Balboa Ins. Co. v. Zaleski

• Decision Date: 03 November 1987
• Docket Number: No. 5461,5461
• Citation: 532 A.2d 973,12 Conn.App. 529
• Court: Connecticut Court of Appeals
• Parties: BALBOA INSURANCE COMPANY v. Joseph D. ZALESKI et al

Page 973

532 A.2d 973

12 Conn.App. 529

BALBOA INSURANCE COMPANY v. Joseph D. ZALESKI et al.

No. 5461.

Appellate Court of Connecticut

Submitted on Briefs Sept. 1, 1987.

Decided Nov. 3, 1987.

Mark S. Rosenblit, West Hartford, filed a brief for appellant (named defendant).

Mark E. Blakeman, Hartford, filed a brief for appellee (plaintiff).

Before DUPONT, C.J., and SPALLONE and BIELUCH, JJ. BIELUCH, Judge.

The named defendant, Joseph D. Zaleski, appeals from the judgment rendered by the trial court in favor of the plaintiff for monetary damages in its suit on a general indemnity agreement executed by the defendants. ¹ The sole issue before this court is whether the plaintiff's action was barred by the six year statute of limitations on contract actions contained in General Statutes § 52-576. ² Determinative of this question is the date of accrual of the plaintiff's cause of action. The trial court held that the cause of action arose when the plaintiff's loss was determined by judgment against it on its performance bond and on its labor and material payment bond which were issued at the defendant's request pursuant to the underlying general indemnity agreement. We find error.

The facts are undisputed. On April 5, 1979, the town of Chester awarded a contract by low bid to the defendant for replacement of the roof on the Chester Elementary School. Among the required conditions was the submission of performance and labor and material payment bonds. To obtain these financial guarantees from the plaintiff, the defendant and Dorothy Zaleski, as individual indemnitors, executed a general indemnity agreement in favor of the plaintiff on May 31, 1979. Thereafter, on June 14, 1979, the defendant, as principal, and the plaintiff, as surety, executed a performance bond and a labor and material payment bond to the town of Chester, as obligee. Upon the furnishing of these two bonds, the contract for the school roof replacement was executed by the town and the defendant on July 2, 1979.

Daniel Moriarty & Associates, the town's architects and supervising engineers on the roof project, on September 21, 1979, gave the defendant seven days written notice that the town was terminating the roof replacement contract, giving as its reason the defendant's "wrongful abandonment of work and removal of materials and supplies." A copy of this notification was sent to the plaintiff.

On February 25, 1980, Green Enterprises, Inc., a supplier of materials for the roof contract, brought suit in the Superior Court in the judicial district of New London against the defendant and the surety on their labor and material payment bond. Summary judgment was rendered in favor of Green Enterprises, Inc., in that action on October 27, 1981.

The defendant on March 25, 1980, brought an action in the Superior Court in the judicial district of Hartford-New Britain at New Britain against the town of Chester for breach of contract. The town, on April 28, 1980, countered with a suit in the Superior Court in the judicial district of Middlesex against the surety for payment under its performance and labor and material payment bonds. On April 19, 1983, the defendant's case and the town's case were consolidated for trial in the judicial district of Hartford-New Britain at New Britain. After trial of the consolidated cases, the court on July 22, 1983, rendered judgment in A.W. Campbell Co. v. Chester, for the town. In Chester v. Balboa Ins. Co., damages of $5550, plus interest and taxable costs, were awarded to the town on the two surety bonds.

After these judgments were rendered, the plaintiff brought suit on its general indemnity agreement on January 23, 1985, within the period fixed by the statute of limitations. This action was returned to the Superior Court in the judicial district of Hartford-New Britain at Hartford. Although the defendants were Joseph D. Zaleski, doing business as A.W. Campbell Co., Joseph D. Zaleski, individually, and Dorothy Zaleski; see footnote 1, supra; mesne process had been served only upon Dorothy Zaleski. The plaintiff was unable to locate Joseph D. Zaleski for service upon him. Because of this failure of service, a second suit, the action before us, was commenced by service of the writ, summons and complaint upon each defendant on October 2, 1985. Upon motion of the defendant, these two cases were consolidated for trial. Subsequently, the two actions were withdrawn as to the defendant Dorothy Zaleski. Later, the earlier case was withdrawn in its entirety, leaving only the second suit against the defendant for trial and judgment.

The defendant alleged by way of special defense that the cause of action did not accrue within six years before the commencement of suit, contrary to the statute of limitations, General Statutes § 52-576. By stipulation, the evidence at trial consisted of the exhibits introduced by the parties.

The plaintiff's claim at trial was that the statute of limitations began to run on October 27, 1981, when judgment was rendered against it in the suit brought by Green Enterprises, Inc., on its labor and material payment bond. The defendant, on the other hand, alleged by special defense that the statute began to run on September 21, 1979, the date of the defendant's breach of his contract with the town of Chester and his concomitant default thereby of the general indemnity agreement, which gave the plaintiff the immediate right to bring suit against the defendant.

The trial court rendered judgment for the plaintiff, finding that none of the plaintiff's losses was barred by the statute of limitations before the commencement of this action on October 2, 1985. The holding of the court was narrow and succinct. Without reviewing the specific terms of the general indemnity agreement, the court's complete legal reasoning was simply stated: (1) where an agreement indemnifies against liability, the cause of action arises as soon as liability is incurred; and (2) where it indemnifies against loss, the cause of action does not accrue until a loss has occurred. That court cited Fairfield v. D'Addario, 149 Conn. 358, 361, 179 A.2d 826 (1962), and Calamita v. DePonte, 122 Conn. 20, 23, 187 A. 129 (1936). On that basis, the court concluded: "Obviously, as to the plaintiff's indemnity of the defendant's performance with the town of Chester, liability was incurred as soon as the defendant defaulted; Fairfield v. D'Addario, supra, 149 Conn. at 361, 179 A.2d 826; but as to the defendant's indemnity of the plaintiff's loss, liability occurred only when the plaintiff had such a loss. Calamita v. DePonte, supra, 122 Conn. at 24-25, 187 A. 129." In reaching that conclusion, the court erred by failing to consider the terms and provisions of the general indemnity agreement upon which suit had been brought.

The sole issue presented in this appeal is framed by General Statutes § 52-576(a). As relevant here, the statute provides that "[n]o action ... on any contract in writing, shall be brought but within six years after the right of action accrues...." (Emphasis added.) In our jurisdiction, an action is commenced on the date of service upon the defendant. Valley Cable Vision, Inc. v. Public Utilities Commission, 175 Conn. 30, 33, 392 A.2d 485 (1978); Broderick v. Jackman, 167 Conn. 96, 99, 355 A.2d 234 (1974). The plaintiff's suit against the defendant, therefore, commenced on October 2, 1985. The determinative question before us, consequently, is whether the plaintiff's cause of action under the general indemnity agreement "accrued" before or after October 2, 1979. " 'Applied to a cause of action, the term to accrue means to arrive; to commence; to come into existence; to become a present enforceable demand.' Eising v. Andrews, 66 Conn. 58, 64, 33 A. 585 (1895)." D'Occhio v. Connecticut Real Estate Commission, 189 Conn. 162, 182, 455 A.2d 833 (1983).

The trial court correctly found that "[o]bviously, as to the plaintiff's indemnity of the defendant's performance with the town of Chester, liability was incurred as soon as the defendant defaulted." It erred, however, when it concluded thereafter that "as to the defendant's indemnity of the plaintiff's loss, liability occurred only when the plaintiff had such a loss." These contradictory holdings were predicated upon the same general indemnity agreement. In substance, the trial court found that the defendant's agreement was an indemnification for both liability and loss, but since the plaintiff sought recovery for loss, and not for liability, the particular action accrued when the loss occurred. The trial court incorrectly subdivided the general indemnity agreement this way.

There could be but one statute of limitations applicable to any cause of action under the defendant's indemnification agreement, and we find that the plaintiff's right of action against the defendant thereunder accrued as soon as it incurred liability due to the defendant's default on the roof replacement contract. This default occurred on September 21, 1979, giving the plaintiff an immediate right to bring suit against the defendant. Our conclusion is based upon our review of the law and examination of the general indemnity agreement before us.

Generally, indemnity agreements fall broadly into two classes, those where the contract is to indemnify against liability and those where it is to indemnify against loss. In the first, the cause of action...