreasonable “given [the insurer’s] failure to address and either accept or deny the claim until . . . well after the expiration of the two-year limitations period.”[48]

The court rejected the policyholder’s reliance on Exec. Plaza and upheld the policy’s limitation period.[49] The court explained that Exec. Plaza was inapplicable because, in the present action, the policyholder was not required to satisfy a condition precedent before bringing action to recover.[50] The plaintiff also failed to establish that the insurer’s actions presented a barrier to the commencement of a suit when the plaintiff first determined that he did not receive the relief he sought.[51]

The New York Court of Appeals has applied the Fabozzi and Exec. Plaza interpretations of homeowners insurance policy limitation periods to a commercial crime insurance policy that barred plaintiffs from bringing suits after a specified period following the discovery of a loss.[52] In Sportsinsurance.com, Inc. v. Hanover Ins. Co., Inc., the New York Court of Appeals held that a provision limiting action to two years after the discovery of the loss is enforceable so long as it is (1) specific—meaning that the limitations period is tied to the discovery of the loss—and (2) reasonable—meaning that the policyholder is not prevented from timely suing.[53]

Sportsinsurance.com held a commercial crime insurance policy with Hanover Insurance Company.[54] The policy contained a limitation period, prohibiting the plaintiff from bringing legal action until ninety days after the plaintiff filed proof of loss with the defendant, and unless the action was brought within two years from the date the plaintiff discovered the loss.[55]  The policy defined “discovered” as

the time when [plaintiff] first become[s] aware of facts which would cause a reasonable person to assume that a loss of a type covered by this policy has been or will be incurred, regardless of when the act or acts causing or contributing to such loss occurred, even though the exact amount of details of loss may not then be known.[56]

In January 2016, Sportsinsurance.com discovered that its Chief Financial Officer had embezzled from the company.[57] In April, the company notified its insurer of the loss, and the insurer denied the claim.[58] In March 2020, the company filed suit against Hanover Insurance for breach of contract and breach of implied covenant of good faith and fair dealing.[59]

The district court held that the policy’s two-year limitation period was reasonable and enforceable, and therefore, there was no breach of contract.[60] The court distinguished the case from both Exec. Plaza and Fabozzi.[61] Unlike Exec. Plaza—where the policy barred an insured from bringing suit when the loss could not reasonably be replaced within the specified period—here, “there was no complete obstacle to Plaintiff’s initiation of a legal action within the two-year period.”[62] Accordingly, the limitation provision in Sportsinsurance.com’s policy was deemed reasonable and enforceable.

In contrast to Fabozzi, the policy language in this case specifically tied the limitations period to the discovery of the loss.[63] Unlike the vague “date of loss” deadline in Fabozzi, Sportsinsurance.com’s policy included a specific discovery deadline with an explicit definition of “discovery.”[64] The court in Fabozzi held that generic policy language requiring suits to be brought within two years “after the date of loss” should be interpreted as the date on which the claim accrued or, when the loss was discovered.[65] The court also noted that “exceptionally clear [policy] language” could require suits to be brought within a specified period after the date of the accident.[66] By defining “discovery,” Hanover Insurance made the limitation provision “exceptionally clear” and thus, enforceable.[67]

Both parties eventually appealed to the Second Circuit Court of Appeals.[68] The appellate court affirmed that the policy’s two-year limitation period was reasonable and enforceable, and consequently, the insured’s breach of contract and implied covenant claims were time-barred.[69]

Sportsinsurance.com cemented the two Second Circuit holdings on how courts should interpret insurance policy limitation provisions and emphasized the legitimacy of these provisions. While the clock starts later for generic limitation provisions, and unreasonable provisions are unenforceable, those provisions with reasonable terms are legitimate. Furthermore, if drafted with “exceptionally clear language,” limitation provisions can impose a stricter time constraint on plaintiffs. Since the Second Circuit’s ruling, one case has cited to Sportsinsurance.com to uphold a property insurance policy’s two-year limitation provision, which required plaintiffs to bring suit “within 2 years after the date on which the direct physical loss or damage occurred.”[70] There, the court held that the limitation provision was reasonable and unambiguous in tying the limitation period to the date the damage occurred.[71]

It is important for policyholders who have suffered a property loss to know the timeframe within their policy for filing a lawsuit to protect their rights. Almost every state holds that a policyholder is presumed to have read and understood their policy, making it essential to know when the timeframe to sue begins.[72] However, the starting point of this period is not always clear. When in doubt, consult an attorney and initiate your lawsuit promptly to safeguard your rights. Always read your insurance policy carefully, and if you do not understand it, contact your insurance agent, insurance company, or an insurance specialist to discuss your policy. If you ever suffer a property loss, be sure to know the timeframe you have to sue.