(Article from Insurance Law Alert, May 2018)
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The Second Circuit asked the Connecticut Supreme Court to address whether a party’s continuing course of conduct tolled the applicable three-year statute of limitations for negligence claims involving adjusters. Evanston Insurance Co. v. William Kramer & Assocs., LLC, 2018 WL 2142171 (2d Cir. May 10, 2018).
An insurer sued an adjuster, alleging that the adjuster negligently failed to inform the insurer of a mortgage on damaged property that he was investigating. The adjuster argued that the suit was time-barred because more than three years passed between when the adjuster first failed to inform the insurer of the mortgage and the filing of the complaint. See Conn. Gen. St. § 52-577. A jury found that the statute of limitations was tolled based on the adjuster’s continuing course of conduct with the insurer for several years following the adjuster’s initial negligent representation. However, a Connecticut district court entered judgment as a matter of law in the adjuster’s favor, finding that no reasonable jury could find the doctrine applicable.
On appeal, the Second Circuit noted that Connecticut courts have found a continuing course of conduct for purposes of tolling the statute of limitations if “there is evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act.” The court rejected the adjuster’s assertion that ongoing communications between the parties, without more, is insufficient to establish a continuing course of conduct. In any event, the court noted, the complaint alleged more than ongoing communications. In particular, the insurer asserted that following the initial negligent misrepresentation, the adjuster billed the insurer, used the insurer’s attorneys and treated the insurer as its client. The court stated that “such facts seem to us arguably sufficient to support a finding that a special relationship continued between the Adjuster and the Insurer . . . which would render the Insurer’s claim timely.” The court further reasoned that an ongoing special relationship need not be based on a continuation of the original duty of care; rather, a continuing duty may be found where the parties’ relationship has evolved. Finally, the court noted the possibility of tolling based on “later wrongful conduct . . . related to the prior act.”
Finding that the parameters of the tolling requirements have not been clearly addressed by Connecticut precedent, the Second Circuit certified to the Connecticut Supreme Court the following question: “Is the trial evidence legally sufficient to support the jury’s finding that the statute of limitations was tolled at least through October 21, 2010, rendering the Insurer’s claim timely?” We will monitor this matter for future developments.